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    GROCERY: Fruit Beverages: Sweet revenge

    Pure juice has been taking some lumps, but new flavors, nutrient enhancements, and single-serve packaging all promise to revitalize the fruit beverage business.

    By Bob Phillips

    Who says fruit juice isn't healthy? Enough people, apparently, that some of the category's biggest segments have been taking the heat for the levels of sugar and calories many juices contain. Citrus is the most acute example, with orange juice sales in decline since 2000, and grapefruit juice sales for longer than that.

    For the larger category of fruit beverages, though, trends are looking better. As a notable segment of the New Age beverages grouping, they benefit from a good-for-you reputation that's seemingly as solid as ever, and also have the advantage of premium price points and a growing role in the single-serve segment.

    In many cases the players in the fruit beverage segment are also busy trying to gain traction in the diet beverage market, with many light brand extensions.

    Not everyone, however, thinks the future of the fruit beverage category is fully dependent on the success of the diet segment.

    Take the world's leading retailer, for instance. "Juice provides benefits that many people think outweigh the calories," says Karen Burk, a spokeswoman for Bentonville, Ark.-based Wal-Mart. "It's about customers understanding that juice is an indulgent way to get the nutrition they need.

    "Juice is still a convenient way to get the nutritional benefits of fruit, a great way for people to indulge their desire for great taste, and a good value," adds Burk. "Low-cal products are simply good complements for an already strong category."

    Over the years, fruit beverages have lived a somewhat charmed life. Fueled by the postwar baby boom of the '50s, fruit juice became a popular staple in the diets of most American families -- primarily as part of the breakfast experience. That tradition, of course, was passed on to the so-called "echo boom" --children of the baby boomers. And then, so it seemed, just as the baby boom generation began to confront its twilight years, fruit juice took on the aura of New Age, good-for-you beverages.

    But lately a growing segment of the scientific community is raising questions about the actual health benefits of juice consumed without constraint. And while fruit beverages are still perceived as healthy alternatives to soda -- certainly by most parents and school districts -- with nearly 50 percent of U.S. children currently at risk for obesity, some consumers and diet experts are starting to reconsider the role of 100 percent fruit juice, because of its high caloric and sugar content.

    According to guidelines put forth by the American Academy of Pediatrics, fruit juice is not recommended for infants younger than 6 months old, and after the age of 1, consumption should be limited to four to six ounces a day until the child turns 6.

    "All of these beverages are largely the same -- 100 percent sugar," says Dr. David Ludwig, an expert on pediatric obesity at Children's Hospital in Boston. "With the possible exception of milk, children do not need any calorie-containing beverages. What is needed to replace fluid loss and satisfy thirst is the same beverage we've been drinking for millions of years, and that's water."

    According to ACNielsen data, the pace of bottled water sales has been outgrowing that of juice in supermarkets. Scanning data from $2 million-plus food stores (excluding supercenters) shows that bottled water grew 63.2 percent in dollar sales between 2000 and 2004, while fruit beverages, both chilled and shelf-stable, grew just 3.2 percent over that same period. The shelf-stable juice segment has been the driver, since consumption of chilled juice has declined 7.7 percent.

    "It's safe to say chilled orange juice [which dominates the refrigerated juice segment] has been held back in recent years by consumers' fixation on carbohydrates," says Gary Hemphill, s.v.p. information services for Beverage Marketing Corp. (BMC) in New York.

    Swinging singles

    Single-serve packaging is likely to represent the future of the fruit beverage category. While the shelf-stable sales numbers also include larger, family-sized packages (up to 64 ounces), much of the segment consists of smaller units, from 12 ounces to 24 ounces in singles and multipacks. Here's where much of the category's innovation can be seen.

    Not surprisingly, the demographics of the fruit beverage category skew heavily toward families. But digging a little deeper shows that families with infants and toddlers aren't the only ones drinking the stuff. According to ACNielsen Homescan data, refrigerated fruit beverage consumption increases as children get older. Both product segments, refrigerated and shelf-stable, overperform in households with children from 13 to 17 years old.

    "We see continued growth in single-serve juices, fueled by increasingly important consumer trends in health and wellness, and convenience," says Laura Lopez, v.p., bottled juice brands for Half Moon Bay, Calif.-based Odwalla, a unit of Coca-Cola North America.

    But the single-serve segment has hit its own bumps in the road. According to BMC, case volume in single-serve rose in each year between 1998 and 2002. Then case volume dropped 1.3 percent from 2002 to 2003. (BMC's final figures for 2004 weren't available at presstime, but "modest increases" were expected.)

