Even as consumers continue to turn away from sugary drinks of all types, they may not yet be ready to put down the lemonade.
As a case study on the modern beverage market, lemonade cuts across several current trends. The category benefits from its positioning as an all-natural refreshment that can take advantage of rising interest in organic products; according to the Organic Trade Association, sales of organic beverages rose 10.5 percent last year to reach a new high of $5.9 billion. At the same time, growing awareness of the health risks of excessive sugar consumption, combined with public health initiatives such as a tax on sugary drinks, has motivated some brands working in the lemonade space to explore ways of cutting sugar or adding functional benefits to their products.
According to consumer research group Technavio, the global lemonade drink market is expected to grow at a compound annual growth rate (CAGR) of over 6 percent through 2021. The U.S. shelf-stable lemonade market grew over 8 percent last year, reaching $390.6 million in sales in a 52-week period ending on March 25, according to IRI. During that period, refrigerated lemonade also increased approximately 5.3 percent, to over $745 million, in total MULO plus C-store sales.
Ian Neitzke, a category manager for dairy and refrigerated juice at Illinois-based grocery chain Jewel-Osco, said that finding ways to cut sugar in an inherently sweet and indulgent beverage like lemonade was a challenge for companies, due in part to consumer resistance to artificial sweeteners.
“A lot of the ways you cut calories out of sweetened beverage is you throw stevia in there, then you get into aspartame and other things that scare consumers,” he said. “It’s a tough place to break in with something you think the consumer will like.”
Neitzke noted that refrigerated juice overall is not a category in which many brands are actively trying to innovate, but suggested that consumers were the ones driving that behavior.
“I suspect the consumer is looking for lemonade and tea and is pretty content with what’s out there,” he said. As it relates to consumers interest in products with less sugar, he compared the lemonade category to yogurt, where the introduction of Siggi’s presented “an easy solution” for that category. “We haven’t found that player in lemonade yet. Generally, I don’t think it’s a category that lends itself to the kind of consumer that’s looking for a lot of [certified] organic or health claims — by nature, it’s a sweetened beverage. It’s going to take some creativity for people to break into [the category].”
Still, as in other categories, established players in lemonade are reacting to shifts in consumer preferences. In recognition of consumer interest in low sugar and low calorie options, Coke-owned Simply recently unveiled Simply Light, a new line of lemonades and orange juice products. Simply Light lemonade contains 75 percent less sugar and 25 calories per 8 oz. serving for both its original and raspberry flavored SKUs. The lemonades are sold in 52 oz. multi serve PET bottles, with select retailers carrying the original SKU in single-serve 11.5 oz. bottles.
According to data from Nielsen, during a four-week period ending on June 16, Simply Lemonade saw all-channel dollar sales increase by 6 percent, despite a 14.2 percent increase in average unit price. That comes against drops in dollar sales for some refrigerated orange juice brands, including Tropicana, Minute Maid and Simply’s own line.
Meanwhile, Coke-owned Odwalla is taking a different tack in using premium lemonade primarily as an on-premise offering. At the National Restaurant Association (NRA) show in May, the brand sampled a new frozen concentrate line of craft lemonades, which are sweetened with cane sugar and aimed at consumers “seeking customization and premiumization,” according to a spokesperson for the company. Flavors include blackberry basil, pomegranate limeade, lavender mint and classic lemonade. The products are still in a testing phase, and are scheduled to launch in Q4.
On the other end of the spectrum is newcomer Poppilu. Based in the Chicago area, the brand was created by founder Melanie Kahn as an alternative to sugar-laden lemonades and was recently accepted into Springboard, a food and beverage accelerator program launched by Kraft Heinz. With the inclusion of aronia berry, an antioxidant rich fruit sourced from local farmers in the Midwest, Poppilu has emphasized its health benefits and lower sugar content (11 g of added sugars per 12 oz. bottle) relative to other lemonades on the market.
“For us, it’s about giving the consumer permission to love lemonade again,” said Kahn. “I’m not going to have to sell anyone on whether or not they like citrus; what I have to do is be able to communicate that this is a health-forward drink.”
Kahn also said that Poppilu’s functional call out can make it an attractive option within a relatively stagnant refrigerated juice set.
“The refrigerated juice category has lacked for innovation,” she said. Rather than compete for space in the functional beverage set, which she noted can span a broad range of consumer need states and use occasions, Kahn is hoping to disrupt the existing cold juice segment with a better-for-you lemonade offering. “We are giving them something healthy in a set that consumers are starting to turn away from because a lot of those juices don’t offer the nutrition that consumers want.”
Even for lemonade brands using more traditional recipes, managing sugar content is an unavoidable task. Hubert’s Lemonade, for example, sweetens its products with a blend of cane sugar (14g per 12 oz. bottle) and stevia leaf extract, with each bottle containing 120 calories. In Europe, Italian soda brand San Pellegrino, which is owned by Nestlé, recently announced that it would be cutting sugar in its lemon-flavored Limonata SKU by 40 percent in the coming months in favor of a sugar-stevia blend.
Yet for a drink as simple and timeless as lemonade, there may not be a need for drastic reformulation. Courtlyn Smith, founder of Austin, Texas-based Shade Tree Lemonade, said that his brand has worked to find the right balance between tart and sweet while maintaining the spirit of fresh squeezed organic lemonade.
“We realized that being more on the tart end of the spectrum, rather than everyone else, was the direction we wanted to head for,” he said. “Not everyone likes tart, but people are leaning more towards health — that itself is a prerequisite to having less sugar.”