100324_FD_Issue 181

functionaldrinks zenithinternational newsletter This issue at a glance...

nutraceuticals

Page five Another diet cola with a difference

Page six Drink enhances power of flowers

Page five Low-cal option for new consumers

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Optimising cognitive performance

Nawgan is a brain supplement developed by Dr Paul and is intended to support memory and thinking skills. The drink contains a patentpending blend of four key ingredients to protect the brain and enhance its functioning: lycopene to provide anti-inflammatory protection, vitamin E to deliver an antioxidant effect, as well as alpha-glyceryl phosphoryl choline and citicoline in the form of Cognizin - Kyowa Hakko's branded ingredient which has been scientifically demonstrated to increase mental activity and may be responsible for reversing age-related changes in the brain.

These two chemicals help provide structural support to brain cells as well as increase acetylcholine levels, which is critical for memory and thinking skills.

brain, claims Nawgan's formulation is backed by extensive and sound research. Hence, according to Paul, the drink's main strength and appeal to consumers is its scientific background.

Nawgan is targeted at adults, with the noncaffeinated version usually preferred by older adults, compared to the caffeinated variant which is preferred by younger adults. To increase brand awareness amongst its target group, Dr Paul said, "We have developed outstanding POS material to support the brand. Nawgan will be sponsoring events targeting adults, and engaging the local media outlets."

Furthermore, the website features a memory test so that consumers can track their memory performance over time. The test changes with each administration to provide a fresh assessment of memory.

Dr Paul is confident about the prospects for Nawgan given that since the soft launch in June 2009, sales of the drink have steadily progressed, especially in Missouri, one of two states where Nawgan is sold.

Nawgan is currently available in select retail locations in Missouri and Arizona. In addition, the company has recently partnered with Major Brands, which will provide distribution coverage for all major retail outlets in the state of Missouri.

Nawgan retails for approximately US$2.29 to US$2.49.

Dr Paul, who is a professor and has conducted extensive research on the

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United States

Having recently completed the formal launch of its flagship drink, functionaldrinks spoke to Nawgan Products LLC founder and clinical neuropsychologist Dr Robert Paul, who told us about how sales of his eponymous drink have progressed since its launch last year.

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functionaldrinks zenithinternational newsletter Page 2 Issue 181 24 March 2010

editorial comment Welcome to the 181st issue of functionaldrinks. As nutraceuticals become increasingly ubiquitous, particularly in the more developed markets, launches of mood and concentration beverages appear to be picking up pace.

Here we first feature the launch of a mind-boosting drink developed by clinical neuropsychologistowned Nawgan in the US, which even brings with it an online memory test to help consumers prove the drink's efficacy (see Page 1).Also in the US we cover the introduction of an innovative mood-enhancing drink based on the Bach flower remedies by Maayan LLC (see Page 6).

Again from the innovative US, we also review the launch of a threestrong high-protein range by Pro Foods LLC, one of which is a functional ice cream (see Page 4).

We also look at the latest news surrounding Hobarama LLC, owner of the BAWLS energy drink brand (see Page 3).

Over in the UK, Halewood International has expanded its Red Alert energy drink brand with an offering for men that purportedly delivers more than just an energising effect (see Page 3).We then report on the launch of GSK's new Lucozade Sport Lite, which will replace Lucozade Hydro Active (see Page 5).

In Spain, Danone España has introduced a spoonable version of Actimel to help spur demand amongst those who prefer to eat their yogurt rather than drink it (see below). Further afield in Japan, Coca-Cola Japan has unveiled a third drink under the Coca-Cola Plus series, this time enriched with dietary fibre (see Page 5).

Finally, developments within, and interest surrounding the coconut water category are showing no signs of slowing, with new offerings by Naked Juice Company, O.N.E.World Enterprises and Germany-based KULAU (see Pages 6 and seven).

Cecilia Martínez Núñez Deputy Editor cmartinez@zenithinternational.com

functional dairy

Spain

Increasing consumption options as well as immunity

The company is optimistic about the yogurts' prospects, as this will mean consumers can now better incorporate Actimel into their daily lives, either as a dessert or as a snack. Moreover, Actimel is the brand that brings the most contribution to the company's portfolio of chilled dairy products, according to Spanish trade magazine Alimarket.

Danone España has introduced a spoonable yogurt version of its Actimel brand in order to expand consumption occasions for consumers.

The new spoonable Actimel was designed with those consumers that prefer spoonable over liquid yogurts in mind. It is available in 115g pots, 15g more than in the liquid version, and also has an introductory offer price.

