100416_FD_Issue 182

functionaldrinks zenithinternational newsletter This issue at a glance...

Issue 182

nutraceuticals

United States

Multi-pronged approach to weight Better Health Beverage has made its official entry into the functional arena with its first offering, a four-strong range of nutraceuticals that promise to keep hunger at bay.

Page three Herbal infusion enters France

underWAY is an appetite-suppressing beverage targeted primarily at females aged 24-54, regardless of their occupation or physically active or inactive status, although the company stresses that the product is suitable and can be beneficial for anyone aged 4-94.

Page five Yogurt with dual digestive impact

Pages six and seven Already applauded shot for UK

Page two Picking Japan up after big night

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The drink contains vitamins B2, B3, B6 and B12 to contribute to heart health and increase energy levels. In addition, it contains HeroFiber, Better Health Beverage's unique and proprietary super fibre blend that also includes ForteFibre.

HeroFiber reportedly keeps insulin, glucose and cholesterol levels within the normal range in healthy individuals. Because of its low glycaemic index, the beverage also helps suppress the appetite and delay gastric emptying, thereby making consumers feel fuller longer. underWAY is made with allnatural ingredients and is hotfilled without any preservatives.

The firm has also revealed that it anticipates engaging in cross-promotions between underWAY and its sister company's line of weight loss products, Smart For Life, and eventually extend its new underWAY offering with a MangoPeach variant.

Although underWAY was officially launched on 15 March 2010, it was already available in select locations across the US, including mass retailers and cash and carries such as Publix, BJ's, Costco Canada, Kinney Drug, USA Drug, Discount Drug Mart, Bartell Drug, and numerous online sites including Walgreens.com, Drugstore.com and BJs.com.

A single-serve 16oz bottle of the weight management beverage retails for US$1.69US$1.99, whilst a four-pack is priced at US$5.99US$6.99, and a 24 unit tray at US$29.99. underWAY is currently available in AรงaiPomegranate, Grape, Green Tea and Orange flavour variants. www.under-way.com

To promote underWAY, the company has partnered with Brooke Burke, model and current co-host of US TV show "Dancing with the Stars", who will be the drink's spokesperson. Burke will also appear in all TV ads and point of purchase collateral pieces.

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functionaldrinks zenithinternational newsletter Page 2 Issue 182 16 April 2010

editorial comment Welcome to the 182nd issue of functionaldrinks.As developments in the energy drinks category continue unabated, more and more consumers from different walks of life seem to be recognising that they can benefit from an energy boost to face the demands of daily life.

In another energised issue we explore how companies are responding to this increased uptake by creating unique offerings to better suit individual requirements.

First we look at the evolution of Vitality Distribution's caffeinated plain bottled water, seemingly the only such water in the US, which was created to satisfy the founder's own energy needs (see Page 4).

We also report on the latest entrant to the energy category by Crunk LLC with a powder sachet that not only delivers the same punch and ingredients as its regular counterpart, but is portable and convenient (see Page 3).

from Reed's ginger soft drink consumers who not only consumed them for refreshment purposes but also to treat nausea (see Page 6).

Meanwhile, Better Health Beverage has entered the nutraceuticals market with a line of drinks that help to suppress the appetite, as well as energise, to assist all women with their weight management goals (see Page 1).

In Europe, James White Drinks has introduced a shot-sized version of its beetroot juice, targeted at consumers looking for a pre-sport boost or simply to feel more energised (see Page 5).We also look at two new healthy energy shots launched by All Day Energy Ltd (see Pages 6 and 7).

French distributor to the on-trade channel Delidrinks has recently started importing Venga, a range of nutrient-enriched drinks (See Page 3).

And in Italy, supermarket Sigma has debuted a line of pre- and probiotic yogurts through its partnership with ingredients company BeneoPalatinit (see Page 5).

Finally, we review the launch of a recovery drink in Japan by Ajinomoto. Made with clam extract, this claims consumers can begin to feel the benefits in less than 30 minutes (see below).

