Smoothie boom shows no signs of flattening off
Tapping into demand for healthier beverages, the fresh fruit smoothie has been one of the success stories of soft drinks market in recent years, particularly in the UK. Annette Farr takes a look at other major markets to see if the exceptional success seen in the UK is being replicated elsewhere.
From a niche drink launched in the UK by Harry Cragoe under the Pete & Johnny (PJ) brand in 1994, followed by Innocent in 1999, the smoothie has evolved into a mainstream soft drink. It is also the fastest growing soft drinks category in the UK. According to the 2008 UK Soft Drinks Report published by the British Soft Drinks Association (BSDA), in 2007 consumption figures reached 75m litres, growing by 44% and outperforming all other soft drink categories.
The smoothie is a drink for our times. The 100% crushed fruit juice drink meets all the criteria for today's health-conscious and ethically aware consumer. As the BSDA report observes: "Smoothies have connected to an emotional and functional mindset. Consumption is linked to feeling better and healthier together with the perception of added benefit via superfruit offerings."
Growth in the UK has been spearheaded by Innocent. Today, the company claims a 74% market share (MAT January 08). PJ's, bought by PepsiCo in 2005, has been revived with three new 'superfuit' flavours and a new look, repositioning itself in 2008 to attract consumers who are put off buying smoothies because they are too expensive.
"Consumers have long complained that smoothies are too expensive and in a recent survey 42% said that price was the biggest barrier to consumption," says Richard Lawrence, brand manager at PJ's. The company believes that a combination of lower price points, choice and repackaging will attract new consumers to the category.
Now firmly established in the UK, smoothies are gaining ground across mainland Europe. Three years ago, Innocent began its European operation in France where it has since achieved 50% market share (AC Nielsen). In Denmark, in just over a year, the brand has gained a 26% grocery share, and in Germany has secured its first grocery chain signing. Less than six months ago, Innocent launched in the Alps, selling in Starbucks, and the company reports that in the Benelux countries all targets are being met.
Innocent maintains it is now the leading smoothie brand across Europe with potential for further growth. However, the company's dominance will be put to the test this year both in the UK and mainland Europe, with the news that Tropicana and Nestlé have entered the market.
In February, PepsiCo launched Tropicana Smoothie in the UK, with the support of a GBP4.5m (US$8.76m) marketing programme, including TV advertising. Adrian Baty, senior brand manager for Tropicana, says: "We believe that this campaign will engage with consumers in an impactful way and help us grow the smoothie sector which we believe could be worth GBP300m in just two years' time."
In April, Tropicana also launched a three-flavour range in France. While smoothies remain a niche category in France, European beverage carton manufacturer Elopak expects them to feature heavily on French consumers' shopping lists going forward. According to Lionel Ploton, Elopak market unit manager, both Eckes Granini and Andros are set to develop smoothie ranges, with all major manufacturers expected to have smoothie products by 2011.
The news that Nestlé has partnered with Boost Juice, the largest smoothie chain in the southern hemisphere, to launch its first smoothie range in the UK creates further interest and competition. The company is reported to be investing GBP5m to test the market in the UK, before what is anticipated to be a global roll-out.
There is activity too in the Nordic countries. In Norway, Ringnes is relaunching its Solo Smoothie, first introduced in 2006. Karen Lima, the head of Solo's product development unit, says the market for natural fruit-based smoothies is growing and demand is very strong. "We are seeing a definite link between demand, and a growth in the number of consumers who are turning away from sugared drinks to consume healthier drinks with natural ingredients," Lima says.
Meanwhile in Finland, where health-promoting soft drinks have become significantly more popular over the last decade, Helsinki-based Hartwall has launched Jaffa smoothies. The European smoothie bandwagon is well and truly rolling.
As for the US, the birthplace of the smoothie, the market remains buoyant, according to Mintel, which states in its 2007 report on the US smoothies market that a five-year boom has raised sales by more than 80%. "Consumers are attracted to smoothies because they are seen as a healthier option to most sweets and on-the-go meals," says David Lockwood, director of Mintel Reports. "Now that the smoothie market is a proven success, companies are being pushed to the next level - extreme differentiation. Similar to the coffee market, smoothie companies need to continue developing innovative flavours and additives to keep consumers engaged in the market."
Although US consumers are used to drinking their smoothies in juice bars, more brands are appearing on-shelf. Market leading Jamba Juice, which opened its 700th location last December in Portland, Oregon, has signed a deal with Nestlé USA to produce and distribute a line of healthy RTD beverages which will include smoothies.
Further, a small 'smoothie war' appears to have broken out between Naked Juice, which was bought by PepsiCo last year, and the Odwalla juice and smoothie company which Coca-Cola acquired in 2001. The latest skirmish has resulted in Naked Juice replacing Odwalla in some 7,000 Starbucks throughout the US. With these two battling it out and other major companies looking for a share of the action, competition will only intensify.
The smoothie scene in the southern hemisphere is also upbeat. Nudie has replicated Innocent's success in Australia and one New Zealand company, Charlie's, has seen its NFC range of juice smoothies grow by 32% against last year. The company is about to introduce its reformulated smoothies in four variants: Detox Smoothie with Spirulina, Vitamin C Smoothie with Acerola Berries, Anitoxidant Smoothie with Acai Berries and Energy Smoothie with Guarana.
Ron Curteis, marketing manager and "wizard of juice" at Charlie's, says: "Currently smoothies make up around 20% of the chilled juice category. The smoothie trend has huge potential for growth. The personality of the brand seems to be critical. Consumers drink smoothies for health reasons and they want a brand that can deliver on a promise of being healthy and good for you."
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