Food Product Design: Foodservice Focus - March 2004 - Expanding Beverage Options

March 2004

Expanding Beverage Options

By Nancy BackasContributing Editor

Consumers today have a daunting array of beverages from which to choose. Foodservice operators have equally as many choices. It once was enough to have a decent coffee, a couple of teas, the basic soft drinks, a couple of juices and maybe a milkshake or two, depending on the menu and audience served. Today there isn't any such thing as a simple beverage. Flavors have exploded in every beverage segment. It's also difficult to categorize beverages since there is such a crossover among beverage categories. Consider the following beverages available today:

· "New-age" nutritional beverages that combine caffeine with juice and added nutrients or juice with added nutrients and yogurt;

· Chai teas combined with alcohol or served at quick-service restaurants in milk shakes;

· Tropical juices targeted to specific ethnic groups that also have vast appeal to other groups;

· Water fortified with nutrients and boosted with caffeine;

· A vast array of coffee beverages, both hot and cold, that really have more milk in them than coffee;

· Carbonated dairy beverages;

· Carbonated tea beverages;

· Juices with added nutrients that become wellness/new-age beverages.

It's more important than ever for foodservice operators to look at their customer bases to determine what beverages fit their menu and demographic and to work with suppliers to figure out what flavors, sizes and varieties make sense.

Coffee and tea The coffee and tea category is enormous today. The advent of the upscale coffee house in the '80s, especially the now-giant Seattle-based Starbucks (which just opened its first unit in Paris, France, where the independent coffeehouse is legend) took coffee, and then tea, to a level never imagined. First there was strong, premium, "gourmet" coffee, then lattés and cappuccinos became popular, and then it was iced and frozen coffee, lattés and cappuccinos. (Without planning it, consumers are now drinking more milk because of these milk-based coffee drinks.) Ready-to-drink coffee beverages came next and, according to Beverage Marketing Corporation, New York, are one of the fastest growing sectors fitting into the "new age" beverage category, which grew 23.1% in just one year from 2001 to 2002.

Chai came next, a traditional Indian drink composed of black tea and aromatic spices (cardamom, cinnamon, cloves, ginger, nutmeg and pepper). It is now served hot or cold in such places as Dunkin' Donuts, Atlanta Bread and Panera Bread in addition to coffeehouses everywhere, both independent and chain. One small, quick-service chain in Vancouver, WA, Burgerville, created the Oregon Chai milk shake. Chai is especially popular with the college and university crowd.

Tea companies have also begun to take tea in new directions with flavor, packaging and added nutrients. Tea flavors run the gamut from traditional black and green teas to every herb, fruit, edible flower and spice imaginable, not to mention so-called functional ingredients to boost the immune system and help with insomnia, stomach problems and menopausal symptoms. Revolution Tea, Tempe, AZ, offers, for example, Earl Grey Lavender Tea, White Tangerine Tea and Honeybush Caramel Tea made with the African herb rooibos and caramel flavoring. The company created the Single Serving Box that holds a nylon Infuser Tea Bag(TM) and just recently came out with two-pack samplers marketed especially to hotels for in-room dining.

Celestial Seasonings, Boulder, CO, started out in funky, natural-foods cafés several decades ago. Now it's the leader in variety, offering its most popular herbal teas, along with black and green teas, chai teas, and Maté (made with yerba maté, a South American "super-antioxidant" herb). Some of the company's newest flavors include True Blueberry Herb Tea and Perfectly Pear White Tea. One of its newest lines features wellness teas, including Metabo(TM) Partner, Mood Mender and Menopause Day and Night teas.

Bottled tea companies sprang up almost a decade ago with sweetened bottled tea beverages in a wide variety of flavors. Now some of those companies have come up with new, sweetened teas that are free from carbs and calories to appeal to the current low-carb diets. In May 2003, the Republic of Tea, Novato, CA, introduced large-sized bottled tea for the upscale restaurant market to be presented at the table like wine. Bottled tea may be a way for restaurants to boost profits by offering it as an alternative to brewed tea or for those desiring a nonalcoholic beverage alternative when others are drinking wine.

Sparkling choices Carbonated beverage companies have had to find a way to combat the flight to other forms of refreshment. One response companies such as The Coca-Cola Company, Atlanta, and PepsiCo, Purchase, NY, have had is to introduce new lines of products. Coca-Cola introduced a dairy-based Choglit® drink (which has since been replaced by a similar drink, Swerve) and expanded its water line. PepsiCo took SoBe noncarbonated drinks into the carbonated arena with Mr. Green.

Cadbury Schweppes, London, added dnL, a fruit-flavored, green, caffeinated beverage similar to 7 Up and Red Fusion, a bright-red, cherry-flavored version of Dr Pepper.

The other approach is to expand the lines of existing beverages. Coca-Cola added Vanilla Coke and a berry version of Fanta. Coca-Cola has also been testing Kust, a guarana-flavored beverage made with juice from the guarana berry. In January 2004, the company introduced Diet Coke with Lime. PepsiCo added an orange-flavored Mountain Dew in the summer of 2003 as one of its line extensions.

