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Private label drink mixes aren’t big players now, but just watch them grow.
When it comes to drink mixes, manufacturers need look no further than the music industry to find the biggest supporters of their products. Take Harry Nilsson, for example, and his suggestion on how to use a mix to create the perfect concoction: “You put the lime in the coconut and drink ‘em both up.”
In the same A-chord, let’s not forget Jimmy Buffet. He’s been crooning for years about the wonders of margaritas. And anyone who knows margaritas knows that it’s not a one-ingredient drink. Add two ounces of harmony to margarita mix and tequila, and you’ve got yourself not only a hit song reminiscent of relaxing Caribbean vacations and tropical breezes, but you’ve also got yourself a tasty beverage. Right?
If only the world of drink mixes could be so simply explained through a song. Unfortunately for manufacturers and retailers at large, the drink mix category is not that simple. If it were dollar shares posted for the total category and private label would be much better than they are.
According to Chicago-based Information Resources Inc. (IRI), private label drink mixes only take in 8.6 percent of the total dollar share. In subcategories such as private label fruit drink mixes, dollar share hovers at 8.8 percent for the same 52 weeks, IRI reports, and private label shelf-stable sports drink mixes nab a paltry 1 percent of the dollar share.
The dollar share numbers are weak, but to be fair, the category has gained a lot by way of dollar sales. For the 52 weeks ending July 15, 2007, IRI reports that private label drink mixes gained 11.3 percent in dollar sales for the total category. Private label fruit drink mixes increased its dollar sales by 12.0 percent, and though private label shelf-stable sports drink mixes take home only 1 percent of the dollar share, that translates to a 36.5 percent jump in dollar sales for the subcategory.
New Kids on the BlockPrivate label drink mixes may be a small portion of the total category, but they continue to make music in an effort to give branded products a run for their money, and not become a one-hit-wonder for retailers.
“Private labels are getting bigger and bigger,” explains Peter Lowinger, vice president of sales for Elizabeth, N.J.-based Deb-El Foods. “They’re garnering a larger percentage of the total business, and not just in drink mixes, but in many categories. The drink mix category is no different; it’s getting bigger and bigger in the stores.”
In a bid to entice consumers with the siren song of new products, the packaging and convenience aspect of products have undergone an overhaul, and private label drink mixes are seeing a “stick” shift in what’s driving the category. Through the addition of the just-add-to-water drink mix sticks, manufacturers agree that the category can catch those consumers looking for convenience.
“Single-serve sticks are the fastest -growing segment of the business,” says Pat Goldthorpe, director of marketing and consumer services for Associated Brands, Toronto.
Besides convenience, new flavors of drink mixes also are bringing consumers to the category.
“We’ve found that although the traditional [margarita] mixes are going strong, customers do like unique flavors,” says Devon Keane, private label manager for Buda, Texas-based Jardine Foods. “They like something new and different. A flavor like pomegranate, which is getting a lot of press for its anti-oxidant [benefits] and is really in front of the consumer’s face, is something they are really attracted to. Consumers jumped right on the pomegranate when we launched it.”
Sweet MelodyJulie Andrews as Mary Poppins sang that a spoonful of sugar made the medicine go down, which helped her charges change their tune on downing their meds. Adhering to a similar theory, since their dawn onto store shelves, drink mixes have been sweetened with various quantities of sugar to help the liquids go down consumers’ throats. In recent months, however, consumers have tuned their eating habits in response to the national press that obesity has gotten, as well as all of its by-products, such as diabetes and cardiovascular disease. According to the American Diabetes Association, an estimated 14.6 people have been diagnosed with diabetes, and another 6.2 million are unaware they have the disease.
It’s well understood that for those with diabetes sugar is a no-no ingredient in foods and drinks. Much to consumers’ delight, instead of having to give up their favorite sweet foods and drinks completely, various sweeteners have broken onto the sweetener scene, aiding in the process of better-for-you products for diabetic consumers and regular consumers alike. The American Diabetes Association notes that reduced-calorie sweeteners such as erythritol, hydrogenated starch hydrolysates, isomalt, lactitol, maltitol, mannitol, sorbitol and xylitol can replace sugar in most products to make them healthier for consumption. Also, low-calorie sweeteners such as ascelfume potassium, aspartame, saccharin and sucralose are heralded as more favorable options than sugar. Manufacturers and retailers are taking notice of this information, and adjusting products to meet consumer demands.
“Both consumers and retailers are looking for innovation,” says Billie Jo Rice, vice president of marketing services for Sturm Foods, Manawa, Wis. “Consumers are looking for progressive retailers to bring something new to the category. For example, functional and sugar-free drinks continue to drive the category. Sugar blends, or reduced-sugar mixes also continue to be introduced to the category, which we feel will eventually replace 100 percent sugar-containing products.”
“Sugar-free and calorie-reduction products are representing a much bigger slice of the pie due to their extreme growth, and it doesn’t look like it will slow down,” Associated Brands’ Goldthorpe says. “Health and convenience are the mantra of this new century, and this category is shaping up to suit it.”
Rice agrees that health factors will continue to play a part in how the category will continue to rise. “Sugar-free drink mixes will be a lifelong product for consumers who want to maintain a healthy lifestyle. This category will continue to grow with more functional, sugar-free choices for consumers,” Rice notes.
The Price of FameGoing after a bigger piece of the private label drink mix pie, retailers need to keep a careful watch over the pricing of their products, if they want consumers to sing the same tune.
“Unfortunately, sugar prices have gone up over the past couple of years, though they’ve leveled off recently,” says Deb-El’s Lowinger. “But there’s no question that you have to be very sharply priced to make inroads in this business.”
In speaking to those products that imitate national brand offerings, however, consumers are willing to go for a price slightly above their normal range.
“Consumers are ready to pay for convenience and single-serve options in this category,” Goldthorpe says.
“There are shoppers out there looking only to purchase products on price, and there are also consumers willing to pay extra for a specific functional beverage to address their health needs,” Rice says. “With the introduction of functional beverages in this category, new users continue to be attracted to this section of the store.”
And when it comes to drink mixes of the adult beverage kind, price-conscious consumers are even more willing to stretch their vocal cords on prices.
“These are prestige products,” Jardine’s Keane explains. “Our private label customers who are offering it are offering it at a premium price, and getting a very good response to it. So it’s not as price-sensitive [as other private label drink mixes]. People aren’t going for the value brands [in this segment], they’re going for something that looks exclusive, looks unique and is special.”
Growing With the FlowWith so much space above it, private label drink mixes have no option but to grow, grow, grow. But letting their voices be heard will take some work.
“Keep in tune with the growing trends like sugar-free, single-serve and functional beverages,” Rice advises. “The core sugar consumer needs to migrate into the sugar-blend product as it is better for them and yields a higher number of servings. Be sure to refresh your set at least twice a year to stay on trend with new products being introduced. Also, it is very important to cross-merchandise within the store to continue to gain consumer trial and awareness.”
Associated Brands’ Goldthorpe echoes that notion, and adds that collaboration is key. “The drink mix category is dynamic and changing with these new trends. It’s important to review the category several times a year for private label opportunities with partners who understand the category and can provide private label solutions.”
With so much going for it, from new products and innovations to healthier offerings, the private label drink mix category is quickly becoming a perfect duet for consumers and retailers to sing in perfect harmony.