NACS 2017: Major Players Move to Address Trends in RTD Beverage

Amongst the hundreds of brands that exhibited at NACS 2017 last week in Chicago, the large beverage brands made perhaps the strongest impressions. As the dominant players in c-store coolers nationwide, Coca-Cola, PepsiCo, Dr Pepper Snapple Group, Monster Energy and other major corporations showed a range of new products and line innovations aimed at taking — or at least holding — a larger share of the market. As they do, they are taking different approaches to various opportunities and challenges currently roiling the marketplace, including concerns over sugar content, the development of a broader dairy set, and offering natural and “clean” energy products.

Grappling With Sugar

Whether it’s due to declining soda sales or the movement to tax sugar-sweetened drinks in certain areas around the country, the movement of consumer and public health trends against sugar poses an ongoing challenge to Coke, Pepsi and other major beverage brands in terms of product innovation. As they showcased their respective products at NACS 2017, brands made subtle shifts in formulation and positioning to give consumers more options in both full sugar and low sugar drinks.

Coke’s most significant recent move to deal with the sugar question was this summer’s reintroduction of Coca-Cola Zero as Coca-Cola Zero Sugar. The formula itself hasn’t changed, as the line is still sweetened with aspartame and acesulfame K with only a slight tweak in the proprietary blend of natural flavors. But the name change is a sign of the times, and of the importance of a “no sugar” callout for consumers. Speaking with BevNET at NACS 2017, Coke VP and GM Diane Wallace said the relaunched line was growing steadily, though still only about a quarter of the size of the brand’s flagship zero calorie line, Diet Coke.

Amongst its new products on display at NACS, Coke showcased sugar in a variety of offerings. On the low calorie end, besides Coca-Cola Zero Sugar, the introduction of a Mexican-style agua fresca line, Barrilitos, plays in between several existing categories and use occasions. A blend of water infused with natural fruit juices that give it a subtle sweetness, most of the seven flavors come in at under 100 calories per 12 oz. serving. The line launched this summer and is currently available exclusively in Bag-in-Box and frozen concentrate formats aimed at food service. However, Wallace noted Coke would be interested in exploring a potential RTD line for the brand based on its retail performance.

Meanwhile, the two new flavors joining Coke’s core soda line, California Raspberry and Georgia Peach, are positioned as craft soft drinks; each is made from all natural, locally sourced ingredients, including cane sugar, and packaged in the brand’s iconic glass bottles. The bright green colored Green Apple Fanta, which will be joining the fruit flavored soda line next year, also expands Coke’s lineup of full-sugar soft drinks. The company quietly cut sugar content in Fanta produced for European markets by 30 percent earlier this year, but there’s no indication yet that a similar shift will be coming to the line domestically.

At PepsiCo’s booth, the company sampled a variety of new products across all categories that showcased sugar in different ways. Mountain Dew, a perennial high performer in c-stores, will see the clear, lemon-lime flavored Mountain Dew Ice join its 20 oz. bottled lineup in January 2018. While that product goes for a traditionally sweet soft drink experience, Mountain Dew’s energy-forward Kickstart line will add a new SKU with no sugar added and just 5 calories called Ultra in January as well. Kickstart, a blend of Mountain Dew, caffeine (92 mg per 16 oz. can) and 5 percent juice from concentrate, will also launch an “original flavor” SKU with about 80 calories and 20 g of sugar that same month.

High sugar has long been a calling card for Monster’s expansive roster of energy drinks, but the brand has been open to shifting the way in which it sweetens its products. At NACS, Mango Loco was introduced as the newest addition to the Juice Monster line, a non-carbonated hybrid energy blend that contains around 16 percent juice per 16 oz. can. While still packing around 50 g of sugar, using juice presents the product as a natural, more refreshment-forward offering relative to Monster’s other lines. Monster Hydro, a blend of water and energy that debuted earlier this year, is another example of the company’s shift towards providing consumers low sugar options within its set.

