PepsiCo Emphasizes Zero Sugar Offerings
Recognizing the decline of sugary carbonated soft drinks, erstwhile soda giant PepsiCo has for years been moving toward better-for-you offerings in both its snack and beverage portfolios. At NACS this year, that push continued with the introduction of new Zero Sugar varieties for several of its most popular beverage lines.
The company revealed Wild Cherry as the first flavor extension for Pepsi Zero Sugar, which will be available in 20 oz. bottles for grab-and-go retail in February. As well, PepsiCo announced MTN Dew Zero Sugar in all pack sizes, offering a full flavor alternative to the citrus-flavored drink’s diet offerings which will be available in January. Energy-focused MTN Dew Game Fuel will also give consumers sugar-free options with new Charged Raspberry Lemonade and Charged Watermelon varieties available in 16 oz. cans.
Nitro cold brew has been a growing presence on draft at Starbucks cafes. Now the coffee maker — which distributes its RTD products through PepsiCo — is launching its unsweetened nitro product in 9.6 oz. cans. The new product will be available in February. The company will also release two new products in December — Tripleshot Energy Dark Roast containing 225 mg of caffeine in a 15 oz. can and Brown Butter Caramel Frappuccino with a Splash of Cold Brew in a 13.7 oz glass bottle.
PepsiCo’s sparkling water entrant, Bubly, will launch a Blackberry variety in 16 oz. bottles in January.
Beyond its CSDs, PepsiCo announced Fruit Punch would be the latest addition to the Gatorade Zero line, available in 28 oz. bottles starting in January.
The sports drink brand’s functional Bolt24 extension line, which debuted earlier this year, will also see two new flavors next year — Antioxidant Mixed Berry and Energize Strawberry Lemon, both in 16.9 oz. bottles.
The company’s recent acquisition of Muscle Milk maker Cytosport has not stopped it from introducing a competitor to the protein drink brand. Under the Gatorade banner, PepsiCo announced G Super Shake, a dairy-based shake line featuring 30g of whey protein per 11.16 oz. carton. The new line comes in chocolate and vanilla varieties and will launch in February. As for Muscle Milk itself, the brand will introduce a Slammin’ Strawberry SKU in 14 oz. cartons that same month.
At Natural Products Expo East 2019 last month, The Coca-Cola Company’s Honest Tea brand announced it would follow iced tea trends with a new line of cold brew offerings. PepsiCo followed suit at NACS with Pure Leaf Cold Brew. The new products will include Slightly Sweet Black Tea and Black Tea with Tropical Mango varieties. The teas will launch in 14 oz. bottles in February. As well, the brand introduced a new unsweetened herbal iced tea flavor — Mango Hibiscus, which will launch at the same time in an 18.5 oz. bottle.
In Juice, Naked introduced a Pina Colada flavor available in 15.2 oz. bottles, while Dole added a lemonade.
Nestlé Waters Makes Functional Push
Last year saw the minor tweaks to the sparkling lines for Nestlé Water North America’s (NWNA) regional water brands, but this year the focus was on functionality.
Northeast water brand Poland Spring will introduce a three-SKU line of flavors sparkling energy waters in 11.5 oz. slim cans. Available in Meyer Lemon, Valencia Orange and White Peach flavors, the line gives NWNA an entry point into caffeinated flavored waters, an area in which brands like Sparkling Ice, Phocus, Caribou Coffee and others are currently playing. Each single serving can contains 30-35 calories, depending on the flavor.
Elsewhere, mass market brand Nestlé Pure Life will step into the enhanced water case with the introduction of a functional SKUs: Active, with potassium; Revive, with magnesium “to help reduce tiredness and fatigue”; and Protect, with zinc. Each has a different fruit flavor — Orange, Lemon and Blackberry, respectively.
Nestlé is also broadening availability for S. Pellegrino Essenza, the zero-calorie flavored line it introduced in 11.2 oz. slim cans at last year’s NACS show. Essenza will launch in c-store friendly 16.9 oz. PET bottles early next year in three varieties: Lemon & Lemon Zest, Dark Morello Cherry & Pomegranate and Blood Orange & Black Raspberry, the latter being a new flavor.
Finally, Nestlé is also set to launch a fruit blended coconut water via Outshine, a brand of frozen fruit bars. Taking the line of providing “refreshing nutrition” with no added sugar, the drinks are flavored with fruit purée and will retail at grocery for around $2.79 when it launches in select markets in January.