Also in the US, we look at the introduction of a beverage by Reed's Inc that helps alleviate symptoms of nausea and was inspired by feedback

Cecilia Martínez Núùez Deputy Editor cmartinez@zenithinternational.com

nutraceuticals

Japan

'Clam'ping down hangover symptoms Japan-based Ajinomoto has recently launched a drink that promises to help alleviate the symptoms of the overconsumption of alcohol.

No-Mikata is a plum-flavoured drink featuring alanine as its main ingredient.

Alanine is an amino acid that is naturally produced by the body, hence not being considered as essential, but can also be found in corbicula clams the source of alanine used in NoMikata - beans, meat, nuts, dairy products, eggs, fish and seafood, amongst other foods.

Alanine is said to be vital for the production of protein and for the proper functioning of the central nervous system as it helps form neurotransmitters. The amino acid is also necessary for maintaining stable blood glucose levels and releasing energy from protein and from the muscles during exercise. In terms of its hangover curing credentials, alanine helps by quickly addressing hypoglycaemia - an excessive drop in blood glucose levels that can be caused by drinking too much alcohol - by releasing stored glucose and thus restoring energy levels.

Each bottle of No-Mikata contains 5g of alanine, equivalent to the content found in 600 clams.

Ajinomoto has said that the amino acid is absorbed by the body in less than 30 minutes, after which consumers can begin to feel the benefits.

No-Mikata has been available through a wide range of outlets in Japan since the beginning of 2010. www.ajinomoto.co.jp

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functionaldrinks zenithinternational newsletter Page 3 Issue 182 16 April 2010

enriched beverages

France

Herbal offering infuses horeca channel

The original line includes Brainstorm, Calorie Burn, Daily Dose, Energize, Health & Zen and Rehydrate variants. Of these, Delidrinks currently only carries the Calorie Burn and Energize variants in addition to two new offerings: Relax and Immunity Defense.

French distributor of beverages to the on-trade sector Delidrinks has added a selection of the USborn Venga range of enriched beverages to its portfolio.

Relax contains white grape, grapefruit and white tea as well as chamomile, lemongrass, magnesium, aloe vera, folic acid and vitamins B2, B5, B6, B12 and E.All of these combine to help the body restore its natural equilibrium and reduce psychological and physiological, or oxidative, stress.

Venga was launched in August 2008 (see Issue 141) by Beverage Innovations which produces and distributes the drinks in Germany and the US.The drinks are all based on pure Swiss alpine water and mixed with100% fruit juices, vitamins and minerals to offer consumers 'the next generation of functional beverages'.

Meanwhile, Immunity Defense features a mix of red fruits and berries and green tea.To strengthen the immune system the antioxidantrich drink contains grape seed and grape skin extract, shiitake mushroom extract, folic acid, biotin, vitamins B1, B5, B6, B12, C and E to provide 700mg per 500ml.

Calorie Burn features lemon, lime and green tea, whilst Energize contains orange, acerola and matĂŠ tea.

The drinks will be available through cafĂŠs, bars and food service outlets. www.delidrinks.com

energy drinks

United States

Innovative firm sticks to new guns Crunk LLC has unveiled the latest addition to its eponymous energy drink range, the format of which is a first for the company.

Formulated to deliver long-lasting energy with low calories and no crash, CRUNK!!! Energy Stix contain the same ingredients as the rest of the line, with one sachet providing just 10 calories from 2g of sugar in addition to 50% of the daily value (DV) of vitamins B3, B6 and B12. Moreover, the Energy Stix, currently available in an orange flavour, contain white willow, ashwagandha, ginkgo biloba, skull cap, milk thistle, green tea, guarana, panax ginseng, and 100mg of caffeine.

Across the energy drinks category, the vast majority of operators have moved away from the 250ml slimline can, a long-standing tradition that came about through pioneering Red Bull, towards supersize offerings, and most recently to shot-sized extensions.

