100119_FD_Issue 176

functionaldrinks zenithinternational newsletter This issue at a glance...

Page five Replenish beauty with new drink

Page five Energy shot with Brazilian roots

Pages six and seven Relaxation drinks in the spotlight

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19 January 2010

energy drinks

United States

Offers help expand distribution reach The Masters of Beverages LLC has announced the future launch of its flagship energy drink Spider Energy across the southern US. Spider Energy is a unique orange-citrus flavoured energy drink and is described by the company as tasting like a lightly carbonated soda with a bite. The drink features slightly higher levels of caffeine and B vitamins than traditional energy drinks which, along with its unique flavour, sets it apart from other offerings.

Page four Conveniently cleansing drink

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Although its target market is composed mainly of males aged 18 to 34, the company has found that other 'nontraditional' energy drink consumers are switching from drinking regular soda to Spider Energy due to its taste.

Nonetheless, the company is marketing the energy drink in the music, sports and auto racing markets. To further promote Spider Energy in these markets, the company has its own blog, www.getbitstaylit.com, where it communities its presence at a wide range of events.

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As part of its efforts to secure wide distribution in time for the drink's launch, the company is offering retailers an introductory deal where for each case bought, the second is free.This is coupled with a promotion for the end consumer where Spider Energy can be bought for only US$0.99 for the first 60 days that the drink is first stocked. Founder Pete Algarin stated, "I'd rather offer the retailer a great introductory offer and have them offer a great deal to the consumer than spend a ridiculous amount of money on advertising and only hope that the consumer will pick up the product.We look at it this way; if the consumer knowingly gets a great introductory offer in these economic times they are more likely to try our product.

Once they taste Spider Energy they will no doubt come back as we are confident we have provided them with the best tasting product possible."

Spider Energy is already available in select stores in Southern California and Nashville, Tennessee, where it is being test-marketed, and will be available in convenience stores in the rest of California and Tennessee, Arizona, Nevada, Colorado and Atlanta, Georgia, from the first quarter of 2010.

A sugar free variant will accompany the existing Spider Energy in the near future.

Even though Spider Energy has not been officially launched, the company has commenced test-marketing the beverage to gauge consumer reaction and acceptance. So far, Spider Energy has been selling very well with sales coming

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from new and repeat purchases.

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Each 16oz can will retail for US$1.99, or two for US$3, with retailers having the ability to price in multiples.

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functionaldrinks zenithinternational newsletter Page 2 Issue 176 19 January 2010

editorial comment Welcome to the 176th issue of functionaldrinks and the first one for this year. Amidst one of the worst winters experienced in the northern hemisphere, beverage producers have not let the harsh weather stall their plans and just two weeks into the year, it seems that activity in the functional drinks arena is beginning to warm up.

In this issue we look at some of the latest drinks, particularly from the US, where it seems companies are in very good spirits and cannot wait to get back on track. Firstly, we cover The Masters of Beverages' premier launch in the form of an energy drink with a bite (see Page 1).Also entering the energy drink sector is Açaí Roots with an energy shot naturally full of nutrients (see Page 5).

Meanwhile in Spain, Coca-Cola España has added a third variant to its successful Burn range of energy drinks, with what is viewed as a first for the country (see Page 2).We also cover the latest development from another well established energy drink player, this time in France, Karlsbraü France with a small yet potent energy shot (see Page 4).

Nearby in Switzerland, we cover the launch of a novel drink by retailer Migros that promises not to damage teeth and to even improve dental health (see Page 3). And for those who are on the lookout for the latest skin health products, we see a range of cosmeceuticals by Thai beverage producer Sapanan General Food Co. (see Page 5).

Back in the US, we feature a liquid supplement recently introduced by Vemma Nutrition Company, specifically designed for children's health and parents' peace of mind (see Page 3).

Finally, we also look at Simplifast's very timely take on one of the most common new year's resolutions (see Page 4).

Happy 2010!

Cecilia Martínez-Núñez Deputy Editor cmartinez@zenithinternational.com

energy drinks

Spain

New daytime dimension for young consumers A year on from its launch of a daytime specific energy drink, Coca-Cola España has now introduced a brand extension that is considered to be a first in Europe.

this gives the drink a distinct flavour and further sets it apart from other offerings.

Burn with juice is targeted at a younger audience as an alternative to traditional energy drinks for consumption during the day. According to Senior Brand Manager, Beatriz Osuna, around 60% of consumption occasions for energy drinks are during the day, hence the company's decision to continue innovating in this area.

