Overall, the refrigerated juice and juice drink category has been on a bit of a downturn during the past year. During the latest 52 weeks ending March 21, dollar sales in the supermarket channel declined 1.5%, to $4.2 billion. Unit sales took a bigger hit, falling 3.3%, according to data from SymphonyIRI Group, a Chicago-based market research firm.
By contrast, the category enjoyed solid dollar sales gains of about 4% in 2007 and 3% in 2008 on flat volume and rising prices. By mid-2009, both prices and volume had begun declining, and with several notable exceptions, that trend appears to have accelerated.
The good news for retailers is that it doesn't look like shoppers are necessarily leaving the category. Instead, purchasing habits are shifting, as many shoppers select higher priced premium brands, and new products displace old ones in an area with limited merchandising space.
“That's what we've been seeing,” said Tony Abbatemarco, operations manager for Middletown, N.J.-based Food Circus Super Market. “Smoothies and superfood drinks, like the Acai, blueberry and cranberry blends, those drinks have expanded.”
Like many supermarkets, Food Circus merchandises these drinks in their produce departments. Abbatemarco noted that some half-gallon sub-categories in the dairy aisle have also been performing well, such as iced teas, lemonade, limeade and fruit punches. But, he said some of the sluggishness with many other carton juice products could be explained by customers opting for one of these premium or superpremium juices in the produce department, rather than a conventional juice from the dairy aisle.
“People who may have gone to their refrigerator over the course of the day to get a glass of orange juice are now going to these superberry drinks,” he said.
Dave Johnson, the assistant manager for Bayview Thriftway in Olympia, Wash., agreed, noting that brands such as Naked and Bolthouse Farms have been becoming more popular. But, he pointed to another trend as well.
“What has surprised me — and maybe it's just this area — but Kombucha is just out of control here,” he said. “If we're out of Kombucha, they start protest lines. It tastes like feet to me, but people think it's the best thing since sliced bread around here.”
The fermented, slightly fizzy beverage is certainly an acquired taste, but its fans claim it has many health benefits, and can help detoxify the body. Johnson said that Bayview began offering Kombucha about eight or nine years ago. Now they offer about 20 varieties, and he said it can be tough to keep product in stock whenever it is put on ad. Most of the buyers tend to be younger shoppers, he added.
The trend does look like it's growing quickly off of a very small base. Unit sales of one Kombucha brand, GT Dave's Synergy, were up more than 100% in the latest 52-weeks, according to SymphonyIRI. The brand netted almost $8 million in sales in the supermarket channel, with 2.4 million units sold.
It is difficult to predict whether a beverage like Kombucha could gain more mainstream traction. But, it's niche popularity helps illustrate some of the challenges that RFG beverage merchandisers have been facing recently. Basically, antioxidants and superfoods have been hot trends for the RFG juice category for years now. However, shoppers can be fickle when selecting products based on these supposed health benefits.
Take pomegranate juice, for example. Pomegranate juice — especially the POM Wonderful brand — has enjoyed a lot of success in the super-premium juice category. But its growth may have peaked. Unit sales slipped more than 15% in the latest 52 weeks, and dollar sales fell 14.7% to $50.1 million for the brand, according to SymphonyIRI. The company's blended fruit juice products performed better, with sales flat at $16.2 million.
There is no concrete evidence that shoppers are swapping one product for another. And, as with any super-premium category, high prices probably forced many shoppers to trade down during the recession. But, Johnson noted that the juice category does go through fads.
“We still carry a Bolthouse acai berry product, which has its loyal customers. We still need to have POM Juice too, but we're not likely to make giant displays of it,” he said. “There's health conscious people concerned with getting antioxidants who will buy it. But, by far, they're dominated now by the smoothie people and the Kombucha people.”
And, while antioxidants are also highlighted prominently on many of these smoothie items, Johnson said there seems to be other motivations for selecting a smoothie over a similar juice product.
“The number one reason I hear is ‘high protein, low sugar,’” he said. “They'll compare grams of protein per serving [with the smoothies]. I haven't really gotten into the mind of the Kombucha shopper.”
The data confirms these observations from Abbatemarco and Johnson.
Unit sales in the RFG Juice and drink smoothies category rose almost 14% during the latest 52 weeks, according to SymphonyIRI Group data. Dollar sales were up 12.6%, to $173.5 million, led by Naked, Bolthouse Farms and Odwalla, the top three brands in the category. The brands are also enjoying success in the vegetable juice category, where dollar sales were up 14.7% to $35.7 million.
And, as Abbatemarco pointed out, several other sub-categories, including refrigerated lemonades, iced teas and fruit punches are also doing well.
RFG lemonades, in particular, have been performing exceptionally well during the past few years. During the latest 52 weeks, unit sales rose more than 22%, and dollar sales rose almost 20%, to reach $268.7 million. Similarly, RFG teas enjoyed a volume sales increase of more than 8%, and a dollar sales increase of 5.8%, to reach $316.8 million.
The larger, $712 million fruit drink category, had more sluggish growth, with dollar sales up 1.5% and unit sales up about 1.3%.
Of course, all of these categories are dwarfed by refrigerated orange juice, which is by far the largest juice category in the dairy aisle, with almost $2.5 billion in annual supermarket sales.
Dollar sales of orange juice fell more than 4% during the latest 52 weeks, which is quite a lot for such a multi-billion dollar category. However, the decline was due primarily to lower prices. According to SymphonyIRI, unit sales actually rose 2.1% during the same period.
It may be another indication that shoppers are becoming more price sensitive with their conventional juice purchases. When cold weather and freezes in Florida this winter caused a significant spike in orange juice futures, producers raised prices 2.1%, to an average of $5.47 per gallon, according to BusinessWeek. Shoppers noticed, and orange juice sales volumes fell 8.6% during the four weeks ending February 20.
