Juice Strange Journey for Juice Brands; Sidebar: Coconut’s Cocktailian Alter Ego (with Brand News)

STRANGE JOURNEY

FOR JUICE BRANDS

DISEASE HURTS SUPPLY, BUT COVID RAISES DEMAND

BY BRAD AVERY

In the throes of pandemic lockdowns and concern over personal health, juice sales – which had been slumping amid the broad consumer rejection of sugar – saw a signifi cant resurgence as demand for immunity and wellness beverages led a return back towards traditional fridge staples like Orange Juice.

Now, a little over two years later, consumers are returning to pre-pandemic routines. Although juice sales may not compare to the 2020 boom, they remain elevated, and health and wellness continue to be top consumer concerns. Data fi rm IRI reported that refrigerated juice sales in MULO plus convenience were up 4.8% to $7.8 billion in the 52-weeks ending June 12. Within that space, orange juice – which makes up around $3.3 billion on its own – grew 1.4%. Top brand Tropicana (sold last year to private equity fi rm PAI Partners) saw sales decline -8.2%. Comparatively, shelf-stable bottled juice was up 5% to $8.1 billion, aseptic juices grew 14.8% to $1.7 billion and canned juices were down -1.6% to $1.3 billion.

But the category has also been impacted heavily by supply shortages – not only due to labor and shipping complications, but also because of a citrus greening epidemic that began long before the pandemic and has been exacerbated by worsening climate change. As well, while pandemic-era functional trends like immunity and focus are continuing to hold, there’s still the question of how long they’ll continue to fuel category expansion.

While the pandemic impacted supply chains across all consumer goods sectors, juice – in particular orange juice – has also had to reckon with worsening citrus agriculture. According to an April 2022 report by Rabobank, the global orange juice market is experiencing its lowest inventory levels in fi ve years, with “diminishing output from Brazil and Florida impacted supply and demand in developed markets.” In both regions, citrus greening has plagued orange trees while unexpected frosts have further devastated crops. The report noted that Florida was on track to produce a record small crop for the 2021-22 season, producing around 41.2 million boxes – down from 52.8 million the year before. Currently, Mexico has served as a lone “bright spot” providing consistent supply.

Brands and consumers are still feeling the impacts of supply disruption in different ways. Florida’s Natural, a co-op owned brand which for decades has marketed its orange juice as being locally sourced and “not from concentrate,” began sourcing concentrate from Mexico earlier this year and reformulated its fl agship drink to be a blended product. An updated label explained the change, noting that the co-op’s harvests are now 70% lower than a decade prior and declaring the harsh truth that “There’s just not enough juice in Florida.” Despite the shift, the brand is still performing; according to IRI, Florida’s Natural’s refrigerated juice sales were up 8.2% year-over-year and its shelf-stable orange juices grew 82.8%.

With Diageo Onboard, RTD Coconut Water Cocktails

On the Rise

The founders of Sunboy, a spiked sparkling coconut water, initially got together slanging fresh coconuts at events and parties in New York. The two hosted parties on the Brooklyn Bridge selling coconuts from a bicycle, eventually growing the enterprise to offer the experience at food and corporate events. But when the pandemic put those events and that hustle to a stop, Luke McKenna and Yair Tygiel were forced to come up with another product: a hard coconut water.

Launched In 2021, Sunboy is not the only hard coconut water or ready-to-drink coconut water cocktail on the market; brands like Osena, CocoVodka/CocoRum, and 100 Coconuts have also launched different versions in the past couple of years. And now, the leading coconut water

The Rabobank report suggested that there are some positive early signs for the 2022-23 growing season, particularly in Brazil where more favorable weather patterns bode well for orange production. Nevertheless, a recovery for Florida “continues to be an uphill battle” due to rising costs.

Matt McLean, founder and CEO of Florida-based Uncle Matt’s Organic, said the supply issues in Florida have greatly impacted the industry. A fourth generation citrus grower, McLean said he made the decision in 2015 to diversify Uncle Matt’s supply chain to source oranges from Texas, California and Mexico in addition to his own farm – which was already facing signifi cant declines from citrus greening.

“We’re watching the citrus industry in Florida really decline rapidly right in front of us,” McLean said.

Outside of citrus, Todd Putman, CMO of juice and smoothie maker Bolthouse Farms, noted that his company’s supply chain is vertically integrated, which has been integral to weathering the slow shipping and labor shortages that have created hurdles over the past year. While he said the freight issue has steadily improved over the past six months, the brand – which produces a wide array of juices including carrot, daily green, berry and orange – has been quick to seize on empty shelf space that has opened up as competitors still struggle to meet fulfi llment demands.

