Fruit Juice and Juice Drinks - US - February 2008

Table of Contents

Scope and Themes

• What you need to know
• Definition
• Data sources
• Sales data
• Consumer survey data
• Abbreviations and terms
• Abbreviations
• Terms

Executive Summary

• Market at a glance-staying weak
• Competitive context
• Fruit juice hurt from increasing prices; fruit drinks suffer from negative perception of "added" artificial ingredients
• Retail distribution-opportunity for supermarkets in single serve
• Supplier alliance and acquisition would grow sales through expansion in distribution
• Targeting the consumer

Market Size and Forecast

• Key points
• Future market growth is contingent upon overcoming competition from other RTD non-alcoholic beverages
• Fruit juice hurt by increasing prices; fruit drinks suffer from negative perception of "added" artificial ingredients
• Targeted product introduction and communication with key consumers is essential for growth
  • Figure 1: Total U.S. sales and forecast of fruit juice and juice drinks at current prices, 2002-12
  • Figure 2: Total U.S. sales and forecast of fruit juice and juice drinks at inflation-adjusted prices, 2002-12

Competitive Context

• Key points
• Bottled water, energy drinks, and sports drinks threaten fruit juice and juice drinks market share
  • Figure 3: Sales of major RTD non-alcoholic beverages, 2003, 2005, and 2007
• Fruit juice/juice drinks provide essential vitamins/minerals-but so do other beverages
• Juice and juice drinks marketers have responded through innovation
• Antioxidant platform
• Fresh fruits better than fruit juice maxim contributes to declining sales
• Pricing pressure from within to continue; continued upward trend in pricing to impair future growth
• Acquisition and distribution alliance activity heats up-driving growth through expanded distribution for small but successful brands

Segment Performance

• Key points
• Fruit juice and juice drinks growth relies upon health-focused, value-added innovation
  • Figure 4: U.S. sales and forecast of fruit juice and juice drinks at current prices, by segment, 2002-12
  • Figure 5: Total sales of fruit juice and juice drinks, segmented by type, 2005 and 2007

Segment Performance - Fruit Juice

• Key points
• Rising prices and heightening beverage competition may mitigate growth
• Positive outlook for innovative juice blends, portability innovation, and health-oriented aseptic juice
  • Figure 6: FDM sales of fruit juice by form, 2005 and 2007
• Consumer focus on healthful eating drives growth in organic, functional, and all natural juice niches
• Price-sensitivity creates functional opportunity; drives non-orange juice sales
  • Figure 7: FDM sales of fruit juice by flavor, 2005 and 2007
• Super-premium juice niche threatened by mass entrants; growth contingent upon flavor innovation and new functional attributes
  • Figure 8: U.S. sales and forecast of fruit juice, 2002-12

Segment Performance-Fruit Drinks

• Key points
• Presence of artificial ingredients and added sugar do not align with current consumer trend; future growth depends on pro-health/functional positioning
  • Figure 9: FDM sales of juice drinks by form, 2005 and 2007
  • Figure 10: FDM sales of juice drinks by flavor, 2005 and 2007
• Effective communication needed for target audience
  • Figure 11: U.S. sales and forecast of fruit drinks, 2002-12

Retail Channels

• Key points
• Non-convenience channels can stimulate growth through increasing single-serve selection
  • Figure 12: Choice of retail channels to purchase fruit juice and drinks by immediate or at-home consumption, November 2007
• "Mass and other" declines as convenience stores de-emphasize fruit juice in favor of energy drinks
  • Figure 13: U.S. sales of fruit juice and juice drinks, by retail channel, 2005 and 2007

Retail Channels-Supermarkets

• Key points
• Private label price strategy and innovation has mixed implications for market growth
• Super-premium juices have growth potential at supermarkets
  • Figure 14: U.S. sales of fruit juice and juice drinks at supermarkets, 2002-07

Retail Channels-Mass Merchandisers and Others

• Key points
• Proliferation in "superstore" format would help the market growth in mass channels
• Convenience store sales would benefit from expansion in distribution of small but popular brands
  • Figure 15: U.S. sales of fruit juice and juice drinks at mass merchandisers and other* channels, 2002-07
  • Figure 16: U.S. sales of fruit juice and juice drinks at convenience stores, 2004-07

Retail Channels-Natural Stores

• Key points
• Consumer focus on consuming organic and all natural food/beverages would ensure growth
  • Figure 17: U.S. sales of edible fruit juice at naturalsupermarkets, 2004-07

