Coca-Cola further extended its presence in ready-to-drink coffee products in 2006. Godiva Belgian Blends was a line of premium indulgent beverages, and the company announced plans to team with Caribou Coffee Co. to produce a chilled, slightly sweet blend of dairy and coffee.

Enviga was the result of more than a decade of collaboration between Coca-Cola and Nestlé, but it will be the last non-black tea product from Beverage World Partners.

One of the biggest news items in beverages in 2006 was a tea product that would not hit the market until 2007. Part of a joint effort between Coca-Cola and Nestlé, Enviga is a sparkling, canned green tea containing added calcium and caffeine. However, the true selling point of the product is its description as a “calorie-burning” beverage. It purportedly boosts metabolism and encourages the body to burn more calories. Tests at the Nestlé Research Centre in Switzerland showed three 12oz cans per day could burn 60 to 100 calories in consumers of lean to normal weight.

At the core of the calorie-burning is the drink’s blend of a green tea antioxidant called epigallocatechin gallate (EGCG). When combined with caffeine, it increases the body’s energy usage and creates what the companies have termed “negative calories.” Available in green tea, berry and peach flavors, the beverage has 90mg of EGCG per serving, as well as 20% of the daily recommended value of calcium. Press materials for the product also feature an interesting usage of terms: they refer not to dieting but opt instead to “support active lifestyles.”

That is not to say Coca-Cola was only interested in tea. Far from it, the company also made a major announcement to push further into the ready-to-drink coffee market, introducing an iced drink carrying the Caribou Coffee Co. moniker. The product will combine the distribution power of Coke with a fairly well-known coffee brand: Caribou operates more than 400 coffeehouses, mostly in the Southeast and Midwest. The Coke/Caribou effort will be a chilled, slightly sweet blend of dairy and coffee, though a line extension is already planned. On Caribou’s part, the company clearly aimed to expand its reputation among consumers in 2006, as it also partnered with General Mills to launch a line of snack bars and with Kemps for a premium ice cream.

Furthermore, the line is hardly Coke’s only coffee drink effort. Debuting in August in the Northeast and now expanded into the Midwest and Southeast, Godiva Belgian Blends was a line of “premium indulgent beverages,” further proof of Coke’s desire to venture into territory long-dominated by the Starbuck/Pepsi Frappuccinos.

Thinking Hot

The latter pair also has been hard at work on a long-rumored hot vending machine. The hope is for it to dispense 9oz of Starbucks in recyclable steel cans with insulated labels. All of this activity demonstrates just how competitive the U.S. packaged coffee market has become, as several years of double-digit growth have propelled it to a value of nearly $1 billion. That growth rate is expected to continue, but the Starbucks/Pepsi venture known as the North American Coffee Partnership controls almost 90% of the U.S. market for ready-to-drink coffee and is likely to maintain that position for years to come, though Coke’s efforts show the giant will fight for share of any and all segments of the beverage market—with or without a partner.

Following the development of Enviga, Coca-Cola and Nestlé reformulated their partnership to go their separate ways when it comes to producing and marketing some teas. The pair cooperated for 15 years to produce and market canned and bottled teas, but decided their Beverage World Partners joint venture would stick to the development and marketing of black tea products, as well as the marketing of Enviga. Coffees, on the other hand, are now off-limits for the group, as are red, white and green teas.

The deal’s end should enable Coke to develop new coffee and tea products faster, and it may prevent sharing of profits. Perhaps most importantly, the move also will allow Coke to bring some of its own concepts stateside. For instance, under the agreement with Nestlé, Coke was unable to bring its Georgia brand ready-to-drink (RTD) coffee to the U.S. without going through the partnership (Georgia is a powerhouse brand for the company in Japan). Coke has made strong efforts with the Far Coast and Chaqwa brands in U.S. restaurants, as detailed in PF’s Foodservice Annual in November 2006. If either builds a strong enough reputation, the company may use the Georgia technology to bring one or both to the retail side of the market.

Elsewhere on the coffee front, bean prices forced a number of companies to raise their prices. Procter & Gamble increased the cost of its Folgers coffee by 4%. Days later, Kraft Foods and Massimo Zanetti Beverage USA followed suit, increasing the cost of some of their most popular brands by at least a dime. The former experienced a severe disappointment with one of its introductions: sales of the Tassimo hot beverage system, a machine that brews single-serve packets of coffee and other drinks, fell well short of expectations, prompting Kraft to “evaluate the business.”

Home to Roast

Part of the sales problem could have been due to an emerging trend which finds consumers roasting their own beans at home. While the movement is still in its infancy, it is growing, largely through Internet commerce.

However, Tassimo’s fate could be a sign of something greater, a trend being seen across a variety of food and beverage segments. Some consumers are seeking products that are Fair Trade Certified, guaranteeing farmers have been paid a fair price for their coffee harvest. (Fair trade guidelines actually have a variety of principles, gender equity and safe working conditions among them.) Companies are responding, as evidenced by PBS Blend from Green Mountain Coffee Roasters and PBS. Offered in 10oz packages and single-serve packs, the product carries the Fair Trade Certified label. The company is far from the only purveyor of fair trade coffee. In fact, the biggest name in coffee in recent years has stepped up its fair trade efforts.