As with the original Burn Day variant, the juice-based Burn is also packaged in a white can to contrast with its Night counterpart.The new Burn is available in 250ml cans that can be purchased through supermarkets and petrol stations.

The new Burn Day variant is made with juice and, as such, is reportedly the first such energy drink to be available in Spain, and indeed in the rest of continental Europe.The new Burn is fruits of the forest flavoured and contains 20% fruit juice as well as 37.5% less caffeine than the regular Burn Day. According to the company,

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The Burn brand is said to account for 20% of the Spanish energy drinks market. www.burn.es X

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functionaldrinks zenithinternational newsletter Page 3 Issue 176 19 January 2010

wellness beverages

Switzerland

Tooth-friendly functionality

Acids are typically added to soft drinks to prevent the growth of bacteria and to ensure beverages' stability. However, these acids have a knock-on effect on teeth and promote their demineralisation and erosion. To get around this issue, Bischofszell chose a specific bottling process and combined this with isomaltulose to ensure the drink's stability and eliminate the need for acids.

Swiss supermarket Migros has recently introduced an innovative tooth-friendly beverage boasting the Tooth Friendly label.

The tea-based drink is produced by Bischofszell Produits Alimentaire, a subsidiary of the Swiss retailer, and is flavoured with honey and orange as well as being acid-free, the latter determining its tooth-friendly credentials.To this effect, Good for Me has been sweetened with isomaltulose, a disaccharide and a known non-cariogenic sucrose replacement, which means the drink carries no threat of caries or tooth erosion.

Good for Me, which retails for 1 Swiss franc per 330ml bottle, has been available across all Migros supermarkets in Switzerland from the end of October 2009. It has been speculated that the innovative drink could be launched across Europe sometime this year.

www.migros.ch

wellness beverages

United States

Next big thing for kids

omega-3 fatty acids, known for their brain and eye health benefits, quercetin for added antioxidant power, as well as prebiotics to help support digestive health.

US-based Vemma Nutrition Company recently introduced a liquid supplement specifically formulated to address children's nutritional needs.

Officially launched on 1 September 2009,Vemma Next is a premium, physicianformulated, liquid dietary supplement targeted at children aged 2-12.

A 2oz serving contains a half dose of Vemma's clinically tested nutritional formula containing 12 full spectrum vitamins, antioxidants and over 65 major trace and ultra trace plant-sourced minerals. Its antioxidant-rich ingredients include mangosteen and aloe vera as well as decaffeinated green tea. In addition,Vemma Next contains vegetarian DHA

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Two clinical studies have found the Vemma formula to be highly bioavailable, demonstrating an increase in the presence of vitamins and antioxidants in the blood after consumption.

Independent laboratory tests have also confirmed Vemma's high ORAC (Oxygen Radical Absorbance Capacity) value of 3315, significantly higher than that of most competing products.

The orange-flavoured drink is preservative free, gluten free and contains no artificial colours, flavours or sugars.

The company is very active in its social responsibility efforts, and for each month's supply of Vemma Next purchased,Vemma donates the equivalent supply to a child in need in the country of purchase. In the September to November 2009 period,Vemma also donated a portion of the proceeds of Vemma Next to notfor-profit charity Children's Miracle Network.

A 'fridge brick' pack of 30 2oz bottles retails for US$50 and is available for purchase online via the company's website.

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functionaldrinks zenithinternational newsletter Page 4 Issue 176 19 January 2010

enriched beverages

United States

Masterful cleansing with lemon functionaldrinks spoke to Dianna Toomey, Founder and CEO of Simplifast, who told us about the latest developments of the company's eponymous detox drink.

Simplifast was founded in 2007 with the aim to develop a RTD offering based on the Master Cleanse, or Lemonade Diet, for all those wishing to follow a fasting diet or simply wanting to cleanse their body from toxins and other impurities.

The Master Cleanse diet was created over 70 years ago by a naturopath, Stanley Burroughs, who claimed that a mixture of water, lemon juice and sugar helps cleanse the kidneys and digestive system, purify glands and eliminate waste in the joints and muscles. Although not originally intended as a weight-loss tool, the fast has also become popular for those looking to lose weight quickly.

Simplifast officially introduced its eponymous drink in October 2008 through select specialty retail stores and online retailers.Toomey describes Simplifast as "a unique, first-of-its-kind,

RTD lemon detox beverage" targeted at health conscious consumers who routinely go on cleansing fasts or those seeking to lose weight.