However, CRUNK has skipped these entirely and instead launched a powder stick.

The company recommends consuming one sachet for moderate energy, or two sachets for maximum energy equivalent to twice the caffeine content of a regular can of CRUNK!!! energy drink.The Energy Stix are highly portable, according to the company, and convenient for on-thego consumption, whilst studying, driving, or exercising.

CRUNK!!! Energy Stix retail for US$2.99 per two sachet blister pack through the same outlets as the original energy drink line.

CRUNK!!! Energy Stix are what the company calls powder-shots, designed to be consumed by sprinkling the powder on the tongue, without the need of mixing with water.

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functionaldrinks zenithinternational newsletter Page 4 Issue 182 16 April 2010

energy drinks/functional waters

Activating new niches

United States reportedly been receiving positive and very encouraging feedback on both the functional water itself as well as its packaging.

Nine months following the unveiling of its novel caffeinated water, functionaldrinks spoke to Vitality Distributing founder and CEO, Brian Pitzer, to find out more about the product's progress.

Upon launch, the functional water - called 'avitae' (ah-vee-tay) - sought to fill what was perceived as a gap in the US beverage category for a caffeinated nonflavoured water. As such, the product contains just that: purified water and 45mg of tasteless, odourless natural caffeine per 500ml of water, making it an apparent equivalent of a diet soda.

Moreover, the company has recently announced an agreement with 20 new distributors across ten states in the Midwest, which will see the sale of avitae in around 10,000 locations, compared with its current 3,000, mainly through supermarkets, convenience stores, pharmacies and drug stores.

With regards to the water's positioning against regular caffeinated energy drinks, Pitzer does not see these as competing products due to avitae's target market, which he described as being "sophisticated, health conscious, classy clientele" who recognise they need a lift but do not want the artificial chemicals found in other drinks. avitae competes more against diet sodas and plain bottled water whose uplifting effect is more subtle.

On reaching its audience, Pitzer said that viral marketing has been the principle medium due to budget limitations for expensive above the line media. The company has also been using social media as well as sampling at points of purchase and various events to promote avitae.

However, Pitzer stressed that even if Vitality Distributing had enough capital to engage in traditional advertising, he would still opt for guerrilla marketing as he believes it is better to grow a brand through word of mouth than through 'big' media activity.

Pitzer explained the history of the name avitae, which combines the Latin word vitae (life) with the letter 'a' for aqua, therefore giving it the meaning "water for life".

Pitzer also told functionaldrinks that although avitae was launched in June 2009, its concept dates back to 2005, when he first took the decision to develop a drink containing caffeine but free from flavourings, sugar and other such ingredients to satisfy his own needs as well as those of consumers. The next three years were spent in the pipeline with an ingredients company which developed the taste and odourless caffeine used in avitae on the basis that it would generate sufficient additional demand to warrant the investment.

As well as its continued focus on growing the avitae brand, Pitzer revealed that Vitality Distributing intends to launch brand extensions in the near future to meet consumers' changing requirements. avitae has a suggested retail price of US$1.49 per 500ml bottle.

Vitality Distributing, currently composed of just four people including its founder, has

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functionaldrinks zenithinternational newsletter Page 5 Issue 182 16 April 2010

functional dairy

Italy

Meeting consumers' desire for better health Italian supermarket Sigma has recently launched a range of preand probiotic yogurts as part of its commitment to satisfy consumer demand for products promoting a balanced diet.

The supermarket partnered with German ingredients company Beneo-Palatinit to develop the drinking yogurts under its own-label range.

The line is composed of four variants: forest fruits, banana, peach-kiwi and plain with cereal.

The latter two variants are low-fat with only

0.1% fat compared to their regular counterparts.

All yogurts contain the Lactobacillus casei strain in addition to Beneo's chicory root extracted fibre, which is rich in the prebiotic oligofructose and able to deliver its benefits but pass through the digestive system without actually being digested.

