Powered by an influx of ready-to-drink (RTD) products featuring elevated health profiles, juices and teas are becoming American consumers’ health elixirs.
Customers are seeking juices and teas with better-for-you additives and interesting flavors, and they’re willing to pay more for them.
According to Packaged Facts’ “U.S. Beverage Market Outlook 2019,” retail tea sales reached $8 billion in 2018 after trending upward at a compound annual growth rate (CAGR) of 3.8% the previous five years. The report projects sales to reach $9.5 billion by 2023.
“In the c-store world, it’s the 22- to 38-year-old blue collar (shopper),” said Scott Zaremba, who owns multiple convenience outlets in the Lawrence, Kan., area. “And they’re the ones buying the big jugs, the big cans of tea that are infused with something.”
It’s that infusion that is key to higher sales dollars. Sales volume trends remained flat, which means people are more willing to pay more for what they see as a better product. Regardless of the flurry of new RTD tea flavors and additives the market has seen recently, consumers still respond to familiar combinations.
“I’m just seeing the ginseng tea and the other stuff that’s been around for a while, but now we’re getting big cans of it,” said Zaremba. “When it comes to teas, tea is everything now … and now sweet tea seems to be coming on and becoming a big deal.”
That consumer behavior is in line with the rise of functional beverages, especially among millennials, a demographic that expects more of their beverage choices.
Cold-pressed juices, reported Packaged Facts, are possibly the most popular drinks on the market because of their high nutritional value. They also feature immunity boosters and can even serve as meal replacements.
Contributing to that healthy profile are innovations by juice and tea makers to include trendy ingredients. Look for juices to include kale, spinach, turmeric, spirulina, barley grass, alfalfa grass — and even activated charcoal.
Then there are juice blends, which go one step further: Instead of extracting the juice, these smoothie-like drinks are made using the entire fruit — retaining the fiber as well as the nutrient-rich skin.
Despite the skyrocketing innovation in the juice category, many c-store owners aren’t yet seeing the demand for trendier juices among their demographics.
“We’re a little slower to catch on to some of these things,” said Dan Dunstan of Parkland USA, which operates 50 stores in six Midwest and Southwest states. “I’m definitely not seeing the large draws there. Not early out of the gate.”
When it comes to juices, another trend Zaremba has seen is lots of activity in mixing flavors.
“They’re flavoring them all,” he said. “There’s not just grape juice anymore. It’s cranberry-grape-apple, whatever.” Zaremba said he believes the new flavor profiles are a sign that drink makers are trying to keep up with a diversifying market.
Those unconventional innovations don’t extend to simply flavor, either. Health-targeted options abound. Strong trends have emerged in favor of more antioxidants, less sugar and more gut-friendly probiotics.
Packaged Facts reported manufacturers may be working in mashup overdrive to find the next huge juice/water trend, one that might achieve a swift rise to mainstream recognition like coconut
water did. The report cited “fringe drinks” containing ingredients like aloe vera, cactus, tart cherry and watermelon gaining acceptance in a health-conscious consumer mindset.
Future innovation in juices will primarily build on enhanced functionality and the creation of unique drinking experiences.
The c-store cold vault is a competitive place, but also a high-traffic place, which means testing some of these trendier items could pay off for retailers.
“I think you’ve got to be a bit more creative and try some products that you might not try elsewhere in the store,” said Dunstan.
Separating the few winners from the many more losers will take work. Dunstan said Parkland USA tries to narrow the options based on other products, whether by flavor or product type.
“And then certainly looking at sales right out of the gate — what’s moving,” said Dunstan. “You put something on the shelf, in the vault, you highlight it a little bit and then you get some early movers, and you know what’s going to move.”
And if it doesn’t move?
Dunstan is clear on that question. “It’s got to move, or it’s out.”