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functionaldrinks zenithinternational newsletter This issue at a glance...

Page four Fuelling American sports fans

Pages six and seven Anti-ageing drinks in focus

Issue 178

energy drinks/wellness beverages

Keeping antioxidants at bay Bai Brands LLC, a coffee berrybased beverage producer, has added a range of low-calorie beverages called Bai-5. The new drinks, like the rest of the company's portfolio, are primarily based on coffee berry, which has been traditionally used by coffee farmers as a source of energy for food and drink applications. Moreover, studies have suggested the fruit is high in phenolic compounds, a type of antioxidants. In fact, according to Bai Brands, the coffee berry has an Oxygen Radical Absorbance Capacity (ORAC) count of 3,000 compared to açai's count of 100.The drink's uplifting properties are derived from its 70mg of natural caffeine from coffee fruit and white tea extract. The new Bai-5 contains just five calories thanks to being sweetened with organic stevia, with the first variant scheduled for launch called Sumatra Dragonfruit and to be followed by Panama Peach. All variants are named after the most important coffee growing

Page five Pick-me-up for Irish party-goers

United States regions in the world.The company has revealed that a Costa Rica Clementine version will be launched in March 2010. The drinks, according to company founder Ben Weiss, have a wide appeal amongst consumers. Weiss commented, "We find that the Bai-5 drinker spans targets ranging from the young, college age kids looking for an all natural energy boost, but also the 30-50 year old chic mom set looking for that little bit of lift without the calories." Since the regular Bai drinks were introduced, sales have reportedly grown aggressively, with expectations set high for the next six months.To this end, Bai Brands will implement street teams and viral marketing on college campuses, starting with the universities of Yale and Princeton, and to be followed by a nationwide rollout. Bai and Bai-5 can be found primarily through specialty food stores in New York, New Jersey, Pennsylvania and Connecticut.The company intends to have national presence by 2011. Bai-5 has been available since January 2010, with the regular Bai range first introduced in August 2009 and retailing for around US$1.99 per 8oz bottle.

Page three Coconut water’s ray of light

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functionaldrinks zenithinternational newsletter Page 2 Issue 178 11 February 2010

editorial comment Welcome to the 178th issue of functionaldrinks.We're only just into the second month of this year and activity within the industry has already gained considerable momentum. First, we report on the preliminary test results of a shake trialled by Groupe Danone to help treat Alzheimer's disease which, if launched, could revolutionise the way certain diseases are treated and pave the way for treating other degenerative diseases (see Page 3). We then take a look at Vita Coco's latest round of investors, comprising some of the most famous stars, a bold move that will put the brand in the limelight (see Page 3). Also in the US, we cover the launch of a green coffee berry drink by Bai Brands LLC, which apparently represents a technological breakthrough finally allowing companies to take advantage if this highly nutritious berry (see Page 1).

company Deuverop has unveiled its juice-based energy drink that promises to cure fatigue with a touch of mysticism (see below). Set to launch a first of its kind in Ireland is energy drink player Shark AG, which has released news of a dedicated hangover beverage to help consumers recover and find the necessary energy to face the day after a big night out (see Page 5). Back to the US, Innovative Beverage Products, producer of a diverse range of nutraceutical shots, has added an immuneboosting variant with various natural ingredients that help reduce the symptoms of the common cold and flu (see Page 4). We also cover the latest two launches in sports nutrition, the first by American Body Building Products in the form of a high-protein beverage and the second by CytoSport with an innovative multifunctional energy shot which gives consumers a sustained energy boost (see Page 4). Finally, we take a closer look at nutraceuticals, with focus on the broad anti-ageing spectrum of drinks that include beauty, joint and bone health and cardiovascular health benefits and the developments in each segment (see Pages 6 and 7).

