Special edition: Drinks ingredients

Niches make the beverage world go round

By Jess Halliday

- Last updated on GMT

Related tags Coca-cola Euromonitor international

Pepsi, Coca Cola, Snapple, Dr Pepper, Gatorade. Big beverage brands are household names, but while they may make up the lion’s share of revenues niche products are where the growth potential and innovation lies.

Last month market researcher Euromonitor International observed that the battle for new business in the saturated European and North American beverage market has turned to niche brands. It sees low overall growth as a long term reality.

Richard Haffner, the Euromonitor head of non-alcoholic beverages research, told BeveragDaily.com that the packaged drinks market in Europe and North America is now strictly share game.

Relying on brand awareness is no longer enough. To achieve sales growth companies have to segment markets in new ways and blend across categories creating products like fizzy milk. They need to be in touch with changing consumer tastes more than ever before in order to think of new product concepts and ideas to persuade customers to buy their products.

Other industry experts have made similar observations. Last year the Beverage Trends: Culinary Trend Mapping Report, put together by the Center for Culinary Development in the US and Packaged Facts, found significant market potential in niche products tailored to certain demographics – be they teens, savvy parents, or active baby boomers.

Testing innovation

No right minded beverage brand owner would take a chance by changing the recipe of its major money spinners these days.

Rather, they are more likely to try new spins on old favourites as brand extensions. Like Vanilla Coke before it, Black Cherry Coke, for instance, can stimulate sales by catering to Coke users’ quest for novelty; Coke Zero, meanwhile, leverages a well-known brand to reel in consumers with a specific need or demand.

In markets where stevia-derived sweeteners are already permitted, such as the US, Australia and New Zealand, and France, brand-owners are not taking chances with their major brands. Since stevia, although sweet, has a taste profile all of its own, the industry realises there is a need for consumers to get to know – and accept – the taste. This means they have been dipping their toes with niche brands, rather than taking the plunge with major brands and risking mass rejection.

One taste does not fit all

Frequent travellers will be more than aware that a familiar brand may not be the same in every country of the world, as formulations are tweaked to appeal to taste preferences of a given population.

Fanta is a prime example of this – and its tendency to take on a local spin has an intriguing history. During World War II, trading bans meant Coca Cola in Nazi Germany could not get hold of the syrup needed to make regular Coke, so they developed a whole new drink using locally available ingredients. The name sprang from a brainstorming session, where boss Max Keith asked his team to use their imagination, or ‘Fantasie’ in German.

Related topics Market Trends

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No niches, no markets

Posted by Fred @ savorique.com,

All most successful businesses started pitching a niche audience. Take Apple.

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Everything starts as a niche...

Posted by Danny Rubenstein,

Having been an innovator in the beverage industry since 1985, starting as a partner in Naked Juice, and then with my strategic involvement with Odwalla, Tazo Tea, Numi Tea, POM Wonderful and One Natural Experience, I can only say that identifying the niches and then separating trends from fads is where the growth will come from.

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