Furthermore, according to Toomey, "Our core customers crave Simplifast on a daily basis, use it as an energy drink and to skip a meal to maintain their optimal weight."

Each bottle of Simplifast contains the juice of three lemons, 11g of fibre (or 44% of the daily value), 100% of the DV of vitamins B6 and C, and 50% DV of vitamins A and E. Simplifast is sweetened with pure organic maple syrup (gradeB) and stevia, which makes Simplifast a low GI beverage and safe for those consumers that suffer hypoglycaemia and even some forms of diabetes.

In order to promote the drinks,Toomey said public relations and in-store promotional activities are the focus as these are considered to be the best ways to sell the drinks and create customer loyalty.Toomey added, "Educating the consumer that there is now a proprietary formula that is ready to drink, based on this popular concept, is the key to success. Once consumers sample the great taste and realise the health benefits and the time and money Simplifast saves them, it becomes a no-brainer."

When asked about possible new variants,Toomey said, "We do have active market research and R&D efforts underway to expand the product line and introduce complementary beverages and products. Our product extensions will revolve around our current health and wellness mission."

In the meantime, Simplifast has identified a few select international markets and considers the Middle East to be the prime area for initial international distribution in 2010.

Simplifast is packaged in 16oz bottles and is available in Lemon, Strawberry and Blueberry flavours. Each bottle sells for between US$4.29 and US$4.99, which Toomey justifies by the time and money saved compared to home-made alternatives.

Simplifast can be bought at a wide range of stores including supermarkets, supplement shops and wellness centres, which the company hopes will reach the thousands by 2011, as well as online through Amazon amongst others. www.simplifast.com

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functionaldrinks zenithinternational newsletter Page 5 Issue 176 19 January 2010

cosmeceuticals

Thailand

Replacing nutrients sapped by city living Sapanan General Food Co., Thaibased producer and exporter of soft drinks, has recently expanded its portfolio with a new cosmeceutical range.

The new drinks, which fall under the newly created Sappé Beauti brand, are designed to help counteract premature ageing

provoked by the impact of modern city life, involving stress, pollution and exposure to the sun. In addition, each of the four Beauti variants features a specific key ingredient to target different needs.

Beauti Collagen delivers 500mg of the ingredient, helping replenish the body's stores as they diminish with ageing. Meanwhile, Beauti CoQ10 contains 15mg of the enzyme in addition to vitamin E to increase the drink's antioxidant effect. L-carnitine and 4,000mg of fibre are the main ingredients in Beauti Fiber, which helps regulate digestion, as well as reducing hunger and the build up of fat. The final variant is Beauti Chlorophyll, whose namesake ingredient reportedly helps strengthen the immune system, detoxify the body, clean the intestines and keep skin young and healthy.

All variants are available in 365ml PET bottles as well as 180ml cartons. The Sappé Beauti range can be bought across select department stores in the country. www.sapanan.com

energy drinks

United States

Rooting for success Açaí product specialist Açai Roots has expanded into the energy shot market with the launch of nex4 Pure Açaí Energy.

The natural energy formula is packed with antioxidants and vitamins derived from açaí, acerola, guarana and green tea, and is designed to give consumers a healthy sustained energy boost, without the sudden crash associated with some energy drinks.

The benefits of the açaí berry have been well documented, and are based on the fruit as a rich source of antioxidants, essential fatty acids, dietary fibres, protein, calcium,

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vitamins A, B6 and E. According to Igor de Freitas, CEO and cofounder of Açai Roots, "The idea behind the shot was to develop an innovative açaí product for our consumers. Something completely new, with which they would be extremely pleased".

Nex4 is ready to drink but the company also suggests that it can be mixed with any liquid to make nutritious juices, shakes, smoothies or cocktails.

The shot is aimed at health-conscious consumers aged between 16 and 40. To reach its target market Açai Roots is undertaking several marketing initiatives, including promotion on its FaceBook social network page and sampling at events such as jiu-jitsu, capoeira and volleyball tournaments.

A 2oz bottle retails for US$2.99, with a 32oz format also available. Nex4 shots can be purchased online from the company's website and through select retail locations across the US, including Whole Foods, Max Muscle, 24h Fitness, Publix and Froots.