Monster has also had a range of sugar free, zero-calorie drinks in its stable for years, with more due to join in the coming months. At the booth, the company sampled White Lightning, a clear, zero-calorie SKU for its much-discussed Mutant “super soda” line that was rolled out to c-stores over the past year. Designed to compete with the likes of PepsiCo’s Mountain Dew products, Mutant has had an uneven debut, plagued by product shortages and complaints from retailers that Monster offered little in terms of promotion or sales guidance. Yet the line’s performance has been solid within c-stores, and the forthcoming launch of White Lightning, along with widening distribution, suggests Mutant has ample room to capture a larger share of the soda cooler.

Developing the Dairy Set

As seen at this year’s NACS show, the big soda brands are exploring ways to further develop their presence in both traditional and alternative dairy markets.

As noted in BevNET’s recap of new product innovations at NACS, PepsiCo will be launching several Starbucks-branded RTD coffee beverages that will incorporate non-dairy milk for the first time. Almondmilk will be featured in the new vanilla and mocha SKUs of Starbucks Frappuccino set to debut in April 2018, as well as in the Starbucks Double Shot smoothie line. While Pepsi reps were not available to answer questions, the move to showcase almondmilk in coffee-based drinks suggests the brand is looking to increase its appeal with consumers who may have dairy allergies or who have been introduced to nut milks at their local coffee shop.

Meanwhile, Coke shared plans to further build out its Fairlife line of “ultra-filtered” dairy milks. The line — which boasts 50 percent more protein, 50 percent less sugar and 30 percent more calcium than traditional milk — debuted in 2014; last year, the company introduced the flavored milk sub-line YUP! in single-serve 14 oz. bottles. At NACS, Wallace shared an advanced look at a redesigned package for YUP! that more clearly indicates its place under the fairlife banner and calls out the 16 g of protein in each bottle. A new unflavored milk SKU will also launch as the revamped bottles are rolled out to retailers next year.

Fairlife’s brand equity has also extended to the Core Power protein smoothie line. Coke shared a new package design for the four-SKU line which includes the text “fueled by fairlife protein” above the Core logo. Wallace noted that value-added dairy was the fastest growing beverage segment for Coke. A coffee flavor, which was tested in a pilot program this year, will launch nationally in January 2018.

Elsewhere, Horizon Organic, the dairy brand under the Danone banner, displayed a 10 oz. single-serve bottle of its low fat chocolate milk which reps said was aimed at millennial consumers at the show. The SKU will retail for $1.99 upon launch. Though samples and further details weren’t available at NACS, reps confirmed Horizon is also preparing to launch a new non-GMO dairy sub-line early next year that will play in between the brand’s conventional and organic offerings.

Clean Energy

Particularly in the energy category, the major beverage brands exhibiting at NACS 2017 showed a commitment to developing organic and “clean label” products that highlighted the use of simple, natural ingredients. As evidenced by Anheuser-Busch’s recent acquisition of HiBall in August, this emerging segment is drawing greater attention from larger CPG players.

Pepsi shared several new products that are positioned as natural and organic alternatives to conventional energy drinks. AMP Energy Organic, which launched in late August as an exclusive for 7-Eleven, fits that mold; all four fruit flavored SKUs are made with just organic cane sugar, organic caffeine from green coffee beans, carbonated water, citric acid and natural flavors. Packaged in a 12 oz. slim can, the product label features “organic” in bold text across the front to clearly distinguish it from the Amp core lineup. Broader retail distribution for the line will begin early next year. Yachak, a non-carbonated organic yerba mate-based energy drink, was also sampled in two flavors, including Berry Red.

Energy shot category leader 5-Hour Energy has been consistently sought new innovation for its regular and Extra Strength lines. Though samples were not available at NACS, reps at the brand’s booth discussed the forthcoming launch of a Peach Tea variety which will be the first SKU to use natural caffeine from green tea. The flavor, which will contain 200 mg of caffeine, is due to launch next year.