Is New Age reaching middle age?
In the beverage aisle, the New Age category -- home of Snapple, SoBe and other tea-juice alternatives to traditional carbonated soft drinks -- has lost some of its youthful edge in recent years. Growth isn't as rapid as it once was, and brands are beginning to mature and behave under the watchful eye of corporate parents.
Manufacturers continue to offer a myriad of new products in this area, and trends in health and wellness seem to bode well for the "functional" aspect of such drinks. Supermarket operators tell SN that growth elsewhere in the beverage aisle -- in energy drinks and bottled water in particular -- remains the big story, and that adding one product in New Age tends to be a matter of moving another out.
That's not necessarily a bad thing. Products that establish a strong brand can weather the rationalizations and grow via extensions or by commanding better prices. Most feel that with the right placement and promotion, New Age can age "gracefully."
"It seems like everybody's trying to come up with the next Snapple in their bathtub," said John Riley, a beverage buyer for Bronx, N.Y.-based Morton Williams Associated Supermarkets. "The [New Age] category reminds me a little bit of the microbrew movement a few years back. You had a lot of new products, some that were very hot. You knew that they weren't all going to make it, but you have to give some a try."
The 10-store chain most recently added Izze, a line of carbonated 100% fruit juices from Izze Beverage Co., Boulder, Colo. Izze's maker, who prefers the term "superpremium soft drink" over New Age, maintains that its product benefits speak to some of the same "good for you" attributes of its competitors, without the added sugar. It's already doing well in health sets at some supermarkets including Kroger-owned King Soopers in the Denver area, as well as in Whole Foods, San Antonio, and other natural food stores, said Greg Stroh, Izze's vice president and co-founder.
"It's very important for us to have a relationship with the traditional grocery store," said Stroh, whose background is in the beer company that bears his family name. "Coming from the beer industry, I know it took supermarkets some time to get out of the mentality that there was just Miller and Budweiser and nothing else. Now, it's clear that they get it. There are customers who like a premium product, like Sam Adams, and are willing to pay for it."
New Age, like energy drinks, grew up in the convenience channel. Having the products cold, convenient and diverse is key to their success, observers said. At Roth's Family Markets, Salem, Ore., a grab-and-go case featuring some New Age drinks along with enhanced waters, energy drinks and boutique sodas is doing particularly well, especially in locations that get traffic from nearby schools, said Tim Jennings, sales and marketing director of the 12-store chain.
"Glaceau water is on fire right now," said Jennings. "It used to be when students didn't buy a Coke or a Pepsi, they'd get a Snapple. Today, they're buying other branded pops, like Jones, enhanced waters or energy drinks."
Red Bull -- the tiny can of taurine, caffeine and ginseng -- continues to lead the charge among energy drinks, despite additional competition. "Everybody's coming out with an energy drink, but it still isn't beating Red Bull," said Eileen Heuser, DSD buyer for Scolari's Food & Drug, Reno, Nev.
According to Jennings of Roth's, Red Bull's distributors are facilitating the change in focus from single cans to multipacks. "They won't offer co-op dollars to me for single-serves, only four-packs," Jennings said.
Piggy Wiggly Carolina Co. of Charleston, S.C., welcomes the change, said Steve Harkins, DSD category manager. "We probably sell as much or more [Red Bull] in the four-packs as the can, and we push that. We want the higher ring."
Red Bull dominates the energy category nationally, accounting for nearly 50% of volume and unit share, according to recent figures from Information Resources Inc., Chicago. Rock Star Energy, which grew unit sales by 126% over the last year according to IRI, is next. Rock Star's 16-ounce package is nearly twice the size of the ubiquitous 8.3-ounce Red Bull, but only recently has the price reflected that.
"They've just raised the price on [Rock Star] to over $2 [it retails for $2.19, vs. Red Bull at $1.99]," said Jennings. "I'm anxious to see what happens to it now."
At Piggly Wiggly, space is the major challenge to growing the alternative drink set, Harkins explained.
"In a chain like ours where our physical size is fairly small relative to other stores, we have limited shelf space," he said. "We only average about eight feet in the gondola for New Age, so we have to be selective about what we display. We track the items that sell the best, and when a new item shows up that looks good, something else has to go. That's just the way it is."
The chain has been more generous about devoting real estate to bottled water, which continues to be the most significant so-called alternative beverage in the supermarket. IRI figures show the bottled water category overall grew volume by 30% over the last year. Included in that category are "enhanced waters" such as Pepsi's fast-growing Propel and Energy Brands' Vitaminwater and Smartwater. Speedo Fitness Water, a joint effort between Fuze Beverage Co. and the activewear maker, hopes to join that set soon, as well as Power Water, a distilled, oxygenated water from Power Water Systems, Toronto, Canada.
"We have Propel in the planogram, and it's doing quite well," said Harkins. "But compared to the movement of the 16.9-oz. Aquafina six-pack, it's just negligible." Water averages 16 to 20 feet of gondola space at Piggly Wiggly. "Three-fourths of my stores also have a full endcap of Aquafina," he said.
One promising trend in the alternative beverage set -- and everywhere else in the supermarket -- is the low-carb movement. Ferolito, Vultaggio & Sons, Lake Success, N.Y., brewers of Arizona teas, has released a line of three No Net-Carb green teas and is accompanying the launch with an on-pack promotion offering consumers a free sweatshirt with the purchase of the "Atkins for Life" diet book.
"Anything that has to do with low carb is hot right now," noted Jennings of Roth's. "We're already having to re-order the Arizona low-carb teas. Consumers don't even have to sample it. They're just buying it.