Coconut water. Relaxation drinks. Hemp beverages. Libido shots. Anti-hangover remedies. These are just a few niche beverage categories that look to target consumers looking for a specific benefit. But which one of them, if any, is the next big thing?
That’s hard to say without a crystal ball, but the trends in the beverage marketplace are clearly pointing to one need state and that’s energy. Though the category has been around for quite some time, it’s continued to see positive growth at a fairly high price point. Dominated by a few brands, the energy category often has been referred to as saturated and cluttered with “me too” products looking to take a piece of the pie, but with little success. However, of late there have been some sub-segments of the energy category that seem to have legs.
“I think you are going to see innovation in the category because its growth continues to be very strong, but I think you are going to see companies go about it in a different way,” says Gary Hemphill, managing director and chief operating officer, Information Services, Beverage Marketing Corporation.
For example, energy products appealing to an underserved demographic or ethnic group or packaging innovation, Hemphill offers, could find their own space in the category.
Products that posted positive numbers last year are rehabilitation products or hybrid drinks such as Monster Rehab, a tea-based energy drink, or Rockstar Recovery, which offers energy and hydration with fruit juice like lemonade and the brand’s herbal energy blend. Though not ranked among energy drinks AriZona Rx (listed under RTD tea) would rank at No. 20 among 2011’s top-selling energy drinks according to SymphonyIRI data.
“Certainly, if you want to say Rehab is in the energy category, then you have to give it some credit for extending the category,” says Mark Hall, president of the Monster Energy Division at Monster Beverage Corp. “Or you can say Rehab is a tea and you can say it extended the tea category. Regardless, it brought new people into our franchise, which is what we were hoping for.”
Battery Hydro is another hybrid energy product, which was launched last year in different countries in different sizes to meet varying consumption habits, such as a 400 ml bottle in Finland and a 330 ml can in Chile, according to Euromonitor International. The drink is being marketed as an energy-plus-sports drink—it’s an isotonic with little carbonation, with caffeine and vitamins targeting athletes and fitness consumers.
Functionality in beverages is something consumers are seeking, but with the array of functional drinks on the market comes a fair dose of skepticism, says industry analyst Jonas Feliciano of Euromonitor International.
“There is a lot more skepticism,” he says, adding that any sort of claim a beverage makes will have to deliver on that claim and it will take time before consumers discover if in fact the drink does what it says. “One of the reasons you’ve seen the energy drink market do so well is because it’s established; it’s been a player for a while now. People know that Red Bull gives you energy and you can get energy from a beverage. Now you are seeing [energy drinks] experiment with different flavors, but what needed to be established first there was that the function actually worked.”
With functionality comes health and wellness concerns. Feliciano says that while some consumers are looking for only functionality and low calories, others are looking for the health and wellness tag as well. Within the energy category, Starbucks has introduced its Refreshers line of products: RTD, VIA instant powder sticks or handcrafted drinks made with real fruit.
“What is being offered to consumers there is a blend of natural sweeteners where it’s not as sweet as something that is maybe sweetened with artificial sweeteners or pure sugar, but keeps the calories down,” he says of the Refreshers products, which has a natural claim in that the energy source is from green coffee extract. The handcrafted and RTD Refreshers are made with real fruit juice and are naturally sweetened with stevia. The handcrafted beverages contain less than 100 calories each (Tall, Grande and Venti). The Starbucks VIA Refreshers contain cane sugar and have 35 calories per eight-ounce serving.
“We are reinventing how consumers enjoy coffee with Starbucks Refreshers beverages,” says Brian Smith, director of Global Beverage Innovation for Starbucks. “Unlike traditional coffee and coffee beverages, Starbucks Refreshers beverages contain green coffee extract—a new type of coffee experience that delivers the boost of caffeine and energy that is naturally found in 100 percent Arabica coffee beans without the coffee taste. When combined with real fruit juice, it results in a thirst-quenching beverage that provides the natural boost of energy our customers are looking for. Starbucks Refreshers beverages are also a low-calorie drink that delivers 50 percent or more of the daily value of vitamin C per beverage.”
Hemphill says that while it would be difficult to pinpoint the future success of one beverage category over another, he offers: “I think the movement of the market is toward healthier refreshment. So more of the innovation is going to come around healthier products and products with functional benefits.”