Participants in Beverage Industry’s ingredient supplier roundtable had much to say about product development and trends, particularly in functional and nutritional beverages. Like many in the industry, these ingredient specialists have observed the trend toward “healthier” beverages that provide benefits such as heart health, weight management and energy through nutrients, antioxidants and vitamins. But with all these “extras,” consumers still want products with flavor that tastes top of the line. Authentic and ethnic flavors such as exotic fruit and floral tastes continue to be a driving purchase factor.

This year’s panel included: Pam Stauffer, marketing programs manager at Cargill Health and Food Technologies, Minneapolis; Debby Poskanzer, senior manager, consumer insights, and Erik Donhowe, director, beverage applications, at Wild Flavors, Erlanger, Ky.; Diane Hnat, senior marketing manager, DSM Nutritional Products Inc., Parsippany, N.J.; and Maureen Draganchuk, vice president, business development, and Anton Angelich, group vice president, marketing, at Virginia Dare, Brooklyn, N.Y.

Q: What are the most important beverage trends you have observed in 2005?

Pam Stauffer: Consumers continue to address health concerns with fortified beverages.  Nutritional beverages are becoming more customized by designing health for specific use-occasion, health concern and age demographics.

Debby Poskanzer and Erik Donhowe: We have to mention the flurry of activity in diet drinks across so many categories (soft drinks, energy drinks, as well as lower calorie fruit drinks and dairy drinks for kids). Functional beverages continue to be on a big up-swing, because consumers are really interested in wellness and want to address health concerns. This will continue, because the baby-boomers are getting older and they represent a quarter of the nation’s population. There has also been an extension of high growth rates of RTD coffee into 2005. 

The extreme popularity of energy drinks has resulted in continuing high growth rates. We have seen an extension due to a broadening of the energy drink category into more diverse flavors, and energy drinks into other categories such as enhanced waters.

The media has been reporting a decline in low-carb as a trend, and sustainable diet.  However, in the beverage arena, most of the low-cal offerings are also, naturally low in carbs, so the declining trend may not be true. These beverages just aren’t being ‘marketed’ as low-carb. Where we do see a decline is with the 100-percent juice category.  Parents are looking for lower calorie ‘healthy’ options for their children. 

Diane Hnat: ‘One Upping’ on energy drinks is still in vogue. Besides the name and the packaging, a few new ingredients are hitting the beverage scene such as CoQ10 and EGCG, for example.

Although some of the beverage marketers are not focused on using GRAS ingredients there are definitely new ingredient entries with new purported health benefit promises being introduced every day. Watch for olive leaf extract for joint health very soon.

Also milk drinks continue to be innovative. With 26 states having introduced legislation in 2005 to curtail unhealthy snack vending sales in schools, milk is a natural entry because it’s already healthy. Marketers are making it ‘healthier’ with higher percent daily values of B vitamins and vitamin E particularly. Strict no-carb/low-carb products have dwindled. Fortified smoothies are increasingly popular, especially with prebiotics.

‘Beauty from within’ is a growing trend … or call it cosmeceuticals. The vitamin E, biotin and pantothenol in your shampoo and lotion translate to a spectacular low-calorie water beverage with vitamin E, biotin and pantothenate, at the very least. There is a great interest in skin health with boomer women, also wishing they could see borage or evening primrose in those beverages too. In supplements, these are linked to skin health.

Maureen Draganchuk: Some of the top growing trends include an increased focus for improved nutrition through the use of added vitamins and minerals, reduced ‘sugar calories,’ a larger number of fruit- and vegetable-based drinks and more flavored milks/ soymilks/smoothies. Tea-based beverages also continue to grow such as red, white and green teas with new interest in Matcha and Kombucha teas, as well as juice teas, tea sodas and nectar teas. The industry is also seeing an increased number of ‘un’ sweet tea varieties and not just diet products. Additionally, there are more flavored waters and more alcoholic beverages with many unique flavor profiles to choose from.

Q: What issues are product developers dealing with this year?

Pam Stauffer: Product developers in the beverage industry address formulation issues associated with incorporating health promoting ingredients into beverages.  Cargill Health & Food Technologies offers a host of ingredients that are easy to incorporate into beverages without negatively affecting taste and texture – such as Prolisse soy protein isolate, Oliggo-Fiber inulin, CoroWise plant sterols and OptaFlex chondroitin.

Debby Poskanzer and Erik Donhowe: Of course the sucralose shortage was a challenge, but beyond that, we believe beverage developers are still learning how to fortify and formulate with functional ingredients. This requires a great deal of complexity and developers will need to work very closely with suppliers to avoid negative interactions, color changes, processing issues, and off-notes in their products. Additionally, functional beverages have more complex requirements for batching and scale-up (from concept to production run), and they require extensive product stability testing. 