The yogurts are targeted primarily at dynamic, modern and demanding consumers who are health conscious. Moreover, the yogurts are made using natural ingredients, making them more palatable for those looking to stay away from artificial chemicals.

According to the retailer, the yogurts were introduced as part of its desire to grow its ownlabel offerings, which currently account for 22% of turnover, whilst also responding to consumer trends.

The yogurts are available in 200ml bottles and had an introductory price promotion of €0.50 apiece. www.supersigma.com

nutraceuticals

United Kingdom

Shot effect hard to ‘beet’ Organic juice manufacturer James White has introduced a staminaboosting 70ml concentrated shot of its aptly named beetroot juice, Beet It. Aimed at the UK's functional drinks market, the new proposition - Beet It Stamina Shot - has a sports positioning, unlike the company's existing offering which emphasises the heart health credentials of beetroot.

The innovative move comes after the results of a scientific trial, led by the University of Exeter and co-authored by top UK sports scientist Professor Andy Jones, were published last year. Researchers found that the naturally high dietary nitrate content found in beetroot juice is converted via enzymes in saliva in the mouth to boost nitric oxide levels in the blood.This boost was found to reduce the oxygen needed during endurance exercise and showed that stamina could be enhanced by up to 16%.

Lawrence Mallinson, Managing Director of James White, commented on the impact of these results, "Interest from the elite sports professionals of cycling and swimming to athletics and even the England rugby team took off

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straight away after the publication of Professor Jones' research. I know this because we are now supplying them all directly ourselves."

Unlike the Beet It organic beetroot juice, the new shot is made with concentrated beetroot juice combined with lemon juice to reduce its sweetness.

Consequently it neither tastes nor smells like beetroot, although it still retains the characteristic deep purple colour. It tastes delicious, according to Mallinson, and should appeal even to those who dislike the taste of the distinctive vegetable.

The unique selling point of Beet It Stamina Shot compared to other sports drinks is, rather than relying on glucose as a stimulant or water to rehydrate, beetroot's naturally high dietary nitrate content which impacts blood pressure and stamina levels.Additionally, it is positioned as the only organic and entirely natural sports drink which also counts towards one of the recommended 5a-day portions of fruit and vegetables.

Scheduled for launch in May 2010, the product will be supported by an integrated marketing and PR campaign, both off and online, and targeted primarily towards the sports drinks market but also to health conscious individuals.

Beet It Stamina Shot is certified by Informed Sports confirming that it will have no impact on drugs tests.

Ideally consumed one to three hours prior to exercise, the new shot will carry a recommended retail price (RRP) of £1.79 and will be available in counter ready boxes of 15 units. www.jameswhite.co.uk

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functionaldrinks zenithinternational newsletter Page 6 Issue 182 16 April 2010

enriched beverages

United States

Calm wave washes over numerous channels Reed's Inc, producer of gingerbased soft drinks and other ginger products, has introduced a beverage harnessing the properties of the popular root to alleviate common sickness.

Called Reed's Rx, the latest drink to join the Reed's portfolio was developed upon the company's discovery that customers were routinely using its products to help alleviate the symptoms of motion sickness, morning sickness and nausea.

Neal Cohane, Senior Vice President of Sales and Marketing, stated, "We have received many testimonials over years from people who have used our products. In addition, ginger has a very long history of use as a remedy for nausea."

Reed's Rx contains 12g of fresh ginger and 10mg of vitamin B6, along with lemon, lime, honey and pineapple to offer a tropical and fresh-tasting alternative to traditional nausea medicines.

Ginger is a traditional herbal tonic used to alleviate nausea. It has reportedly been in use in China and India for thousands of years, not only to treat nausea but also for other health benefits.

Other cultures, such as the Roman Empire, used ginger extensively to settle stomach complaints.

More recently, vitamin B6 has gained recognition for its anti-nausea properties.