We also see the latest addition to The CocaCola Company's Minute Maid range with a natural juice drink with yerba maté for an energising effect (see Page 5). Meanwhile French

Cecilia Martínez Núñez Deputy Editor cmartinez@zenithinternational.com

energy drinks

France

Natural drink works like magic

and does not contain taurine. Each can of Chamane also claims to deliver 40% of the recommended daily allowance (RDA) of vitamins B3, B5, B6, B8, B9 and B12. Chamane has a natural red colour derived from its fruit concentrates and is free from artificial colours.

French distributor Deuverop has introduced an energy drink with a difference to the country's growing category.

In terms of packaging, Chamane sets itself further apart from the image of classic energy drinks by being packaged in an alubottle; which although it has been done before by the likes of CocaCola's Burn energy drink, is not widely used.The choice of packaging is also accompanied by a funky and childlike design to catch consumers' attention.

The new drink aims to differentiate itself from the leading brands Dark Dog and Red Bull, characterised by having a medicinal or classic candy-like taste, through its composition of eight various fruit juice concentrates as well as natural flavours. Chamane, as the drink has been named, contains grape, citrus blackcurrant, cherry, blackberry, elderberry, blackberry and natural pomegranate flavours.

Chamane can be bought online through the online retailer telemarket.fr as well as via Monoprix. A 250ml alubottle retails for around Euros 2.20-2.50. www.forcedelanature.com

Carbonated in type, the drink features 320mg of natural caffeine from guarana

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functionaldrinks zenithinternational newsletter Page 3 Issue 178 11 February 2010

nutraceuticals

World

Clear future for memory aid? It has been revealed that global dairy giant Groupe Danone has been involved in the development of an alleged memory-boosting shake for those suffering the early stages of Alzheimer's. The shake, already touted as a miracle drink by the general press, is called Souvenaid and was recently trialled at research centres in the Netherlands, UK, US and Germany. During a 12 week experiment, patients were given Souvenaid or a look- and taste-alike placebo drink.The researchers then applied tests to measure improvements in memory, and reported that the participants demonstrated improved verbal recall, just one of the aspects of Alzheimer's disease.

Souvenaid is purportedly composed of a cocktail of nutrients found naturally in breast milk and that are typically deficient in those suffering from the disease.As such, the researchers have claimed that the drink is not toxic and is proven to be safe. Moreover, unlike existing medicines which aim to raise levels of key brain chemicals, Souvenaid targets the connections that carry vital messages between brain cells - also known as synapses. Damage to the synapses is blamed for many of the symptoms of Alzheimer's, including memory loss. Although the results seem encouraging, more tests apparently need to be carried out in order to determine the true effectiveness of the drink as well as to ensure its complete safety. Furthermore, additional research would need to demonstrate that the drink can improve the most common symptoms of Alzheimer's if Danone intends for Souvenaid to become a serious contender against traditional drugs. Whatever the future may hold for Souvenaid, could this set a precedent for the further development of similar drinks aimed at targeting specific diseases that are currently only treated or controlled through the use of drugs? www.danone.com

natural hydration

United States

Coconut water takes centre stage

Kiedis on board as additional investors.

Vita Coco, the reported bestselling coconut water and one of the fastest-growing beverage brands in the US, is poised for major growth in 2010, according to local press coverage. With a 60% share of the coconut water market and annual revenue more than doubling in 2009, Vita Coco CEO and cofounder Michael Kirban's recent announcement of a new, high-profile set of investors could help the brand achieve record sales this year. On 4 February 2010, Kirban publicly revealed that entertainment manager Guy Oseary and his client Madonna have invested in the company - each contributing a reported US$1.5 million, with Oseary also brining Matthew McConaughey, Demi Moore and Red Hot Chili Peppers frontman Anthony

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This announcement apparently also went out on Madonna's Facebook page, reaching 1.9 million people and Vita Coco's web traffic suddenly increasing ten-fold. Coconut water, harvested from young, green coconuts, has become increasingly popular as a natural alternative to sports drinks and as a lifestyle beverage, thanks to its inherently high potassium content - 15 times that of the average sports drink in the case of Vita Coco. Whilst it is still very niche, the category seems to have been creating considerable noise recently, with developments such as Kirban's announcement all helping to raise the product's profile and acting as a catalyst for further mainstream penetration. This latest development follows shortly in the footsteps of PepsiCo's August 2009 acquisition of Amacoco, Brazil's largest coconut water company, for an undisclosed sum, and The CocaCola Company's purchase of a 20% minority stake in Zico a month later in September. Vita Coco is currently sold through over 14,000 (continued on Page 4)

