Consumer interest in RTD tea and coffee has been reflected in the pace of new product development in these sectors. Ben Cooper reports on recent research from industry analysts, Mintel.

The ready-to-drink tea and coffee sectors have been among the fastest growing areas in the international soft drinks markets in recent years, and according to a recent report from industry analysts, Mintel, this sector is leading the way in terms of range development activity.

According to Mintel, which monitors new product development through its Global New Products Database, the number of new variety/range extension launches within the RTD Iced Tea & Coffee subcategory experienced growth of more than 70% between 2002 and 2003, while the number of new products remained relatively stable. During 2003, the sector for the first time saw more new varieties and extensions than actual new products.

"This is an exciting time for RTD Iced Tea & Coffee, with products blurring category lines and flavours becoming more complex," Mintel says in a recent category review. "Tea remains the largest segment, with around 70% of product introductions during the period under review for this report, a slight decline from the last report, where tea products accounted for 75% of the introductions."

Mintel expects new varieties to account for more than half of the RTD iced tea and coffee introductions in 2004 based on projections from the launches in the first quarter of the year. This suggests that flavours and slight variations to existing brands will become the focus of the manufacturers' attentions.

The Asia Pacific region dominated the RTD iced tea and coffee launches with just under 850 new introductions in 2002 through to March 2004, around two-thirds of all introductions.

In 2003, 430 products were introduced in Asia Pacific, representing 61% of the total launches in 2003, a 38% growth over 2002. However an 8% decline may occur by the end of 2004, based on the first quarter launch numbers. Europe was the next largest new product contributor overall with slightly more than 250 new introductions, 109 of which occurred in 2003, a 4% decline over 2002. European region launches are expected to grow by 17% in 2004 over 2003, based on projections from first quarter 2004. North America grew by 40% in 2003, compared to 2002, although projections based on the Jan-March 2004 performance indicate a 14% decline in 2004 as a whole against 2003.

In general, the use of new flavours, as well as different flavour-enhancing production techniques has been key to product development, according to Mintel. Flavour combinations have also become more popular.

"Innovation is prominent through various production methods used to enhance the flavour of the end product," Mintel says. "Source ingredients play into the premium positioning of products. Interesting promotions and positioning tactics are used to entice consumers to purchase. Flavoured varieties account for about half of the RTD iced tea and coffee introductions, with an increase in different fruit combinations and adult/indulgent flavours."

Regarding key product trends during the last year or so, health factors have continued to influence NPD in iced tea and coffee, with a variety of "better for you" issues being addressed including diet, low carb, general wellness, and beauty. Drinks also continue to boast energy benefits, with positioning claims focused on energy-enhancing ingredients such as guarana. Green tea, which contains catechin and is naturally rich in polyphenols and antioxidants, continues to be promoted as having a variety of health benefits such as helping to regulate blood cholesterol and aiding weight loss.

Dieting has been addressed with fortified products containing extracts to help suppress one's appetite. In particular, the low carb craze in the US has impacted on the category with the launch of products such as Ferolito Vultaggio & Sons' Blueberry Green Tea and White Cranberry Apple Green Tea, promoted on the company's website in conjunction with the Atkins diet plan.

Also in the US, SkylarHaley introduced AchievOne High Protein Coffee Beverage, a low carb, high protein beverage designed for coffee drinkers looking for an alternative to high-sugar, high-fat coffee beverages.

General wellness issues are addressed through products that speak to refreshing, revitalizing and cleansing benefits such as the Spanish brand, VitaTea Green Tea Soda from Unidrinks and Suntory Foods' Tainai Kirei Cha Kokokara Body Cleansing Tea, launched in Japan. In South Africa, Clover introduced Manhattan Ice Tea Lite Ice Tea, a range of caffeine-free iced teas said to be refreshing due to being packed with the robust flavor of natural tea extracts.

Beauty has latterly featured as a selling proposition for new products with products such as Bibco's Tao range in the Netherlands, which includes a low-calorie drink range containing green tea, ginkgo biloba, vitamin C, and biotin. It is claimed to refresh and revitalise the body and mind, and is ideal for fitness and beauty enthusiasts.

Looking forward, Mintel anticipates continued emphasis on the health benefits through fortified products and light versions. Authenticity, positioning the product on the basis of its geographic source, has become more common latterly and this trend is likely to continue. Mintel also forecasts an increase in flavour variety, especially tropical, indulgent, and more complex flavour combinations. While segmentation is generally based on demographics, Mintel predicts that companies in this sector will primarily address their target markets through an attitudinal segmentation, where the focus is on attitude and lifestyle.