Report: Functional Beverages - US

Scope and Themes
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Advertising Creative
Abbreviations and terms
Abbreviations
Executive Summary
Market at a glance
Slowing growth in energy drinks and enhanced water impacts the overall market growth
Functional brands face intense competition both within and beyond the category
Supermarkets still lead in FDMx sales, other channels gaining
Youth drives market, but youth population to grow more slowly
Increased scrutiny of functional foods and beverages may hinder growth
Coca-Cola and PepsiCo lead, but smaller companies have managed to gain
Pace of new product activity peaked in 2008
Advertising focuses on performance
Key research findings
Market Size and Forecast
Key points
- Figure 2: U.S. FDMx sales and forecast of functional beverages, at current prices, 2004-14
- Figure 3: U.S. FDMx sales and forecast of functional beverages, at inflation-adjusted prices, 2004-14
Competitive Context
Key points
Ongoing recession negatively influences premium-priced functional beverages
- Figure 4: FDMx prices for select non-alcoholic beverages, 2008
Interchangeable options create competition among functional beverages
Regular beverages' inherent good-for-you profile creates competition for functional beverages
Competition from supplements and functional foods; high prices inhibit growth
Segment Performance
Key points
- Figure 5: FDMx sales and forecast of functional beverages, at current prices, by segment, 2004-14
- Figure 6: FDMx sales of functional beverages, by segment, 2007 and 2009
Segment Performance--Functional Juice and Juice Drinks
Key points
Still a default choice, fruit juices lose share to functional innovators
Sales and forecast of functional juice and juice drinks
- Figure 7: FDMx sales and forecast of functional juice and juice drinks, 2004-14
Segment Performance--Energy Drinks
Key points
Energy drinks cool down
Energy shots heat up, have more room for growth
Sales and forecast of energy drinks
- Figure 8: FDMx sales and forecast of energy drinks, 2004-14
Segment Performance--Enhanced Water
Key points
Enhanced water epitomizes category' s strengths and weaknesses
Low- and no-calorie versions haven' t stemmed the decline
Sales and forecast of enhanced water
- Figure 9: FDMx sales and forecast of enhanced water, 2004-14
Segment Performance--Functional Soy, Rice and Almond-based Drinks
Key points
Steady sales from a solid base
Value-added products have limited impact on segment
Segment promotion shifts to protein
Sales and forecast of functional soy, rice and almond-based drinks
- Figure 10: FDMx sales and forecast of functional soy, rice and almond-based drinks, 2004-14
Segment Performance--Functional Tea
Key points
Increased competition from the broader tea market
Increased competition from other functional beverages
Recession hits RTD functional tea; Bagged/loose form presents an opportunity
Sales and forecast of functional tea
- Figure 11: FDMx sales and forecast of functional tea, 2004-14
Segment Performance--Functional Yogurt Drinks and Smoothies
Key points
Except for probiotics, high-priced yogurt drinks suffer
Fruit smoothies hold steady
Smoothie shops have indirect impact on RTD smoothies
Sales and forecast of functional yogurt drinks and smoothies
- Figure 12: FDMx sales and forecast of functional yogurt drinks and smoothies, 2004-14
Retail Channels
Key points
Other channels likely to continue gaining share from supermarkets
- Figure 13: U.S. sales of functional beverage, by retail channel*, 2006 and 2008
Wide choice of functional beverage retail channel purchasing options
- Figure 14: Choice of retail channels to purchase functional beverages, by age, May/June 2009
Retail Channels--Supermarkets
Key points
Supermarkets have untapped potential in functional beverages
- Figure 15: U.S. sales of functional beverages at supermarkets, 2004-09
Retail Channels--Drug and Other
Key points
Mass and drug strong in emerging segments
Mass merchants win on price and, in some cases, selection
Drug stores dispense (energy) shots
- Figure 16: U.S. sales of functional beverages at mass and drug channels, 2004-09
Retail Channels--Natural Channel/SPINS
Functional beverage sales in natural channel
- Figure 17: Natural product supermarket retail sales of functional beverages, at current prices, 2007-09
