WaterWater is an important place to start because it is at the core of who we are, with 60% of the human body made up of water. Proper hydration is crucial, with adult males requiring about 3 liters per day and adult females 2.2 liters per day (1). “Water that comes from a clean and pure source is paramount,” says GT Dave, founder and CEO of Millennium Products, Inc., Beverly Hills, CA, which is indicative of the way consumers think about water.
While some places like New York City take pride in their tap water, insecurity about one’s water source and the potential health risk from contamination are major influencers in bottled water sales. This is particularly relevant now, given what has happened in Flint, MI, where toxic lead-contaminated tap water flowed through the community before authorities realized a serious problem was at hand.
In addition to its perceived safety and the inherent health benefits of drinking water, consumers are attracted to water that offers additional health value, such as mineral and fortified water.
A 2004 randomized, placebo-controlled, double-blind study found that a mineral water fortified with folic acid, vitamin B6, B12 and calcium decreased plasma homocysteine concentrations and had favorable effects on bone metabolism (2). More recently, a 2015 randomized placebo-controlled trial published in the American Journal of Clinical Nutrition found that water fortified with highly bioavailable zinc had a significant effect on plasma zinc concentration, potentially making it an “effective intervention in children from rural African settings“(3).
Whether or not waters marketed as healthier actually are more beneficial is a claim that warrants greater scrutiny from retailers. Bottled beverages such as water are convenient and therefore a popular choice for consumers who want proper nutrition and health on the go. It’s no surprise then, that some brands have taken water a step further into dietary supplement territory.
Oxigen by Formula Four Beverages Inc., Vancouver, BC, Canada, is described by Blair Bentham, the firm’s chair and CEO, as “an oxygen product delivered by water.” The product’s proprietary main ingredient activated stabilized oxygen (ASO) is a dietary supplement in which two oxygen (O2) molecules are bound to create O4, which is highly stable in solution and bioavailable.
“The consumer as we all know is moving in droves to healthy beverages, healthy alternatives and they’re looking for real functionality, not the smoke and mirror show, or just great packaging but something that actually produces a benefit in the body,” says Bentham. In an effort to distinguish itself from other oxygenated water products, the product has been subject to double-blind placebo-controlled trials to test its efficacy. One study completed in 2015 by Indiana State University and in the process of being published, says Bentham, found that Oxigen had the ability to more quickly remove lactic acid from the body after exercise. Another study is under way at Trinity College in Dublin, Ireland.
Find Your FunctionEfficacy is important in today’s market because consumers are educating themselves to a greater degree, reading product labels and looking for ingredients they do and do not want to buy. Because of this, they notice patterns and make connections across products and categories.
Probiotics.“One of the top current trends in ingredients is adding probiotics to beverages,” says Michael Bush, president of Ganeden, Mayfield Heights, OH. “Our recent survey showed that among those who are aware of probiotics, 50% of healthy consumers would pay 10% or more for beverages containing probiotics.”
Given the scrutiny functional products and supplements are under, manufacturers want to incorporate probiotics that work. This is where Bush believes Ganeden’s patented probiotic strain (GanedenBC30) comes in. The strain has over 22 peer-reviewed and published clinical studies demonstrating its efficacy.
Because of this reliability, in 2015, products with GanedenBC30 reached over $1 billion in retail sales and to date, the firm has already partnered with companies to launch 100 probiotic product SKUs, a third of which are beverages.
“The functional beverage category as a whole continues to gain momentum as interest around probiotics grows,” says Bill Moses, CEO and co-founder of KeVita, Oxnard, CA. His company’s Sparkling Probiotic Drinks and Cleansing Probiotic Tonics are fermented using a proprietary water-based kefir culture that also utilize Ganeden’s patented strain. These beverages target a more mainstream consumer whom KeVita hopes eases into kombucha.
A category that was once made up of mostly fermented dairy product such as yogurt and kefir, technological advances are allowing companies to reach a much broader audience with products that are not only organic, but also vegan and in a convenient liquid format. “Previously, many beverages weren’t able to add probiotics due to viability,” says Bush. “While most probiotic strains are unable to withstand the manufacturing processes, GanedenBC30’s unique structure and protective spore allows it to survive most of these processes, shelf-life challenges and withstand digestive transit.”
Water, or at least the moniker of water, is also becoming a major part of the probiotic trend with brands like Suja and Uncle Matt’s releasing Pressed Probiotic Water and Cold Pressed Fruit-Infused Water, respectively. “Drinking probiotic water gives users the added benefits of supporting digestive and immune health in a simple and healthy drink that they already know and love,” says Bush. These aforementioned products fuse the concepts of juice and water, emphasizing the water to create familiarity and the association of refreshment.