Market Drivers

• Fruit juice and juice drinks fall out of health-savvy consumers' favor
  • Figure 18: Attitudes regarding healthy eating, 2003-07
• Increasing incidence of obesity; consumers turn to non-caloric beverages
  • Figure 19: Percentage of population who are overweight or obese, 20-74 years of age, 1988-2004
• Natural and organic claims draw consumers' attention
• Children and teens impact sales of fruit juice
• Rising incidence of obesity among children threatens fruit juice/juice drinks
  • Figure 20: Prevalence of obesity among children aged 6-19, 1988-2004
• Households with children impact consumption of fruit juice
  • Figure 21: Incidence of purchasing fruit juice and juice drinks, by presence of children, November 2007
  • Figure 22: Household frequency of drinking fruit juice and juice drinks, by presence of children, May 2006-June 2007
  • Figure 23: Nestlé' s juicy juice-TV ad, 2006
  • Figure 24: Households with children under age 18 present, 2001-07
  • Figure 25: U.S. children and teen population and projections, 2003-13
• Population diversity to benefit market growth
  • Figure 26: Incidence of purchasing fruit juice and juice drinks, by race/ethnicity, November 2007
  • Figure 27: Household frequency of drinking fruit juice and juice drinks, by presence of children, May 2006-June 2007
  • Figure 28: Population by race and Hispanic origin, 2003-13

Companies and Brands

• Key points
• PepsiCo innovates in response to declining Tropicana sales; expands Naked and Izze distribution
• Coca-Cola gains; Simply Orange brand continues to attract consumers
• Health-focused messages may continue to drive Ocean Spray while Nestlé benefits from rebranding
• Private labels create price competition for the national brands
  • Figure 29: FDM* sales of leading fruit juice and juice drinks companies, 2006 and 2007

Brand Share-Fruit Juice

• Key points
• Orange juice brands could benefit from health-focused innovation amid consumer attrition due to price increase
• Create and communicate brand attributes that build trust and create value-added perception among consumers
• Super-premium brands to experience price competition
  • Figure 30: FDM* brand sales of fruit juice in the U.S., 2006 and 2007

Brand Share-Fruit Drinks

• Key points
• Brands catering to adults' value-added outlook and kids' flavor needs would thrive
• Opportunity to attract price-sensitive orange juice consumers
• Brands catering to Hispanic and black consumers would experience growth
  • Figure 31: FDM brand sales of juice drinks in the U.S., 2006 and 2007

Brand Qualities

• Tropicana aligns with health-forward market trend to overcome decline in core orange juice brand
• Minute Maid; innovation key to the growth

Innovation and Innovators

• New product trends
  • Figure 32: Trends in the new product introduction in the market, 2002-07
• Innovation and innovators
• Tropicana and Minute Maid keep consumers interested in orange juice through functional offerings
• Minute Maid introduces Minute Maid Breakfast Blends- the low-price solution for breakfast juice drinkers
• Trend towards fruit and vegetable juice fusion

Advertising and Promotion

• Overview
  • Figure 33: Leading beverage manufacturer' s measured media and unmeasured spending on advertising, 2005-06
• Getting specific with health promoting juice/juice drinks attributes in marketing communication
• "Antioxidant " continues to be the marketing buzz word in fruit juice
• All natural
• Major advertising spots
• Coca-Cola
• Minute Maid
  • Figure 34: Coca-Cola' s Minute Maid Enhanced Orange Juice, TV ad, 2007
• Simply Orange
  • Figure 35: Coca-Cola' s Simply Orange orange juice TV ad, 2007
• Kraft
  • Figure 36: Kraft' s Capri Sun Fruit Waves TV ad, 2007
• Nestlé
• Nestlé Juicy Juice
  • Figure 37: Nestlé' s Juicy Juice Harvest Surprise-TV ad, 2007
• Ocean Spray
  • Figure 38: Ocean Spray cranberry juice-two TV ad, 2007
• Sunny D
  • Figure 39: television ad Sunny D, 2007
• Welch' s
  • Figure 40: Welch' s television ad, 2007

