Look Behind: Year in Review


Editor’s Note: Please note correction, below, on the topic of aloe vera juice.

Several emerging brands took big steps forward in 2016, continuing growth rooted in the prior year. That’s why, for the categories we’ve cherry-picked here, we’re showing side-by-side IRI reports: the incursion of new brands in categories was less significant than in 2015, when many of the companies listed here first popped up in retail channels.

But if the frequency of new names in the mix was lower in 2016, the growth was greater for the ones who have crossed over, meaning that consumers are taking note of the category invigoration. Newer categories like energy drinks or coconut water (itself spread throughout the store) are the product of entrepreneurial brands, certainly, but it takes innovation and execution to penetrate the established order.

It’s still at toehold and foothold levels, but particularly in the refrigerated space, turnover is coming. Center store is harder to change with more entrenched buyers and more category captainship from the big soda companies, but again, many of those categories, like water, sports drinks, coffee and tea, are being invaded by premium brands. We’ve broken our analysis up to show progress across the board.

All hail the one-percenters – those brands in massive categories that have managed to grab or increase their share by just one percent.

One percent might sound small, but in a billion-dollar category, revenues for one share point are $10 million – or right about what the fine team at Venturing and Emerging Brands (VEB) considers “proof of concept” for a beverage company.

So in a $6 billion category like sports drinks, one percent can mean a whole lot of sales, which Body Armor showed this year, hacking and slashing its way to a gain of almost an entire share point on category leaders Gatorade and Powerade, each of which lost a bit – and lagged the category growth rate in 2016, as well. It was momentum that continued from 2015.

Canned juice drinks had a couple of brands from whom the momentum that began in 2015 continued into 2016: Bai Bubbles shot through the DPSG network in 2015 to establish itself as a having credibility in its own right, next to its non-carbonated older brother, while organic yerba mate brand Guayaki continues to make the right calls as it moves across all channels; the brand has more than doubled in each of the past two years, and has more than two percent of the category.

That one percent share mark can be particularly telling when there’s ongoing shift in a category hierarchy. In the refrigerated section, fruit drinks like Sunny D, Tropicana, and Welch’s have long track records of sales in convenience channels, but their share is starting to drop off in supermarkets and other large-format stores. The category growth slowed year-over-year and those mainstream brands are being affected by a fracturing of the market: emerging brands like GTs, Kevita, Mamma Chia, and Goodbelly are all over a share point and showing the energy in the category that the older brands aren’t.1_A
2So what are some of the growth categories and the brands that are helping to power them?

Sparkling water continued to bubble over with growth, with the share growth divided between four brands: power player Talking Rain, whose revenue growth matched the category’s overall, along with LaCroix, Polar Beverages and Topo Chico.

Meanwhile, still water continued to grow at a steady rate – although some of the fastest-growing brands remain below the radar. Meanwhile, brands of the category’s past and future have all steadily ridden its growth, from commoditized private label to dominant growth story Smart Water, the premium product that continues to gain on warhorse brands like Aquafina and Dasani.

That kind of steady growth rate also fits the energy drink category; despite a year in which the category growth rate fell by half, it still grew nearly 6 percent – and the share gap between leaders Red Bull and Monster dropped to less than a quarter-point.

2_A3Meanwhile, say hello to Les Enfants Terribles, those new brands that have come from nowhere (at least in terms of IRI) to start registering sales in the mainstream channels that these readings tend to represent most accurately.

Argo Tea debuted with a half-point of share in the tea category, which continued to expand even as top brand AriZona bled a bit of share to Pepsi and Coke plays like Lipton and Gold Peak. Honest, meanwhile, continues its slow but relentless march of 20 percent revenue growth year-over-year, showing the miracle of compound interest.

In the case of Aloe Gloe – and kid sibling brand Aloe Rey – the move into mainstream grocery in New York and Los Angeles from Coke’s own distribution system has resulted in immediate leadership of the Aloe Vera Juice category, one that’s already hard to pin down because of the variety of small-scale aloe drinks out there. If these brands continue to grow, expect a couple more years of category dominance before the category starts to show the rest of the players.

Correction: In the January/February issue’s article “Look Behind: The Year in Review” a table on the size of the Aloe Vera Juice category did not include several brands that had been classified in other product categories by the data company that supplied the sales figures. The following table represents the leading brands in the Aloe Vera Juice category for the 52-week period ending on February 17, 2017.

Of course, Aloe Gloe’s founders tend to think of the brand as more “aloe water” than “aloe juice” – and that’s the same approach taken by WTRMLN WTR, another brand that debuted in its category this year and snared a bunch of sales. Part of the path was bushwhacked by another brand that broke into conventional a couple of years ago, Harmless Harvest, which is now big enough to have invited its own competition from other premium coconut water brands like Coco Community and Waterhill. Those two are too small to be considered bad babies, but come 2018, when we’re here again, odds are they’ll have turned into pretty loud toddlers.3_A