Cohane commented on the launch, "The Reed's Rx product line represents an exciting new growth area, and is a testament of the naturalness and healthiness of our products.This new product allows us to access over 24,000 convenience, grocery and drug stores across the US that have stomach aisles offering over-thecounter nausea relief products, as well as other channels, including hospitals, cancer centers, airports, and cruise ships, where consumers are looking for natural alternatives.We believe this represents an exciting new opportunity to significantly grow our sales beyond traditional food and supermarkets."

Reed's Rx is available in 5.5oz cans and can be purchased through select pharmacy and health food stores as well as through the company's website where a case of 24 mini-cans retails for US$26.95. www.reedsinc.com

energy drinks

United Kingdom

Intense shot aims h'i'gh

alertness, focus and energy.

All Day Energy Ltd has made its foray into the UK energy drinks market with what it positions as a healthy alternative to existing energy shots.

Called iShot, the new offering has been scientifically developed with a unique combination of B vitamins, amino acids, antioxidants and herbs to create a stimulating shot designed for working people with active lifestyles who could benefit from heightened

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In terms of ingredient quantities, iShot contains 15% of the recommended daily allowance (RDA) of vitamin B2, 100% of the RDA of vitamins B3 and B5, 200% of the RDA of vitamins B6 and B9, as well as 300% of the RDA of vitamin B12. In addition, the shot contains glucoronolactone, Siberian ginseng, L-carnitine, guarana and green tea extract, as well as being free from sodium and low in calories to deliver a crash-free and sustained energy boost.

Kursat Uysal, Managing Director of All Day Energy, commented, "Most people need an energy boost when juggling the demands of day to day living, such as working late at the office or being on the road. Good nutrition, rest and (continued on Page 7)

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functionaldrinks zenithinternational newsletter Page 7 Issue 182 16 April 2010

energy drinks

United Kingdom

(continued from Page 6) regular exercise are the best ways to stay alert, however sometimes we need that added boost."

According to Uysal, the shot's attractive and minimalist look reflect its quality and consumer appeal amongst working adults, coupled by its ingredients - such as such as green tea, ginseng, açaí berry and L-carnitine - which are already commonly consumed by this group in tablet, powder or drink form.

The firm presented its energy shot at the recent Convenience Retailing Show 2010 in Birmingham from 21-24 March. Uysal said, "We decided to initially launch iShot at the Convenience Retail Show in March as this is where our target market would be and would provide an opportunity for us to meet our potential partners in the wholesaling and distribution of this exciting new product."

And its presence at the exhibition was a success, with several stores, wholesalers and distributors expressing their interest in iShot, and some also placing orders on the spot.

As part of its promotion at the event, iShot underwent extensive sampling - tasted by 2,500 people, the results of which revealed that the iShot Decaff (açai berry flavoured), followed by its original counterpart, was considered the best tasting energy shot, with the company stating that even staff from three competitors present at the event recognised the shot's great taste.These results support those from a survey regarding the shot's efficacy, in which 96% of participants reported significant increases in energy levels over a five hour period and said they would definitely purchase the product. iShot All Day, packaged in 60ml bottles, is already available for purchase in original, with an orange flavour variant to follow, and iShot Decaff variants, both of which retail for £1.59 apiece. www.ishotenergy.com

functionaldrinks in brief

Europe

France: Collagen-specialist Rousselot has announced that it will be showcasing its proprietary ingredient Peptan at the forthcoming In-Cosmetics exhibition to be held in Paris on 13-16 April.The company's planned attendance is in line with its commitment to grow its presence in the cosmetics and cosmeceutical industries.

Ireland: Australian company Probiotec Limited has revealed that it will establish its European manufacturing headquarters in Dundalk, Ireland, where it will produce its range of Celebrity Slimbranded weight management and other food products.The investment is expected to create 70 new jobs and generate sales of over €30 million over the next three years.

UK: Coca-Cola Great Britain (CCGB) owned Relentless launched its lifestyle magazine This Is The Order online for the first time in March.

