The growth of functionality and the importance of health issues in the German soft drink market are creating a new agenda for producers determined to succeed. Ute Ballay reports on trends and developments pushing the industry forward.

Innovation shows no signs of dimming on the German soft drink market. Per capita consumption of soft drinks in the country climbed by 1.5% last year to an average 256 litres, according to industry association wafg. And, wellness and functional brands continued to drive demand, while traditional fruit juices and nectars lost headway.

"The traditional categories water, tea, soft drinks and juice are merging into a new growth category," says Dr Hans-Peter Wild, head of drinks industry raw material and aromas supplier Wild. "Firms who recognise this trend and respond with suitable products will succeed." The approach combines the success factors of individual segments into new product concepts.

Good taste and appearance are vital, but the most popular brands also deliver something extra in terms of performance (improving health, raising energy levels etc) or convenience. The switch to plastic packaging by ever more German consumers has brought a new stress on convenience, while discount retailers have also used PET to win market share. Private label has even muscled into the wellness and functional sector, threatening sales of the premium priced brand leaders.

A new agenda
Eckes-Granini has retuned its marketing strategy in response to these trends. The industry giant spent much time and money developing separate brand families for each market: Hohes C for health aware drinkers, Granini Nektare as a premium juice, Fruchttiger for children etc. Now the Nieder-Olm-based company believes product differentiation is no longer so useful. "The variety and multi-pack options now available for flexible supplies‚ are setting a new agenda," according to Eckes-Granini boss Herribert Gathof. This approach again owes much to current packaging innovations, the onward march of PET, aseptic bottling and new packaging (developed jointly with Schmalbach-Lubeca) that lengthens the shelf-life of fruit flavours and aromas.

First examples of this new approach are a fruit schorle or spritzer added to the Hohes C range this spring, and a new 0.5l PET variety of its Vitamin Schorle in Exotic and Apple flavours. Spritzers are one of the most dynamic market segments in Germany - with growth last year of over 30%, they are now bought by one-third of German households. The pre-mixed mineral water and fruit drink is a convenience product, which also sits comfortably in both the wellness and functional segments.

No surprise then that new varieties keep on coming. Selters, the mineral water division of Binding, recently introduced an apple and cherry spritzer with added vitamin C, while RoehnSpruedel added a 'pineapple plus' variety to its spritzer range. Wild offers drinks firms a range of 'red spritzer' or even 'sports spritzer' flavours alongside traditional apple brands. The Heidelberg specialist launched an extended range of 'from the named fruit (FTNF)' flavours at April's International Fruit Juice Week in Leipzig. This includes new exotic flavours such as mango, paw-paw, guava and grenadilla as well as classic apple, orange and lemon.

Eckes also launched 0.33 litre PET varieties of the Granini Orange and Multivitamins fruit drinks earlier this year. This 'ready to serve' option - aimed especially at on-the-move drinkers - again targets the convenience market. It also shows how such innovations can be used to update traditional brands.
Many smaller drinks firms show the same innovative strength. Bad Liebenwerda is market leader in Brandenburg, and also scrapes into the top 30 list of German wells. But with a supply area limited to 200 kilometres of its east German base, the 10 year-old firm is hardly a household name even in Germany. Yet each year Bad Liebenwerda adds new varieties to a successful range of wellness drinks.
Most popular is Hollerblute, a mixture of holunderberry, apple vinegar and green tea extracts. In February Bad Liebenwerda launched 'Hollerbeere', another flavour based on the richly scented holunderberry, at the International Green Week trade fair. Both varieties are also marketed in a 'Six Pak' - 6 x 0.5 litre disposable PET cans - for the convenience market.

Powerful range
The firm also produces a spritzer with over 60% fruit content, and the Fiesta Power wellness range, including Fiesta Joghurt Power and Fiesta ACE Power with added vitamins. 2002 launches include Fiesta Waldbeer-Power, made from forest fruits and aloe vera, and the carbonated fruit drink Fiesta Limo Lemon. A €30m plant opened on the outskirts of Bad Liebenwerda last year to meet growing demand.

New wellness drinks continue to roll out from all the leading suppliers. The latest example is the Corpore Sano

Some of today's most dynamic growth is in the less glamorous world of private label and discount supermarkets
range from Karlsberg soft drinks subsidiary Merziger. Corpore sano comes in three varieties: Vitale (with lime-blossom extracts and vitamin C), Balance (magnesium, currants and red wine extracts) and Esprit (ginseng and green teas). Noerdlingen firm Haarman & Reimer is developing Body'n Soul, a near-water range that claims to improve appearance; some see such 'beauty drinks' as the next add-on to the wellness segment.

Some of today's most dynamic growth is in the less glamorous world of private label and discount supermarkets. The switch from glass to PET helped lift soft drinks sales among discounters (even excluding Aldi) by 20% last year, over three times the average figure for supermarkets and off-licences. Private label mineral water brands have sold well for several years, but Germany's leading discount stores are now also active in the wellness, functional and sports drinks markets. "Swifter responses from the discounters mean that brand names no longer enjoy the same headstart," argues Gerhard Boeller, drinks analyst at market researchers Nielsen. "Brands no longer dictate in the new

This aggressive approach boosted sales of private label sports drinks by almost 300% last year. Sales of 24.5m litres were almost half the total for supermarkets and off-licences. Demand for wellness drinks climbed over 70% in 2001. Growth of over 150% in the energy drinks segment lifted sales above 10m litres, winning discounters, especially Lidl, Penny and Plus, around 40% of this lucrative market. Sales growth of mineral water (34%) and colas (14%) was also three times ahead of other retailers. The success of discount cola brands was one factor in Coca-Cola's move to offer price concessions last year.

Expert Analysis

The Market for Soft Drinks in Germany

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Germany Soft Drinks Market Profile


Why growth?
Cost is obviously a key issue; many of the discounters' wellness and sports drinks are half the price of top brands. But there are many other reasons for the growth of private label: the greater acceptance of these products by German consumers, partly due to much improved variety and design of the Penny and Plus brands; the growth of discount chains, both by store size and numbers; and the boom in non-returnable PET packaging, which allows stores to limit costly recycling.

Fresh chilled juice is another segment growing with the discounters. This has long been a neglected area in Germany. For example, non-concentrate products have over 20% of the fruit juice market in Scandinavia, but account for less than 1% of German sales. But demand jumped 86% last year to over 6m litres (as ever, the figures exclude Aldi), as both Plus (Pure & Fresh) and Lidl (Solevita) expanded own brand production. Aldi Sued also entered the market in early 2002 with its own Del-Rivo brand, and fellow cut-price chains Penny and Norma look set to follow.

The main beneficiary of the chilled juice demand growth is the Moenchengladbach supplier FSP, which produces most private label 'Direktsaft' as well as its own brand, market leader Paradise. In all FSP covers some two-thirds of output. And again, private label is growing at the expense of brand names; the market share of Germany's second biggest seller, Sportfit brand Tropicana, more than halved in 2001. Also the industry search for new varieties knows no bounds. Latest flavour from Hesse chilled juice specialist Kelterei Mueller is a 'hampster juice', made from apple, cherry and grape juices. "Children find the 'hamster pee' lots of fun," reports the family firm's co-owner Tanja Mueller.

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