Cold beverages run hot: new beverages lead the way in sales, as product introductions decline for the first time in two years, setting the stage for a bump due to low-carb launches next year

Prepared Foods, May, 2004 by William A. Roberts, Jr.

According to the New Product Pacesetters report from Information Resources Inc. (IRI, Chicago), the number of 2003's new food and beverage products stood at 34,900, a drop from the previous two years. However, IRI is quick to note the numbers likely will rebound next year, when low-carbohydrate products begin to surpass the 52-week lifespan necessary to qualify as a Pacesetter.

Despite this low-carb promise, several non-carb-oriented products launched in 2003 achieved great success. Pepsi (Purchase, N.Y.) Vanilla and Sprite Tropical Remix (Coca-Cola, Atlanta) both placed among the topselling launches, even though neither has been around for 52 weeks.

For that matter, among the "Pacesetter Candidates to Watch in 2004," IRI does not list any products that tout their lack of carbohydrates. To be fair, though, Michelob Ultra from Anheuser-Busch (St. Louis), the first nationally marketed brand of beer to tout its low-carb aspect, managed $156.1 million in sales for its first 52 weeks, placing fourth on the Pacesetters list. What was the next-largest low-carb launch? Endulge nutritional bars from Atkins Nutritionals (Hauppauge, N.Y.) enjoyed $29.2 million in sales and served as the impetus for the company to team with CoolBrands (Toronto) and introduce super-premium ice creams and ice cream bars later in the year.

While sensory appeal was important, being healthful and convenient also were important goals for Dannon (Allentown, Pa.), which introduced Dannon Light 'n Fit Creamy. Indeed, the company is quick to note the unique recipe behind the nonfat yogurt. Consumers responded, to the point of $63.8 million1 in 52-week sales.

How Figures are Figured

IRI begins tracking sales of a new product once the product's distribution level reaches 30% of the nation, to order to qualify for this year's listing, a product's 30% distribution level must have been met between February 24, 2002, and December 28, 2003. In the past year, 749 food and beverage brands surpassed that criteria: however, to be considered a Pacesetter, IRI also demands that a product achieve at least $7.5 million in sales in the 52-week span. Some 117 of those required the full 52 weeks to clear the $7.5 million mark, but another 65 reached that plateau in less time, resulting in 182 total Pacesetters this year. In 2002, only 130 met the standards, while 2001 saw 153 Pacesetters.

In fact, 2003 saw more Pacesetters than any of the previous nine years of Pacesetter reports. Wal-Mart (Bentonville, Ark.) sales data have not been included in IRI data since the end of 2001.

While there are a record number of Pacesetter products this year, their sales--on average--are smaller than those in the 2002 group. The largest decline is seen among the strongest-sellers, those with $50 million or more in sales. According to IRI, just over 2% of all new food and beverages surpassed that level.

Big Year for Beverages

One of the year's biggest surprises has to be Yellow Tail red and white wines from Casella Wines (Yenda, Australia). Named for the yellow-looted Rock-wallaby kangaroo and blended specially for the U.S., Yellow Tail enjoyed $77.3 million in sales, a surprise even for its bottlers. Casella sold 2.2 million cases and actually ran out of bottles at one point.

While supplies were not quite as depleted elsewhere, the beverage category did place four entries among the top 10. Considering the quick success of Pepsi Vanilla and Sprite Tropical Remix, it could be said that six beverages ranked among the top 10. (See chart "Setting the Standard.") The category's success permeated throughout the Pacesetter list. Some 34 of all 182 new beverage launches hit the $7.5 million sales mark, combining for a total of $1.5 billion in sales.

Vanilla proved its mettle, if 2003 launches are any indication. Vanilla Coke posted $292.1 million in sales, to take the top spot among Pacesetters. Certainly, the launch was not without its concerns. It was Coke's biggest and perhaps boldest new product since the infamous introduction of New Coke in 1985.

With the newest version of Coke, the company would attempt to hearken back to a simpler time. Press materials recalled 1950s soda fountains and promised, "Vanilla Coke offers the same true taste of Coca-Cola Classic with a hint of vanilla flavor," extracted from vanilla beans.

Not to be outdone. PepsiCo added its own vanilla-enhanced colas (regular and diet versions) later in the year and met with similar success, albeit expectedly lower sales. Through 24 weeks of distribution, Pepsi Vanilla achieved $81.7 million, and IRI believes the product will reach the $150 million mark for full-year, 52-week sales. In so doing, it likely will be the leading Pacesetter next year.

Another beverage apt to appear next year will be Sprite Tropical Remix from Coca-Cola. Through 40 weeks of sales, the seasonal soft drink's $98.7 million haul puts it among this year's top seven. IRI believes the product will reach $120 million in 52-week sales, setting the stage for a competitive and beverage-laden 2004 Pacesetters report. Promising "another way to enjoy Sprite," Chris Lowe, chief marketing officer with Coca-Cola North America, believes, "Sprite Remix will build on the brand's popularity in a way that is true to the personality of Sprite."