Given current dietary trends, manufacturers are striving to find new ingredients for product development, seeking the 'next big thing' after the unstoppable coconut water. 1. Growth Category: Natural Mineral Water Natural healthy (NH) mineral water has advantages: it suits various drinking occasions, provides excellent hydration, and because consumers worry about sugar and artificial ingredients in sports and energy drinks, it is also used as a hydration substitute during and after exercise. In fact, every natural mineral water brand has a specific and identifiable source, allowing brand owners to craft marketing stories that build trust and traceability. This approach fully caters to consumer demands for authenticity, traceability, and transparency. It is expected that still natural spring water will also grow rapidly, a trend that may prompt manufacturers to seek new natural sources. Wonderful Company's Fiji Water has a unique clean taste, purity, and country of origin (product identification). Fiji Water is a rising star in the natural healthy water sector, with global sales growing 56% from 2011 to 2016. 2. Development Opportunities for Drinking Water in China The huge development opportunities in China's bottled water market have attracted many market players, and it is also one of the most diverse consumer markets. However, drinking water companies also face regulatory challenges. The new pricing system requires large users of water resources to pay higher extraction fees. Additionally, there was previously no clear definition for naming different types of bottled water. Therefore, manufacturers often gave their brands various 'fancy/marketing-friendly' names. In May 2015, the National Health and Family Planning Commission of the People's Republic of China published the updated 'National Standard for Packaged Drinking Water GB19298-2014'. The new standard prevents other still bottled water companies from commercially naming their products and clearly stipulates that bottled water can only be divided into two categories: natural mineral bottled water or other drinking water. This change places natural spring water (as defined by Euromonitor) in a negligible position. Regarding product naming, to comply with the new standard, bottled drinking water product names should be scientifically accurate. It is not allowed to name products after one or more ingredients; only water can be used. Misleading use of creative marketing descriptions for water products will be regulated. This change puts pressure on manufacturers' marketing strategies, especially when they want to expand into the functional water segment. 3. Competition with Fortified Water Consumer demand for diversification is both an opportunity and a challenge for manufacturers. Marketing companies need to make strategic decisions based on geographical regions, where they plan to develop natural healthy (NH) or fortified/functional (FF) categories, or both as complementary. That is, NH food and beverage brands sometimes compete with FF products. Danone's Mizone (FF) and Evian (NH) have such a relationship in the Chinese market, with Mizone being the stronger brand. For bottled water, Coca-Cola is fully committed to functional fortified water through its international brand Glaceau, rather than natural healthy water. At the same time, Coca-Cola is also re-promoting its sugar-free, fiber-fortified soft drink Coca-Cola Plus in Japan, which competes with natural high-fiber beverages. KeVita Sparkling Probiotic Drink Image source: FTM Probiotics are increasingly used in packaged foods and beverages. Manufacturers need to determine which 'unique selling proposition' (USP) to use to promote a new product, better fitting the target audience and market. KeVita Sparkling Probiotic Drink (acquired by PepsiCo) is an example, successfully combining probiotics with natural claims. 4. The Rise of Hybrid Products Coconut water and plant-based waters are natural healthy hybrid products that combine the characteristics of juice and water. This is becoming an important industry, with investors flocking in. Coconut water contains more potassium than bananas, no added sugar, no fat or cholesterol, and no preservatives; it is growing rapidly in many regions, such as the Middle East and Africa, which grew 17% in 2016 alone. Further advancements in processing and packaging technology have extended the shelf life of coconut water. This has led to an influx of pioneering brands, with extensive publicity positioning coconut water as a healthy alternative to juice and sports drinks. Vita Coco Coconut Water Image source: Seeking Alpha Brands like Vita Coco are rapidly expanding and capturing the global market. For any emerging field, the current fragmented state will enter a consolidation cycle. The speed of consolidation is uncertain; but brands like Vita Coco are rapidly expanding and capturing the global market. Most coconut water manufacturers will continue to enter the market through existing distributors, and this is unlikely to change in the near term. 5. Positive Trends in Tea Beverages It is estimated that between 2016 and 2021, the net growth of natural healthy hot tea will reach approximately $3.5 billion, mainly driven by growth in China, India, Canada, the UK, and Germany. China alone will contribute $1.6 billion in absolute growth during this period. Even