There’s nothing quite like the beverage category. Think of the players as tech start-ups. Only instead of code, these gutsy entrepreneurs are armed with acai, aloe and antioxidants. They are whipping up tasty concoctions in their kitchens and hoping for something to click with early adopters who are label-reading at Whole Foods and Fresh Markets.
Each year, countless new products appear in hopes of being the next vitaminwater or Vita Coco.
One of the key behind-the-scenes players attached to the success of both of the aforementioned brands is Ken Sadowsky. Those in the beverage industry know Sadowsky and his track record for making good bets in this highly entrepreneurial field.
Sadowsky began as a very successful distributor in the Northeast. He was asked to join the board of Vitaminwater and was an early investor in the brand, which Coca-Cola acquired for a gaudy $4.2 billion. Then he became involved with Vita Coco, which continues to enjoy triple-digit growth and is the leader in the category. Sadowsky also has ties to up-and-comers like Hint Water, Inergetics, Bai Brands and Sambazon.
I caught up with Sadowsky during a rare moment of downtime (he was recovering from the flu), and asked him, given his reputation as something of a beverage whisperer, to identify the five biggest micotrends in the industry. Here is what he had to say:
Drinkable oats: There will be an oat category. Five legitimate oat entries already exist, including Sneaky Pete’s and Alpina. They are trying to get into mainstream accounts. Some are positioning themselves as satiating, as a meal replacement alternative. Others see it as dietary, something that can provide the fiber component. I am also interested in a brand called Oat Works, featuring a proprietary ingredient call Promoat.
Texturally modified beverages (TMB): Like the oat drinks, there is a move toward drinks that have texture including aloe and chia. A lot of aloe entries are already out there, including Aloe Gloe and even a carbonated aloe drink that’s hitting the market now. One of the knocks on the category has been calories, so Aloe Gloe has substituted the water for juice, leaving in all the effective ingredients but taking out some of the calories. The other issue had been viscosity, but consumer tastes are changing. Now having chunks in a drink isn’t a bad thing. There are also chia drinks, like Mamma Chia, which have chia seeds in it. In the early days of alternative beverages, Clearly Canadian Orbitz and Mistic Jumpin’ Gems, with gelatin bits in it, tried to the lead the way in TMB, but they weren’t ready for primetime. It’s important to be evolutionary versus revolutionary. A lot of revolutionary drinks are too far ahead of their time.
Coffeefruit: After coffee is roasted, a berry is left over. It’s a byproduct of the coffee industry and it’s heavy in antioxidants. Bai 5 is five calories, it’s all-natural and it fights off free radicals. It has a lot of positives, and that’s why I invested in it and am on the board. The other brand in this category is Kona Red.
Fruit juice made fresher: An iterative change has taken place, in that Odwalla and Naked (owned by Coca-Cola and PepsiCo, respectively) are using a technology called high-pressure pasteurization (HPP). HPP maintains the natural freshness and extends microbiological shelf life. Not wanting to miss out on the ultrafresh juice market, Starbucksacquired a drink company called Evolution Fresh that uses a purer method called cold pressing. I haven’t seen that scaled yet, but both types of technology are about keeping juices as fresh as possible. These are game changers, but it’s incumbent on those brands to possess multiple supply chain options, because the shelf life is only 21 to 30 days.
Gum sweeteners: We are starting to see more drinks using xylitol. Xylitol is a natural non-nutritive sweetener more commonly used in gum. The xylitol beverages that I have seen are sourcing xylitol directly from birch trees. The potential exists that a mainstream xylitol beverage could reach the market.
These five are all microtrends, but each has something to offer. It just needs to be a careful blend of head and heart. By head, I mean it could be the best thing to drink, but there is no brand or it doesn’t taste great. Too much heart means the brand is there but not much else. It takes both.