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Functional Beverages - US - September 2004

INTRODUCTION AND ABBREVIATIONS
Introduction
Other relevant reports
Definition
Abbreviations & terms
Abbreviations
Terms
EXECUTIVE SUMMARY
A $10 billion market
Functional beverages cross many beverage categories
Health and convenience are key drivers
Major beverage companies have expanded drink portfolios with functionals
Advertising and promotion: sampling
FDM tops other channels for distribution
More than a third of consumers purchase functional beverages
Forecast for functional beverages similar to beverages overall
MARKET DRIVERS
Health concerns
Demographic opportunities
Age groups—favored drinks for each group
Figure 1: Types of functional drinks purchased, by age, July 2004
Figure 2: U.S. population projections, by age, 2000-2009
Women consumers
Figure 3: Female population projections, by age, 2000-2010
Ethnic consumers
Figure 4: American households, by race/ethnicity, 2000-2009
Consumers embrace active lifestyles
Figure 5: Health and fitness club* membership, 1998-2003
Packaging and convenience innovations
Larger sizes and other innovations for energy drinks
Plastic in several new types of beverages
Glass
Successful single-serve products expand to multipacks
Ingredient innovations
Health claims proliferate, but functional declines
Figure 6: New product introductions with a functional or fortified positioning, 1999-2004
Consumer skepticism
Figure 7: Most likely source of information about functional drinks, August 2003
MARKET SIZE & TRENDS
Figure 8: Total U.S. retail sales of functional beverages*, at current and constant prices, 1999-2004
Graph 1: Total U.S. retail sales of functional beverages*, at current and constant prices, 1999-2004
MARKET SEGMENTATION
Figure 9: FDM sales of functional beverages*, by drink category, 2002 and 2004
Juices and juice drinks
Figure 10: FDM sales of functional juices and juice drinks*, at current and constant prices, 1999-2004
Soy-based drinks
Figure 11: FDM sales of functional soy-based drinks*, at current and constant prices, 1999-2004
Enhanced water/sports drinks
Figure 12: FDM sales of enhanced water/sports drinks*, at current and constant prices, 1999-2004
Smoothies/yogurt drinks
Figure 13: FDM sales of functional smoothies/yogurt drinks*, at current and constant prices, 1999-2004
Figure 14: Total sales of RTD smoothies/yogurt drinks at FDM and made-to-order functional smoothies, 2001 and 2003
Teas
Figure 15: FDM sales of functional teas*, at current and constant prices, 1999-2004
Energy drinks
Figure 16: FDM sales of functional energy drinks*, at current and constant prices, 1999-2004
SUPPLY STRUCTURE
 AMERICAN VS. INTERNATIONAL PRODUCTION
 COMPANIES AND BRANDS
Overview
Figure 17: FDM sales of functional drinks, by manufacturer, 2001 & 2003*
Figure 18: Brand sales of functional beverages, 2001 & 2003*
Juice and juice drinks
Figure 19: Manufacturer and brand sales of functional juice and juice drinks, 2001 & 2003*
Soy-based drinks
Figure 20: Manufacturer and brand sales of functional soy-based drinks, 2001 & 2003*
Enhanced water/sports drinks
Figure 21: Manufacturer and brand sales of enhanced water/sports drinks, 2001 & 2003*
Smoothies/yogurt drinks
Figure 22: Manufacturer and brand sales of functional smoothies/yogurt drinks, 2001 & 2003*
Tea
Figure 23: Manufacturer and brand sales of functional RTD teas, 2001 & 2003*
Figure 24: Manufacturer and brand sales of functional loose/bagged teas, 2001 & 2003*
Energy drinks
Figure 25: Manufacturer and brand sales of functional energy drinks, 2001 & 2003*
 MAJOR PLAYER PROFILES
PepsiCo, Inc.
Tropicana and Dole
SoBe
Aquafina Essentials
Propel
Amp
The Coca-Cola Company
Minute Maid
Odwalla
KMX
Powerade
Dasani
Dannon Fluoride to Go
Ocean Spray
Nestlé USA
Welch Foods Inc.
Florida’s Natural Growers
Dean Foods Company/Suiza Inc./White Wave
Procter & Gamble
Cadbury Schweppes America Beverages
Mott’s
Snapple
Campbell’s
Ferolito, Vultaggio & Sons
Red Bull GmbH
Yoplait (General Mills, Inc.)
The Hain Celestial Group, Inc.