Turmeric.While curcumin may be particularly popular among dietary supplements consumers, this popularity has translated into the functional beverage category. According to Google’s Food Trends-2016, “turmeric” as a search term has experienced sudden growth in the past months. While turmeric has had sustained interest for some time, between November and January this year, searches grew 56%, becoming a national trend that hit all major cities by December 2015 (4).Among those who are aware of probiotics, 50% of healthy consumers would pay 10% or more for beverages containing probiotics. — Michael Bush, Ganeden
“It’s an exciting time to be a part of the functional beverage category because consumers’ minds and palates are expanding to ingredients the way nature intended, closer to the source, closer to whole foods with high quality products that are minimally processed and easily absorbed,” says Daniel Sullivan, founder and CEO of Temple Turmeric, New York City, NY. He explains that the firm’s products use efficacious levels of whole root, consciously grown, organic Hawaiian Oana Turmeric, ranging between 5,000 mg and 13,000 mg per bottle, depending on the product.
In addition to using adaptogenic ingredients like black pepper, plant-based fats and ginger to highlight turmeric’s flavor and improve absorption of curcumin, Temple Turmeric also utilizes Ganeden’s patented probiotic strain for some of its products. “By incorporating probiotics in already functional beverages, like Temple Turmeric, you amplify a beverage’s benefits and answer multiple consumer needs,” says Sullivan.
Kombucha.This ancient fermented tea is a major force behind the rise of the functional beverage category, particularly probiotics, in the natural products channel. According to a report by MarketandMarkets, the kombucha market in North America is the largest and fastest growing in the functional beverage category, accounting for a 39.4% share of the market. It is projected to have a compound annual growth rate of 25% by 2020 (5).
Breaking away from a culture of home brewing, GT’s Kombucha by Millennium Products, Inc. was the first kombucha introduced to consumers, gaining major traction in prominent stores like Whole Foods Market. The introduction of kombucha products by public companies like Los Angeles, CA-based Reed’s Inc. further grew the profile of kombucha and created a fertile marketplace for brands to compete. “It’s definitely crowded out there in kombucha,” says Chris Reed, founder and CEO of Reed’s Inc. “There are lots of new brands with a lot of money behind them and they’re spending it aggressively to grab shelf placement.”
A major component of this is the digestive health trend. “Kombucha has become increasingly popular as people start to become more aware and sensitive to digestive health,” says Dave. “To help maintain its continuing popularity, kombucha is finding its way into other ‘occasions’ such as replacing juice, coffee or even alcoholic beverages.” So, the key for kombucha is being purchased because of digestive health, but being accepted as a well-rounded beverage simply to be enjoyed.
While digestive health is a common denominator among kombucha brands, their approaches differ. The home-brewing tradition of kombucha is not necessarily conducive to creating consumer products, given that a true-to-form kombucha will contain detectable amounts of alcohol as a result of the fermentation process. This means that kombucha manufacturers have to devise ways to meet regulations but still give consumers what kombucha advertises. For some, that means fortifying products with patented probiotic strains.
KeVita utilizes Lactospore, a patented probiotic strain from Sabinsa, for its Master Brew Kombucha, delivering “four billion CFUs of live probiotic per bottle,” says Moses, adding that this “is twice as many as the leading competitors.”
They also make an effort to appeal more to mainstream consumers by offering a verified non-alcoholic product and by filtering out the yeast and “floaties” common to kombuchas, which may turn off newbie kombucha buyers.
While GT’s uses GanedenBC30 for its Enlightened varieties of Kombucha and Synergy products (lighter, smoother and more palatable to the mainstream consumer), the company’s Classic varieties are not fortified with a commercial probiotic strain as they are truer-to-form kombucha brews, naturally rich in live bacteria and containing more than 0.5% alcohol, requiring a person to be of legal drinking age to purchase.
“Authenticity is key,” says Dave. “There is no shortcut to making these types of authentic beverages; fermentation takes time. Manufacturers need to be aware that simply putting the word ‘probiotic’ on a bottle of water or juice does not guarantee it will provide a successful consumer experience. In addition, there’s the risk of cheapening the work ‘probiotic,’ like what the industry saw happen with ‘natural.’”
GT’s appears to have found the balance between making a revised consumer product efficacious, and also creating a traditional beverage with a deep-seated history of health benefits. Reed’s Inc. for its part, has a similar attitude, although it markets its products differently. While most kombucha brands put the word “probiotic” front and center, Reed’s Culture Club Kombucha avoids using this term or listing probiotic bacteria species, saying only that its contains a live organic kombucha culture.
That is not to say Reed’s kombucha does not offer these benefits. “We have analyzed the bacteria in our culture and these bacteria are extremely beneficial so we saw no need to add any commercial bacteria to increase the probiotic content of our drinks,” says Reed. “We felt that the kombucha on its own was a very, very strong combination and I’m not messing with Mother Nature on this one.”
While the company absolutely stands behind the digestive health prowess of its kombucha, that’s not necessarily the priority. “We’re the best in the flavor development and it’s partially because we’re just sticklers for the quality of the ingredients that we use and we don’t compromise,” says Reed. “I just think I was making this kombucha for kombucha-savvy people and not necessarily for people who were just coming to kombucha for the first time.”
Of course, not everyone is going to love kombucha or considers digestive health a priority, but they love tea and want functionality, so other products are going to spring up to fill that void. “Kombucha is just one example of legitimate functional beverages on the market,” says Andy Horrow, partner and CMO, Wholesome Tea Co., Englewood, NJ. “A very important consideration of functionality should be ‘can you add good stuff without adding unnecessary calories and sugar to make it taste good?’”
