Market trends and developments

Growing product lines or ‘add-on products’ is another trend and according to Brooksy Smith, a Planet Smoothie franchise developer in Houston U.S, says that some juice bars now offer “low-fat soups, proprietary snacks, wrap sandwiches, breads, muffins and baked goods.” 5 A decent supply of add-on products will satisfy a customer’s need to crunch and will bring in additional profits for the industry.  The surplus of add-on products is unending.  The director of the juice and smoothie industry, Dan Titus has indicated that retailers can choose from healthy on-the-go food items like pitas, salads, soups, to pre-packaged favorites such as energy bars and sport’ supplements.  Juice and Smoothie chain, Maui Wowi have recently expanded their menu.  The company had added expresso drinks and a new frozen yoghurt item called ‘rip stick’ that comes packaged in a tube.  Juice and smoothie chains who have added these foods to their existing smoothies and juices have created healthy quick service restaurants, which is exactly what many people are seeking out nowadays as the healthier eating trend continues to grow at a staggering rate.  

The following data shows the change in the number of retail units of the U.S Juice and Smoothie Bar Market:

SOURCE: beveragemarketing.com/Statline75smoothie.htm

Presented in the graph below, the U.S market for beverages in 2002 shows that the fruit beverages segment is 7.8% and there is still room for growth.  The Carbonated Soft Drinks (CFD) is at 28.2% which indicates that they control a major portion of market share and that fruit beverages have a long way to gain market power.

Source: beveragemarketing.com/MultipleBeverageUSgr.htm

b. LEGAL AND ETHICAL ISSUES

There is plenty of scientific evidence that links various nutraceuticals to health benefits.  However, more targeted research on the inhibition of certain enzymes or other activity is needed.  It is still difficult to determine which functional ingredients to use, and also understanding which statements can be made regarding those ingredients is a dilemma.  For example, the activity of antioxidants clearly shows strong evidence of health benefits, but all of the necessary research hasn’t been done.  

In some countries like the U.S, they need to understand certain government regulations.  For example, understanding the provisions of the Dietary Supplement Health and Education Act (DSHEA) is helpful for those involved in the design of a functional beverage.  Traditionally, the Food and Drug Administration (FDA) has considered dietary supplements to be essential nutrients such as vitamins, minerals and proteins.  Some of these items today include botanicals such as ‘ginseng’ which can apparently give a shot of energy and sexual prowess.  According to DSHEA, claiming that a dietary supplement either prevents, treats or cures a specific disease is not allowed unless approved under the new drug provisions of the ‘Food and Drug Cosmetic Act.’  Statements can be made about classical nutrient deficiency diseases if they disclose the occurrence of the disease in the United States.  Statements can also be made concerning the ‘structure or function’ of the body or the state of well being expected from consuming the supplement.

According to Dr. Lee Beck, a nutritional expert, nutrients such as “LactoActin is good for people that have rheumatoid arthritis and for elderly people who suffer from inflammatory symptoms. We can’t say that it’s an anti-inflammatory because that puts it into the drug category.  We can make the statement that it supports strong joints and muscle flexibility,” notes Beck.  The challenge is to go as far as the law will allow without stepping over boundaries.  Another example is the evidence to support the claim that supplement LactMune, enhances immune function.  Dr. Beck states that “a survey was run in the U.S starting in 1960 and running through 1997.  During that time there were at least 500 consumers drinking the milk product, and the health benefits and any potential side effects were documented.”  It is known that the antibodies in the milk directed against specific human pathogens help to enhance the immune function of the intestine.  From the compiled evidence, it might be alright to say that “the beverage containing LactoMune enhances immune function, but not to claim that drinking this beverage treats or prevents E. coli infection,” says Dr. Beck. 6

Firms making nutritional support claims must have proof that their statements are truthful.  Therefore if firms attempt to label their products it must contain the following according to the FDA:

• “This statement has not been evaluated by the Food and Drug Administration.”  
• “This product is not intended to diagnose, treat, or prevent any disease.”  