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functionaldrinks zenithinternational newsletter Page 6 Issue 176 19 January 2010

nutraceuticals

United States

Relaxation drinks in focus

Whilst the concept is not entirely novel, relaxation drinks, also known as anti-energy or antistress beverages, have only really started to command attention over the past year with a wave of new offerings appearing in the US. Heralded as one of next big things in the US just last year, such products have already been present in many markets as part of ranges or as standalone niche drinks for some time. This is particularly the case in pioneering Japan, which arguably spearheaded this emerging trend and where the majority of such stress-busting offerings feature GABA (gamma aminobutyric acid) - a brain chemical that promotes relaxation and sleep.

Some of the most commonly used ingredients in those products appearing in the more Western world range from well-known herbs such as chamomile, valerian root, passion flower and St John's Wort to the Polynesian root kava and even to prescriptiontype alternatives such as GABA, L-theanine or the hormone melatonin.

Irrespective of their composition, the arrival of the new wave of relaxation drinks has received varying reactions. Many expected these, along with other nutraceuticals, to suffer due to the economic crisis as consumers tightened their belts and cut

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down on discretionary spending. However, the overall nutraceuticals category has thus far proven its resilience thanks to its value-added nature, highlighting that consumers are not only influenced by price but also by health benefits.

Similarly, as relaxation drinks started to increase their presence in the market, their counterpart, energy drinks, started to witness a slowdown in growth as the market becomes more saturated.

However, energy shots have provided the category with fresh impetus and are proving immensely popular not only in the US but also in West Europe. On the strength of this success, a considerable number of new anti-energy entrants are packaged in shot format, entirely bypassing the path taken by energy drinks - first supersizing and then downsizing.

Also against a backdrop of lower energy drink volumes, some have suggested relaxation drinks are set to become a serious contender to energy drinks as consumers get tired of leading hectic lifestyles and instead opt to sit back and relax. And although it is true that certain offerings, such as Jones Soda's GABA drink, claim to relax and aid concentration, for the most part these have a different appeal and bring new consumption occasions, and can also be viewed as a natural compliment to energy shots. According to recent industry comment, "Energy drinks and relaxation drinks are like teas; you have caffeinated teas for when you need to be alert and you also have caffeine-free teas for when you don't need to be alert."

Relaxation drinks seem to be set to expand from their current niche in the US, however whether their appeal will catch on in Europe and what, if any, regulatory issues such drinks may face, particularly given that certain

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functionaldrinks zenithinternational newsletter Page 7 Issue 176 19 January 2010

nutraceuticals

United States

substances such as melatonin are not approved for consumption without prescription.

US, however, is predicted to grow throughout 2010. Some of the most notable relaxation drinks launched recently are listed below:

The number of relaxation drinks available in the Company

Product name

USP

Packaging

RelaxCo

Blue Cow

First of its kind in the US

10oz bottle

Mary Jane's Soda Inc

Mary Jane’s Relaxing Soda

Only cola with such a functional positioning

12oz bottle

Jones Soda

Jones GABA

First GABA drink in the 12oz slim can US

Vitila Brands

Tranquila

Day and Night variants 2oz shot

Peaceful Remedies

RelaxZen

Zero calories

2.5oz shot

functionaldrinks in brief

Europe

Austria: Coca-Cola Hellenic Austria has introduced an apple-redcurrant variant of its Römerquelle Emotion near water range.The product is to be available in 500ml and 1 litre PET bottles, priced at approximately €0.85 and €1.19 respectively.

France: Red Bull France has been promoting its newly launched energy shot, highlighting its many attributes, including delivering the same amount of caffeine as a 250ml can of Red Bull, easy placement in stores due to no refrigeration requirements, and the wealth of consumption occasions it creates for consumers.

Gelatine and collagen specialist Rousselot has published the results of its latest research into its Peptan ingredient, which demonstrate that it can help maintain bone health and prevent the onset of osteoporosis.

Netherlands: Lipid Nutrition has launched a ready to use emulsion featuring its Marinol omega-3 ingredient that provides EPA and DHA. The new emulsion is innovative in that it not only provides health benefits for consumers, but also helps manufacturers since mixing the emulsion with dairy-based beverages boosts its active ingredients' stability and protects them from oxidation.

Spain: Novalicor Auria has introduced a threestrong range of energising liqueurs, each of which features either ginseng, coffee or guarana.The

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liqueurs, branded Entropía, are packaged in 700ml glass bottles.

UK: Voltz International has announced plans to launch its eponymous energy shot in Australia, shortly after appointing a local distributor. CEO Rob Arnold commented, "The energy drink market is established in Australia but the energy shot market is a relatively new concept.We anticipate the introduction of such a new and exciting product like Voltz will prove particularly popular and we are therefore delighted to have appointed a sole distributor for Voltz in Australia."