- Figure 18: Natural product supermarket retail sales of functional beverages, at inflation-adjusted prices, 2007-09
Natural channel sales by segment
- Figure 19: Natural product supermarket retail sales of functional beverages, by segment, 2007 and 2009
Brand performance: Functional beverages in natural channel
Despite decline, GT Kombucha continues to surge
Other brands with notable growth
- Figure 20: Manufacturer brand natural supermarket sales of functional beverages, 2007 and 2009
Market Drivers
Key points
On balance, rising obesity rates a negative driver for functional beverages
- Figure 21: Percentage of population aged 20+ who are overweight, obese or extremely obese, 1988-2006
But, manufacturers can ride the ongoing consumer trend toward wellness
- Figure 22: Reasons for watching/controlling diet, 2004 and 2009
Youth drives market, but youth population to grow more slowly
- Figure 23: Personal incidence of drinking energy drinks among teens and adults, by age, 2003-08
- Figure 24: U.S. population of teens aged 12-17, 2004-14
- Figure 25: Population aged 18 or older, by age, 2004-14
Hispanics are becoming increasingly important to functional beverages
- Figure 26: Population, by race and Hispanic origin, 2004-14
Increased scrutiny of functional foods and beverages may hinder growth
Companies and Brands
Key points
PepsiCo and Coca-Cola lose ground
One-brand companies do comparatively well
- Figure 27: FDMx functional beverage sales of leading companies, 2008 and 2009
Brand Share--Functional Fruit Juice and Juice Drinks
Key points
Mainstay brands lose share in an increasingly difficult market
New generation of fusion brands gains share
Functional line extensions meet with mixed success
- Figure 28: FDMx brand sales of functional juice and juice drinks in the U.S., 2008 and 2009
Brand Share--Enhanced Water
Key points
Market share consolidates in declining segment
Segment leaders hit hard by economy and health concerns
Low- and no-calorie versions of leading brands have some success
Line extensions from brands outside the segment fizzle
- Figure 29: FDMx brand sales of enhanced water in the U.S., 2008 and 2009
Brand Share--Energy Drinks
Key points
Red Bull remains the leader, but others closing the gap
Energy shots give users and segment a boost
- Figure 30: FDMx brand sales of energy drinks and energy shots in the U.S., 2008 and 2009
Brand Share--Functional Tea
Key points
AriZona asserts its dominance
Snapple struggles to keep up
- Figure 31: FDMx brand sales of functional teas in the U.S., 2008 and 2009
Brand Share--Soy, Rice and Almond-based Drinks
Key points
Silk plays the role of segment leader, now focuses on ' feeling of strength'
Enhanced wellness soymilks generate limited appeal
Strong showing for private label
- Figure 32: FDMx brand sales of functional soy, rice, and almond-based drinks in the U.S., 2008 and 2009
Brand Share--Functional Yogurt Drinks and Smoothies
Key points
Specific functional claims, probiotics drive select yogurt drink brands
Smoothie brands gain by holding steady
- Figure 33: FDMx brand sales of functional yogurt drinks and smoothies in the U.S., 2008 and 2009
Brand Qualities
Functional beverage category built by challengers
What' s outside counts too
Glacéau Vitaminwater
AriZona
Innovation and Innovators
Pace of new product activity peaks in 2008
- Figure 34: Number of new product launches in U.S. functional beverages, by product segment, 2004-09
Functional claims diversity expands at a rapid pace
- Figure 35: Functional claims* made by new U.S. functional beverages, 2004-09
Multiple benefits
Cardiovascular health
Digestive health
Immunity
Brain
A functional beverage for every imaginable function
Advertising and Promotion
Overview
Performance and accomplishment at the core of most brand promises
- Figure 36: Measured advertising spending for select functional beverage brands, 2007 and 2008
Ocean Spray Cranergy gives busy moms a boost
- Figure 37: Ocean Spray Cranergy, television ad, 2009
DanActive promises to keep users productive by strengthening immunity
- Figure 38: DanActive, television ad, 2009
Red Bull takes performance to the extreme
- Figure 39: Red Bull, television ad, 2009
Glacéau Vitaminwater makes performance playful
- Figure 40: Vitaminwater, television ad, 2009
Juicy Juice targets moms' emotions
- Figure 41: Juicy Juice Brain Development, television ad, 2009