The area of carbonation that companies are exploring is mid-calorie drinks that offer fewer calories than regular beverages but with better taste than diet beverages. Fruit-juice-based carbonated drinks fit into this category. Carbonation is still popular and one way that operators can present it in a creative way is to offer Italian sodas made with soda water and flavoring syrups or soda water and fruit juice.

Foodservice operators can use brand marketing as one device to boost beverage sales. Patrons have a strong connection with their favorite beverage brands. When servers are trained to merchandise those brands through effective beverage service, it often results in increased sales. A simple order of a soft drink can add 25% to 30% to a guest check. Having a variety of carbonated beverages available and keeping up with the newest beverages on the market -- especially those that customers have tried on their own at home -- communicates that the operator is keeping up with trends. In addition, most soft-drink producers will help operators evaluate customers' desires and cater to them by designing beverage programs specific to the operator's markets. One operation may benefit from offering a larger 44-oz. option, for example, or by shifting beverage options to appeal to a more mature audience.

Moo juice The dairy industry has worked long and hard to get people to drink milk with its Got Milk? campaign, and while that has no doubt increased consumption of milk, the real story in the dairy category is that milk is showing up in all kinds of beverages in various forms, boosting milk-drinking even more. As mentioned, milk is consumed in numerous coffee beverages. However, milk is also showing up in new carbonated beverages and various yogurt-based beverages and smoothies. These types of beverages may become preferred options as schools across the country make sodas "beverages non grata."

New packaging of milk in ready-to-drink, single-serve plastic containers with lively graphics has helped boost sales in school foodservice venues. In an effort to encourage more children to drink milk, the dairy industry conducted a study in 2003 in several school districts by offering chocolate, strawberry and plain milk merchandised in cow-spot-decorated coolers that not only visually appealed to kids, but kept the milk at colder, more-appealing temperatures. The milk consumption rose significantly. The success of the study prompted other school districts to adopt the program in elementary as well as secondary schools. Some even added vending machines that only dispensed milk.

One study conducted by the Milk Processor Education Program (MilkPEP) revealed a 52% increase in sales when milk was promoted to children and a 35% increase when promoted to adults. The study suggested that when properly promoted, adults will order milk, often in addition to other beverages. As part of the study, Denny's restaurants, Spartanburg, SC, offered flavoring straws for white milk. The straws contained chocolate, strawberry or caramel flavoring that children could mix into their milk themselves.

In California, dairy processors recently promoted licuados, a drink from Latin America that combines milk with blended fruits, coffee or chocolate. The drink is already popular with Hispanics but the California Milk Processor Board hopes to appeal to non-Hispanics as well by making it an "ethnic-neutral" beverage.

A number of yogurt and milk companies have introduced flavored, single-serve yogurt smoothies. The yogurt-based Light 'n Fit Smoothies from Dannon, Allentown, PA, are now available at Starbucks stores in six flavors. Dannon's Frusion combines lowfat yogurt with fruit as another smoothie alternative, very popular with a college-age audience.

One of the newest entrées into this category is carbonated milk. Introduced several years ago, it has yet to catch on. However, The Beverage Network (bevnet.com) touted Sparkling Cow soda, from the Sparkling Milk Company, Ft. Lauderdale, FL, as one of the best new beverages in 2003. Sparkling Cow is available in three flavors, Luscious Lemon, Sweet Strawberry and Outrageous Orange; is fat free; has all natural ingredients, including skim milk and yogurt flavoring; and is enriched with vitamins C, D and A.

Milk can be pretty hip, too. Milk steamers, a hot combination of steamed milk and flavored Italian syrup, were on the menu at the Bad Ass Coffee Company, based in Salt Lake City, during the 2004 Sundance Film Festival. A special promotion co-sponsored by the Got Milk? folks and San Francisco-based Torani syrups featured four steamers. Steamers are another way for operators to offer signature beverage alternatives.

Juices The ready-to-drink juice category is second only to hot beverages in introducing the most new products in the last 4 years. Adding new flavors, especially combining two or more juice flavors in one drink, has comprised many of the new offerings. Tropical juice flavors, such as guava, mango and pineapple, are in a lot of the new products, appealing to Hispanic and non-Hispanic populations alike.

Campbell Soup Company, Camden, NJ, recently added two new flavors to its V8 Splash® line, Guava Passion Fruit and Mango Peach. The flavors are geared to the Hispanic market with labels in both Spanish and English.

Fortification of juices, as in other beverages, has impacted the category. Combinations of vitamins and minerals, such as the addition of calcium and antioxidant vitamins, are common. Mintel International Group, Chicago, states in its "Fruit Juice and Juice Drinks Market" report that calcium-fortified juices account for 30% of the growth among fortified juices.

Odwalla, based in Half Moon Bay, CA, and now owned by Coca-Cola, produces all-natural juices, including three organic juices and three smoothies, in plastic, ready-to-drink containers. Naked Juice, Glendora, CA, offers similar products. The company has over 25 juice-based smoothie drinks from which operators can choose. The drinks are merchandised in special coolers that the company supplies to the operator. Delivery personnel rotate the juices once a week and exchange expired products for new ones.