This is in addition to the fact that it has been estimated that during 2009, dairy products containing the L.casei bacteria, like Actimel, grew by 1.8% in volume despite a 7% drop in value caused by price reductions across branded and own-label offerings.

It has been estimated that the Danone umbrella brand dominated the category by value with a 74% share, followed by own-label. And by volume, Actimel also dominates, although to a lesser extent with almost 58% share compared with 41% for own-label.

The new Actimel variant, which was originally introduced in the country three years ago but proved unsuccessful, is available at all major retail outlets. www.actimel.es

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functionaldrinks zenithinternational newsletter Page 3 Issue 181 24 March 2010

nutraceuticals

United Kingdom

Niche product fills gap in market Halewood International, producer of Red Alert energy drink, has just launched an energy drink targeted at men which reportedly produces an aphrodisiac effect.

Stimul8 combines eight 'uplifting' natural ingredients and aims to "make a good night better" by providing a mixture of leaves, roots and berries derived from damiana, Korean ginseng, echinacea, schizandra and ginkgo biloba, all of which the company says are well known for their aphrodisiac properties.

A sub-brand of the Red Alert energy drink brand, Stimul8 is targeted at adult males and is already being promoted with sampling and promotions at the point of purchase.The company has revealed that the new drink will be supported by a "six figure" national campaign spanning radio, press, online, social media and PR. Richard Clark, Head of Innovation, commented, "With Stimul8, we have created a niche product that will generate intrigue and interest whilst at the same time widespread appeal.This product capitalises on the trend for functional energy drinks and highlights our commitment to ongoing innovation in the soft-drinks category."

Stimul8 can be bought through a range of retailers in the off-trade channel, which the company claims have responded very well to the launch as they have recognised a gap in the market served by the drink.

Stimul8 was launched at the beginning of March and retails for ÂŁ2.99 for a 60ml bottle.

In February, Halewood International launched Red Alert Power Pack, the shot version of its flagship energy drink brand.This is available through convenience and impulse channels and retails for ÂŁ1.39 apiece. www.halewood-int.com

energy drinks

United States

Market still has balls!

Hobarama LLC - whose investors' restructuring firm forced out founders Hoby Buppert and Christina Staalstrom in November 2009 and have laid off most staff to the point were some distributors' calls for more product were unanswered - the BAWLS brand had a strong, loyal following, particularly amongst the gaming, paintballing, BMX and military communities.

With a history of well over a decade in the US energy drinks market, it seems that BAWLS' investors will inject the funds to stabilise the brand whilst they look for an exit strategy.

And it seems the passion for the guarana-based energy brand still continues. Four variants strong (original, extra caffeine, cherry and a root beer), the BAWLS range remains the product of choice for numerous consumers, with online evidence of this on the social network sites Facebook and YouTube, amongst others.

Kevin Coyne, a Partner at Canal Mezzanine Partners, commented to BevNET, "we're optimistic that the brand's not going to die. We're not going to walk away from it."

First introduced to the market in 1996 by the now flailing

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functionaldrinks zenithinternational newsletter Page 4 Issue 181 24 March 2010

sports drinks/functional dairy

Plenty of pros for new range

Finally, PRO CREAM is, to our knowledge, one of the healthiest ice cream products, with a butterfat content of only 9% against the average of 16%. The PRO CREAM formula is blended with vitamins, minerals, and a combination of three different proteins (milk, whey, and egg). This allows consumers to enjoy ice cream whilst also meeting their nutritional and physical needs. The ice cream can be found in Vanilla, Strawberry and Chocolate flavours.

Pro Foods LLC has announced the impending launch of its three-strong range of high protein products.

The forthcoming Pro products are aimed at active consumers of every age group, since protein supplementation is said to help at various life stages. For example, health enthusiasts looking to better manage their weight can benefit from consuming high quality protein for its ability to increase satiety levels and promote lean muscle.

Also vegetarians or vegans, who are at risk of being protein deficient, are recommended to look for alternative sources of protein. Other demographics that benefit from high protein diets include expecting mothers, seniors or patients recovering from surgery or burns.

The company has also said that it already has additional flavour profiles in the pipeline for its three products. Although Pro Foods declined to reveal exactly which variants these will be, it did say it plans to expand its product portfolio this calendar year.