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functionaldrinks zenithinternational newsletter Page 4 Issue 178 11 February 2010

natural hydration

United States

(continued from Page 3)

increase the physical number of outlets by 25%.

retailers nationwide, including Whole Foods Market, Safeway, Giant Eagle, Ralph's, Shaw's, Stop&Shop/Giant, HEB, Hannaford Supermarkets, ACME and Shop Rite, as well as via Amazon.com. It is not known whether the brand's current distribution network is ready for the potential hike in demand resulting from this increased exposure, however, the company has recently entered into a new agreement with GNC which should help

In other investment news it transpires that flavour and ingredients firm Wild GmbH & Co. KG, Eppelheim, has taken its first step towards becoming a public company. As of the 1 January 2010, investor Kohlberg Kravis Roberts & Co. (KKR) acquired shares in the 80 year family business including the subsidiaries of a total 11 countries.There will, however, be no changes in the top management. www.vitacoco.com

functional dairy

United States

Control your energy and 'whey'ght with protein

convenience to hard-training athletes and 'weekend warriors' who will appreciate the way the aluminium container keeps this performance beverage cool while giving them the option to recap it and save some high-quality protein for later."

American Body Building Products (ABB), a wholly owned subsidiary of Optimum Nutrition, has extended its range of sports nutrition products with the introduction of high-protein Pure Pro 50. Pure Pro 50 provides 50g of protein from a blend of milk protein concentrate and whey protein concentrate.The product is formulated for bodybuilders looking to move up to a heavier weight class and for athletes who typically burn a lot of calories when training or competing. The 429ml shakes are available in five flavours Banana Cream, Chocolate Peanut Butter, Cookies & Cream, Milk Chocolate and Vanilla Bean.The shake is low in fat, with just 2-4g per bottle, and provides essential amino acids including branch chain amino acids (BCAAs).The ready-to-drink shakes are packaged in lightweight Alumi-Tek aluminium bottles from Ball Corporation. "The resealable Alumi-Tek aluminium bottle is a sports nutrition industry first," said Alan Yengoyan, General Manager, Growth Initiatives, ABB. "It distinguishes Pure Pro 50 from the pack and represents an incredible

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ABB-branded products are available to purchase in gyms, fitness centres, independent natural product and specialty retail stores - including GNC and Vitamin Shoppe - and major grocery and drug store chains in the US. Pure Pro 50 is also available to purchase on the ABB website, priced at US$53.88 for a pack of 12 bottles. Meanwhile, CytoSport has introduced an innovative multi-functional energy shot which gives consumers a sustained energy boost. The new Muscle Milk Refuel contains 5g of ultrapure whey protein isolate and BCAAs to support muscle tissue and enhance satiety.The shot also contains 90mg of antioxidant EGCG from green tea extract, along with 100mg of caffeine, to increase calorie burning. CytoSport claims that, when taken three times a day, the ingredients in Muscle Milk Refuel have been shown to increase daily calorie burning by approximately 5% or 100 calories. CytoSport has also added its US patented functional energy source alpha-L-polylactate to the product, an advanced carbohydrate molecule (lactate with acid removed), which has proven in recent studies to buffer lactic acid production in muscle tissue and provide a steady, burning source of carbohydrate energy. Each shot of Muscle Milk Refuel contains 35 calories and 4g of carbohydrate, and provides the RDA of vitamins B6 and B12. Muscle Milk Refuel is packaged in 90ml bottles and is available in three flavours - Raspberry, Tropix and Fruit Sour. www.musclemilk.com www.americanbodybuilding.com

