Healthy juice drinks drive dollar growth
While price, taste and convenience continue to be key influencers of food-shopping behavior, U.S. consumers are increasingly prioritizing health and wellness in their decision-making, and this is especially true when it comes to beverages.
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According to IRI, sales of natural beverages are leading the growth in the overall beverage category. Sales of natural juice drinks and smoothies topped $673 million in the 52-week period ending Oct. 2, which is an increase of nearly 4% from the previous year. Sales of other natural juices rose 21% (compared to last year) during the same period. Growth of these natural products in fact is outpacing that of total food and beverage sales, which have been relatively flat through that period.
Packaged Facts, a division of MarketResearch.com, estimates that total U.S. retail sales of natural and organic foods and beverages through all retail channels will reach $69 billion by the end of 2016, an 11% gain over 2015 sales of almost $63 billion and 32% higher than sales five years earlier. During the 2012 to 2016 period, the firm said these sales rose by a compound annual growth rate of 7%.
“From freshness to healthy ingredients to transparency of sourcing, and eco-conscious business models, there’s no denying that today’s core consumer values increasingly center around what the natural and organic food and beverage market has been offering,” said David Sprinkle, Packaged Facts’ research director.
According to the latest IRI data, the most popular natural beverage brands among consumers include Naked Juice, Bolthouse Farms, Odwalla, Suja Juice and the Starbucks-owned brand Evolution Fresh, which is seeing double-digit growth in the category. Additional IRI data show that sales of Evolution Fresh drinks specifically netted more than $4 million in the 52-week period ending Oct. 2, an increase of more than 31% from the previous year.
“Natural and organic beverages continue to see sales growth. While they account for only 6.6% of the beverage category, healthy beverages are driving 31% of dollar growth. We are seeing increased interest in green juice as people are looking to add more fruits and vegetables to their diets,” said Anne Williams, vice president, Evolution Fresh Marketing. “With innovation always a top priority at Evolution Fresh, we recently looked to emerging juice trends and found that consumers are looking for more sources of protein and new options for refreshment. These findings informed the brand’s recent product innovations: New Evolution Fresh Protein Power Berry and Protein Power Greens, inspired by smoothies.”
Looking ahead at the natural beverage category, Packaged Facts projects that the retail market for natural and organic foods and beverages will grow by almost 70% between 2016 and 2021.
Bryan Crowley, chief strategy officer for California-born kombucha brand KeVita, said consumers care more and more about what they’re putting inside their bodies and are becoming much more savvy about reading and understanding ingredient decks.
Kombucha specifically is growing in popularity, with sales expected to reach $1.8 billion by 2020, he added.
Brian Reed, principal of market structure at IRI, recently discussed three key ways in which retailers can extend the growth in the natural beverage aisle:
Think nontraditionally about the CSD aisle. Retailers should planogram for base volume and use surge areas for promotional products. Recognize that natural beverages are driving growth in the aisle and not just the perimeter of the store.
Plan adjacencies thoughtfully. Cross-purchasing opportunities are vast and retailers should act to use these to their advantage.
Make the experimenting “stickier.” High ring trial buys are great, but repeat buys are even better. Before attacking promotional pricing, retailers should explore everyday pricing and make sure it is appropriate.
By using these strategies, retailers can expand beverage industry growth opportunities well beyond the health-and-wellness categories.