Silk shifts message to the positives of soy protein
- Figure 42: Silk, television ad, 2009
Functional Beverage Purchases: Incidence, Frequency and Type
Key points
Purchase incidence for functional beverages continues to grow
- Figure 43: Purchase incidence of functional foods and beverages, by gender, May/June 2009
Younger adults considerably more likely to buy functional drinks
- Figure 44: Purchase incidence of functional foods and beverages, by age, May/June 2009
Orange juice tops the list of functional beverages tried
- Figure 45: Types of functional beverages purchased in past three months, by gender, May/June 2009
Younger adults drink a far broader array of functional beverages
- Figure 46: Types of functional beverages purchased in past three months, by age, May/June 2009
Children are a moderate factor in the purchase of some functional drinks
- Figure 47: Types of functional beverages purchased in past three months, by presence of children, May/June 2009
Frequency of functional beverage consumption
Increasing frequency among light users may be best opportunity for growth
- Figure 48: Frequency of functional beverage consumption in the past month, by age, May/June 2009
Attitudes Towards Diet, Health and Lifestyle
Key points
Americans hold the best intentions for healthy eating...
- Figure 49: Attitudes towards diet and health, 2003-04, 2005-06, 2008-09
...but actual behaviors and results tell a different story and define the opportunity for functional foods and beverages
- Figure 50: Attitudes towards healthy lifestyle, by gender, May/June 2009
Responses by age point to lifestage opportunities
- Figure 51: Attitudes towards healthy lifestyle, by age, May/June 2009
Reasons for Drinking Functional Beverages
Key points
Many reasons for consuming, but taste rises to the top
- Figure 52: Reasons for drinking functional beverages, by gender, May/June 2009
Motivations differ by age
- Figure 53: Reasons for drinking functional beverages, by age, May/June 2009
Functional Beverages Opinions and Interest
Key points
Government involvement welcomed, likely to increase, impact uncertain
Recession appears to be curtailing category growth
- Figure 54: Opinions towards functional foods, by gender, May/June 2009
- Figure 55: Opinions towards functional foods, by age, May/June 2009
Functional beverage drinkers seek out only a handful of ingredients
- Figure 56: Role of functional ingredients in functional beverage purchase decisions, May/June 2009
Desired benefits in functional beverages
- Figure 57: Desired benefits in functional beverages, by gender, May/June 2009
- Figure 58: Desired benefits in functional beverages, by age, May/June 2009
Attitude towards Functional Beverages
Key points
Family-size packaging could help functional brands win share
Concern over sweeteners a drag on functional beverage growth
Match and mix
- Figure 59: Attitudes toward packaging, innovation, and sweetener in functional beverages, by age, May/June 2009
- Figure 60: Attitudes toward packaging, innovation, and sweetener in functional beverages, by presence of children, May/June 2009
More functional food and beverage users increasing consumption than cutting back
- Figure 61: Incidence of using more or less functional food/beverages compared to a year ago, by age, May/June 2009
Reasons for using more functional beverages compared to a year ago
- Figure 62: Reasons for using more functional beverages than a year ago, by gender, May/June 2009
- Figure 63: Reasons for using more functional beverages than a year ago, by age, May/June 2009
Cost tops reasons for consuming less, too much sugar comes in second
- Figure 64: Reasons for using fewer functional beverages than a year ago, by gender, May/June 2009
Impact of Race and Hispanic Origin
Key points
Few dramatic differences across groups
- Figure 65: Purchase incidence of functional foods and beverages, by race/Hispanic origin, May/June 2009
- Figure 66: Reasons for drinking functional beverages, by race/Hispanic origin, May/June 2009
- Figure 67: Desired benefits in functional beverages, by race/Hispanic origin, May/June 2009
- Figure 68: Attitude toward packaging, innovation, and sweetener in functional beverages, by race/Hispanic origin, May/June 2009
Appendix: Trade Associations

Functional Beverages - US - September 2009

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