“Without that vertical integration, we’ve seen other competitors in the space not doing nearly as well,” he said. “We’re aggressively sapping up that space.”

Juice on the Table

Despite the supply side challenges, many brands are continuing to see strong demand from consumers for multiserve juice drinks – particularly functional drinks, with immunity chief among category trends. Uncle Matt’s is now one of the fastest growing brands in the category – up 43.1% year-over-year to $18.6 million, per IRI. After the 2020 rush for immunity-rich products, McLean said the company’s vitamin-fortifi ed Plus and Ultimate Immune lines are continuing to be top sellers.

It helps to be attached to a category ripe for innovation: while there was a slight decline in the U.S. coconut water market leading up to 2020, the market is expected to grow at a compound annual growth rate of approximately 22% from 2021 to 2025, according to market research fi rm Technavio. To compete with other hydration beverages, Vita Coco and others have released new fl avors, paving the way for coconut water’s status as a mixer in the U.S., a practice not uncommon among bartenders in Caribbean countries. Other categories are hopping on the trend as well: a new generation of premium spirits like Coconut Cartel and Montauk Rumrunners offer premium rums cut with coconut water or fl avored with coconut.

That momentum, combined with a shift towards premiumization and better-for-you beverages within beverage alcohol, has created strong tailwinds for Sunboy, which uses fermented sugar cane juice as its alcohol base (5% ABV) and is available in four fl avors in 12 oz. cans. Having entered Whole Foods Market in New York shortly after being launched, the company currently ships to 33 states and is in talks with a distributor to enter stores in other regions.

While alcohol marketers are required to tame any health benefi t claims, McKenna said Sunboy is being positioned to tap into coconut water’s reputation as a hydrating, healthy drink.

“When you’re working with alcohol, you need to be really careful about making any kind

maker, Vita Coco, is coming to shelves in 2023 with Vita Coco Spiked, a collaboration with Diageo that will feature Captain Morgan Rum. With former major competitors Zico and O.N.E fading into the background, independent coconut water producers see the spiked version as an opportunity to revive the category and fi nd a canned cocktail niche beyond hard seltzer.

“I don’t think anything’s at COVID levels anymore [in terms of sales], but it’s got a nice foothold in the market, and I think immunity is here to stay at a new level,” McLean said. “It’s fallen off since COVID, but it’s defi nitely still front and center in the mind of the consumer, and I think it’s basically attached to health and wellness. It’s just a functionality of health and wellness. So immunity is always in the mindset of the new customer.”

But as infl ation remains volatile, many retailers may not be looking to overhaul or radically expand their juice sets at the moment. McLean said that, in his conversations with buyers, most retailers have been making little to no adjustments to their juice sets during recent resets, which he attributed to the uncertainty of pricing as well as a lack of labor to actually restock shelves.

“The ones that are willing to make a change, it’s still got to be high quality, it’s got to be stuff that has a functional purpose,” he said.

Meanwhile, Putman offered a more optimistic outlook and suggested that retailers are still taking in new products. He said the brand is currently selling in nine new SKUs of functional juices and smoothies for the fall, including a new energy product that is looking to offer consumers a balanced and nutritious buzz.

According to Putman, premium products are still selling well despite the impact of infl ation on consumers. The calculus: a refi ned preference for taste and nutrition wins out over savings – so long as consumers feel they’re getting more bang for their buck in the form of clean label, function, or just better fl avor. Bolthouse, which closed on its acquisition of HPP brand Evolution Fresh this summer, has seen strong sales growth across its product portfolio – including a 20.1% increase on its core refrigerated juices and smoothies and 4.6% growth of its refrigerated vegetable juices, per IRI. “A really important thing about shelf space is oftentimes there’s an intab of an aisle that’s premium space, and so [retailers] want to see a lot of velocity and a lot of profi tability coming out of that space, which they should,” Putman said. “And so what we see across that taste and nutrition fulcrum, if you will, is consumers wanting more and more value, more and more functionality, and better taste with that functionality.” Nick McCoy, co-founder and managing director of Whipstitch Capital, also suggested that despite the air of an economic recession hanging over the industry, there’s still major signs that consumers are continuing to spend on and stick to healthier habits. Unlike the Great Recession in 2008, low income workers are currently outpacing middle and upper class consumers in wage gains, helping them to maintain certain spending habits and putting more cash back into the economy. As well, he noted that the continued strength of health trends like low sugar – and even the rise of alcohol alternatives – bode well for categories like juice, as long as consumers are continuing to prioritize wellness. “People like managing their health through food and beverage choices,” McCoy said. “There’s this of health claims. But I think consumers already understand coconut water to be healthy, hydrating, low sugar, low calorie, all that kind of stuff. And so we don’t actually need to say any of it,” he said.