8th Continent (General Mills & DuPont)
Glacèau Water Co. Inc.
Groupe Danone
The Dannon Company, Inc.
Stonyfield Farm
Hansen’s Natural Corp.
Traditional Medicinals
Rockstar International
Clearly Canadian Beverage Corp.
Unilever
Bigelow
ADVERTISING & PROMOTION
 OVERVIEW
 MAJOR MANUFACTURERS AND BRANDS
PepsiCo
Coca-Cola
Ocean Spray
White Wave (Dean Foods)
Cadbury Schweppes
Red Bull GmbH
Glacèau Water Co. Inc.
RETAIL DISTRIBUTION
Overview
Figure 26: Sales of functional beverages, by channel, 2002 and 2004
Food, drug, and mass
Convenience stores
Specialty retailers
On-premises sales
THE CONSUMER
Introduction
Regular or occasional purchasers of functional beverages
Figure 27: Trends in regular or occasional purchasing of functional drinks, 2003 and 2004
Figure 28: Regular or occasional purchasing of functional drinks, by gender, July 2004
Figure 29: Regular or occasional purchasing of functional drinks, by age, July 2004
Figure 30: Regular or occasional purchasing of functional drinks, by household income, July 2004
Figure 31: Regular or occasional purchasing of functional drinks, by race/ethnicity, July 2004
Types of functional beverages purchased
Figure 32: Trends in types of functional drinks purchased, 2003 and 2004
Figure 33: Types of functional drinks purchased, by gender, July 2004
Figure 34: Types of functional drinks purchased, by age, July 2004
Figure 35: Types of functional drinks purchased, by income, July 2004
Figure 36: Types of functional drinks purchased, by level of educational attainment, July 2004
Figure 37: Types of functional drinks purchased, by geographic location, July 2004
Figure 38: Types of functional drinks purchased, by presence of children and marital status, July 2004
Reasons for purchasing functional beverages
Figure 39: Reasons functional drinks purchased, July 2004
Figure 40: Reasons functional drinks purchased, by gender, July 2004
Figure 41: Reasons functional drinks purchased, by age, July 2004
Figure 42: Reasons functional drinks purchased, by income, July 2004
Figure 43: Reasons functional drinks purchased, by presence of children and marital status, July 2004
Reasons for not purchasing functional beverages
Figure 44: Reasons functional drinks not purchased, July 2004
Figure 45: Reasons functional drinks not purchased, by gender, July 2004
Figure 46: Reasons functional drinks not purchased, by age, July 2004
Figure 47: Reasons functional drinks not purchased, by income, July 2004
Figure 48: Reasons functional drinks not purchased, by level of educational attainment, July 2004
Summary
FUTURE & FORECAST
 FUTURE TRENDS
Introduction
Health-consciousness and convenience have become mindsets
Increase in disease management products
Qualified health claims in the future
Ingredient approval may become stricter
 MARKET FORECAST
Functional beverages
Figure 49: Forecast of total U.S. retail sales of functional beverages, at current and constant prices, 2004-2009
Graph 2: total U.S. retail sales of functional beverages, 1999-2003, and forecast, 2004-2009
Forecast factors
APPENDIX: TRADE ASSOCIATIONS
APPENDIX: NEW PRODUCT BRIEFS
All Sport: All Sport Plus Sports Beverage with Supplements
Leading Brands: Soy20 Fruit Flavored Water and Natural Soy Isoflavones
Minute Maid: Premium Heart Wise Cholesterol-Reducing Orange Juice
BioEssentials: Motion Potion Dietary Supplement Drink
Hain-Celestial Group: Celestial Seasonings Menopause Nite Tea
Hain-Celestial Group: Rice Dream Heartwise
Novartis Consumer Health: Resource DiabetiShield
APPENDIX: NUTRITION BUSINESS JOURNAL SOURCE DATA
Figure 50: Total U.S. retail sales of functional beverages, 5 leading brands, 2002-2003, and 2003 retail channel sales
Figure 51: Total U.S. retail sales of functional breads and grains products, 5 leading brands, 2002-2003, and 2003 retail channel sales
Figure 52: Total U.S. retail sales of functional dairy products, 5 leading brands, 2002-2003, and 2003 retail channel sales
Figure 53: Total U.S. retail sales of functional packaged/prepared foods, 5 leading brands, 2002-2003, and 2003 retail channel sales
Figure 54: Total U.S. retail sales of functional snacks and bars, 5 leading brands, 2002-2003, and 2003 retail channel sales

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