Ocean Spray recently introduced White Cranberry Juice Drink, a clear, less-tart alternative to red cranberry juice. All Ocean Spray juices are now also available in special 60-oz. rectangular bottles and 4-oz. aseptic juice cups geared especially to the foodservice industry. The new, large rectangle bottles are a perfect fit for bars and cafeteria-style lines where the bottles are easy to pick up and pour. Another foodservice product geared to bars is Ocean Spray Cranberry Purée for frozen cranberry daiquiris and margaritas.

Foodservice operators can also boost profits with juice by squeezing fresh citrus on site. For just pennies an ounce and the cost of a citrus juicer, operators offer fresh-squeezed orange and grapefruit juice to customers.

Wellness drinks When it comes to beverages that claim to supply some sort of added benefit, so much crossover exists that it could make your head spin. There are energy drinks, functional beverages, sports drinks, nutritionals, vitamin waters and soymilk-based drinks. Also, the aforementioned juice beverages, milk- and yogurt-based drinks, carbonated beverages and teas (both bottled and bagged), all with added nutrients and other substances, claim to offer health benefits.

According to Mintel, the functional beverage industry is slated to top $13 billion by 2008, a 44% increase over today's industry figures. According to its research, interest in these beverages is highest among younger consumers who are willing to experiment with new products and like the convenience factor. Products oriented toward women, especially products that claim to provide relief from menopausal symptoms, are very popular among women aged 45 to 54.

Like most beverages, wellness drinks started out as retail products. However, college foodservice, business and industry foodservice, hospitals, coffee cafés and many quick-service and fast-casual operations now offer these beverages as alternatives to carbonated soft drinks. Like yogurt smoothies, wellness drinks especially appeal to the college-age and young-professional crowd, and venues geared to these markets benefit from offering these options.

Energy drinks are growing by leaps and bounds. Mintel's research found that energy drinks are especially attractive to minorities, including Hispanics and blacks. Red Bull has been a phenomenally successful product, especially with young people. Recently, Campbell Soup introduced its own energy drink, Invigor8, made with 100% juice and no added sugar. The two varieties, Energy Boost and Nutrition Boost, both have added niacin, B6, B12 and vitamins A and C. Energy Boost contains caffeine and guarana; Nutrition Boost is caffeine-free and also has added vitamin E, calcium and potassium.

Odwalla calls its wellness drinks Nutritionals. Odwalla's offerings include a high-protein drink, Super Protein 2003, that has a base of soy protein; "C" Monster, a high vitamin C beverage; Blueberry "B" Monster, a vitamin B drink; Femme Vitale, a beverage devoted to women; Superfood, a green beverage that gets its color from spirulina, chlorella, wheatgrass, barley grass and "sea vegetables"; Serious Energy, a high-energy drink; and Wellness, an immune-system booster that features echinacea and astragalus.

Soymilk beverages are mostly sold to a very health-conscious crowd and appear on foodservice menus mostly in vegetarian and other health-oriented restaurants, as well as in college and university settings. But with products showing improved flavor and the growing awareness that soy can help prevent osteoporosis, lower cholesterol and prevent heart disease -- as well as provide a good source of protein -- these beverages will no doubt grow in popularity.

One of the newest beverages is a drink that has been popular in Europe for a while now. Dannon's DanActive (formerly called Actimel) is a probiotic cultured dairy drink that contains live Lactobacillus casei cultures at levels 10 times higher than yogurt. According to Dannon, these levels have been clinically proven to help strengthen the body's defense system. DanActive comes in Strawberry, Vanilla, Orange and Original flavors. Consumers can drink it as is or add it to coffee, tea or fruit juices to create unique smoothies.

What's an operator to do? It's a wild world of choices out there -- but also a wealth of opportunity. Choosing the right new beverages or beverage mix for a particular operation depends on who is being served. Are you catering to a "20 something" crowd? If so, functional drinks, new-age beverages, energy drinks, a wide array of coffee beverages and fruit smoothies might be a good bet. If your demographic is families with children, it might be a good idea to offer exciting milk beverages with flavor alternatives as well as a wide variety of juice combinations.

Deciding what to offer can require a delicate balance. Offer too many beverages and an operator risks having too much inventory that doesn't move fast enough and takes up too much storage space. One solution is to partner with beverage companies that can help hone-in on the right beverages for the market. Any issues related to the storage of fresh product can be solved by working with a company that rotates products after a suitable period and informs the operator when new selections are available.

With such a wide array of beverages available today, choosing the right beverage mix could spell renewed profits and garner new customers -- not to mention giving repeat customers some refreshing options.

Nancy Backas is a Chicago-based freelance writer and chef. She has been writing about the foodservice industry for 20 years and can be reached at [email protected].

Back to top

3400 Dundee Rd. Suite #100Northbrook, IL 60062Phone: 847/559-0385Fax: 847/559-0389E-mail: [email protected]Website: www.foodproductdesign.com