PRO H2O is a high protein flavoured water that contains whey protein isolate and is free from fat and carbohydrates. It is intended to hydrate while supplementing the body with protein throughout the day. Each 500ml bottle provides 90 calories and 20g of protein, reportedly the highest amount compared to other protein waters available in the market. PRO H2O is available in Kiwi Strawberry and Black Cherry variants.

The second product is PRO ADE, a high protein sports drink composed of electrolytes, protein, carbohydrates, and other essential nutrients that aid in rapid body recovery.

Unlike other leading sports drinks, PRO ADE is currently the only one in the market to deliver 22g of whey protein isolate. The drink is available in Orange and Fruit Punch flavours in 500ml bottles.

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To promote the line-up, the firm will use various forms of Internet marketing using social media through Twitter and Facebook, email marketing campaigns, an interactive six week fitness challenge, ongoing contests and promotions intended to engage and interact with consumers and the community.

In terms of promotional advertising, a series of ads will be streamed through websites such as YouTube to create viral activity. This will be supported by print advertising, being involved at sports events and offering product sponsorships.

The company intends to make its portfolio available through fitness facilities, convenience, grocery and health food stores. By aligning with sports trainers and nutritionists within universities, it aims to target athletes and patients in recovery or with dietary restrictions.

The initial launch will be in April with retailers in the South Central region, gradually availability will increase across the country. The products will also be sold online through a very large retailer.

PRO H2O, PRO ADE and PRO CREAM will retail for US$2.79, US$2.99 and US$3.99 respectively.

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sports drinks

United Kingdom

Lighter, everyday option broadens reach

to roll out in April.

Just a year after GlaxoSmithKline (GSK) presented its Hydro Active range of sports nutrition products, the company has now launched a new low-calorie hypotonic drink.

Called Lucozade Sport Lite, this offering seems to be replacing GSK's existing Lucozade Hydro Active ready-to-drink variant (although the Hydro Active name is being retained for the powdered sachets) and, like its predecessor, contains only 50 calories compared to the 140 calories in a regular 500ml bottle of Lucozade Sport.

Moreover, the new sports drink contains calcium and vitamins B3, B5, B6 and B12 to help release energy and, according to the company, contains approximately 70% less sugar than regular sports drinks.

The launch of Lucozade Sport Lite is intended to help bring "everyday exercisers and social sports participants", who are not regular sports drinks consumers due to calorific content, into the category.To this end, GSK will support the launch with a multi-million pound marketing campaign spanning TV, outdoor, press and sponsorship, set

GSK also recently revealed that it had earmarked £15 million to market the campaign entitled "Fuelling England's Roar", which will debut in May and feature Liverpool captain Steven Gerrard.

Matt McKie, Brand Manager for Lucozade Sport, said, "As the official sports drink of the England team, our objective is to fuel the players to World Cup success, as well as leverage our association with ITV's coverage of the 2010 World Cup." The campaign will include digital and social media activity as well as an iPhone application.

According to GSK, the sports and energy categories had a combined worth of £706 million in the UK in 2009. Of the sports segment, it claims that the Lucozade Sport umbrella brand reached sales of £102 million, although this is 6.4% less than in 2008. However, Lucozade was not the only brand to experience a decline in sales, as Coca-Cola Great Britain's Powerade also witnessed a decrease of 4.6% in 2009, with sales of £34.4 million.

Lucozade Sport Lite can already be found at gyms and other health and fitness outlets where other Lucozade products are sold as well as through the brand's website. A case of 12 500ml bottles retails for £10.80 online, with Lucozade Sport Body Fuel jelly beans - another new GSK offering - retailing for £15 per 24x30g bags.

Lucozade Sport Lite is currently available in Summer Berries and Lemon & Lime flavours. www.lucozade.com

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Japan

Another 'good for you' cola

new drink is described as a lemon-flavoured cola, and consumer reports claim the flavour profile is no different to the other two CocaCola Plus variants.

Coca-Cola Japan has unveiled the third drink to be part of its Coca-Cola Plus series, which follow on from Coca-Cola Plus Vitamin and Coca-Cola Plus Green Tea.

The drink was launched at a time when consumers in the more mature beverage markets are increasingly aware of the importance of dietary fibre in health and have a growing interest in beverage applications and innovative ways in which they can increase their intake of fibre without resorting to soluble powders.

The latest addition, instead of featuring vitamins or green tea catechins, provides 1.7g of dietary fibre per 100ml or 8.5g per 500ml bottle, features no calories and is targeted at health-conscious individuals. The taste of the

Coca-Cola Plus Fiber has been available in the Japanese market since the beginning of November 2009 through a wide range of outlets.

