While organic meat and produce are fast becoming mainstream elements in the food market, the organic soft drinks sector has suffered from a lack of new product development and innovation. Annette Farr reports.

With major retailers such as Wal-Mart and Safeway in the US announcing recently that they are expanding their organic ranges, any suggestion that the organic boom is losing momentum can be swiftly dismissed. Even the most casual glance around supermarket shelves tells us that organic meat and produce have entered the mainstream.

Increasing attention may be being paid to more general concerns about health and wellness, recommended daily dietary allowances (RDAs) and obesity, but there is little evidence that this is resulting in any decline in consumer interest in organic specifically. In fact, experts expect health issues will create another boost for organic products.

According to the Soil Association, the UK organic market has grown by 30% over the past year to GBP1.6bn (US$3.02bn), compared with an annual growth rate for all UK food and drink sales of around 3%. The Soil Association estimates the global market for organic food and drink last year was worth GBP16.7bn, up by GBP1.2bn from the previous year. Organisers of the organic trade show BioFach 2006 declared that organic agriculture and marketing of organic products are expanding almost everywhere in the world.

All very encouraging for the organic market in general, but the picture for the organic soft drinks sector in particular requires some qualification.

A report published last year by specialist consultancy Organic Monitor, entitled The North American Market for Organic Juices, points out that although there have been many new product launches, there is a lack of new product development in the organic drinks market.  Most product launches have been organic versions of conventional juice products.

Large beverage firms dominate the American organic juices sector. They have entered the sector either by acquisition, such as Coca-Cola's purchase of Odwalla, a leading producer of natural and organic juices in 2001, or by launching organic variants and using their established distribution channels to get them on shelf. Examples of the latter would include Nantucket Nectars and Apple & Eve.

But the Organic Monitor study suggests that more product differentiation will help dedicated smaller organic juice producers to compete. A successful example of this would be the new V juice from UK-based Grove Fresh, a sub-range of vegetable juices. Each 1-litre size contains the juice of at least 1.5kgs of organic vegetables, the company claims, while a 250ml serving contains fewer than 60 calories and a minimum 25% of the RDA of vitamins A and E.

Also in the UK, James White Drinks continues to innovate. Its latest offering is an organic Pomegranate & Apple juice, claimed to be the first organic pomegranate drink on the market. This joins the company's range of organic fruit juices which are all made with farm pressed apple or pear juice.

In the US, Steaz Organic Green Tea Soda has been hailed as the world's first carbonated organic green tea and Froid, LLC has introduced a line of organic ready-to-drink coffee beverages. Being the only organic bottled RTD coffee beverage on the market, Froid says its brand has attracted the attention of distributors and retailers who are looking to take advantage of the growing popularity of organic products.

The lack of newcomers in the UK could be down to the age-old question of margins. Simon James, founder of The Biq Squeeze Fresh Juice Co., manufacturer of the award-winning Twisted organic juice range, explained: "Price is still key. Multiples have been getting on the organic bandwagon and overpricing organic products, and making high margins. This, in turn, has slowed growth. We price our Twisted juice in line with non-organic juice, which puts our already small margin under pressure. We pay around 70% more for our organic ingredients versus non organic, which is why others have not gone the organic route."

As in other sectors of the organic market, it has been difficult for manufacturers to keep pace with demand. "It's the supply and demand equation. We can't easily get organic produce because farmers are still converting across - and it takes three years in the UK - so demand is outstripping supply," James said.

There is also another significant problem in sourcing organic fruit for juice production. In the conventional fruit market, produce with imperfections, or 'outgrades', are earmarked for juice production. However, in the organic market consumers are more tolerant of minor imperfections, so less fruit is generally passed on to be juiced. "Outgrades which have historically gone to the juice industry do not exist in the organic world because consumers want to see imperfections in the fruit," James explained. "So we are using first-grade fruit, which isn't a problem because we get decent tasting juice; it just costs a fortune!"

Despite the tight margins and supply problems, James remains upbeat. "Organic has so many meanings, and is over used. What consumers want are great tasting natural products without pesticides, insecticides etc. It is still a niche, but I believe organic will become, and is becoming, mainstream."