To mark the launch of its eponymous shots in supermarket Waitrose, Focus 5 Hour held a Batak challenge at a London branch to highlight the shot's ability to increase concentration and response times. According to the company, sales of Focus 5 Hour rose 630% after the activity.

Distributor Tree of Life has launched Yumberrybranded yang-mei juice across the UK.Yumberry is a 100% organic juice sold through most health food shops and a 500ml bottle retails for approximately £2.50.Yang-mei juice has been reported to be high in anthocyanins.

UK food wholesaler Booker Group has revealed that its Euro Shopper Energy Drink has the fastest rate of sale of any impulse drink.The brand reportedly enjoys sales of 36.4 cans per week at a price of just £0.35. Steve Fox, Sales Director - Retail, commented, "This research

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functionaldrinks zenithinternational newsletter Page 8 Issue 176 19 January 2010

functionaldrinks in brief proves that the drink offers a significant cash profit contribution for retailers due to the volume of sales. However, equally important is that the product tastes great, so shoppers love it."

UK newspaper The Sunday Times has ranked Boost Drinks in 44th position in the 2009 Sunday Times Virgin Fast Track 100 of Britain's top performing companies. Boost Drinks' sales have grown 88% year on year, from £1.5 million in 2005 to £9.7 million in 2008, exceeding the average growth rate within the energy drink market.

Gatorade UK has launched a promotional campaign intended to reward consumers for their sporting efforts. Consumers collect codes from bottles of Gatorade that can be redeemed against equipment, music downloads, sporting holidays and others. In addition, a weekly prize draw will run for all registered participants.

North America

According to Consumer Edge Research (CER), North America now accounts for 41% of global volume of energy drinks, despite the category having emerged from Asia and Europe. CER estimates that the global energy drink market is worth US$20.2 billion and sized at around 865 million litres.

US: DNA Beverage Corporation, producer of DNA Energy Drink, has signed an agreement with Vital Pharmaceuticals for the distribution of its VPX and Redline branded weight loss drinks.

The agreement will see the drinks distributed throughout the southeast region of the country.

Fruit 66, producer of an eponymous low-calorie and nutritious juice drink, has announced that it has added vitamin D to its sparkling drinks after a recent study revealed that one in five children do not get enough vitamin D.The reformulated beverages are already available for purchase in

functionaldrinks zenithinternational newsletter

Editor: Jenny Foulds Deputy Editor: Cecilia Martinez-Nunez Contributors: Charmaine Holmes Market Intelligence Director: Gary Roethenbaugh functionaldrinks is issued 25 times a year and is only available by subscription: electronic PDF format only £495; hard copy and PDF £595* *VAT chargeable on electronic format to UK companies and EC companies not registered for VAT

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schools and natural food stores.

Beverage Plus has received a letter of intent from a Hong Kong-based company for the distribution of its MC2 Energy Drink across China. The distributor also intends to make a US$150,000 investment in Beverage Plus.

Hansen Natural Corporation has introduced Monster Energy DUB Edition in Ball Corporation's resealable jumbo cap can.

UpLift Nutrition has signed a distribution agreement with Mr Checkout Distributors for the sale of its All Day Energy Spray across 17,000 stores in the US. Skinny Nutritional Corporation has appointed five new distributors in California: Bay Area Distributing Company, Energy Source Distribution, GBL Distributing Company, Morris Beverage Distributors and Saccani Distributing Company.

Sales of Pepsi-QTG owned Propel were down 32.4% in the year to August 2009 compared to 2008. The downward trend has been attributed to negative press about the environmental aspects of bottled water as well as the economy.

World

According to UK researchers, drinking a cup of Brazilian mint tea can alleviate pain to a similar measure as commercially available analgesics.

The plant has been traditionally used in Brazil as a remedy for headaches, stomach pain, flu, fever and other ailments.

Mexico: According to Nielsen data, sales of energy drinks rose 24% during August and September 2009, compared to the same period in 2008. The sector was second to RTD tea, which experienced a rise in sales during the period.

7 Kingsmead Square Bath BA1 2AB United Kingdom t +44 (0)1225 327900 f +44 (0)1225 327901 e functionaldrinks@zenithinternational.com www.functionaldrinksnews.com No part of this periodical may be reproduced in any form, copied or stored electronically without prior permission in writing from the publisher. Every effort is made to verify all information published, but Zenith International cannot accept responsibility for any errors or omissions or for any losses that may arise as a result.

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