Enter Blue Buddha Teas by Wholesome Tea Co., which hopes to give consumers taste, refreshment and functionality with minimal calories and broaden the functional tea category beyond kombucha. “Developed in Ayurvedic tradition, Blue Buddha Teas combines clinically studied herbs, organic teas and fruit extracts for a refreshing tea with heightened acuity, immunity and vitality,” says Horrow. “This is thanks to the meaningful amount of ashwagandha, maitake mushroom and Indian gooseberry (amla).”
Plant-Based WaterDerived from sources like coconut, cactus, maple trees and even banana, this category offers consumers hydration as well as naturally occurring nutrients. While coconut water has become rather prevalent, it has also cleared the way for similar products that diversify the category, opening it up to consumers who may not enjoy the flavor of coconut water or coconuts in general.
One such product is banana water produced by Elmhurst Naturals, a division of Steuben Foods, Elma, NY. “Our banana water is first cousin to coconut water,” says Ron Zussman, senior director of marketing at Steuben Foods. “It’s a single-source hydrating beverage with a ton of electrolytes and potassium in it.”
Banana water has the advantage of coming from a familiar fruit, while also offering something uncanny and different. “It’s never what anyone expects,” says Zussman. “When they try it, they change their thinking that it’s not a heavy, sweet banana shake, but something light and hydrating.”
Another up-and-coming plant-based water is cactus water, made from the juice of a prickly pear fruit. “It is ultra-hydrating, great post-workout to help reduce inflammation, and really good for cell health and for skin health,” says Linda Barron, CEO of Steaz, Doylestown, PA. “High in electrolytes, antioxidants, with half the calories and sugar of most coconut waters on the market, cactus water is really a product high in nutritional integrity.”
While coconut water is clearly dominant, once again, brands like Elmhurst and Steaz are creating variety and giving consumers choices. “I see cactus as being where coconut was 10 years ago,” says Barron. “I really do think you’re going to see tremendous growth within the functional water category continue and be in the double digits year after year for the foreseeable future.”
Dairy AlternativesA beverage category that once belonged in the fringe among vegans and the lactose-intolerant, dairy alternatives have grown immensely both in variety and in demographics. “The category of milk alternatives is becoming more mainstream,” says Zussman. “More and more food service applications, famously Dunkin’ Donuts and Starbucks, are now serving almond milk as something that is permanently out there…It has just become something people drink just because they like it.”
Additionally, while yogurt, cheese and export sales have allowed milk production to increase by 18%, annual per capita fluid milk consumption between 1975 and 2010 went from 28.6 gallons to 20.8 gallons, according to a 2013 report by CoBank (6). This trend has continued in the ensuing years. This is due in part to the immense variety of beverages consumers have to choose from as well as changing opinions about the health benefits of drinking milk that has given rise to dairy alternatives.
Internally, the category is also changing with nut milks surpassing soy and rice milks in sales, says Zussman. Almond milk in particular is dominating the category, making over $700 million per year, up 40% in 2014 compared to 2013 (7). Nut milks “just offer a lot more from a health point of view, a flavor point of view and usage point of view,” explains Zussman. While almond milk is leading the charge, the rising gap between nut milks and other dairy alternatives allows for additional diversification within that category.
In addition to almond milk, Elmhurst Harvest also manufactures the only pistachio milk and walnut milk on the market. “Our research showed that as much as people liked almonds, the walnut flavor is just a little bit richer and more robust, making it a great base for cereal and oatmeal,” says Zussman. “The pistachio just has a real nice sweetness to it that people like to cook with.” Piggybacking off the success of almond milk, these and other varieties such as hemp and flax milk are sure to enjoy increased attention from consumers who appreciate variety.
Innovation is also happening with an old standby in the dairy-free category: rice drinks. For instance, one brand (Benerice from Wibe Naturals) combines rice drinks with ingredients like coconut, tigernut and baobab for additional flavor and health benefits. As demand for taste and function continue to shape the healthy beverages market, be on the lookout for even more innovative launches in this growing category.WF
References
- http://water.usgs.gov/edu/propertyyou.html
- N.S. Tapola, et al. “Mineral water fortified with folic acid, vitamins B6, B12, D and calcium improves folate status and decreases plasma homocysteine concentration in men and women.” Euro J Clin Nutr. 58(2): 376-385. 2004.
- V. Galetti, et al. “Efficacy of highly bioavailable zinc from fortified water: a randomized controlled trial in rural Beninese children.” Am J Clin Nutr. 102(5): 1238-1248. 2015.
- “Food Trends-2016.” https://think.storage.googleapis.com/doc/Foodtrends-2016.pdf, accessed 6/21/2016
- http://www.marketsandmarkets.com/Market-Reports/kombucha-market-211406364.html
- A.L. Krebs. “Beyond the Gallon Jug: How Can Innovation Change the Path of Fluid Milk?”CoBank. June 2013.
- M. Koba. “Almond milk sales are soaring, but is it good for you? http://fortune.com/2015/05/27/almond-milk-sales-soaring-health/, accessed 6/21/2016
