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July 28, 2012

NPD Watch: Stevia – Is 50 the Magic Number?

CA2_BlogAnalyst Insight by Diana Cowland, Health and Wellness Analyst at Euromonitor International

Euromonitor International has been closely watching developments in stevia since it was permitted for use in the 27 EU Member States on 2 December 2011. This article focuses on the introduction of stevia in soft drinks and where future opportunities may lie.

Since Euromonitor International reported on the launch of Polo Cola Slim from Zbyszko (PPH Zbyszko) in February 2012, we have, as predicted, seen the launch of soft drinks sweetened with stevia from a major player in the EU, namely PepsiCo Inc and Unilever Group. PepsiCo Inc has launched their brand SoBe and Unilever launched stevia-sweetened Lipton Green Tea with Mango. Hot on their heels, The Coca-Cola Co is about to launch mid-calorie versions of Sprite and Fanta in the US sweetened with stevia.

Unilever’s Lipton Green Tea with Mango 

1

Source: Euromonitor International

Developments in the EU

After SoBe's V Water attracted headlines in the summer of 2011 due to the high amount of sugar in the drink, PepsiCo decided to reformulate it and launch the first stevia-sweetened soft drink in the UK in April 2012, targeting the sports and energy drinks market. This coincides with the marketing push for sports drinks before the 2012 London Olympics, but is it just a short-term sell? The brand could compete with reduced-calorie sports drinks by offering a natural alternative.

Since 2008 when SoBe started using stevia as an ingredient in the US, the brand has seen a declining share of the soft drinks market, falling from its peak in 2007. PepsiCo's SoBe recorded total off-trade volume sales of just over 318 million litres in the US - the brand's biggest market – in 2011 compared with 431 million litres in 2007. Perhaps this should be reason enough to question the future of the brand. Nevertheless, with the second largest soft drinks player entering the UK market, others are bound to follow.

Changes have been somewhat slow to occur since stevia was permitted in December 2011. In France, where stevia has been permitted since 2008, the only soft drinks containing stevia remain Coca-Cola's Fanta Still, Nestea and Sprite. Although, Nestea with stevia will be launched in more EU countries in 2012, including the Czech Republic, Austria, Greece, Italy, Poland, Slovakia and Slovenia in July and Benelux and Germany in Q4. If the success of PepsiCo's Pepsi Next – a mid-calorie drink – in the US is replicated in Europe, we are likely to see more reduced-calorie rather than zero-calorie soft drinks introduced to the market.

The Coca-Cola Co’s Fanta Still

Fanta

Source: Euromonitor International

50% a winner

There is still some disagreement about stevia as it has to be combined with sucrose to create the best taste profile. According to growers such as Sweet Green Fields and companies such as Coca-Cola and PepsiCo, the industry consensus is that products containing the natural sweetener can only offer a 50% reduction in calories.

However, the success of PepsiCo's Pepsi Next in the US should ward off some critics. As Pepsi Next is sweetened with high fructose corn syrup, aspartame, sucralose and acesulfame K, no doubt manufacturers would see some success if they used stevia to replace this cocktail of high intensity sweeteners.

Coca-Cola is reported to be doing exactly that. The company is set to launch stevia-sweetened versions of its Sprite and Fanta brands in the US in the summer of 2012, with 50% fewer calories. It is likely that Coca-Cola will see stronger sales than those of its rival PepsiCo as the natural angle is sure to capture the interest of more consumers.

Tea: The next port of call?

Green tea has been of interest to many consumers since its potential health benefits, including its high antioxidant content, were first realised. Whilst the science behind the benefits of green tea has never been particularly strong, hot green tea witnessed absolute value growth of US$1.3 billion globally over 2006-2011. This can be partly attributed to the growing population in Asia Pacific (where it is drunk in the greatest quantities) and rising disposable incomes, but it is also gaining interest in other regions.

Outside Asia, RTD green tea has yet to become truly established. However, this appears to be about to change in the US in particular as consumer demand is rising. Incorporating stevia into RTD green tea can not only be used to advocate the product's naturalness but also reduce its calorie content by half. This formulation has started to be used by a number of companies, and those who are yet to cotton on should do so quickly.

Trop50's time for tea

PepsiCo's Trop50, which generated global sales of US$160 million in 2011 (equivalent to 78 million litres), just three years after it was introduced to the market, launched green tea and white tea mixes designed to target the health-conscious consumer in 2012. Marketed as containing antioxidants in the form of vitamin C and E as well as containing 50% less sugar and having 50% fewer calories than regular products, it offers a healthier alternative to the American favourite of iced tea.

Asian brands bring green tea to the US

Ito En, (a top-20 global soft drink player in 2011) launched Teas'Tea Plus half & HALF in April 2012, which is green tea flavoured with apple, lemon or peach and sweetened with stevia. The product markets the fact it contains catechins, an antioxidant present in tea which, according to the product, helps to maintain a healthy heart and neutralise free radicals. Whilst this seems a particularly strong claim for a drink, it highlights the fact that stevia manufacturers could benefit from promoting the naturalness of their product to boost sales of beverages with a cardiovascular health positioning.

Euromonitor International's prime positioning data show that global sales of beverages with a cardiovascular focus are set to reach US$9 million by 2015, up from US$5 million in 2010. The vast majority of this growth will be driven by Western Europe, but the introduction of stevia in soft drinks in North America could significantly impact this projection.

Ito En's Teas'Tea Plus half & HALF launched in the US in April 2012

4

Source: Euromonitor International

Could flavoured milk drinks follow?

Perhaps the next step after soft drinks will be a cross-over into flavoured milk drinks, particularly those flavoured with fruit juice, which are set to enjoy absolute value gains of US$2.3 billion globally over 2011-2016. As milk is regarded as a natural and healthy product, the addition of stevia could help to promote its health-related attributes by reducing the sugar content.

50% calorie reduction in soft drinks is here to stay

Consumers are looking for a reduction in calories and these stevia-sweetened drinks offer a halfway point. But is a 50% reduction enough? If a consumer were to drink one full-calorie soft drink a day, his/her daily calorie intake could be reduced by around 70 calories, the equivalent of a light snack. Whilst the saving is minimal for many, any reduction is worthwhile. Furthermore, the additional benefit of the sweetener being natural means that these mid-calorie drinks are here to stay and in fact could be particularly successful for those brands or products targeted at children. 

 

 


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