In 2005, Starbucks purchased 11.5 million pounds of Fair Trade Certified coffee, up from 4.8 million in 2004. In 2006, the company aimed to increase that amount to 12 million pounds. Though best known for its coffee, however, Starbucks’ efforts this year also saw it firmly in different territory.

The coffee giant’s Starbucks Coffee Liqueur had been on store shelves for more than a year, but the drink found its way into restaurants in 2006. Bennigan’s Grill & Tavern utilized the product to create a three-item line of drinkable desserts including such flavors as mocha cappuccino and peppermint. Starbucks’ efforts were evidence of the growth of spirits sales in the U.S., where volume sales grew 3.8% in 2006, according to the Distilled Spirits Council.

The segment, in fact, has averaged 2.9% annual growth since 2000. Accounting for 23% of that increase has been super premium vodka, which saw revenues jump $236 million to reach $782 million, with a volume growth of 38.6%. The Distilled Spirits Council cites two reasons for the trend: the popularity of vodka as a mixer and the “desire of consumers to have something better.”

Nevertheless, beer remains the most popular alcoholic beverage in the U.S. in terms of volume, though its market share is slipping. Younger consumers, in fact, are opting for premium spirits and sophisticated brands of wine over beer. Through 2005, wine consumption has grown steadily, with sales of reds increasing 8.3% nationally, according to ACNielsen.

Mature Drinks Mature

Beer sales, on the other hand, appear to be maturing. According to Information Resources Inc. (IRI), dollar sales of beer grew only 2.4% for the six months ending in September. This is less than the 5.5% growth in malternatives, now termed “progressive adult beverages” by category leader Diageo. The giant is testing Smirnoff Source, a malt beverage with pure spring water. Likewise, Coors is trying once more with the Zima brand: April will see its third launch. Zima XXX tones down alcohol by volume (ABV) to 5% and lessens the carbonation while adding citrus, pineapple citrus and tangerine flavors, not to mention electrolytes. Smirnoff Source has even less ABV, with 2.5%.

Seeking to reverse beer’s declines, Anheuser-Busch introduced a number of products in 2006, perhaps the most interesting being an effort for adults with a gluten- or wheat-free lifestyle. Available in stores carrying organic products and restaurants, Redbridge was described as the first nationally sold sorghum beer and contains 4.8% alcohol per 12oz serving. Sorghum is important to the brew, because it is a safe grain for those allergic to wheat or gluten.

The brewing giant also ventured into limited-edition territory with Michelob Celebrate Chocolate, Michelob Celebrate Vanilla Oak and Budweiser Brew Masters’ Private Reserve, the latest in Anheuser-Busch’s seasonal releases. Miller Brewing Co. likewise continued its seasonal efforts, the second time in two years. Miller’s contribution was a chocolate-flavored beer for the holidays, though the availability of Frederick Miller Classic Chocolate Lager was limited mostly to the Midwest.

Miller’s parent, SABMiller, continued its energy beer efforts, purchasing McKenzie River Corp.’s Sparkz. Many regard the caffeinated, alcohol malt beverage, which includes ginseng, guarana and taurine, as the first energy beer. Since its 2003 debut, it has had an annual growth rate of more than 100%. Naturally, others have since joined the fold: Anheuser-Busch with Be and Tilt, and Miller with Mickey’s Stinger (released in May, it promises more caffeine than a cup of coffee.)

Energetic Growth

As for energy drinks proper, the growth in this segment continued around the world in 2006, with more than 500 debuts. The $3.4 billion industry (annual sales) grew by 80% in 2005, attracting mostly younger consumers. According to Simmons Research, 31% of U.S. teenagers drink energy drinks: 7.6 million—an increase of nearly 3 million in three years. The first, Red Bull, remains the most popular. There is the very real likelihood that Red Bull is coming to be perceived as too big and too corporate. In fact, one of the year’s most controversial launches was from a small company that is the virtual antithesis of that.

Redux Beverage initially wanted to call its new offering Reboot, a fairly pedestrian name already in use by another brand, as luck would have it. So, the company opted for a different route, changed the name to Cocaine Energy Drink and watched controversy ensue, along with publicity that few marketing campaigns could match.

The ingredient glucuronolactone, common to a number of energy drinks, received a similar amount of press this year, as critics assailed it and consumers seemed to embrace it for much the same reason: it works hand-in-hand with caffeine by amplifying and extending the stimulant’s effects. One release proudly touted the ingredient: Xenergy from Xyience was a sugar-free energy drink claiming to be ultra-premium. In addition, it was fortified with B vitamins.

The year also saw energy drinks diversify, as Stonyfield Farm launched Shift, described as an alternative to the caffeine-fueled products common to the sector. Shift combined protein, vitamins, acai and ginseng (though no caffeine or guarana). Rich in calcium and vitamin D, the cultured dairy drink also was certified organic, as was an entry from Steaz. The latter, however, went further with its Steaz Energy by making it Fair Trade Certified as well. The certification was noteworthy, because this particular energy drink is made with green tea. It also contained organic Guayaki yerba mate and acai.