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functionaldrinks zenithinternational newsletter Page 5 Issue 178 11 February 2010

energy drinks

United States

Instant energy drink The Coca-Cola Company (TCCC) has expanded its Minute Maid umbrella brand with an energising offering. The newly released beverage is a strawberry-kiwi flavoured juice drink with added yerba maté extract for a natural energy boost.The juice drink's yerba maté extract delivers natural caffeine, whilst the drink is made with natural fruit juice. To accompany the launch of Minute Maid Enhanced Strawberry Kiwi,TCCC also unveiled its reformulated Minute Maid Enhanced Pomegranate Flavored Tea which now only contains 40 calories per serving and is a good source of antioxidant vitamins C and E. Minute Maid Business Unit President, Mike Saint John, commented "Minute Maid is constantly looking for new ways to meet the needs of health-

conscious consumers. Minute Maid Strawberry Kiwi with yerba maté is a delicious juice drink providing a natural energy lift with the trusted great taste for which Minute Maid is known." In other company news, it has been revealed that the Minute Maid Enhanced line will be available in 12oz shrink-wrapped single-serve bottles through supermarkets and other retailers to accompany the original 59oz bottles. Saint John added, "By launching our most popular varieties of the Minute Maid Enhanced juice and juice drink line in a chilled single-serve, we will continue to meet the needs of health-conscious consumers with a new, convenient package." According to Saint John, all these developments will be supported by a marketing campaign that includes in-store and out-of-store trials. Minute Maid Enhanced Strawberry Kiwi has been available since the end of 2009 and the 12oz bottles from January 2010. www.minutemaid.com

energy drinks/nutraceuticals

New elixir soothes alcohol wounds Amongst the world's leading energy drink players, Shark AG is expanding its offering with a hangover remedy for the Irish market. Called REVAMP, and positioned as the first dedicated anti-hangover drink in Ireland, the new proposition is a functional energy drink with fast refreshing energising qualities as well as combating the effects of alcohol consumption. It derives this hangover-zapping functionality through the use of extracts of glutayeast, rosemary and chamomile, in addition to magnesium lactate and vitamin B6. Meanwhile the drink delivers its refreshing function from D-ribose, taurine and caffeine, with sustained energy achieved through the combination of glucose, inositol, L-carnitine, choline bitartrate and vitamins B3, B5 and C. Designed for consumption the day after a night out and is not gender or age related. It is more of a lifestyle product, formulated to relieve hangover symptoms and give consumers the energy to start their day.

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Ireland In its capacity as the first such offering to be available in Ireland, REVAMP will be sold at a premium price of €3 per 75ml glass bottle (the product is also available in 6 pack display and multi pack units).This premium selling price also enables retailers and distributors to receive a higher margin which should help REVAMP secure prime areas such as counter space. The hangover remedy will initially be launched into dedicated off licences and pharmacies, with the company then set to look at opportunities within retail stores and forecourt convenience stores, and later within on-trade channels. Through initial trade talks, Shark AG has received a lot of positive feedback and interest. In terms of marketing and promotion, the company has devised some strong commercial imagery that it feels instantly creates an association with the message and positioning of the product. Building on this, the advertising strategy is to create awareness and interest in REVAMP whilst educating the consumer on its benefits.An important part of the strategy is getting product into consumers' hands to create awareness and encourage conversation and recommendations to friends and colleagues. The Irish market will be the primary market for the launch of REVAMP, with further markets to follow thereafter.

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functionaldrinks zenithinternational newsletter Page 6 Issue 178 11 February 2010

nutraceuticals

World

Anti-ageing drinks in focus

Nutraceutical beverages represent a low volume, high added value sector when compared to the soft drinks category as a whole.Yet for the past few years they have been showing good growth and hold considerable potential for future development as more and more consumers embrace the concept of diet as a major factor influencing health. The sector encompasses a wide variety of beverages, including juices, water and even alcohol, each purporting health benefits from weight management and beauty to heart health and cognitive function. Some areas are more established and better understood than others, whilst weight management and anti-ageing drinks in particular are looking key for driving future growth. Anti-ageing drinks are typically associated with beauty and skin health, however, in the broadest sense anti-ageing drinks also involve joint and heart health benefits which have become more relevant to consumers as the proportion of individuals affected by cardiovascular or circulatory diseases in developed markets steadily increases. Moreover, drinks with a joint or heart health positioning have proved more popular partly because such drinks normally aim to help treat or diminish symptoms or ailments; whereas skin health drinks appeal to a smaller group of consumers who are almost always

