Article

Beverage trends all about health and variety

More flavors and healthier options are in store as restaurants and beverage providers try to quench consumers' thirst for choice.

August 2, 2009 by Valerie Killifer — senior editor, NetWorld Alliance

If variety is the spice of life, consumers are drinking up more than their fair share when it comes to beverages.

No longer interested in the average joe offering of a few select soda, iced tea and coffee drinks, restaurants diners are demanding more beverage options, and companies from Coca-Cola to McDonald's and Red Mango are answering the challenge.

"From a 30,000-foot-level, the continued tension between health, functionality and commodity refreshment is challenging the traditional fountain model," said Neil Kimberley, an industry consultant. "But it also affords new concepts with an alternative way to compete through improving their beverage selection."

Gene Farrell, Coca-Cola vice president of the Jet Innovation Program, said the company is working with several customers on signature beverage lines along with smoothies incorporating Minute Maid products.

"Consumers have told us they're looking for choices and variety and want different drinks for different dayparts," Farrell said.

So what's in store for beverages in the future? Here's a look at the top beverage trends shaping the industry:

Smoothies

According to the 2008 Juice & Smoothie Bar Market Report, published by Juice Gallery Multimedia, there are more than 6,400 outlets in the United States that serve juice, smoothies and frozen yogurt. This segment of the industry also serves up $3.4 billion in annual revenues.

Over the past few years smoothies have gained in popularity because of their healthful indulgence moniker. Smoothies have started to serve as meal replacements for breakfast and lunch, and as snack options for the time between lunch and dinner.

And as smoothie popularity evolves, concepts from McDonald's to McAlister's Deli are taking notice.

While McDonald's isn't a new or emerging concept, it has entered the specialty-beverage market with its McCafe line of coffee products. The burger chain also has been testing smoothies and frappes for more than a year and anticipates a full product launch in 2010.

Natalie Blacher, McAlister's Deli senior vice president of marketing, said the company has plans to review smoothies as a possible menu addition in 2010, despite its reliability on the company's signature sweet tea, which accounts for 73 percent of the company's beverage sales.

"McAlister's is a bit of a traditionalist when it comes to beverages. We have a high incidence of beverages with every entrÃ©e, and that's been largely driven by our sweet tea," she said. "But, we know from a strategic standpoint that beverages are going to be key to some of our growth. So moving forward, we are going to be looking at a number of beverage opportunities."

And while smoothie popularity is nothing new, the addition of superfoods as healthful ingredients continues to help the beverage trend evolve.

In July, Planet Smoothie announced the launch of three new smoothie flavors featuring both ingredients. And according to Mintel Menu Insights, smoothies on fast casual menus grew 108 percent in the first quarter of 2009 as compared to the same period last year.

"Depending on the operator, and depending on how smoothies fit into the beverage platform, smoothies can be health tonics, alcohol alternatives, energy source, treat, or any and all at once," says the Mintel 2009 report, "The Beverage Buz: Trends in Non-Alcoholic Beverages." "Versatility of this kind keeps innovation flowing — and helps ensure a longer trend lifespan for a beverage fast becoming a menu must-have."

Tea and lemonade

New beverage developments for the year also include an influx of infused ice tea and lemonade offerings.

"Especially with restaurants that have a set menu to add seasonal drinks using seasonal fruit, it's a nice way to spice up the menu and add new or changing products," said Andrew Ridgie, director of operations for the New York State Restaurant Association.

Frozen yogurt concept Red Mango announced in July the launch of three iced-tea beverages: Vanilla Black Tea, Wildberry Hibiscus Tea and Lemonade Green Tea. The teas are incorporated with the company's patented GanedenBC30, a strain of probiotic designed to support the immune system and regulate digestion.

Restaurants that are branching out to provide customers with more options don't have to necessarily move away from their core products.

Betsy Wright, director of marketing for Charley's Grilled Subs, said the company decided last year to release a new flavored lemonade every quarter to highlight its original signature beverage.

This summer, the company launched Strawberry Lemonade, a follow up to the Cranberry Pomogranate lemonade rolled out in the fall.

Charley's has three signature lemonade flavors – original, kiwi and raspberry – available year round.

"We wanted to bring more attention to one of our signature products and add some flavor with a twist," Wright said.

Energize me

Whether its iced tea fuzed with antioxidants or smoothies with added caffeine, one thing almost each beverage trend brings to the table is a focus on energy and health.

While energy drinks have boosted convenience store sales and been added to bar menus (such as the pairing of Red Bull and vodka), their foray onto fast casual menus is still in its early stages.

A majority of restaurants that do sell energy drinks provide the bottled variety, but as beverage innovations continue, Farrell said companies such as Coke are working on the creation of healthful product additions.

Coke's FUZE iced tea products for sale at Subway restaurants contain antioxidants such as B3, B5 and B12.

"So, it's the idea of enhanced tea that is healthier," he said. "We've done a significant amount of work to look at enhanced beverages. It's a real trend on the packaged side of the business, but in the restaurant space its still undefined territory."

But as more consumers look to energy drinks to provide the types of daily vitamins and nutrients they need, the issue of how those items are dispensed will have to be addressed.

"There are some opportunities to deliver, through (Coca-Cola's new) Freestyle, vitamins or folic that consumers could choose to add to their beverages. Certainly energy could be one as well," Farrell said. "Again, the key is to leverage the technology to give consumers the choice that is both healthy and responsible.

"When you start going into dispensed beverages, the challenge is around size variation and (products) given in a healthy dosage. In a restaurant where sizes might be from a 12- to 42-ounce, you can imagine how challenging that can be, and energy drinks have the same issue."