Nutritional claims of this sort don’t have to be approved by the FDA prior to product launch.  The FDA must be notified no later than 30 days following the product’s entry into the market.

c. NEW EMERGING MARKETS

The juice and smoothie industry can be thought of as future nutritional fast food and its customer base is continuing to grow to maintain its maturity in the market.  The public is becoming more educated and aware of fitness and health and are looking for drinks with functionality, i.e. they’re buying the drink for what it does and not for just the taste and refreshment.  People are not just aware of the juice and smoothie industry but they know the functions of the products.

For the juice and smoothie business owner, the main concern is identifying the demographics of the market and observing consumer behaviours.  According to Chris Cuvelier, President of Juice and Smoothie Bar Consulting in the U.S, a typical juice bar customer is health conscious, active, and typically convenience oriented.  The fitness and health aspect is continuing to motivate buyers in this market, and in some parts of the world niche markets have been established where this type of industry is scarce.  At Smoothie World in Canada, the manager Brad Keys says that “we get more folks interested in the health reasons than we do folks buying for flavor.”  The purchase by the consumer for juices and smoothie’s is an impulse buy, therefore businesses must catch the eye of customers and make it more appealing.    

The positive thing about the juice and smoothie industry is that as a whole, populations are growing and people are becoming healthier.  Our ageing population will mean that people will be living longer as they become healthier.  Jason Amack, Manager of ‘Smoothie Blendz’, indicates that our population will live longer which means “we’re now building our client base and, if we do right, they’re going to be with us for a long time.”

There are a number of desired demographics for the juice and smoothie industry which targets; people in high foot traffic; College/University towns; Downtown Mainstreets; Malls/Retail Strips, just to name a few.  New emerging markets have seen an increase in young and middle aged women to fuel the smoothie boom.  The smoothies’ growing popularity is a result of health obsessed women aged between 15 and 45.  According to Rhondi Schigemra, who conducts research and development studies on supplements for Jamba Juice, a juice bar in the U.S, said that “college educated and professional women are the company’s primary consumers.  This shows that the target consumer base is more mothers than athletes.  Women in that age range make up the majority of the population and influence society’s ideas about food and health, she said.  Chris Morrow, President of Juice Bar Solutions in California, U.S, says that the juice industry has similar demographics to the indoor tanning industry where it has almost “80 percent women, often between the ages of 15 and 35.”  With these similar demographics, the juice and smoothie industry can attempt to tie-in with other markets or industries.

Many experts agree on the importance on geographic locations, and that a prime location is vital to a healthy and successful juice and smoothie business.  Cuvelier stresses that it is important to target the health conscious consumer by locations that are demographically and psychographically hitting to customers.  For example, add a juice bar to an existing health and fitness center or in a shopping plaza surrounded by healthy stores.  

Juice and Smoothie companies co-branding with other markets is an emerging market which is moving away from the traditional stand-alone retail outlets and changing conventional methods of distribution for the industry.  It may not be a catapult forward, but is definitely emerging.  

As for consumer habits and demographic purchasing power, Baby Boomers differ from the generation before them in that they put more health issues factors into their purchasing decisions.

d. ASSESS THE MARKETING OPPORTUNITY

Criteria used to assess marketing opportunities….    

→  With rising awareness of health issues, functional foods and especially beverage nutraceuticals create particularly effective segmentation.  People are more aware of nutrition and are specializing their smoothies to fit their needs.

→  Juice and Smoothie operators should consider the potential in increased revenue they could make.  For example, people are willing to spend the three, four, or five dollars for that one little indulgence of impulse buying behaviours.

→  Determining the viability of a beverage operation in a particular store is important.  Then evaluating the current store traffic and food services business, as well as competing operations close to the store can ensure a successful setup of the business.

→  Observing the current state of the industry is important as the marketing opportunity may not be suited to individual needs of the business.  It is critical to the future success of the business to perform further research to see whether trend they focus on will be an ideal marketing opportunity for them.  

→  Co-Branding Opportunities.  Unit and multi-unit franchises can be offered to existing businesses. This allows for putting a juice and smoothie business into an existing business, which allows the two businesses to be mutually rewarding. Convenience zones and fitness centers are just some possible opportunities to co-brand with.

REFERENCES

 

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