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women and are to an extent still considered as a luxury.This is not to mention that for the average consumer, it is easier to justify the price premium paid for a drink that could possibly help ward off serious diseases than for drinks that preserve beauty. There has been some debate about the future of beauty drinks, especially after Groupe Danone's Essensis beauty yogurt failed to capture a sizeable share of the market. The yogurt's price positioning meant it was out of reach for most consumers to buy on a regular basis. Moreover, some consumers remained sceptical of the product's formulation given that certain ingredients, such as borage oil and vitamin E, are commonly associated with menopausal women. After Danone announced it would pull Essensis from the markets where it had been introduced, some claimed the beauty or cosmeceutical category had no prospects for future growth. However, irrespective of the veracity of Essensis’ beauty claims, the yogurt was launched at a time when most consumers were strapped for cash and whose spending decisions became determined by price and perceived value added. The progression of cosmeceuticals in the US has been largely positive, albeit the category remains a niche with a luxury positioning. Drinks such as Borba's Skin Balance Waters and NestlÊ's Glowelle have managed to survive adverse economic conditions largely due to being targeted at well off individuals whose spending habits remained mostly unchanged during the recession. To add to their premium positioning, both drinks are only sold through high end outlets and alongside other beauty products; thus becoming part of a beauty regime and not a substitute. Clear positioning coupled with consumer understanding of a drink's health benefits are key to the success of a product and, to an extent, of a category be it a heart, joint or skin health drink.

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functionaldrinks zenithinternational newsletter Page 7 Issue 178 11 February 2010

nutraceuticals

World

Key figures: According to leading drinks consultancy Zenith International, consumption of nutraceutical drinks in 2008 is estimated to have reached 3.7 billion litres, with a value of €11.5 billion. The North American market has rapidly gained pace since 2003 to become one of the world's most advanced nutraceutical countries, encompassing a full range of product types. In 2007, the region overtook Japan as the largest nutraceuticals market by volume, primarily thanks to investment in the category by major companies such as Coca-Cola and PepsiCo. Recent developments:

Sept 2009:  HydroOne LLC launches Bode Joint which joins Bode Heart and two more nutraceutical drinks - US Oct 2009:  Danone pulls Essensis from remaining markets - Europe  Cooperativa Colanta launches Colanta Funciona, the first dairy product in the country top incorporate Raisio's Benecol - Colombia Jan 2010:  Noah's Naturals launches beauty powder drink - US

Jan 2009:  Stolle Wellness launches LactoMune powder for inclusion in beverages, the proprietary formula helps support joint health US Feb 2009:  Groupe Danone has announced it will cease sales of its cosmeceutical yogurt Essensis in France on 1 March 2009 since it has failed to meet the company's expectations - France Mar 2009:  Hansen Natural launches Self Beauty Elixir drink - US  Zymes Omega Solutions launches Omega Chill with 50mg of omega-3 with brain and heart health positioning - US July 2009:  Skeen launches eponymous youth-enhancing concentrate - France Aug 2009:  Happy Planet launches range of healthy shots including Glow, a beauty shot - Canada  HealthSpan Solutions launches BeneVia range targeted at baby boomers with a heart health offering - US

For more information contact Zenith International on tel +44(0)1225 327900 or email info@zenithinternational.com

functionaldrinks in brief

Europe

Austria: Brands International Marketing & Sales Managing Director, Franz Ellmer, has stated that he is pleased with the performance of the company's near water range, Arlberg Quelle GletscherEis (glacier ice), since its introduction to the Austrian market in June 2009.The product is currently available in the Vorarlberg region and there are plans to extend distribution both nationally and to Germany and Switzerland in 2010.