Until now, the free quarterly magazine was only available in participating stores and venues but will now also be available as an online publication for readers.

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The British Soft Drinks Association (BSDA) has announced that its members have created a code of practice for the marketing and sale of energy drinks to children, however there is apparently confusion over energy shots as these are not covered by the code. Under the code, drinks will not be marketed to children under 16 and will carry on-pack warnings that pregnant women, children and people with sensitivity to caffeine should not consume them.The only main player in the energy category not to be part of the code is Red Bull.

GlaxoSmithKline has been promoting its Lucozade Alert Plus energy shot in the trade press, highlighting the product's accompanying £5 million marketing campaign.

North America

US: GMP Laboratories of America, producer of custom dietary supplements, has expanded its production capabilities for various forms of liquid products to meet growing demand.The company is well known for producing custom nutraceuticals,

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functionaldrinks zenithinternational newsletter Page 8 Issue 182 16 April 2010

functionaldrinks in brief herbal beverages, vitamins and minerals.

Producer of functional waters for children and teenagers Wat-Aah! will be sponsoring this year's New York International Children's Film Festival (NYICFF).Wat-Aah! founder, Rose Cameron, stated, "We are thrilled to be sponsoring this year's New York International Children's Film Festival. NYICFF is the largest festival of film for children and we're always looking for opportunities to help promote creativity for kids around the country, something this festival has been doing since 1997."

Hall of Fame Beverages has signed a letter of intent with the V Group for the purchase of a percentage of its new brand a.n.d. (Antioxidant Nutritional Drinks). Larry Twombly, CEO of Hall of Fame Beverages, commented, "This is a very exciting opportunity for both parties. Not only is this new brand poised to be the leader in quality functional beverages, it also opens up the door to some of the most respected distributors in the business."

Next Generation Beverage and The Canada Dry Bottling Company of New York have entered into an agreement for the distribution of the former's Serenity Zen Beverage.The distribution agreement will cover over 25,000 points in the New York City and Greater Metropolitan area.

Las Vegas-based energy drink company Xyience has announced that its Xenergy branded drinks will be distributed in Texas by Silver Eagle through a range of retail chains, including Valero, Kroger, H.E.B. and Timewise Food Stores. In addition, the drinks will be distributed across the state of Georgia by United Distributors to a range of convenience and supermarket chains.

Coca-Cola-owned Glacéau has launched vitaminwater zero, which will be available in seven variants in 20oz bottles from April 2010.To promote the launch, American stand-up comedian

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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and American Idol judge Ellen Degeneres will appear in a national advertising campaign as well as vitaminwater zero featuring on American Idol.

Skinny Nutritional Corporation has signed a distribution agreement with Arizona-based retailer Fry's Food Stores for the sale of its beverages across 120 stores in the state of Arizona.

In other company news, Skinny Nutritional Corporation has announced that Barry Josephson will join its Board of Advisors.

Josephson has an extensive career in the entertainment industry and was instrumental in introducing Skinny Water to the Hollywood community.

Go Fast Sports and Beverage Company has appointed Jonathan Ekstrom as Marketing Manager and Brad Gorman who has returned to the company as Art Director.

World

According to other industry opinion, functional drinks continued to represent the category with the best growth rates for the last five years to 2009, only behind RTD tea.The company also forecasts that growth rates will slow down in the next five years as sports drinks, which make up a large part of functional volumes, start to dwindle in the US, coupled with a slowing down of the economy. A report concluded that the best opportunity to grow the functional category is to expand distribution across all sub-segments.

Representatives from various ingredients companies have reiterated that consumers are increasingly looking for beverages made not only with natural ingredients but that also have a clean label. In terms of flavours, companies have seen a surge in demand for herbal and botanical flavours such as hibiscus, elderflower, jasmine or lavender for use in RTD beverages. Ingredients and flavour houses expect this trend to continue.

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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