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The New Age beverage category began its growth surge in the late 1980s with the expansion of Snapple.  Snapple’s broad line-up of flavored ice teas and unique juice drinks shattered the industry myth that beverage consumers were unadventurous. In 2001, the total beverage industry annual retail sales of US$208 billion were dominated by two mature segments – soft drinks and beer.  However, while the beverage industry reported a sluggish 2.7% increase, retail sales of New Age beverages sky-rocketed.

In its annual beverage market survey for calendar year 2003, Beverage World magazine (www.beverageworld.com) estimated that the New Age or alternative beverage markets was approximately $11.6 billion in sales.

New Age or alternative beverages are distinguishable from mainstream carbonated soft drinks in that they tend to contain less sugar, less carbonation and natural ingredients. As a general rule, three criteria have been established for such  a classification, (1) relatively new introduction to the marketplace; (2) a perception by consumers that consumption is helpful compared to mainstream carbonated soft drinks; (3) the use of natural ingredients and flavors in the products.  According to Beverage Marketing Corporation (www.beverageworld.com), for 2003 the New Age or alternative beverage category consists of the following segments:

1. Energy Drinks
2. Premium Soda
3. Ready to drink (RTD) coffee
4. RTD Tea
5. RTD (nutrient-enhanced)
6. Shelf-stable dairy (regular/diet)
7. Shelf-stable dairy (nutrient-enhanced)
8. Single-serve-fruit beverages (regular/diet)
9. Single-serve-fruit beverages (nutrient enhanced)
10. Smoothies
11. Sparkling Water
12. Sports Drinks
13. Vegetable/fruit juice blends
14. Other New Age Beverages

The largest segment within the New Age category is bottled water. Industry experts forecast that bottled water sales could be the second largest segment after soft drinks within ten years.  U.S. retail sales of bottled water reached $7.7 billion.  The total category continues to be highly profitable.  The value-added water segment remains largely in the domain of the virtual brand with Vitamin Water and enhanced water gaining margins in excess of 50%.

Single-served bottled water is the largest category by retail sales and is also a growth leader.  Regionally, the West (Washington, Oregon, California, Nevada, Arizona, New Mexico, Colorado, Idaho, Utah, Wyoming and Montana) only represent 22.8% of the U.S. population but accounts for 29.5% of the New Age Beverage sales. The West has outpaced this national category growth for the last three years.

Other segments of the beverage industry are also flourishing.  Juice and juice drinks constitute the second largest New Age Beverage segment with all channel sales of $6.2 billion in 2001. The value-added end of this market comprises nutraceuticals (also known as functional beverages).  These products taste good, have great packaging designs and offer dietary supplements such as ginseng as additional reasons to purchase.

Retail sales of sports drinks have also increased 9.7% in 2001 to U.S. $3.9 billion with the majority of the growth stemming from energy drinks. Scan Data indicated in July of 2003 that the energy drink segment grew at a rate of 33.3% which exceeds the growth of carbonated soft drinks of 0.7%. Energy drinks offer a combination of vitamins and carbohydrates that give the consumer an instant surge of energy. The use of a unique, slim-line can add to the excitement of this young adult beverage largely consumed with alcohol in bars and nightclubs.

Functional drinks can also offer customized experiences.  Functional teas (many of these products cross over multiple product segments) spearheaded the value-added end of the ready-to-drink tea segment which accounted for $3.0 billion in sales in 2001.  Depending on the particular whim at the time of purchase, these brands have formulations that appeal to consumers seeking increased mental acuity, enhanced relaxation capabilities or any of a number of physical and mental advantages never before offered it the traditional beverage market.

Retailers are eager to capitalize on these buoyant market segments and are actively seeking private-label marketing opportunities to by pass national beverage manufacturers.

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