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Belgium: Beneo-Orafti has said that recent polls it conducted in the UK, Spain and France revealed that consumers are loyal to premium brands that deliver health benefits even at times of recession. France: French supplier Bio Serae has announced the organic certification of its second cactus-derived ingredient Cacti-Nea. Cacti-Nea joins NeOpuntia, another of the company's weight management ingredients derived from the

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functionaldrinks zenithinternational newsletter Page 8 Issue 178 11 February 2010

functionaldrinks in brief announced that Update Enterprises will distribute its portfolio of functional drinks across the state of South Carolina.

North African cactus plant, in its organic certification. Sweden: Red Bull has won its trademark infringement court battle with Swedish drinks firm SM Group which is to stop selling its energy drink Red Bat. UK: Voltz Distribution UK has teamed up with Max Power to give away a Subaru Impreza to the winner of a full army assault course.The competition is free to enter and successful applicants will have to compete for the top spot. Coca-Cola Great Britain has launched an integrated marketing campaign for Powerade, promoting its sponsorship of various football and rugby events in the coming months. Britvic has been promoting in the trade press its upcoming on-pack rewards scheme for Gatorade, worth £3 million and intended to boost sales of the sports drink.

North America

US: Dr Siegal's Direct Nutritionals has announced that its eponymous line of hunger-controlling shakes will be sold through the website of pharmacy Walgreens. CEO Dr Siegal commented, "Having my shakes, cookies and latest book all available at Walgreens.com, one of the most popular shopping websites, makes them more accessible than ever." PepsiCo-owned SoBe has marked the launch of Zero-Calorie SoBe Lifewater with actress Ashley Greene, who modelled SoBe 'skinsuits' for the Sports Illustrated magazine swimwear issue.

Market Connections Group has expanded its Amy & Bryan brand of natural juices with a coconut water offering.The new Amy & Bryan Coconut Juice is 100% natural with no additives and is available in 10oz cans. NutriPure Beverages and its subsidiary XND Technologies have contracted West-Pack Industries to manufacture and bottle the Nu2O range of drinks.The former commenced production in January 2010. In order to fuel growth of its G2 low-calorie sports drink, Gatorade has unveiled a new campaign that includes a broader range of athletes that are deemed to be more approachable by consumers.This is to emphasise the low calorie aspect of the drink without diluting the hydration aspect. Ex Drinks has announced that its relaxation drink Ex Chill will be available for sale online from early 2010.The drink is made with Wild's all-natural sweetener Fruit Up and contains the active ingredients chamomile, valerian and lemon balm.

World

According to recent research, pomegranate compounds may reduce the risk of oestrogenfuelled breast cancers. Reportedly, certain chemicals found in the fruit can help suppress the chemical called aromatase that leads to cancer growth. Brazil: According to Brazilian media reports, The Coca-Cola Company is to discontinue its Coca-Cola Light brand due to cannibalisation of sales by Coke Zero and to replace it by vitamin and mineral enhanced Coca-Cola Light Plus.

Bebida Beverage Company has

functionaldrinks zenithinternational newsletter

Editor: Jenny Foulds Deputy Editor: Cecilia Martínez Núñez Contributors: Laura Knight Market Intelligence Director: Gary Roethenbaugh functionaldrinks is issued 25 times a year and is only available by subscription: electronic PDF format only £495; hard copy and PDF £595* *VAT chargeable on electronic format to UK companies and EC companies not registered for VAT

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7 Kingsmead Square Bath BA1 2AB United Kingdom t +44 (0)1225 327900 f +44 (0)1225 327901 e functionaldrinks@zenithinternational.com www.functionaldrinksnews.com No part of this periodical may be reproduced in any form, copied or stored electronically without prior permission in writing from the publisher. Every effort is made to verify all information published, but Zenith International cannot accept responsibility for any errors or omissions or for any losses that may arise as a result.

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