For the creators of spiked cocktail line Osena, the idea to craft a coconut RTD was inspired by their experiences working in the apex of the hard seltzer boom. Co-founder Vicente Surraco was an intern at Anheuser Busch InBev’s ZX Accelerator and saw room for a drink that could expand on hard seltzer’s success and also tap into consumer demand for better-foryou drinks. The 5% ABV line, available in four tropical fl avors, uses an alcohol base of naturally fermented coconut water and has zero added sugars. After fast growth in 2020, hard-seltzer is leveling with a focus on premiumization and value over volume, according to drinks data company IWSR. Those indicators, plus the rise of spirit based RTDs, create an opportunity for a spiked coconut water to check multiple boxes for distributors, said Surraco and his partner Chris Allen.

“The base liquid of spiked coconut water is premium by nature,” said Allen. “Consumers are trained to spend $2.50 plus per 12 ounces for coconut water because of these ultra premium natural properties of the liquid.”

Meanwhile, CocoVodka/Rum has taken a spirits-based RTD approach. CEO Mark Convery modeled his canned cocktail, from retail placement all the way down to the front-andcenter coconut branding, after Mike’s Hard Lemonade. The 12 ounce cans also hit at 5% ABV thanks to the vodka or rum base, which are evenly split in sales. The product caught the eye of Tom Cole, senior advisor to the board of Republic National, while in a gas station, and is now carried by the distributor almost nation-

very real cost around health care, like deductibles, which is across the population…. So if you can cut sugar, and you don’t have to go buy insulin, well, that’s a lot of money you saved. So I think there’s a very good economic case for wellness.”

However, in addition to warning about supply challenges, the Rabobank report also threw some cold water on the outlook for continued sales growth, noting that the boost in immunity and Vitamin C rich beverages lingering after the 2020 explosion should be considered temporary “rather than a permanent reversal of the long-term trend of decreasing consumption in developed markets.”

“Aging populations, smaller households, less time spent at home during breakfast hours, and competition from other beverage categories like coffee, tea-based drinks and other juices continue to be powerful drivers that play against orange juice consumption growth,” the report stated.

The report noted that 100% juice volume sales in the U.S. fell by nine basis points from 2016 to 2019 before rebounding seven points in 2020. However, as many consumers began re-emerging into the world, volumes fell by three basis points in 2021.

CANNED JUICE DRINKS

BRAND DOLLAR SALES CHANGE vs YEAR EARLIER

V8 $164,648,762 9.5%

Arizona $143,313,992 3.3%

Mtn Dew $132,925,093 -37.4%

Jumex $119,761,412 26.9%

Sanpellegrino $80,532,658 -5.2% Minute Maid $54,561,533 161.1%

$46,224,096 -5.3%

$26,776,268 9.4%

$20,280,094 43.5%

$19,937,720 9.5%

Ocean Spray $8,440,020 -15.6%

Parrot $7,880,561 -8.2%

Private Label $7,609,925 -12.6%

Bai $5,855,160 -66.9%

El Mexicano $5,470,438 17.5%

Hawaiian Punch $5,409,925 -20.2%

Jarritos $5,265,123 409.1%

De Mi Pais $4,402,395 27.5%

Zevia $4,218,376 93.5%

Country Time $3,679,101 -1.9%

BOTTLED FRUIT DRINKS

BRAND DOLLAR SALES CHANGE vs YEAR EARLIER

Snapple $362,125,783 15.3%

Bai $291,602,528 -3.3%

Hawaiian Punch $230,960,261 13.6%

V8 $190,172,354 -9.4%

Arizona $155,675,521 21.5%

Welchs $129,322,037 7.0%

Minute Maid $126,164,942 11.0%

Private Label $105,173,013 3.9%

Sunny Delight $93,413,382 79.5% Tampico $76,454,895 12.2% Good 2 Grow $74,427,601 16.7%

Kool Aid $66,283,123 6.8%

Hug

Motts $62,599,677 -5.9%

$62,257,501 53.3%

Brisk $40,972,125 9.6%

Bug Juice $40,582,248 29.9% Okf $34,306,196 14.9%

Natures Twist $27,485,361 25.8%

Robinsons $26,023,276 2.2%

Alo $25,924,873 14.3%

SOURCE: IRI, a Chicago-based market research firm-@iriworldwide% 52 Weeks through 8/07/22

But from the brand perspective, juice makers are hoping that consumers who returned to the category during pandemic lockdowns have been reminded of all the things they loved about it in the fi rst place.