Diane Hnat: Product developers want to put more oily-based nutrients in beverages but continue to search for stable dispersible non-ringine forms. Emulsions are the best bet from carotenoids to omega-3 long-chain fatty acids. Wild Flavors and Blue Pacific have some outstanding ingredients, as far as utilizing their technologies to incorporate such nutrients.

Maureen Draganchuk: Product developers still face the continued challenge of making lower-calorie beverages taste like full-calorie counterparts. Making beverages taste and appear as if they contain dairy also is challenging. Many processors cannot use dairy materials in their plants and don’t want to use dairy because of allergen concerns.

Developers are also challenged with making highly fortified meal replacement beverages taste like a non-fortified counterparts, too. For example, making an Ensure-type product taste like a Starbucks Frappuccino and with minimal cost is a great endeavor. Clients are also asking for their artificially sweetened beverages to taste as if they were sugar sweetened. The industry has come a long way, but demands are even higher in this area.

Additionally, consumers want more naturally colored beverages, which create the challenge of matching artificially colored beverages with natural colors (many of which do not exist yet) and with the same degree of stability. Continually generating new flavor ideas and profiles that will be both authentic to the normal consumer and still be acceptable to other markets is always in the top of most developers’ minds. A good example is a true mango profile for the Latin market that will be acceptable to all other consumers.

Q: In what product category are you seeing the most innovation? Please give examples?

Pam Stauffer: The industry is doing a good job of reducing calories while maintaining great taste in beverage applications.

Debby Poskanzer and Erik Donhowe: We have to acknowledge the yogurt drink and smoothie category. What an overwhelming amount of fun, new, healthy product choices and flavors have been introduced from GoGurt to Dannon Light & Fit Smoothies, Stoneyfield Juice Smoothies, the Nouriche products, and DanActive.  

Another very innovative beverage category is the recent interest in functional alcohol beverages, in particular the energy alcohol drinks. These require the same complexity as non-alcohol energy drinks, with the added regulatory restrictions imposed by the Alcohol and Tobacco Tax Bureau.  

We’d really like to see some of this innovation in the hot beverage categories. Other than Starbuck’s Chantico, we haven’t seen many attempts at anything exciting.

Anton Angelich: There is noticeable innovation in the beverage industry in the area of sweetener systems. Product developers are requiring taste solutions that bring non-caloric sweeteners closer in taste to sugar.

Also with the proliferation of consumer interest in natural and organic products, we are seeing more and more products in the marketplace. Along with this, there is greater competition amongst products, and greater taste expectations. In the past, many wellness  products would be accepted for their health benefits. Today, they must have more than that. They must taste good, and must be appeal to a wider consumer audience.

Q: Looking into the future, what trends and/or concerns do you see on the horizon?

Pam Stauffer: Consumer demand for healthier, great-tasting convenient products continues to grow. Manufacturers need to address health concerns that are most relevant to today’s consumers such as heart health, joint health, bone health, weight management and diabetes.

Debby Poskanzer and Erik Donhowe: We definitely expect continued growth in functional foods and beverages. Along with this, we see a lot in individual specificity – anything from gender-based drinks, ailment-specific drinks, the burgeoning area of nutigenomics, etc. It seems that authenticity, is something that consumers are also starting to desire such as authentic Hispanic/Latin flavors true to character, with the ‘right’ impact and sweetness, or exotic fruit and floral notes that are authentic and identifiable. 

Diane Hnat: As some of the HealthFocus/DSM Nutritional Product Inc. customized consumer research showed in 2003, a growing trend will be ‘gut’ or glycemic index health. People aren’t hesitant to talk about it anymore. As yogurts morph into more drink and smoothie offerings, ‘active cultures’ are expected. Ingredient suppliers need to provide stable versions, second-generation probiotics, if you will. As well, smoothies and yogurt drinks are showcasing prebiotics and soluble fiber magnificently. 

Anton Angelich: The part that beverages play as an integral part of daily food intake requirements/recommendations will be a major influence on the industry in the future.  New beverage products that fit within school nutrition programs and meet the consumer’s interest in fiber and whole grains will continue to develop and evolve. As more and more scientific information about the nutritional benefits and risks (and often contradictory information) about various ingredients and products reach the consumer via the media, a situation of “consumer-hyper-information- nutrition-download” will prevail. The constantly changing information on what is good for you and what is not – will create confusion, misinformation and uncertainty in purchase intent. BI