Fruit Juice and Juice Drinks - US - February 2008

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
INSIGHTS AND OPPORTUNITIES
What does health-focused positioning mean for consumers and market growth?
“Carbs” make you fat; educate consumers to differentiate between good and bad carbs
All natural and organic positioning—provide a “health seal” through exclusion of artificial and toxic ingredients
Linking research on health-prompting benefits to product marketing; create blends with “wonder fruits”
Create value-added perception/innovation to compete effectively with “other” non-alcoholic beverages
Making consumers “happier”
Innovative flavors/varieties equate to increasing consumer happiness
Packaging; innovate to create functional benefits
Build trust beyond general health benefits
Price is important; Create brand loyalty as lower-price imitations are inevitable
FAST FORWARD TRENDS
 TREND: SCIENCE, SALVATION AND ENCHANTMENT
Healthy?
What kind of healthy?
Faith in Exploration
 TREND: LEARNING THROUGH PLAY
Study of Happiness
Choice and Play
Breaking away from health
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