“The whole demonization of orange juice and sugar was leading a lot of people away from fruit juice, in particular orange juice,” McLean said. “And I think when COVID came, it was ‘Okay, wait a minute. Vitamin C, antioxidants, Vitamin B – orange juice has all those things.’ So it checked a lot of boxes for people, and they realized, ‘Hey, we need to put that back into our diet.’ And now it’s just one of the things that you really enjoy; orange juice just tastes great. So the products that I think coming out of COVID that actually taste great, and do have a true benefi t around health and wellness, they have a better chance of sticking.” wide, with some presence in Canada. While Convery initially projected younger health conscious consumers as the target market, his customer base is skewing slightly older too. The company is steering its marketing presence into music-focused communities and has an impending partnership announcement with a popular DJ.

All three companies are on the precipice of expansion. CocoVodka completed a $2.1 million debt equity raise two years ago and is planning a $3-4 million raise in the near future to keep up with projected sales. Sunboy raised funds from family and friends to expand this year and launch into new states next year, and McKenna said he is now being approached by investors. Elsewhere, Osena is in the midst of a raise to step up promotion and has recruited several industry veterans, including Adam Lambert of Craft-Union and Liz Einhorn of Experience Three Growth Consulting, as advisors.

Meanwhile, the brands are sooned to be joined by at least one major player, which may not be a bad thing, according to the founders of Osena.

“[Vita Coco Spiked] validates the points that we have been making around spiked functional beverages as a valuable proposition for consumers, but also a place that wholesalers and retailers might want to place their bets,” said Allen. “And for us, I think that begins the process of really carving out what we think is going to be a dominant subcategory of spiked seltzer.”

McKenna agrees, arguing that the marketing dollars behind a larger brand will create an overall draw to the category.

“With these larger brands I think they’re going to spend a lot of money driving people to our category, and we’ll be waiting to welcome them all with open arms and high quality drinks,” he said.

San Diego-based superfood company Sol-ti expanded its SuperShot Line with ENERGY+ SuperShot. The energy shot features 120mg caffeine from raw green coffee beans and is made with ingredients like L-theanine, Vitamin B12 and organic strawberry and lemon. ENERGY+ is available at select retailers nationwide.

Love Beets revamped its packaging for 10 oz. bottles of Organic Beet Juice and Organic Beet Juice with a Hint of Ginger. The new design features bright colors and ingredients images. Both juice varieties are available online for $30 per 6-pack.

Minneapolis-based functional beverage company So Good So You has bottled happiness with their newest blend, “Happy.” The organic blood orange guava cold-pressed juice shot is powered by ashwagandha, saffron and Vitamin D. The juice shot is available at retailers such as Stop & Shop, Shaws and Target.

Garden of Flavor has launched in the Whole Foods Northeast region, and its garden is now growing in the Big Apple! The brand also just released its Tart Cherry SeaBuckthorn Energy Elixir infused with Trace Minerals and Probiotic Cultures, our Cold-Pressed Tomato Tonic with Probiotic Cultures and Squeezin’ Greetings.

With five fun and functional flavors available in all 50 states, Me & The Bees all-natural, ready-to-drink lemonades are now sold at Giant Eagle, expanding the brand’s presence in the mighty Midwest and marvelous Mid-Atlantic regions and putting the company’s distribution points to over 6,000 from coast to coast. The shelf-stable lemonades are free from high fructose corn syrup, preservatives and additives. They feature U.S. Grade-A honey, lemon juice and flaxseed. Seoul Juice – the first Korean pear juice in the United States – has been picked up by Pete’s Fresh Market and Fresh Farms in Chicago. The drink is made with just three ingredients and contains over 400mg of potassium per 16.9 oz bottle. The drink is also available online for $26.89 per 6-pack.

Coconut water brand Vita Coco is transporting your tastebuds to the tropics with the launch of its boldest-flavored coconut water yet. The new drink is offered in two flavors, Coconut Juice with Pulp and Coconut Juice with Mango. Both flavors are available for purchase online for $24.99 per 12-pack.

Monster went down under for Aussie Style Lemonade, the latest addition to its Juice Monster energy drinks. Rolling out to convenience and grocery stores nationwide this month, this “twist on classic lemonade” is made with real juice and “Monster’s unique energy blend,” the company said. Each 16 oz. can packs 160mg of caffeine. Monster Aussie Style Lemonade is available on Amazon for $52.56 per 24-pack.

Organic juice maker Uncle Matt’s debuted Matt50, a function-forward orange juice that contains “half the sugar and calories as regular OJ” and is boosted with 100% DV Vitamin C, plus prebiotics and probiotics. Matt50 is available in 52 oz. bottles for $6.49 at Whole Foods Market and Sprouts Farmers Market stores nationwide.

Florida-based juice maker Natalie’s Orchid Island Juice Co. launched two new lemonades, Mango Lemonade and Guava Lemonade, in 16 oz. and 64 oz. sizes.