Kombucha Looks to Convenience
From energy drinks pushing 60 g of sugar per can to displays of “Most Stuf” Oreos, NACS is not usually seen as a growth island of health and wellness trends. But this year, as better-for-you products continue to gain steam in the mainstream, two leading kombucha brands made their first appearances on the show floor. GT’s Living Foods and Health-Ade both exhibited as the two companies — long successful in the natural channel — begin looking to c-stores as a way of fuelling new growth.
According to market research firm SPINS, kombucha as a category increased distribution in the convenience channel by 65.5% in the 52-week period ending February 24, 2019. Dollar sales growth in that time grew 55.3% and unit sales improved 48.7%. However, velocities declined 10.1% — a drop that was in line with decreasing velocities in all retail channels.
Overall, kombucha and fermented beverages is now the third largest subcategory within the natural refreshment beverage space with 10% dollar share — trailing only enhanced water and juices.
Speaking with BevNET, GT’s founder and CEO GT Dave said he believed that as sales of CSDs continue to decline and consumers look for healthier options, kombucha has the ability to become a new “anchor” for the convenience channel. GT’s, often credited as an early pioneer of the category, made its first push into the channel about three years ago, Dave said, noting that independent and boutique retailers and gas stations became interested in the category as a point of differentiation.
While the company has reported strong early sales in the channel, Dave noted that kombucha’s extension into convenience requires extensive education with not only new consumers, but buyers who remain unfamiliar or skeptical of the category.
“It’s growing quickly, but by design and with intention,” Dave told BevNET. “We’re trying to make sure we can throttle the growth whenever possible. This is not a slam dunk, it’s not like 7-Eleven and other c-stores are going to start following the model of Trader Joe’s or Whole Foods. There’s still some evolution, still some learning, some trial and error. So what’s important for us as a brand is we go about things incredibly thoughtfully and look for organic growth to be paired with forced growth.”
Dave said the brand has had to carefully consider which flavors it pushes in the channel. Gingerade, one of GT’s top selling SKUs, has played a role in the company’s channel strategy in order to provide the brand’s existing consumers a staple flavor in new locations. However, more fruit forward flavors, such as Guava Goddess, are being promoted as a way to convert new consumers to the category.
“You really need to listen and learn and make adjustments,” he said. “Our plan is to always go in with a limited amount of flavors in order to really understand what the consumer is voting for with his or her purchasing. If we feel a flavor or two isn’t performing to the level we believe it can, we have to move quickly to see if we’re going to swap it out.”
For Health-Ade, fruit-forward flavors like Grape Vibes, Tropical Punch, and Bubbly Rose have been early movers in the convenience channel, according to Vanessa Dew, co-founder and chief sales officer for the brand.
Dew told BevNET that Health-Ade’s push into convenience began with up-and-down the street accounts in New York and Los Angeles, where the brand already had a deep footprint. As Health-Ade begins to dip its feet into convenience, Dew said the company will maintain a focus on similar geographies.
“As I think about some of the larger [chains] within c-stores, we can’t employ those same methods [as independent accounts],” Dew said. “Some of these stores reside in areas which are pretty far reaching … so we have to think about segmenting the right geography with the stores and segmenting where we want to go so that we’re able to tap new consumers.”
Kombucha’s presence in c-stores is still “nascent,” Dew said, noting that leaders in the space such as PepsiCo’s KeVita and GT’s have captured only a portion of the market to date. However, that hasn’t stopped smaller companies from targeting the channel.
KOE, a line of shelf-stable canned kombucha manufactured and distributed by Stratus Group, also exhibited at NACS. At the show, the brand unveiled a rebranded and reformulated product line featuring reduced sugar and calories; each SKU contains 8 grams of sugar and 35 calories per 12 oz. can, down from 80-to-90 calories per can. The products are now additionally sweetened with erythritol and stevia, and feature fruit-forward flavors in order to appeal to mainstream consumers. As well, the company introduced two new flavors: Lemon Lime and Strawberry Lemonade.
Louisa Lawless, chief strategy officer for Stratus Group, told BevNET that while the company plans to take an omnichannel approach with the brand, convenience will be a strong focus for KOE. She added that the company intends to leverage its alkaline water brand Perfect Hydration in order to get KOE into new accounts. She noted that KOE’s lower price point and shelf-stable packaging give it an advantage over its competition, which command premium pricing and a shorter shelf life.
“We’re able to engage more c-store retailers with this small format packaging,” Lawless said. “With the margin game in c-stores, you need to make sure there’s enough meat on the bone for everybody to be profitable. We have a lower price point product that you don’t have to carry on refrigerated trucks and that can be kept in shelf stable storage. When your everyday value is lower, the barrier to entry goes down.”