Keep It Healthful Reduced-Calorie

Reduced-calorie and functional products are a big deal when it comes to the development of new store brand ready-to-drink coffees and teas.

Whether they're guzzled for a morning pick-me-up or sipped for an evening indulgence, ready-to-drink (RTD) coffees and teas are becoming increasingly popular with consumers — and store brand versions are really picking up steam.

Data from Nielsen, New York, show 10.6 percent and 11.8 percent dollar and unit sales increases, respectively, in store brand RTD coffee for the 52 weeks ending June 11 (U.S. food, drug and mass merchandiser stores, including Walmart). During the same timeframe, private label RTD tea saw dollar and unit sales increases of 14.3 percent and 7.9 percent, respectively. (See the table below.)

►Do maintain a healthy image by reducing calories in your store brand RTD teas.

Cut the calories

According to Sarah Theodore, global drinks analyst for research firm Mintel International, 2011 new product trends in RTD tea have remained pretty consistent with those in 2010. "Reduced-calorie" remains the top claim and has accounted for roughly 30 percent of overall introductions so far this year.

"Consumers associate tea with health, and a high calorie count undercuts that image," Theodore notes. "It's one of the most common criticisms of the RTD category, so efforts to reduce calories are an attempt to maintain that better-for-you image."

For example, diet citrus-flavored green tea equivalent to Lipton's offering is particularly popular on the store brand side, notes Andy Dratt, executive vice president of Imbibe, Wilmette, Ill. Retailers such as Batavia, Ill.-based ALDI, Minneapolis-based Supervalu and Pleasanton, Calif.-based Safeway offer such an equivalent in multipacks of single-serve bottles. Dratt says black tea with lemon, too, remains a popular private label choice with consumers.

Retailers also are following the better-for-you trend by adding functional ingredients to their store brand RTD teas, says John Wilson, marketing and sales coordinator with Allen Flavors Inc., Edison, N.J.

"These might be protein, energy or relaxation ingredients," he notes. "Tea flavors and functions are added following the superfruit/antioxidant trend in juices and enhanced waters."

The java jive

Better-for-you also is a big deal on the private label RTD coffee side. Reduction of calories, saturated fats, high-fructose corn syrup and sodium will shape the market for the next decade, says Steve Fay, executive vice president and sales team leader with Roscoe, Ill.-based Berner Food & Beverage.

"I do not believe indulgent products will ever go away, but certainly, there is great emphasis on mitigating the health risks in them," Fay notes, adding that his company has seen "a lot of movement" toward 100-calorie servings in RTD coffee.

Fay adds that some retailers are having success with "unusual seasonal flavors." For example, several retail customers have asked Berner to develop RTD coffee flavors such as pumpkin spice and chocolate mint.

But don't discount traditional taste preferences. Wilson says he is seeing some innovative flavors in the RTD coffee arena, but flavors such as hazelnut and almond have seen a resurgence in popularity.

Fight rising costs

Rising commodity costs have become a real pain on both the store brand and national brand sides of RTD coffee and tea. Some retailers are fighting back by adjusting formulations.

For example, Dratt notes that a number of RTD coffee products contain very little coffee, relying on standardized extracts and flavors to help boost the actual flavor perception.

"From a development standpoint, it's [all about] managing the type and quantity of these core ingredients that you use — and finding ways to supplement them with other ingredients that aren't as subject to commodity-driven price fluctuations," he says.

Packaging is another cost-sensitive area. Many retailers have imitated Starbucks' single-serve Frappucino product by packaging their RTD coffee products in similarly shaped 9.5-ounce glass bottles. Flowever, glass' weight makes shipping an expensive burden.

Fay notes that in about a year, screw-top aluminum bottles — which currently are used by MillerCoors to package Miller brand beer — will be available for packaging store brand beverages. Fay believes the package format will sweep the beverage market in years to come — particularly in the RTD coffee sector.

►Don't just drop your RTD coffee and tea products on the bottom shelf. Merchandise them on end caps with a "switchand- save" message.

"For a low-acid beverage that requires high heat treatment, it is an ideal option," he notes. "It is highly recyclable and has a light shipping weight."

Some retailers also are packaging their RTD coffee products in PET bottles. For example, La Crosse, Wis.-based c-store chain Kwik Trip offers a private brand French vanilla iced cappuccino in a 1-pint PET recyclable bottle.

On the tea side, glass might offer a premium look for more artisan-type offerings. But once again — it can be awfully costly.

Dratt says certain national brands have done a good job creating unique PET packaging that stands out, as The Coca Cola Co. recently did with its carafe-style packaging for Gold Peak RTD teas. It's up to the retailer, however, to determine whether a switch from a glass bottle to a custom-molded PET container makes sense. PGSB

Look What's New

Nature's Touch Chino French Vanilla Iced Cappucino from La Crosse, Wis.-based Kwik Trip is said to be a cool and creamy coffee beverage. The refrigerated product is artificially flavored and retails in a 1-pint PET recyclable bottle.

365 Organic Mango Acai White Tea from Austin, Texas-based Whole Foods Market is said to be made with tea leaves grown in China. The fair-trade product retails in a 16-fl.-oz. PET bottle. The tea's manufacturer donates 1 percent of the product's sales to the Whole Planet Foundation.

Satisfying both thirst and the sweet tooth is Food Lion Southern Sweet Tea from Salisbury, N.C.-based Food Lion. The product retails in a 128-fl.-oz. plastic bottle.

All-natural and gluten-free, Trader Joe's Caffè Latte is an on-the-go product said to be low in fat and sodium. The product retails in a recyclable pack of four 6.5-fl.-oz. cans. Also available in this range is a Caffè Mocha variety.

Source: Mintel's Global New Products Database