Get ready, people.
With the release of Enviga, a new calorie-
burning tea from the Coca-Cola/Nestle
partnership known as Beverage Partners Worldwide,
the functional beverage movement has
gone mainstream.
The rubber is meeting the road. How should
you react? Are you going to have to stock up
on products that flush the system, fill the tank,
shine up the human hood?
What changes will be wrought in your cooler
by the Enviga Effect?
Well, for starters, you’ve got to weave through
a lot of traffic chasing after Enviga for the calorie
burning space. Already, Elite Fx, the company
that first marketed a calorie-burning formula in
Celsius, has ramped up its advertising and is
pressing for increased distribution, claiming
that the release of the Coke/Nestle calorie-burning
tea legitimizes the category they pioneered.
PepsiCo has its own plans to release Tava, a
soda that also supposedly ramps up calorie
burning via the mineral Chromium. Snapple,
which has a growing green tea brand, will add
label language indicating that it, too, boosts the
metabolism. Companies like Fuze and Airforce
NutriSoda, both of which have products with
appetite-suppressing super-Citrimax, are ready
to push for more space.
It’s important to note that all of these
products are only chasing one thing: thin.
Here’s the skinny: thin is the Killer App in
the food and drink business. If people think a
drink will help them lose weight, they’ll buy it.
A recent survey by the drug company Glaxo-
SmithKline PLC showed that 33 percent of
Americans who are trying to lose weight have
tried dietary supplements with no proven
benefit. AC Nielsen recently reported that 15
percent of U.S. households have bought weight
loss products in the last year. The market is there
for a mainstream product that purports to have
a slimming effect.
But at the same time, if it doesn’t work, there
are plenty of other products – be they beverages
or other consumer goods – that are available to
take their place in the weight loss market. That’s
the game that Coke and Nestle started playing
when they showed the Enviga card.
BEYOND SKINNY
Despite the potential gold mine awaiting an
effective weight loss beverage, when it comes
to functionality, Enviga had better not be the
only card in the deck, according to Kaumil
Gajrawala, a beverage analyst with UBS.
“It’s a long-term trend,” Gajrawala says.
“Coke has said publicly that they want to
better leverage their research and development
to develop more of these kinds of products.
You’re seeing it across all CPGs (Consumer Packaged
Goods) as well. Cheerios has labels that
relates to how it affects your heart. Someone else
just launched a chocolate bar that’s supposed
to be good for your heart. So they’re all going
in pretty deep.”
That’s not to say you should expect to
stock racks of functional sodas; according to
Gajrawala, that particular beverage category is
drowning in too many line extensions already.
But in those categories whose shelf presence
is already growing – tea, water, sports drinks
– functionality is going to accompany them
hand in hand.
“Efficacy will become important,” says Debbie
Wildrick, the beverage portfolio manager
at 7-Eleven. “Consumers already have given
the industry ‘permission’ to put additives in
their beverage, but it’s not enough to have just
a splash of a special ingredient in the drink.
Consumers want more from enhanced beverages
and will expect to feel a difference after
consuming these products.”
Natural and New Age food manufacturers
realize what consumers want: at the Expo East
Convention in October, tea and juice lines
like Pure Fruit were defined as much by what
they are expected to do as by their flavor. Fuze
Beverages, which has recently taken nine of
the top 50 supermarket SKUs in the New Age
category, are nearly entirely dependent on a mix
of products that promise various functions, from
appetite suppression to free radical scavenging.
Last year, Ito En presented the Sencha Shot, a
triple strong bullet of green tea that, if antioxidant
research is correct, contains the equivalent
of a mortar attack on free radicals. And if Enviga
takes off, expect some of those companies to
introduce packaging that evokes their latent
qualities as much as it does their natural or
organic origins. After all, the levels of green
tea catechins and caffeine present in Enviga’s
“proprietary blend” of calorie burning ingredients
are very similar to those present in a
well-brewed green tea, in similar ratios.
Nevertheless, even proving a drink helps
consumers lose weight is, while measurable,
still subjective. When considering the effects of
Enviga, which are smallish (the Wall Street Journal
reported the calorie burn is similar to that
achieved in a 15 minute walk), the customer
is going to have to believe, and see, that it is
working. Moving into other functional areas, it’s
going to be hard to prove more. Products claiming
to have longer-term benefits, like all of those
that contain antioxidants, aren’t marketed as a cure for anything – their implied benefit is in
what they prevent, rather than what they cause.
But others, like skin improvement products,
performance enhancement beverages that offer
everything from tranquility, to spiritual insight,
to sexual bliss, may very well have to measure up
to their billing, or disappear overnight.
Nevertheless, marketers are gambling billions
on the belief that a product that might work will
be just as attractive to consumers as the ones that
actually work.
“There are two things here,” says Gajrawala.
“At the end of the day, it’s got to be a genuine
benefit. Today’s consumer is able to see
through anything that’s not real. But people are
moving from CSD’s because they know they’re
bad for you. Now, you look at Enviga, and sure, it’s
carbonated, but it’s clearly a green tea product,
and not only is it not bad for you but it could
be good for you.”
That’s the line walked by the products at Glaceau,
whose Vitaminwater – believed by many
experts to have helped inspire the rush to launch
more functional products – might have already
grabbed the lion’s share of the potential market
for functional waters. But how many more times
can lightning strike in that fuzzy spot between
marketed effect and sugar water?