Usage

• Trends in household fruit juice/juice drinks consumption
  • Figure 41: Household juice/juice drinks consumption, 2003-07
• Who purchases fruit juice and juice drinks?
  • Figure 42: Incidence of purchasing fruit juice and juice drinks, by key demographics, May 2006-June 2007
• Who drinks fruit juice and juice drinks in household
  • Figure 43: who drinks fruit juice and drinks in a household, November 2007
• When do adults drink fruit juice and juice drinks?
  • Figure 44: Occasions adults drink fruit juice and juice drinks, November 2007
• Frequency of use
• Trends in frequency of consumption
  • Figure 45: Household frequency of drinking different types of juices, 2003-07
  • Figure 46: Household frequency of drinking different types of juices, by key demographics, May 2006-June 2007
• Brands of orange juice used
  • Figure 47: Brands of orange juice used, by age, May 2006-June 2007
• Attitudes and Motivations
• Attitudes towards fruit juice/juice drinks
  • Figure 48: Attitude towards fruit juice and juice drinks, by age, November 2007
• Incidence of drinking more or less fruit juice/drinks compared to a year ago
  • Figure 49: Incidence of drinking more or less fruit juice and juice drinks compared to a year ago, by age, November 2007
• Reasons for drinking less fruit juice/juice drinks today, compared to last year
  • Figure 50: reasons for drinking less fruit juice and drinks today than last year, November 2007
• Reasons for drinking more fruit juice/juice drinks today, compared to last year
  • Figure 51: reasons for drinking more fruit juice and drinks today than last year, by gender, October 2007
• Reasons consumers do not drink juice/juice drinks
  • Figure 52: Reasons for not drinking juice/juice drinks, November 2007
• Desirable attributes in fruit juice and juice drinks
  • Figure 53: Desirable attributes in fruit juice (100%), pre-prepared juice drinks, and powdered drinks, November 2007

Appendix: Studies on Fruit Juice

• Studies linking negative influence of drinking fruit juice for children
• Studies linking fruit juice with positive health benefits

Appendix: Other Useful Consumer Tables

• Household usage of fruit juice and drinks
  • Figure 54: Incidence of household consumption of fruit juice and drinks, by key demographics, May 2006-June 2007
• Who drinks fruit juice and drinks in a household
  • Figure 55: Who drinks 100% fruit juice in a household, November 2007
  • Figure 56: Who drinks 100% fruit juice in a household, November 2007
  • Figure 57: Who drinks 100% fruit juice in a household, by presence of children in household, November 2007
  • Figure 58: Who drinks pre-prepared juice drinks in a household, by age, November 2007
  • Figure 59: Who drinks pre-prepared juice drinks in a household, November 2007
  • Figure 60: who drinks pre-prepared juice drinks in a household, by presence of children in household, November 2007
  • Figure 61: Who drinks powdered juice drinks in a household, November 2007
  • Figure 62: Who drinks powdered juice drinks in a household, November 2007
  • Figure 63: Who drinks powdered juice drinks in a household, by presence of children in household, November 2007
• When do adults drink fruit juice and juice drinks?
  • Figure 64: Occasions adults drink 100% fruit juice, by age, November 2007
  • Figure 65: Occasions adults drink 100% fruit juice, by race/ethnicity, November 2007
  • Figure 66: Occasions adults drink 100% fruit juice, by race/ethnicity, November 2007
  • Figure 67: Occasions adults drink powdered juice drinks, by age, November 2007
  • Figure 68: Occasions adults drink powdered juice drinks, by race/ethnicity, November 2007
  • Figure 69: Occasions adults drink powdered juice drinks, by race/ethnicity, November 2007
  • Figure 70: Occasions adults drink pre-prepared juice drinks, by age, November 2007
  • Figure 71: Occasions adults drink pre-prepared juice drinks, by race/ethnicity, November 2007
  • Figure 72: Occasions adults drink pre-prepared juice drinks, by race/ethnicity, November 2007
• Attitudes towards fruit juice/juice drinks
  • Figure 73: Attitude towards fruit juice and juice drinks, by race/ethnicity, November 2007
  • Figure 74: Attitude towards fruit juice and juice drinks, by race/ethnicity, November 2007
• Incidence of drinking more or less fruit juice/drinks compared to a year ago
  • Figure 75: Incidence of drinking more or less fruit juice and juice drinks compared to a year ago, by age, November 2007
• Desirable attributes in fruit juice and juice drinks
  • Figure 76: Desirable attributes in 100% fruit juice, by age, November 2007
  • Figure 77: Desirable attributes in 100% fruit juice, by presence of children in household, November 2007
  • Figure 78: Desirable attributes in pre-prepared juice drinks, by age, November 2007
  • Figure 79: Desirable attributes in pre-prepared juice drinks, by race/ethnicity, November 2007
  • Figure 80: Desirable attributes in powdered juice drinks, by age, November 2007
  • Figure 81: Desirable attributes in powdered juice drinks, by race/ethnicity, November 2007
  • Figure 82: Desirable attributes in powdered juice drinks, by presence of children in the hosuehold, November 2007
• Choice of retail channels by immediate and at-home consumption purchase
  • Figure 83: Choice of retail channels to purchase fruit juice and drinks by immediate or at-home consumption, by age, November 2007
  • Figure 84: Choice of retail channels to purchase fruit juice and drinks by immediate or at-home consumption, by age, November 2007
  • Figure 85: Choice of retail channels to purchase fruit juice and drinks by immediate or at-home consumption, by age, November 2007

Appendix: Trade Associations