    "That [dropoff] can be explained by product innovation, and lack thereof," says Hemphill. "There was more product innovation in 2002 than 2003."

    Given the current dynamics of the marketplace -- a large base of active, health-conscious consumers, combined with an increasing number of older consumers looking for their beverages in smaller units -- the future would indeed appear to be bright for the single-serve segment. And let's not forget the rug rats: creative single-serve units strongly appeal to kids.

    "Sunny D's sport cap was a great innovation that made it more fun to drink punch," says Wal-Mart's Burk, by way of example.

    Let your light shine

    Perhaps in beverages more than any other category, innovation is the mother of invention, and both single-serve and diet are the focus of a lot of creative activity. "To me the most exciting thing in single-serve juice is the category's transition into the 'diet' segment," says Andy Steele, national beverage category manager for Shell Oil Products U.S. in Houston. "At the very least, it's no longer viewed just as a bottle full of sugar. I've been impressed with the offerings from Ocean Spray and Tropicana so far, and I'm sure the rest will follow."

    While some of the more established single-serve brands, such as SoBe and Snapple, already had low-cal or diet versions in their portfolios, last year virtually every brand -- single-serve, shelf-stable, and chilled -- came on board. The trend toward light versions also transcends the juice category to affect virtually every other segment of the beverage world.

    "Being from the beer industry, I am very familiar with the changes in that market," says Bill Hargis, president and c.e.o. of Richmond, Va.-based Switch Beverage Co, maker of The Switch, a blend of fruit juice and lightly carbonated water. "This movement will continue to grow as the consuming public continues to educate themselves on what is truly good for them."

    Besides lower carbohydrates, lower sugar, and fewer calories, the other major trend affecting the fruit beverage category has been a proliferation of flavor options. SoBe, a unit of PepsiCo, expanded its Lean line of fruit beverages, RTD teas, and energy drinks in February, bolstering the sugar-free, low-calorie line with Lean Energy and Lean Mango Melon varieties.

    All SoBe Lean flavors now boast a "South Beach Diet" logo on product packaging; the logo will also be included on point-of-sale materials.

    "We've also developed fruit beverages with value-added ingredients," explains Tom Smallhorn, v.p. marketing at Norwalk, Conn.-based SoBe Beverages. "Take, for example, SoBe's Orange-Carrot Elixir. It contains 100 percent RDA of vitamin C, 100 percent RDA of vitamin A, 25 percent RDA of vitamin E, and 4 percent RDA of calcium. It contains sugar, but for many consumers the great taste and benefits of the value-added ingredients outweigh the sugar content."

    Welch's has joined the low-carb, low-cal parade with its new Low Cal line of drinks, which is sweetened with Splenda and offers just 15 calories and three grams of carbohydrates per 10-ounce serving.

    Powered by the low-carb craze, Port Washington, N.Y.-based Apple & Eve has introduced a low-calorie, low-sugar, low-carbohydrate line, Light & Fruitful, in both "family friendly" 64-ounce bottles and 16-ounce single-serve units. Sweetened with Splenda, the line offers two-thirds fewer calories and nine grams or fewer of carbs than traditional fruit juice blends.

    Another active player, Camden, N.J.-based Campbell's Soup Co., maker of V8 and V8 Splash, is involved in several flavor and packaging initiatives. Campbell's V8 Splash has introduced two exotic blends -- Mango Peach and Guava Passion Fruit -- aimed at the growing Hispanic audience.

    "Beverage innovation will have to continue meeting the changing needs and wants of consumers," explains Eric Huefner, Campbell's director of single-serve beverages. "The current trends are toward healthy ingredients, cool packages, known brands, and unique flavors, as long as they taste great.

    "The energy drink phenomenon has brought an element of cool to a new segment of the beverage category," continues Huefner. "V8 Splash is using a sleek eight-ounce can to bring similar coolness to the kids' category. People know they will be seen when they are drinking single-serve beverages, so the package is critical."

    Nutritional enhancements are the signature of the New Age beverage movement, and they represent another means of growing the consumer base, by increasing consumption occasions.

    "It'll all be about expanding into more healthy flavors," says Supermarket Guru Phil Lempert, the food and beverage editor for NBC's Today show and a regular contributor to Progressive Grocer. "As the new RDAs receive more publicity, look for healthier fruits and vegetables to appear in beverages targeted at the aging baby boomer population."

    By Bob Phillips
    • About Bob Phillips

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