Newest Beverage Industry
Growth Trend Revealed
an "Under the Radar"
report
August 2, 2017
Beverage giants PepsiCo (Ticker: PEP) and Dr.
Pepper/Snapple Group (Ticker: DPS) are all-too-aware
of consumers waning taste for sodas and increasing thirst for
healthier beverages. Soft-drink makers responded years ago to
changing consumer tastes with diet sodas. But, recently consumer
unease with artificial sweeteners like aspartame, has led to
declining sales. According to industry periodical, Beverage Digest,
2016 sales of Diet Pepsi declined the most ever, dropping a
staggering 9.3%. Michael Bellas, CEO of Beverage Digest, noted, the
beverage industry has undergone a seismic shift and this shift
signals a fundamental change in what consumers want from their
beverages.1
Today, consumers are looking for beverages to offer far more
than just satisfying thirst. The beverage industrys product
response has come to be known as functional beverages. The first
and still No. 1 functional beverage market category is energy
drinks. But, conscious of the precipitous declines in diet soda
sales and the uncomfortable fact that most energy drinks are laden
with sugar and caffeine, PepsiCo and Dr. Pepper/Snapple are
introducing revamped drinks featuring natural sweeteners and energy
stimulating plant-based extracts instead of caffeine.
PepsiCos Brisk Mate
is illustrative. Brisk-Mate is an energizing iced tea that, instead
caffeine, infuses its popular Brisk Tea brand with yerba mate a
species of the Holly family grown in South America, known for its
energy and mental stimulation properties.
PepsiCos Brisk-Mate is one of myriad of new products comprising
an emerging functional beverage category identified by Euromonitor,
a leading publisher of independent market-research. The emerging
category is functional tea beverages. Euromonitor
calculates functional tea beverages will achieve an impressive
10.3% CAGR (compound annual growth rate) through the year 2020 more
than any other functional beverage category including energy and
(bottled) water.2
The
impressive growth potential of functional tea beverages is no
surprise to early investors in two functional tea beverage
start-ups acquired recently acquired for huge multiples of their
revenues. Bai Brands is illustrative. The company started in the
proverbial basement of CEO Ben Weiss home in Princeton, NJ in 2009.
For more than year Weiss worked to perfect his antioxidant
functional tea beverage. According to WebMD, antioxidants can play
a positive role in reducing cell damage and are helpful in variety
of conditions including arthritis, heart disease and even
Alzheimers. Bai Brands received its big break when Costco began
carrying its products. Then, building on its success at Costco,
Weiss convinced other retailers to pick up the brand. In mid-2016,
Dr. Pepper/Snapple Group Inc. purchased Bai Brands LLC for $1.7
billion.
On the very same day as Bai Brands was acquired, PepsiCo
announced its $200 million purchase of Kevita Inc. KeVita makes
five flavors of carbonated probiotic drinks. According to WebMD,
probiotics are beneficial for overall health, but most particularly
digestion.
But, the true holy-grail of functional beverages is the diabetes
category. In its earliest stages, known as pre-diabetes, doctors
and nutritionists agree that diabetes can be reversed with
lifestyle changes. Not only can functional beverages play a
credible and beneficial role for consumers with pre-diabetes, the
addressable market potential for any functional beverage targeting
the pre-diabetes consumer is enormous.
CEO Murray Fleming of
Glucose Health, Inc. (Ticker: GLUC), which
manufacturers a functional tea beverage now sold nationally in the
Diabetic Supplies aisle at Walmart, cites numbers from the National
Diabetes Statistics Report published by the CDC (Centers for
Disease Control and Prevention). Fleming points to the 84 million
Americans fully one quarter of the nation estimated in the CDCs
2017 report, to be pre-diabetic.
Building upon its success with Walmart, the company is expanding
its product line-up. Just yesterday, Glucose Health, Inc. announced
a new line of fortified iced tea mixes in the three most popular
flavored iced teas sold in America lemon, peach and raspberry.
According to the Companys news release launching the new functional
tea berages, Glucose Health Fortified Iced Teas offer three
compelling benefits for pre-diabetic consumers.
1. Clinically-Proven - Glucose Health Fortified
Iced Teas are blended with Fibersol-2, a unique 100% soluble fiber,
years of clinical studies published in peer-reviewed scientific
journals indicate, have beneficial functional impacts on blood
sugar, and digestive health.
2. Natural Ingredients - Glucose Health
"Fortified" Iced teas are also blended with natural botanicals the
plant-based extracts considered by many to be holistic remedies for
diabetes and healthy blood sugar.
3. Price - Glucose Health Fortified Iced
Teas offer true value for money retailing for $12 for a 60-day
container just 20 cents per serving.
Whether Bai Brands, Kevita or Glucose Health, Inc., the under
the radar functional tea beverage market category identified by
Euromonitor is clearly an emerging growth trend savvy investors
interested in the beverage industry would be wise to keep on their
radar.
1 April 27, 2017, PepsiCo, Coke Lose Market Share as
Americans Drink Less Soda, www.bloomberg.com
2 March 15, 2017, Storming Growth for Energy, Water
and Tea in Functional Beverages, www.nutraingredients.com
Source: NWBB "Under the Radar"
August 2, 2017
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