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functionaldrinks zenithinternational newsletter Page 6 Issue 181 24 March 2010

nutraceuticals

United States

Red carpet launch for flower drink

melatonin can do.

At a recent pre-Oscar party, Maayan LLC introduced the first of a novel range of herbal beverages based on the naturopath-approved flower remedies developed by Dr Edward Bach.

Dr Edward Bach, a British physician, researcher, microbiologist and homeopath, started developing flower essences in the 1930s, based on a system of medicine found in nature to address mental wellbeing.Through the process of diluting flower material, Bach derived 38 remedies, each directed at a particular emotional state.

MindEssential, as the new range has been called, is based on this same premise and differentiates itself from other relaxation drinks in that these are free from chemicals, hormones like melatonin, and sugar. At present, the line comprises four propositions, all of which will be available in shot and bottle format: Relax, Sleep, Slim and Focus. Moreover, all drinks are designed to provide a relaxing effect without causing the drowsiness that

Relax, the first beverage on the market, contains chamomile, elm, impatiens, rock rose, vervain and white chestnut to release emotional tension and reduce feelings of helplessness or of feeling overburdened.To maximise the drink's effects, consumers are advised to drink Relax on a regular basis, as it is frequency not quantity that is key to achieving results. It is therefore possible to drink as much or a little as one wishes, as long as it is over a sustained period.

Orly Glick, founder of Maayan LLC, told functionaldrinks that next in line for release is Relax shot, followed by the other three variants in both water and shot formats.

The target market for MindEssential is both men and women who are health conscious and active consumers of natural products.To target this group, the company will conduct regional advertising as the drinks become available, followed by national advertising. In addition, social media and TV interviews have been scheduled.

Glick also told functionaldrinks that following MindEssential's glamorous launch at the Oscars, the company has seen an overwhelming response to Relax water.

An 8.5oz bottle of MindEssential will retail for US$3.59. www.mindessential.com

wellness beverages

World

Still nuts about coconut water

Zico and Madonna's financial support for Vita Coco.

100% pure and straight from the source Brazilian green coconuts, Naked Coconut Water "is nature's solution to help replenish the potassium and other electrolytes you need". In terms of nutrition, an individual carton of the drink delivers 19% of the recommended daily allowance (RDA) of potassium, 6% that of calcium, 5% that of carbohydrate, and 4% and 1% of vitamin A and sodium respectively.

California's Naked Juice Company, already active in exotic flavours, has added coconut to its portfolio.

Launched in the form of Naked Coconut Water, the 11.2oz (330ml) TetraPak offering mimics the look of leading brands Vita Coco, Zico and O.N.E, and has been introduced amidst recent noise within the US' coconut water category - note PepsiCo's acquisition of Amacoco, The Coca-Cola Company's minority share investment in

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Meanwhile O.N.E.World Enterprises has added an Active variant to its eponymous coconut water line, and is going the extra mile in terms of (continued on Page 7) X

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wellness beverages

World

(continued from Page 6) functionality, whilst Go Fast Sports and Beverage Co. has introduced several hybrid energy drinks including one based on coconut water, in addition to white, green and black tea variants.

Making increasing use of inbound marketing tools such as social network sites Facebook and Twitter, the company also plans to introduce a new TetraPak format to complement its existing aluminium can offering in 2010 and is looking at new product innovations for the autumn.

The new O.N.E. Active features the active ingredients ginkgo biloba, ginseng and catuaba to support the product's essential electrolyte properties as well as delivering mental focus, concentration, resistance, vigour and stamina dimensions for sports enthusiasts and active lifestyle consumers.

In the UK, Cocofina is the leading British brand of coconut water owned by Fina Brands Limited and winner of several taste awards. First launched in 2006 and called coconut juice since its consumers refer to coconut water as a juice rather than 'water', the brand also saw the addition of a new packaging format in 2009.

Previously available in sports pouch format, Cocofina can now be purchased in an attractivelydesigned 300ml can with a 12 month shelf life.

Although recent category activity appears to be centred around the US, developments in other markets have not gone unnoticed.

Firstly, Josefine Staats, founder and CEO of German-born KULAU (2008), presented at the recent Innobev Global Soft Drinks Congress in Istanbul and helped raise awareness of the benefits of coconut water on a global platform and of the real factors affecting the market.

From the company's own investigations, not only are consumers interested in the product's positive health implications, Kulau has also found that coconut water is quickly establishing itself as a popular ingredient for many cocktails in trendy bars and clubs around the world as consumers become increasingly open to more exotic flavours.