RAISED STAKES
While there’s no arguing with Glaceau’s success,
there’s likely no replicating it, either – their
lead is huge and they’ve already spawned lessthan-
successful imitators. The market strength
of Vitaminwater means that stakes have been
raised. The next product whose label promises
something immediate and tangible beyond basic
hydration or caffeine-related alertness needs to
deliver, or it could torpedo the whole category.
“That’s been the problem with the New Age
The next product whose label promises something
immediate and tangible behond basic hydration
or caffeine-related alertness needs to deliver, or it
could torpedo the whole category.
since the beginning,” says Lance Collins, the
CEO of Fuze. “A lot of these companies haven’t
fulfilled their promise to consumers. Products
that were billed as offering ‘healthy refreshment’
were just offering ‘healthy deception.’
I was a witness to all these false representations
and thought I could deliver something on
that promise.”
Collins says he believes marketers are getting
better at creating functional beverages.
“Big companies are delivering beverages that
offer benefits,” he says. “It’s better, but it’s not
great. They’ve come a long way. They see what’s
going on with consumers, and I guess they’re
heeding the call.”
Still, that doesn’t mean that as retailers, you
should grab every new
functional beverage that
you can.
“You can’t ignore it,
because it’s something
that people are looking
for,” says Lauren Torres,
the chief beverage
analyst at HSBC. “It’s
always great to be the
first one out with things,
like with Gatorade. Some of these categories
at times do have some traction. But retailers
have to be very careful – there’s
always shelf space to allocate, but you have to
take it very slowly to see how consumers react.”
Chances are, if there’s even a hint of helpfulness
to a product, there are a whole lot of sales to
come. As a retailer, remember this: a large part
of the attraction of functional beverages is that
they pay lip service to both convenience and
health – currently two of the top three drivers
of consumer food choices, according to a recent
survey by the NPD Group. Nothing is more
convenient than drinking something that will
slim you down, wake you up, keep you from
getting cancer. It beats the hard work of exercise,
the time you need to sleep, the expense and
detail required to keep track of one’s health.
“Consumers want more functionality, and
they want it to be convenient,” Wildrick says.
“Providing more enhancements that are easy to drink and more readily absorbed by the body
will be important for the beverage industry in
keeping up with consumer needs.”
DOWN THE ROAD
By all means, be ready to hop on the functionality
train. If you’ve simply got a convenience
CSD cooler, think about adding an Enviga or a
Tava, or even a Celsius – products like that are
attractive to drivers (especially considering the
fact they have massive amounts of caffeine). And
if you’ve got a broad array of products, be ready
to go further. Think about the way orange juice
manufacturers created new revenue streams
– and soaked up space in the dairy cooler – by
coming up with different fortification packages,
and you’ll get an idea of the potential for expansion.
But here’s a little packaging note that needs to
be kept in mind:
“This statement has not been evaluated by the
Food and Drug Administration. This product is
not intended to diagnose, treat, prevent or cure any
disease.”
You’re going to see it on a lot of labels. And the
number of disclaimers might eventually come to
overwhelm the perceived level of benefit. In December,
the FDA is meeting to start defining, in a
regulatory sense, some of the products that
produce functionality. If that happens, get ready
to see the numbers shrink all around – including
those products whose only fortification has been
their own marketing claims.
Nevertheless, there’s a lot to try, and the end
result could be, rather than a series of products
that are part of other categories – a la Enviga or
Tava – just a functional category all to itself. The
demand is there, Wildrick says.
“They’ll keep looking,” she says of consumers.
“Word-of-mouth and viral marketing
will quickly raise awareness and trial of those
drinks that customers believe live up to their
claims. Products that disappoint will drop off
the shelves, whereas the best performers will
be the winners.”
You didn’t think we’d leave you with just one
major industry current, did you? Here are some
other important developments to keep track of in
the year to come.
TEAS STEEPED IN ADDITIONAL GROWTH — Tea sits at the intersection of two
trends: functionality and health. With its leaves serving as a natural source
of flavor and of the antioxidant-supplying catechins, tea is poised for continued
major growth this year. How valuable is that prospect? It’s so tempting
that longtime couple Beverage Partners Worldwide – Coke and Nestle – are
taking a trial separation over green, white and red teas, developing their
own products independently.
MORE LIGHT IMPORTS — The only way things could have gone better for
Heineken this year is if Andre Agassi could’ve rallied to win the U.S. Open
with a Heineken Premium Light in his left hand. As it was, though, the product
exceeded all predictions that it would exceed all predictions for success.
So expect other importers to rush to market, and a bigger ad push from
Beck’s. Otherwise, non-high-end imports are likely to face the same problem
as domestic premium brands: the galloping grape.
THE SEARCH FOR THE MAGIC SWEETENER — Honest Tea thought they had it earlier
this year with erythritol, a fermented organic cane sugar, then they scuttled
their Tangerine Green tea. There’s still talk of Chinese Splenda, while ace-K
continues to be blended with everything under the sun. But until someone
comes up with a low-calorie way to replace real sugar’s taste, expect the
juggling acts to continue.
ENERGY — Caffeine paranoia is expected to build to an early high right at
around New Year’s Eve, when the consumption of energy drinks and vodka
hits an all-time high, and products like Cocaine and Green Card draw even
more negative media attention.
WIDESPREAD WATER ENHANCEMENT — From BooKoo to Odwalla, enhanced
waters will be everywhere next year, capitalizing on the growing market exemplifi
ed by Vitaminwater. And while there are plenty of products that claim
functionality coming out, that market will be tiny compared to the demand
for more low-calorie, fruit-flavored waters with a little vitamin enhancement
and some snazzy packaging.