JUICED UP

KELLY GATES

As consumers continue to demand healthier food and drink, retailers are seeing a tremendous rise in sales of items in the non-carbonated beverage category.

Nearly every item in the noncarbonated aisle -- from green tea and apple juice to vitamin-packed orange juice drinks and bottled water -- has increased in sales over the past few years and retailers expect this trend to continue for years to come.

Consequently, retailers are offering off-shelf space to promote such items, as well as helping to boost sales by including noncarbonated beverages in weekly ads and circulars. Many are also working with manufacturers to strategically adjust shelf space for top-selling items as sales trends are identified.

Manufacturers, on the other hand, are responding to sales lifts by expanding their product lines to include nutrient-enhanced items and an array of multi-packs to increase the number of choices they offer consumers.

"Consumers today are very health conscious and a lot of them are looking for alternatives to soda and coffee, so they look to noncarbonated beverages," said David Puhan, category manager for Brown & Cole, which is based in Bellingham, Wash.

"But, it's not only the parents or adults who are consuming these products -- they are wanting to give their kids something healthy to drink, too, instead of sodas or other drinks with caffeine. Juice boxes are doing really well right now, but apple juice is the single biggest seller in the juice category at our stores."

According to Puhan, most of the 100% juices in Brown & Cole stores don't typically do as well as other blended juices, like Ocean Spray cranberry blends, which he said might be related to higher price points. As for new entrants into the noncarbonated beverage category, Puhan said several new items -- Gatorade's redesigned sports bottles and Minute Maid Coolers -- are also extremely popular with consumers.

According to the Beverage Marketing Corp. of New York's annual study of U.S. New Age Beverage Market Segments, sales for sports drinks, teas, juices and energy drinks increased consistently each year from 1995 through 2000. (See chart on Page 50.)

"Each of these segments has increased steadily, but energy drinks is the segment that's most recently emerged and we've seen a lot of growth in that area. Red Bull has been very successful, and there are now more new entries like those from Coke and Anheuser-Busch coming into stores, which we expect to see more of this year," said Gary Hemphill, a consultant at Beverage Marketing Corp. "We've seen a continued strength in the water market and when it comes to other items, people are showing a strong willingness to buy nutrient-enhanced beverages like juices, teas and energy drinks. "Another major trend is the influx of multi-packs that have been made available -- the growth of 1 1/2 liter bottles has slowed, and now people want multi-packs with smaller-sized bottles."

With such a demand for nutrient-enhanced drinks, many manufacturers are expanding their product lines to include beverages that deliver functional benefits.

Arizona Iced Tea Co., which is based in Lake Success, Long Island, N.Y., launched a new line of iced teas in response to the overwhelming consumer interest in healthy products. The new prescription or RX-labeled teas include such trendy supplements as ginseng, Kava-Kava and Ginko Biloba, and were created to boost energy, increase power, relieve stress, enhance overall health and improve memory.

"We see consumers moving more toward nutraceuticals and healthy drinks with supplements like herbs and vitamins, so we developed a line of prescription teas that are doing very well so far," said Francie Patton, spokeswoman for Arizona Iced Tea. "We also have green tea and diet green tea that are big sellers for us and exotic flavors like mandarin orange and Asia plum."

Further expanding its line of health-oriented products, the tea manufacturer is working on a new high-potency energy drink that will boost energy, increase stamina and improve overall physical endurance.

Special consumer programs like the Women, Infants and Children -- WIC -- program are helping to boost the sales of noncarbonated beverages in some retail environments. According to some retailers, shoppers who qualify for such programs tend to buy healthier drinks like Sunny Delight and other fruit juices rather than sodas.

"Here in Texas, noncarbonated drinks have picked up in the past few years because there are more people qualifying for our Women, Infants and Children program and because there are a lot of new beverages entering the category that they can choose from," said Lupe Anguiano, buyer for Handy Andy Supermarkets, based in San Antonio. "There are also a lot more health-conscious shoppers today than in the past and they are moving away from carbonated beverages like sodas and into juices and teas, which can have positive health benefits."

Anguiano said Sunny Delight beverage is one of Handy Andy's top-selling noncarbonated items, with sales of this product increasingly significantly after the product became available in a larger "jug" size. "A lot of consumers think it's tastier than some of the sodas on the market and they also feel good about the vitamins it contains."

Aside from juices, teas and energy drinks, many retailers are reporting a major increase in sales of bottled water. Kevin Copper, buyer for Sterk's Super Foods, which is based in Hammond, Ind., said consumers in nearly every demographic group within the store's market are purchasing water from a variety of brands and in a variety of package sizes.

"Our water business continues to amaze us because consumers keep buying more and more of it every year. They're buying every size, too -- everything from a single liter to gallons and multi-pack liters -- and this trend is the same in our low-income stores and high-income stores alike," he said. "Sales have also gone up consistently in the tea category with items like Lipton, Snapple and Arizona Iced Tea selling very well, even in the large containers like Arizona's gallon-size and Nestea's half-gallon."

To help boost sales of water, Copper said Sterk's frequently promotes different brands of bottled water in circulars and provides off-shelf space such as endcap and aisle displays to draw attention to the products. At the front of stores near the checkout, Sterk's stores also place small coolers containing sodas and water from individual beverage manufacturers to reach consumers with single-serving items before they exit the store.

Whether it's juices, teas, water or energy drinks, Beverage Marketing Corp. is predicting a similar increase in sales in all segments in 2001. "We expect to see the biggest growth in energy drinks this year, but the entire noncarbonated category has remained strong for the past few years and should continue to grow as long as consumers maintain their interest in healthy beverages," said Hemphill.