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Lifestyle beverages are key to the soft drinks industry and the driving influence behind new product development. Given the current enthusiasm for all things healthy, the consumer now has a plethora of choice but how innovative are these launches and can they all last?

The latest research from Key Note on the functional market reveals that total sales of functional foods increased a record 29.4% by value in 2000/2001 due to several major launches and relaunches. Sales are forecast to increase at a significant rate (although this will slow down in the medium term) with growth rates continuing to outpace those achieved by their non-functional counterparts.

Two of the principal areas targeted by functional foods - heart health through cholesterol-lowering products, and bone maintenance through products containing extra calcium and minerals - address problems of old age.

The other two major areas targeted are a balanced digestive system, achieved by eating products containing beneficial bacteria or extra fibre, and a healthy immune system, achieved by the intake of vitamins, minerals or the right bacteria. Key Note cites fruit juices as a principal functional and includes bottled water as a growing functional opportunity.

Leatherhead Food RA, too, has published a report on functional soft drinks. In 'Functional Soft Drinks - A Global Analysis' the research association observes that as the category has developed and shown strong growth, the market has attracted more of the world's leading multinational soft drinks companies. It notes that besides launching their own products, these companies have expanded their interest through acquisiiton, eg: Cadbury Schweppes' acquisition of Snapple and Mistic brands, PepsiCo's purchase of SoBe and Gatorade and Coca-Cola's purchase of Mad River Traders.

The report shows that within the total functional soft drinks market, sports drinks represent the largest single category, with sales of 4,946 million litres worth $6,295m in 2000. This compares with 396m litres of energy drinks, worth $3,501m and 1,868m litres of other functional drinks at $4,062 million.


Innovation in the functional beverage arena is being spear-headed by the flavour houses. The Duckworth Group, for example, launched its range of 'aspirational drinks' in 1995 for adults and today is promoting its 'Time of Day' range of flavoured waters offering appropriate functionality. These comprise 'Breakfast or Morning' - flavoured water to stimulate and refresh, providing a natural source of caffeine; 'Night-time' flavoured waters to help calm, relax and encourage natural sleep; and 'Hangover' flavoured water to combat the effect of dehydration and possibly containing higher levels of oxygen to alleviate that morning after feeling.
In August 1997 Soft Drinks International first carried a report on ACE drinks and the 'wellness' factor from Döhler Euro Citrus. Döhler had identified the fact that consumers were seeking out self-medication in the wake of cuts in national health services. Adding three vitamins A, C and E to fruit juices offered the consumer health, and convenience. Recently, Döhler, amongst others, has extended the ACE range to include folic acid - FACE. The company has also introduced 'fruit and herbs' and 'fruit + grain and fruit + soya' as logical range extensions.

Rudolf Wild's portfolio of functional soft drinks include: near water drinks, sports and energy drinks, new wellness drinks, still fruit drinks and breakfast and lunch drinks. Haarmann & Reimer last year unveiled a raft of new functional opportunities: 'Fun 'n Function, as a further refinement of the FACE concept featuring juice and vitamin combinations, Cool 'N Funky, a non-alcoholic party drink, Fit 'N Fast, offering Alternative Energy, 2nd Generation Energy and Office Water lifestyle drinks; Water 'n Taste and Body 'n Soul. The latter concept uses three types of products for further 'functional' appeal: Beauty, a new generation near water that's low in calories, rich in probiotic fibre and vitamins as well as L-carnitin; Balance - refreshment that's based on green and roiboos teas, along with other herbs hawthorn, lemon balm and ginseng; and Pleasure - featuring soy, vitamins, honey and aloe vera.

All this innovation has resulted in some exciting new product launches. As Nigel Lucas pointed out at his recent presentation at the Functional and Wellness Beverage Forum held in Florida, in 11 months there have been 214 UK branded soft drink launches, of which 44 or 20% could be considered functional. He said that the product trends in functional and wellness drinks can be seen in four main categories :

  • Adult soft drinks - drinks aimed at adults, sometimes as alcohol alternatives. Not generally promoted as functional but usually including ingredients that are considered functional. This market as a whole is beginning to segment with products being targeted at specific groups of consumers. For example, T & T Beverages launched Santesse, a drink targeted directly at women. This comprised a blend of juices with vitamins and minerals and comes in two varieties, Aronia Berries and China Green.

  • Organic drinks - initially in the pure juice sector , but now extended to include carbonates and colas such as Santa Cruz and Whole Earth Foods organic cola. Recently Aqua Libra (the first so-called adult soft drink launched in the UK back in 1988) launched an organic version, Organic Citrus. There has even been an organic bottled spring water.

  • Fortified and enhanced drinks - starting in the pure juice category with ACE drinks, then onto FACE and now vitamins and minerals are being used to enhance bottled waters, for example Danone Activ still mineral water with added calcium. Bottled waters are also being launched with seven times more oxygen. Fortification with probiotic cultures, until recently only in dairy products, has moved into soft drinks with the launch of Pete & Johnny's It's Alive.
  • Sports and energy drinks - despite Red Bull's hold on 40% of the UK market, energy drinks still provide more new launches than most other categories. Recent heavyweight launches competing directly with Red Bull include V from Frucor of New Zealand, Coca-Cola's entry with Burn and Carbon from Britvic.

    The market in energy drinks is also beginning to show signs of moving away from the reliance of caffeine and taurine as staple ingredients. In the sports drinks sector, Coca-Cola's high profile entry with PowerAde will give GlaxoSmithKline's Lucozade some serious competition.

    Nigel Lucas observed, however, that the majority of new products will have disappeared from the shelves within a couple of years. "This rather suggests that an awful lot of resources are being wasted. Part of the reason for this is that the barriers to entry are now so low. New taste, new ingredients and packaging designs can all be copied very quickly. Which is one of the major reasons why truly innovative strategies are far and few between. Because who wants to invest heavily, only to see it copied within months?" Lucas says that the major exception to this would seem to be Japan, a market noted for its high level of new production innovation.

    Low cal for health

    Meanwhile, according to Ajinomoto, the real healthy soft drinks trend is the growing market for low calorie carbonates. The maker of Aspartame says that the latest soft drinks research from Canadean shows that low calorie carbonates continue to deliver market growth, which is significantly higher than most other sectors of the soft drinks market.

    Data for the year to June 2001 shows volumes of low calorie carbonates ahead by 5% in western European countries and by 13% in eastern European markets. This compares with no growth in the market for regular carbonates in western Europe for the same period and just 2% growth in eastern Europe.

    Furthermore, says Ajinomoto, low calorie carbonates is one of the soft drinks market's largest business sectors in its own right, with volumes approaching 4,500 million litres per annum for Europe (east and west) The company maintains that since the market for sports and energy drinks throughout Europe is just 800 million litres, although growing fast, the really healthy action is in the low calorie carbonate sector.

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