Zipfizz Liquid Shot attempted a bit of diversity. The product featured a balance of B12 and electrolytes, but it was still just a drink in a 4oz bottle.

A real departure for the segment is set to appear in early 2007, when Hershey’s Ice Cream will co-brand with energy drink Banzai to launch Banzai Energy Ice. The 4oz frozen novelty has a citrus taste, but few other details have been released.

On the Juice

Coca-Cola announced wholesale price increases of as much as 25% for its orange juice brands, the fourth such increase in less than a year. For its part, Pepsi’s Tropicana brand increased its prices to retailers by about 15% over the past two years.

PepsiCo also augmented its juice portfolio by purchasing Naked Juice Company. The deal worth a rumored $450 million will expand PepsiCo’s sales of natural juice drinks and help it compete with Coca-Cola’s Odwalla. Naked markets 25 vitamin-fortified drinks, a mango antioxidant smoothie and pineapple-banana protein shake.

Perhaps the best news for juice manufacturers, though, was a study which found no link between fruit juice consumption and obesity. Researchers at Baylor College of Medicine found no association between preschoolers’ 100% fruit juice consumption and body mass index, even among children whose consumption exceeded 12oz a day.

Pepsi continued its innovation with the Tropicana brand, launching an omega-3-enhanced orange juice nationally. The company also announced Tava, a carbonated, fortified fruit drink with vitamins and chromium, a mineral said to boost metabolism, though it had not yet set a release date. Furthermore, the company’s Gatorade brand introduced Gatorade AM. This version of the sports drink targeted morning exercisers looking for milder flavor. Unfortunately, sports drinks met with their own controversy this year.

A group of 1,500 dentists produced a patient newsletter warning of the dangers of tooth decay from sports drinks. “There has been some controversy about the erosive effect of carbohydrate electrolyte drinks (sports drinks) on tooth enamel,” the 2006 edition of Word of Mouth notes. “It is our position that there is enough evidence to advocate avoiding, or at least limiting, your consumption of these drinks.” Various studies were touted to support the conclusion, and sports drinks supporters (chiefly manufacturers) countered with arguments in favor of sports drinks and the energy they provide. The dentists’ article concluded by advocating water as the preferred method of hydration.

However, dentists would also weigh in on waters as well, chiefly in heralding an FDA decision. The FDA decided to allow bottlers to claim that fluoridated water may reduce the risk of dental cavities or tooth decay. “The food eligible to bear the claim is bottled water…containing greater than 0.6 and up to 1.0mg/L total fluoride, and meeting all general requirements for health claims…”

Fluoride was far from the only beneficial element added to water this year, however. PepsiCo’s Aquafina released Alive, water enhanced with vitamins and a fruit flavor. It promised to be a good source of vitamins E, B6, B12 and niacin.

Such fortification also is set to expand into carbonated soft drinks in 2007, courtesy of Coca-Cola. Rumors are swirling that Diet Coke Plus will launch in the spring, fortified with vitamins and minerals.

Another soft drink with a benefit came in the form of Celsius from Elite FX. The drink claimed to burn calories, boasting a mix of natural ingredients proven to raise metabolism by an average of 12% over a three-hour period, suggesting it can result in burning an additional 77 calories, depending upon the consumer’s metabolism. Ingredients in the product included green tea with EGCG, ginger, caffeine, B vitamins and vitamin C.

Unfortunately for soft drink manufacturers, research suggests consumers are looking elsewhere for their beverage options, many citing healthy reasons for abandoning the beverages. Instead, water, juices and even coffee are becoming the beverages of choice for young and old.

Going Global

UCC Ueshima Coffee’s Dip In treats coffee like tea. The product, found in Japan, is a pack of eight coffeebags to be infused in a mug of hot water, just as teabags are. In Austria, Gourmet Café aims to make espresso easier; Melange Bar Vienna features 18 single espresso portions.

An Italian sports drink launched with an ingredient not typical for the segment. Emmi’s Lacto Tab Whey-Based Performance Drink contained whey enriched with Q10 co-enzymes, vitamins and mineral salts. The whey was attached to the bottle in a blister pack and had to be mixed almost immediately before consumption.

SABMiller tested Peroni Nastro Azzurro and Pilsner Urquell beers in affluent Chinese cities. Speaking of beer, Germany’s Federal Statistics Office reported 1.2 million hectoliters of beer flavored with Coca-Cola, fruit juices or other non-alcoholic additives were sold in 3Q 2006, a 28.9% jump over 3Q 2005.

In Australia, Coca-Cola will launch Mother in early 2007, an energy drink effort hoping to make a dent in Red Bull’s 36.3% share of the country’s energy drinks market. In its more traditional CSD role, Coca-Cola released an apple-and-pear version of Fanta Free in Sweden. The “free” part is that it adds no sugar and has three calories. The Loves Berry version of Fanta in Japan saw Coca-Cola add a blend of raspberry and blueberry flavors. Meanwhile, in Malaysia, the company released Seasons Red Bean Flavoured Soya, a carbonated soya drink with real red beans. In Egypt, Coke added orange flavor to its Coca-Cola Light line.