in coffee-drinking countries, tea consumption is increasing. This contrasts sharply with the decline of low-calorie cola and regular cola brands. Nongfu Spring Tea π Image source: Zcool Natural healthy ready-to-drink (RTD) tea is more commercialized than the hot tea category, with China and India having large amounts of unpackaged tea. Individual major RTD tea brands far exceed sales of natural healthy hot tea. RTD green tea will be the growth driver in the RTD tea segment, due to its well-known health benefits and improved green tea taste and flavor. Honey is added to green tea to provide a pleasant flavor. Chinese and Japanese brands have always been at the forefront. Lipton's hot tea sales are 64% higher than its RTD varieties, mainly because Lipton hot drinks are available everywhere worldwide, while in major RTD tea markets like China, Japan, and Indonesia, Lipton is a minor brand. 6. Commercialization of Traditional Chinese Medicine Globalization brings more opportunities for different cultures to exchange, with various traditional customs, foods, and beverages influencing each other. Traditional herbs, beliefs, health concepts, and treatments from China, India, and Spain are gradually gaining popularity in Western countries. In this context, diets and beverages associated with these cultures are gradually being adopted. Traditional Chinese Medicine meets beverages Image source: Ms. Sophia Nadur's presentation at FBIF2017 forum Traditional Chinese Medicine (TCM) preparation methods are traditionally time-consuming, so through modernization and commercialization of TCM, products can maintain efficacy while also being convenient and portable. 7. The Revival of Juice Given that many markets impose or may impose sugar taxes, reducing the sugar content of beverages has become a necessary task for companies in the industry. Re-formulation, choosing organic, clean labels, and HPP (high-pressure processing) are all strategies to revive juice. Fruiti HPP Juice Image source: Fruiti official website Overall, natural healthy juice in major developed markets is showing slow growth or decline due to concerns about sugar content and market maturity. Competition from other healthy beverages, as well as consumer expectations for product diversification, also put pressure on juice. However, superfruits have been advancing across different product categories, such as 100% juice, juice drinks, and concentrated juice. The superfruit concentrate juice segment in the US will show strong growth, while the UK and China are seeing growth in superfruit 100% juice. The continued development of coconut water and other plant-based waters, as well as RTD tea, has somewhat diverted consumer attention from natural juice. Manufacturers are seeking new blends and new technologies, such as HPP juice, to attract and retain juice consumers. With the concept of 'drinkable salads' spreading in the US and UK, vegetables are increasingly mixed with juice, reducing a brand's overall sugar content. The emergence of protein and organic beverages, along with marketing strategies like clean labels, also contributes to the competitive landscape in the natural healthy segment. 8. Organic Juice: The Passport to 'Super Natural' In most markets, organic juice is regarded as particularly premium and natural. In 2016, global retail sales of commercially packaged organic juice reached approximately $2 billion; of course, sales are concentrated in developed countries. North America holds the highest sales share, accounting for half of global sales. It is predicted that Russia, Brazil, and India will also develop rapidly in the coming years, while sales in the Chinese market remain sluggish. Given the health positioning of organic food and beverages, and the importance of organic farming as a sustainable agricultural model, organic juice has growth opportunities in both volume and value in the long run. General Mills has recently invested in expanding its organic sourcing. Suja Organic Juice Image source: Suja official website However, in some countries, organic farming models are strictly regulated and underfunded, which limits large-scale production of organic fruits and vegetables. The EU has its own organic labeling regulations and certification, while other countries have their own rules. Therefore, promoting a brand with organic certification labels globally is somewhat difficult. Summary Ancient wisdom such as traditional Chinese medicine provides opportunities for manufacturers, as plant materials perfectly fit the concept of 'natural'. Large companies have spent heavily on coconut water, and its popularity will continue. Organic juice is also expanding rapidly, but certification costs and the transition to organic farming may limit its growth. Natural healthy mineral water is a regulated product in most countries, and the application process for such labels is time-consuming and difficult to obtain approval. Some traditional Chinese herbs are unpalatable to Western audiences, requiring time and effort to cultivate a consumer base. Organic certification and farming are worth attention, but making them scalable and economically sustainable remains a challenge. Source: Ringier Food & Beverage (ID: RingierFoodBeverage), reproduced with permission from the original author. Author: Hope Lee, Senior Beverage Analyst at Euromonitor International -END-