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Beverage Companies Focus On Health

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U.S. soft drink companies have been promoting the fact that they offer various sizes and product formulations to help consumers to meet their health and/or calorie goals, and they also are making acquisitions of healthier beverages to increase their offerings.

Dr Pepper Snapple Group said recently that it would acquire Bai Brands LLC and its complete portfolio of antioxidant-infused beverages for $1.7 billion. Bai, according to DPS, also “provides a strong platform to incubate and grow better-for-you beverages throughout the non-carbonated and carbonated beverage sectors.”

“We’re excited to welcome Bai into our family of great brands,” said Larry Young, DPS president and CEO. “In a relatively short time, Bai has carved out a leadership position in the enhanced water category and has now extended that success into other fast-growing and profitable categories. We’re equally impressed with their innovation pipeline, which will continue to meet the needs of consumers seeking great tasting, low-calorie beverages with natural flavors and no artificial sweeteners.”

DPS has been distributing Bai on a widespread basis since 2013, Young said.

“Adding it to the broad range of choices and options in our company-owned portfolio is a natural next step. Moving forward, we will empower Bai’s management team to continue the breakthrough and disruptive branding and innovation that have revolutionized their categories and work with them to put the brand in front of more consumers in more places.”

The Bai portfolio spans several high-growth beverage categories, including enhanced water, carbonated flavored water, coconut water and premium ready-to-drink teas under Bai, Bai Bubbles, Cocofusion and other brands.

Bai will operate within the Packaged Beverages segment of DPS and continue to be led by founder Ben Weiss.

The transaction, which is subject to customary closing conditions, is expected to close in the first quarter of 2017. The boards of both companies have approved the transaction.

Also recently, PepsiCo announced that it would acquire KeVita, maker of fermented probiotic and kombucha beverages. PepsiCo said the transaction will expand its health and wellness offerings in the premium chilled beverage space.

“I am pleased to welcome KeVita into the PepsiCo family. Under the leadership of CEO Bill Moses, KeVita has become an innovative, high–growth brand that is transforming the functional beverage space,” said Chris Lansing, GM and VP of PepsiCo Premium Nutrition. “This announcement is further evidence of PepsiCo’s focus on delivering Performance with Purpose by continuing to evolve our health and wellness offerings to meet consumers’ changing needs.”

KeVita has three product lines with live probiotics in every bottle. With more than two dozen flavors of Sparkling Probiotic Drink, Master Brew Kombucha and Apple Cider Vinegar Tonic, all KeVita drinks are certified organic, non-GMO, gluten-free and vegan.

“Joining the PepsiCo family will give us an opportunity to extend KeVita’s trend-forward beverages to a broader audience, while staying committed to our core values,” said Moses, who also is co-founder of KeVita. “We’re looking forward to more consumers experiencing the KeVita brand and to leveraging PepsiCo’s marketing and distribution capabilities.”

Coca-Cola also sent out a news release recently outlining the progress U.S. companies have made toward the goal of helping consumers cut the number of calories they get from beverages.

Jay Moye, editor-in-chief of “Coca-Cola Journey,” said, “One year into a 10-year campaign to reduce beverage calories consumed per American nationally by 20 percent, Coca-Cola and its competitors are taking foundational steps to help change consumer behavior and drive interest in lower and no sugar beverages and smaller packages.”

The findings come from an independent, first-year progress report published by Keybridge LLC, which describes beverage innovations, marketing initiatives and distribution strategies being implemented nationally by Coca-Cola, Dr Pepper Snapple Group and PepsiCo to reduce beverage calories consumed per person nationally by 20 percent by 2025. The report estimates that beverage calories per person decreased by 0.2 percent from 2014-15. This was the result of a 2.3 percent decrease in calories per 8-oz. serving that was mostly offset by a 2.2 percent increase in total beverage consumption. Declines in the consumption of low- and no-calorie soft drinks also had an impact, Moye said.

“Driving change of this magnitude takes time,” said Dr. Howell Wechsler, CEO of the Alliance for a Healthier Generation. “We are pleased to see that the beverage industry has begun to implement and learn from strategies that can reach the goal of a 20 percent reduction in Americans’ beverage calories.”

In 2015, the Alliance for a Healthier Generation, the American Beverage Association and the aforementioned companies launched the Balanced Calorie Initiative (BCI) to increase interest in and access to low-calorie and smaller-portion beverages. It’s the single largest voluntary effort by any industry to fight obesity and related health issues.

BCI programs are now underway in five pilot markets with above-average obesity rates—New York, Los Angeles, Little Rock, Arkansas, Montgomery, Alabama, and the Mississippi Delta. Each participating company, including Coca-Cola, is implementing strategies to engage consumers, from increased availability of no- and low-calorie beverage options and smaller portion sizes such as mini-cans, to product reformulation, to calorie awareness messages on coolers, vending machines and fountain equipment. Companies also are launching sampling programs, local media programs, couponing and other incentives; in-store displays prominently highlighting smaller packs, lower-calorie and lower-sugar beverages; and community outreach. These initial efforts will allow the beverage companies to test solutions and develop best practices to roll out in other parts of the country.

“America’s beverage companies are committed to cracking the code on how each company can heighten consumer interest in lower calories, small portion sizes and less sugar,” said Susan Neely, president and CEO of the American Beverage Association. “The innovative strategies we are ramping up in the marketplace will be what gets us to our goal.”

According to the Keybridge report, introductions of no-, low- and mid-calorie beverage innovations across the industry outpaced introductions of full-calorie beverages in 2015. Beverage companies introduced 26 low- and no-calorie beverages and 17 mid-calorie beverages, representing more than 60 percent of all new brands and flavors introduced. Five beverages also had their average calories per ounce reduced from 106 calories to 68 calories per 8-oz. serving, a 36 percent calorie decrease. And companies are working with retailers to change in-store shelf layouts to attract consumer attention toward reduced-calorie options and smaller package sizes.

“We are early in our journey, but the Balance Calories Initiative is an important opportunity for beverage companies to work together to help people reduce the calories and the sugar they consume from our beverages and offer even more choices,” said Caren Pasquale Seckler, VP, social commitment, Coca-Cola North America. “We look forward to growing and expanding our efforts to create and adapt our business strategies to offer people more choices, smaller packages and less sugar.”

The report also emphasizes the challenges experienced during this first year including sharp declines in consumption of low and no-calorie soft drinks. Meeting the 2025 goal will require beverage companies to not only reverse the downward trend in beverages with low- and no-calorie sweeteners but also accelerate growth in these beverage options, the report added.

About the author

Kristen Cloud

A former newspaper editor and publisher who has handled digital duties for The Shelby Report since 2011. She once enjoyed leisurely perusing the grocery store aisles but, since having a baby in 2016, is now an enthusiastic click-and-collect shopper.

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