Recent Developments

The decades of the 1980s and 1990s saw a tremendous proliferation of new products in ready-to-drink teas, juice blends, New Age, and nutraceuticals. Ready-to-drink teas (bottles or cans) were pioneered by the big dry-tea producers such as Lipton, Nestle, Red Rose, and Tetley. These were cold-filled 12-oz cans with preservatives, offered as an alternative to carbonated soft drinks. Drinking cold or iced tea was an American innovation very popular in the South. The packaged product did not really catch on until a small New York company introduced Snapple, all natural flavored teas. These were hot-filled products in 16-oz bottles with fruit flavors. With some clever marketing, Snapple grew at an amazing rate for several years. It spawned many imitators and created a new market segment. Snapple sales plummeted when a large food conglomerate bought the company and tried to change its successful distribution system.

At about the same time, imported bottled waters became popular in small, fancy bottles appealing to upscale consumers. Perrier and Clearly Canadian expanded their offerings with flavored waters and created a new category of innovative products, dubbed New Age, that could not be defined by the existing beverage categories. New Age products were attractively packaged, very expensive, and very profitable when consumers made them a trend. But as more products tried to ride the coattails of their success, the market was diluted, and many new products failed to last long. Many industry watchers felt too many new products were being introduced; sales outlets and distributors had no room to take on so many products. An industry shakeout was inevitable as supermarkets raised the cost of new product introductions by charging for shelf space and quickly dropping products that did not sell well. Many smaller companies failed or were sold to larger com panies, but innovation continued at the more successful firms.

Sports drinks are a recent innovation that has grown steadily but is still dominated by the pioneer, Gatorade. Sports drinks are designed to replace the water, energy, and electrolytes lost during strenuous exercise. Gatorade was developed in the 1960s by researchers led by Dr. Robert Cade to help the University of Florida football team (Gators) maintain stamina while playing in the hot and humid Florida climate. It was successful with the athletes and soon was used by other teams. Clever marketing got it placed on professional football team benches with large logos on coolers and cups plainly visible on national television. This rapid brand identification made it popular with athletes and sports fans across the country. Soon, Gatorade was sponsoring youth sports events with associated promotion of branded accessories like water bottles, hats, and headbands. Its marketing clout kept other sports drinks from making any inroads until Coke and Pepsi developed products and used their distribution power to challenge the market leader. Their market shares are slowly gaining on Gatorade.

Juice companies have been livening up their product lines with exotic juice blends, featuring tropical fruits like guava, papaya, mango, and kiwi. Juices are expensive, so juice drinks with 5 or 10% juice were introduced to compete at a lower price. Lately the trend has swung back toward 100% juice blends, which allow some cost savings with lower-priced juices predominating in the blend. Juice sales are not growing overall, but certain segments such as orange juice and the new blends are doing well.

Coffee sales have been reinvigorated by specialty stores like Starbucks and Dunkin Donuts and upscale specialty products like cappuccino and latte. New cold and frozen products from these stores may help even out the seasonal sales cycles of hot products.

The latest trend in beverages is the healthy or "good for you" segment. This seemed to start with herbal teas making claims to have physiological affects. There has been a sharp increase in fortification of products with calcium, beginning with orange juice. This was based on the health benefits of calcium in preventing Osteoporosis, a degenerative bone condition common in older women.

Now a new class of nutraceutical beverages has emerged claiming health benefits derived from herbs, trace minerals, and amino acids. A list of some of these esoteric ingredients follows in Table 2. The term nutraceutical comes from combining nutrition and pharmaceutical, as

Table 2. Some Interesting New Beverage Ingredients

Ginseng root

Gotu kola

Guaraña

Echinacea

Ginko biloba

Kava kava

Dong quai

Bee pollen

Fo-ti

Carnitine

Damiana

Proline

Agavé nectar

Taurine

Yerba maté

Yohimbe

these products are targeted toward better health through diets rich in these ingredients with curative properties.

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