As people pay greater attention to what they’re consuming, the desire for products that yield a positive impact on both mind and body is growing.
In the AACS State of Industry Half Year Report 2022, it was reported that functional drinks was the fastest growing category within packaged beverages, growing an impressive 12 per cent.
Jake George, Australian Sales Manager at Ārepa, said they’ve noticed that more and more people are making conscious choices when it comes to their beverage selections.
“Consumers are taking the time to research exactly what they are drinking and the benefits the beverage will provide them. Convenience shoppers are increasingly looking for healthy alternatives to the traditional beverages we associate with P&C. As a company, we’ve worked to make the science and research behind our products readily accessible, so consumers have the ability to educate themselves and make informed decisions at the point of purchase.”
Kristian Johannsen, Managing Director and Founder of Bobby, a company that produces healthy ‘unconventional’ soft drinks, agrees that within the functional beverage category there is a consumer expectation that products must embrace a holistic approach and deliver goods that genuinely fulfil ‘better for you’ brand promises.
“Major players in the food and beverage space have got away with buzzwords and asterisks for far too long, consumers are now more educated than ever and can recognise when big brands are trying to health wash products.”
Johannsen believes that moving forward we can expect to see changes in governance around health benefit claims, more sustainable business practices, and an increase in demand for natural ingredient-based products.
James Noakesmith, Brand Manager ANZ of Shine+, agrees that in recent years the pandemic has affected the whole world in numerous ways.
“New work environments have been established, health and immunity have been a household topic driven by the uncertainty stemming from multiple lockdowns, positive case numbers and much more.”
A shift in thinking
Discussing the changes in society from the impact of Covid, Noakesmith believes that this shift has influenced the way individuals value convenience.
“Although the pandemic created physical boundaries, it at the same time created new opportunities for individuals to engage with their local communities like never before. P&C, which was traditionally an impulse interaction, has begun shifting towards a consumer destination for dry goods, meals, snacks, fresh produce, and Shine+ of course.”
Noakesmith continues that P&C is an incredibly influential channel in the functional beverages category and for Shine+.
“It plays a significant role in helping people think, feel, and do better at scale. P&C is at the roots of Shine’s shift from what was in the early days an initial focus on independents to ‘BigCo’. Through independents and e-commerce, Shine+ built brand loyalty, velocity, and proof of concept, which later provided the strong data that administered our first national ranging.”
Santino Luciano, General Manager of Sales and Marketing at Remedy, said both P&C and independent grocery play an important role for Remedy as it looks to continue to convert new drinkers to its range of better-for-you drinks.
“P&C plays a huge role in capturing people on-the-go during key beverage consumption moments to encourage trial, making it a key channel in our drive to make Remedy more accessible to more consumers. We know our P&C retailers are also very focused on increasing their range of healthier options. We believe we can convert a lot more people to choose a Remedy over another fizzy drink filled with sugar or artificial ingredients.”
The channel, along with independent grocery, has allowed Ārepa the opportunity to reach an entirely new customer base.
“Typically, customers who shop via these channels are on the go and are looking for specific products to suit an immediate need. By having our product readily available in these channels, especially as Ārepa’s brand presence grows across the country, consumers will have easy access to a scientifically backed, healthy brain food when they need a boost in their mental performance,” explains George.
While for Johannsen, the P&C and independent grocery channels form a vital part of Bobby’s growth strategy and are key in enabling them to access on the go customers.
“As we’re just starting out, ‘number of doors’ is a vital metric for us and the initial support we’ve received from these channels has been overwhelming.
“We currently have a mix of data from independent grocery and multi-site P&C retail partners for our current range, which show Cola as the most popular flavour; with that said, we’re primarily seeing an even spread of sales across our core range, which is really pleasing.”
As businesses realise the growth potential within the category, an increasing number of players are entering, and George says that the category is becoming more saturated with new products.
“The challenge we face is making our product known and front of mind when consumers are purchasing such beverages, particularly if they don’t often delve into these beverage categories. To further uphold integrity and legitimacy of our products, we are conducting more clinical studies across Australia and New Zealand.”
Lisa Schilling-Thomson, National Sales Manager at Halo Food Co, producer of Tonik protein-based RTDs, said the brand is launching in both EG Australia and OTR later this year, while it already has new ranging in 7-Eleven, as well as independents.
“Independents offer a new brand like Tonik the opportunity to be introduced to their customers from a ground level, enabling organic growth without the massive capital investment required by the majors.”
Innovate and elevate
Staying ahead of the game in a fast-growing category is incredibly important, and Level Beverages is doing just that with its latest innovation – Level Lemonade and Cola.
Chrish Graebner, Founder of Level Beverages, said the new drink is low in sugar, high in vitamin C and Magnesium, and tastes just like a soft drink.
“Cola is the largest flavour segment in carbonated soft drinks. But the real last innovation in that area, attracting the mainstream appeal, was low sugar – but that was about 30 years ago. In many channels, the low sugar Cola versions outsell the normal sugar versions.”
Graebner said that when blending the new flavour, they’ve created a ‘functional Cola’, and the amount of vitamin C and Magnesium means it is a formulated supplementary sports drink.
For Shine+, its latest innovation is the Shine+ Charged 500ml cans, which come in five flavours: Wild Tropical, Grape, Blood Orange, Mixed Berry, and Yuzu Lemonade. The initial launch of the Shine+ Charged range saw Grape sold exclusively in 7-Eleven nationwide for a short time, and Mixed Berry into Ampol sites across Australia.
“Early signs of positive velocity regardless of Shine+ being on or off-promo proved the ranges feasibility to ‘stick’. The standouts among the Charged range to date, have been Grape and Mixed Berry, which are among some of the top sellers in the overall energy category right now.
Shine+ made the decision to be shelved within the energy space, which Noakesmith said has been pivotal to awareness and building brand loyalty.
“Shine+ has prioritised physical positioning within the energy space, firstly to ensure that we are playing within the space that is most relevant to the solution that we are solving, but more importantly, to educate the energy/functional beverage consumer that there is not only a better substitute for bad energy that will help you think, feel, and do better but one that tastes amazing without the compromise on health.”
The emergence of a better-for-you segment within energy is a trend that Remedy has also identified and Luciano there are major and new energy players bringing innovation this space, including Remedy.
“The opportunity in this space can be seen in the data for our Remedy Shots performance in P&C, where our energy SKU leads the way versus Immune+ performing best in grocery.
“We have also just launched Remedy K!CK, a tasty all-natural, no sugar, energy drink that delivers a caffeine kick without the sugar crash. Remedy K!Ck is designed to appeal to those who are looking for a mental boost but would prefer to avoid drinks full of sugar and artificial ingredients. We are super excited for this launch and its potential to expand, led by P&C and independent grocery.”
Ārepa recently launched Ārepa Brain Shot for Protection to the Australian market for the first time, sold exclusively in Woolworths.
“The shot features Ārepa’s patented formulation of Neuroberry blackcurrant juice with the addition of a new superpower ingredient, Bacopa Ayurvedic herb, Bacopa is clinically proven to have properties that positively impact cognition and memory, as well as having neuroprotective effects through its antioxidant and anti-inflammatory mechanism,” explained George.
Schilling-Thomson said that functional beverages have evolved over the past six years as key ingredients change constantly.
“This provides innovation to the category when range reviews come around, but is it innovation that keeps your customers coming into sites and repeat purchasing? Generally, not. What consumers are looking for are great tasting products, with key functional ‘clean’ ingredients that really are a step to living a better, healthier life.”
This article was written for the October/November issue of C&I Retailing magazine.
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