The drink, appealing to ABC1 consumers (upper, middle and lower middle class) and positioned in the retail and convenience sectors, is based on green coconuts and hailed as a natural sports drink due its high calcium, magnesium and potassium content.

Fina Brands cites data showing that coconut water is the fastest growing beverage category in the US, reaching a US$35 million market in 2008, up from US$20 million in 2007. Cocofina coconut juice is expected to achieve high growth in the European market in 2010. www.nakedjuice.com www.cocofina.com

soft/functional drinks

World

Soft spot for functionality

will feature an address on the slow energy release benefits of the sponsor's patented ingredient Palatinose, in addition to presentations from companies including UK-based Boost Drinks, Voltz Distribution and Canada's Slow Cow Drink / Boisson Slow Cow Inc on the subject of value, energy shots and relaxation drinks respectively.

An established networking and knowledge building highlight of the industry's calendar, functionality is set to feature highly at Zenith International's upcoming annual UK Soft Drinks Industry Congress.

With top speakers from leading producers Coca-Cola and Pepsi, content will also cover topics such as cost, quality, sustainability, the environment and new directions for innovation.

Sponsored by global ingredient supplier BENEOPalatinit GmbH and taking place on 13 May 2010 in central London, the event programme

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functionaldrinks in brief

Europe

Austria: Red Bull has posted a 1.5% drop in fiscal year 2009 net sales to €3.27 billion with can sales down 0.4% to 3.92 billion but reported strong sales in the Far East, Germany, France and Brazil.

Germany: PepsiCo Deutschland has signed a distribution agreement with Rockstar Inc to distribute its eponymous energy drink in Germany from 1 July 2010. Zach Lambakis, Executive Vice President for Global Business Development at Rockstar, commented, "Securing distribution with PepsiCo Deutschland has been an important milestone for Rockstar energy drink's international expansion.We are thrilled to be in a distribution system we already know and trust which allows us to focus on building the brand globally. Our alignment with PepsiCo will help ensure we position Rockstar for category leadership."

United Kingdom: Medichem International has announced that its Voltz energy shot is now distributed to Cost Cutter, Palmer & Harvey and Spa outlets as well as other outlets covered by Card Connection.The shot retails for £1.79 at these locations.

North America

US: According to retail data, the energy drink category saw a volume increase of just 0.1% during 2009, pushed up by a surge of 2.4% in the fourth quarter of 2009. In terms of retail volume sales, Hansen's Monster is the leader with a 33.4% share, followed by Red Bull with 23.5% and Rockstar at 13.2%.The category's weak performance has been blamed by the recession as well as the emergence of energy shots.

Fein Innovations has introduced Fein, a flavourfree crystallised caffeine free from artificial ingredients or carbohydrates. Fein can reportedly be added to any beverage to turn it into an energy drink without altering its flavour.The caffeine cubes will be promoted through

functionaldrinks zenithinternational newsletter

Editor: Jenny Foulds Deputy Editor: Cecilia Martínez Núñez Market Intelligence Director: Esther Renfrew 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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television infomercials and national radio endorsements.

The Food and Drug Administration (FDA) has sent a letter to Innovative Beverage Group Holdings stating that the company's Drank relaxation beverage is in breach of the Federal Food, Drug and Cosmetic Act because it contains melatonin, which is not approved for use as a food additive.The company has 15 days to provide supporting evidence for the drink's safety or remove it from the market in its current form.

Omega-3 DHA manufacturer Martek Biosciences Corporation has reported flat first quarter 2010 sales at US$84.1 million, despite its food and beverage division seeing a surge of 60% to US$4.2 million.

Hansen Natural Corporation has seen a 10.6% increase in fiscal year 2009 net sales to US$1.14 billion, with net income almost doubling to US$208.7 million.

Omega Protein Corporation, producer of omega-3 fish oil, has posted a net loss of US$6.2 million for 2009 fiscal year as well as an operating loss of US$4.3 million for the period.The company said that the primary reason for its performance was due to the decrease in demand for fish oil.

World

A recent study has revealed that cranberry pomace, a by-product of the juicing process, may be extruded to produce a range of polyphenolrich ingredients for use in supplements of functional food or beverages.

According to a recently released report, dairy producers have been increasingly shifting the positioning of the their products towards the functional arena and in some cases indulgence. It also states that consumer demand for natural functionality has been the main driving force in the dairy market.

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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