Despite competition from discount outlets and price clubs, supermarkets are holding their own in the beverage category.
Carbonated soft drinks are by far the leader in the supermarket beverage aisle, with $11.8 billion in sales for the period ended Sept. 13, 1998, a 3.7% increase over last year, according to Information Resources, Chicago. During this period, over 7.6 billion units (including bottles, cans and multipacks) of soft drinks were sold, a 0.9% increase over the previous period.
Carbonated soft drinks had almost twice the sales of beer and ale, which add up to $5.6 billion, for an increase of 2.3% in the same period. Coffee had the next-highest sales: $3.3 billion -- a 1.9% increase.
During this same period single-serve bottled juices had $2.9 billion in sales, jumping 5.7%. Bottled water rang up $1.1 billion in sales, a hefty 13.9% increase over the same period in 1997.
Ringing in at under a billion dollars in sales were the categories of single-serve canned juices, isotonic beverages, tea and aseptic juices.
Single-serve canned juices had $723.7 million in sales, a decrease of 6%; isotonic beverages had $624.5 million in sales, representing a significant increase of 11.8% over last year, and a 7.5% increase in units sold.
Sales of tea bags and loose tea rose 1.3% over last year, with $599.3 in sales. Units decreased 1.6% from the previous period.
Aseptic juices brought in a $580.7 million in sales, a 5.1% increase over last year. Ready-to-drink tea increased 5.1% to $406 million, for a 5.9% jump in unit sales.
According to Gary Hemphill, vice president of Beverage Marketing Corp., New York, the soft drink category is growing more slowly in supermarkets than in other channels. "Supermarkets are now getting more competition than ever from other retail outlets," he said. Additionally, the market is reflecting shifting consumer tastes, with an influx of new products, he said. Brand extensions from soft drink category leaders are seen on the shelf, alongside brands from new, smaller companies. According to Hemphill, some of the strongest new products today include bottled and canned coffees, sparkling waters, premium sodas, premium bottled waters, isotonics (sports drinks), bottled teas, and single-serve fruit drinks.
Nonetheless, there is a significant decline in new product introductions, compared with last year, according to Marketing Intelligence, Naples, N.Y. For the period ended Sept. 30, 1997, fruit and fruit-flavored beverages saw 371 new product introductions, but there were only 113 for the same time period in 1998. The tea category saw 322 new products in 1997 and only 86 in 1998.
In the health drink category, only 18 new stockkeeping units made it to retailer shelves in 1998, as opposed to 53 last year. Nineteen new isotonics were introduced, down from 43 last year; 58 new milk, nondairy and yogurt drinks came on board, while the same time period last year had an impressive 207.
In the beer and ale category, new products dropped from 149 last year to only 90 in 1998, while wine and wine coolers plummeted from 230 in 1997 to 92 thus far in 1998.
While consumer tastes are moving in a more health-conscious direction, this preference is not reflected in sales of diet sodas, which have been slowing steadily over the past several years, with market share declining from 29.8% percent in 1990 to 22.9% last year. One theory is that much of the decline is due to the surge in bottled water sales, which leads the beverage industry in terms of category growth. While overall industry sales were $1.1 billion in 1984, they reached $3.9 billion in 1997.
Water has gone well beyond the simple offerings of still or sparkling. "The water segment is huge right now," said David Thorpe, grocery manager for Food Markets Northwest, Seattle. "The newest things in water are electrolytes and artesian water. An extremely popular product for us right now is Trinity, an artesian water advertised to be from the deepest well known to man."
"Flavored waters are also doing well," he continued, "And they seem to be taking some business away from traditional colas.
Baby boomers, conscious of any health benefits offered by the beverages they drink, are gravitating toward choices like Santa Cruz organic juices or Blue Sky natural sodas. "Natural, organic and transitional juices are great sellers," Thorpe noted.
According to Arthur Von Weisburger, a consultant for the bottled water industry, there is a constant stream of new entries into the market.
"A lot of creativity goes into the new products that are coming out," he continued. "There are more price wars now, and a lot of movement in the $1.09 to $1.59 range."
Despite overall growth, new products also declined in this category, with 84 SKUs being introduced through the end of September of this year, compared with 192 for the same time period in 1997.
Dollars are being taken out of advertising and marketing promotions and are instead being funneled into strictly price promotions. As a direct result brands are losing consumer equity. These days, people are buying products, not brands," said Jon Kramer of the J. Brown/LMC Group in Stamford, Conn.