Private Label Buyer

Stir Crazy

August 17, 2009


With the modern consumer’s on-the-go lifestyle and the ubiquity of water bottles these days, drink mixes are evolving beyond a simple flavor and sweetener. Consumers are looking for all the benefits of their favorite ready-to-drink (RTD) beverages, including less/no sugar, unique flavors and functional ingredients. And because many consumers are strapped for cash these days, drink mixes provide an attractive value compared to pricier RTD beverages.

However, the drink mix category’s recent performance hasn’t been as impressive as one might expect. Data from Chicago-based Information Resources Inc. show a dollar sales decline of 0.9 percent and a 1.2 percent unit sales rise for overall drink mixes during the 52 weeks ending May 17. Although dollar sales of private label drink mixes rose 5.0 percent during the same timeframe, unit sales were down 13.5 percent.

According to “Fruit Juice and Juice Drinks - US - January 2009,” a report from Mintel International Group Ltd., Chicago, value is a main driver in the drink mix category, so new product developers should seriously consider creating value-priced powdered versions of their new beverages.

A Different Value

A single-serve RTD beverage offers convenience, but drink mixes offer even greater convenience and value - pocketing a stick pack is easier than carrying a bottle, and drink mixes are less costly than RTD beverages. And despite the underperformance of the category, some companies are seeing consumers turning from RTD beverages to drink mixes.

“People are moving away from the … expensive ready-to-drink fruit drink, juice drink, soda options, and looking for something more in the pennies-per-serving-type opportunity,” says Ken Wegner, president of West Chicago, Ill.-based Jel Sert Co.

Wegner says this isn’t the first time his company has seen consumers flocking toward value - Jel Sert has been in the powdered soft drink business since 1929, right at the beginning of the Great Depression. He notes that Jel Sert - and its powdered soft drink mixes - performed rather well through the Depression.

However, even though the current recession has many consumers reprioritizing and simplifying their lives, people still are making complex demands of their drink mixes. Sugar-free is still important. And functional and nutritional qualities play a bigger role than ever before, with flavor combinations and superfruits abounding in popularity.

Harry Falber, senior vice president of marketing at Manawa, Wis.-based Sturm Foods, says açai is a flavor that was barely known until recently. Now it’s pretty trendy.

“I think part of that comes from [the fact that] we’re looking at foods that deliver good health, as well as good taste,” he says.

Mintel's Global New Products Database (GNPD) points out that “Antioxidant-rich superfruits continue to be popular … with several manufacturers incorporating pomegranate, cranberry, goji and carambola.” GNPD also mentions green tea as another antioxidant-rich ingredient that has been seeing strong growth.

But although exotic fruits and flavors are in demand right now, they’re not the primary driver of the drink mix category. Wegner says the leading drivers of the category are the mainstream flavors such as lemonade- or fruit-based mixes containing cherry, grape or strawberry.

Andrew Rashkow, CEO and president of Wilmette, Ill.-based Imbibe, agrees.

“Typically, you would have a fruit punch, but then, more traditionally, you have lemonade and cherry and grape,” he says. “Right now, we’re doing more things with flavor combinations such as kiwi strawberry [and] cherry pomegranate.”

And Wegner says if an energy booster or antioxidants are thrown into the mix, the consumer reaps further benefits. Added health benefits equal added value for the consumer.

“We are also formulating along the lines of, in some cases, products that have all-natural flavors and that have no artificial coloring in them,” Wegner says.

Wegner puts it very simply: In the end, it’s about following the trends. For example, if other brands start adding omega 3 to their drink mixes, you should do the same with yours.

And getting one’s daily dose of vitamins in a drink mix sure beats popping a pill. Falber says Bayer’s One A Day brand does a good job by offering a complete multivitamin in its drink mixes. Its Women’s2O and Energy Advantage2O drink mixes also come in convenient stick packs.

The Complete Package

Enhancements such as the stick pack show that convenience isn’t limited to the mix itself - packaging also plays a vital role. The traditional drink mix packaging types are the plastic bulk container, the make-a-pitcher packets and the single-serve packets. Newer single-serve packets often come in stick format. For the parent mixing up a jug of iced tea or lemonade for the whole family, buying in bulk makes sense. What doesn’t make sense, though, is the excessive packaging of a bulk container. Wegner says the typical national brand multi-serve plastic container is overpackaged, and store brands can set an example with less packaging. “Somebody should step forward and try to do something that’s good for the environment!” Wegner says.

Sustainability-driving innovations also can drive home the sale. Jel Sert developed a strong improvement on the old school design. According to Wegner, the company’s package exactly matches the 12-quart national brand with 50 percent less packaging - it uses a carton instead of a plastic canister with a cap and tamper-evident plastic band.

And although many people think buying in bulk is more cost-efficient in this shaky economy, consumers still are buying single-serve drink mixes.

“There is greater realized value in bulk,” Rashkow says, “but that value is only realized if you consume a pitcher.”

Right now on the single-serve side, the stick pack is all the rage. It’s portion-controlled, lightweight and uses little material compared to a bottle. And since it’s single-serve, it allows retailers to carton a variety of flavor options for the consumer to try.

To attract customers, packaging also should be a beacon - a bright light drawing people to the shelf. Falber cites the white background on the packaging of Walmart’s Great Value brand revamp as an excellent example. He also mentions one particular retailer that, when it introduced its brand in bright white packaging, probably increased its “illumination” by 30 percent without increasing electric output.

Packaging should never stay the same for a long time, either. Wegner says packaging must remain modern and relevant - it cannot grow stale on the shelf.

“Not that it changes every year so that you lose your identity,” Wegner advises. “But within a certain identity, you need to make tweaks and changes to it from time to time.”

Falber reminds retailers that in the end, customers are taking more than a store’s private label product home. They’re taking home a piece of the store itself.

“It’s the merchant saying, ‘Can I send you [home with] something that I would serve to my family and kids?’” Falber says. He adds that if the answer is yes, “that’s a great private brand.” PLB