According to SPINS, San Francisco, CA, all segments of the business are experiencing double digit sales increases, with stronger growth coming primarily in the mass market channels where penetration is low.

When it comes to food delivery systems for herbal and nutraceutical ingredients, beverages make the most sense and manufacturers have capitalized on growing consumer awareness to add value to product lines and offer health benefits to consumers, all the while walking a tightrope when it comes to describing these benefits.

With a few exceptions-Traditional Medicinals recently changed almost its entire line to dietary supplement status to take advantage of DSHEA claims-most products are classified as teas or beverages and manufacturers are not making claims on the packaging. Companies are, however, adding supplement ingredient information to their packaging for more information-savvy consumers. Those who have chosen not to add supplement statistics are positioning their products as mainstream "refreshment" rather than as "health" beverages. But as witnessed by the growing popularity of brands such as SoBe, the lack of ingredient information has not stopped consumers from grabbing products off the shelves.

In the tea area, green tea has been one of the hottest markets recently with even more growth on the horizon. According to Dana Emory, Brand Manager-Specialty Teas at Lipton, Englewood Cliffs, NJ, the market for green tea in 1995 was approximately half a million pounds; in 1999 it is expected to hit three million. Mr. Emory also said that there is 80% awareness of green tea and 30% awareness of the health benefits among consumers, but only 8% household penetration, providing strong potential for future growth.

Likewise chai is quickly becoming a booming segment in the tea market, with several companies making product introductions in the past few months. Black tea is also growing in popularity, as awareness of the health benefits of a good old cup of "Earl Grey" continue to grow.

In the fight between hot and cold teas, the market is largely seasonal. In the Northern climes, hot tea maintains an edge, while iced tea products are popular throughout the country when the warm summer months hit.

In terms of herbals, echinacea products in both the tea and juice categories have been the strongest sellers. The popularity of the herb has increased substantially in recent years and, particularly during cold and flu season, it remains a top seller. Other areas companies report are doing well are energy products and sleep aids.

In the juice area, fresh juices are gaining in popularity as are the addition of special herbal ingredients. With such imaginative names as "Fruity C Monster" from Odwalla and "Desperately Seeking C" from Fresh Samantha, this segment definitely reflects the small company roots of the industry.

The growth of juice bars such as "Jamba Juice" also bodes well for the future of the juice market. Jamba Juice reportedly signed an agreement recently with Whole Foods Market to include Jamba Juice bars in Whole Foods stores, a logical move for the both companies and a boon for the juice market nationwide.

Despite a lack of solid infrastructure to support it, organics remains an area where manufacturers are showing interest. Suppliers report they are adding organic products to their lines, but are unable to procure the necessary ingredients on a consistent basis in substantial volumes.

In terms of market saturation, while most manufacturers felt that store shelves are full of many choices, most agreed that, particularly in the tea area, there is always room for someone with a truly differentiated product. Quality plays a role in how products will survive on crowded shelves, as does educating the consumer to the product's added value. Mass market in general remains less saturated for functional tea and juice products.

For the future, even for established market segments like teas and juices, credibility remains key. "It's important going forward that we work on standardization in tea products," said Walt Freese, Vice President-Wellness Products at Celestial Seasonings. "This will add legitimacy to our business."

"The issue now is how the herbal tea companies comply with the new dietary supplement labeling required under DSHEA," said Traditional Medicinals President Linda Sadler. "It will be interesting to watch how companies position and label their products and the scientific substantiation behind it. We hope the standard will be raised."

The market can generally be divided into hot tea, ready-to-drink tea, shelf stable juice and fresh juice. Some companies cross over between the hot and cold tea areas or ready-to-drink teas and juices. Here's a look at what's new among manufacturers.

And How Would You Like Your Tea?
Among the more mainstream product manufacturers, Snapple, White Plains, NY, has been highly visible in the nutraceuticals arena recently with its new "Elements" line introduced in April. The six product line-including four fruit drinks and two teas-is currently available in major metropolitan areas and expected to move nationwide by the end of this month. The Elements line includes "Sun," a starfruit orange juice drink fortified with echinacea, beta-carotene and rosemary extract; "Fire," a dragonfruit drink fortified with ginseng, ginkgo biloba and guarana; "Earth," a grape cranberry juice enhanced with ginseng, bee pollen and grapeseed extract; "Rain," which is an agave cactus beverage enhanced with ginseng, agave and astragalus; "Moon," a green tea-based beverage with ginkgo biloba and kava kava and "Lightning," a black tea with schizandra, ginseng and yerba maté. According to Maura Mottolese, Director of New Products Marketing, the reception has been fantastic and "we can't produce enough." All the products provide ingredient information;"Earth," for example, has 250 g of ginseng, 125 mg of bee pollen and 25 mg of grapeseed extract. The Elements brands are available in natural food stores, mass markets and delicatessens.

Another of the more mainstream product companies, Nantucket Nectars, Cambridge, MA-which sells both teas and juices-reports that the juice business in general has been the strongest. In the functional area, Super Nectars debuted two years ago, but according to Public Relations Director Eric Schaecher, "We weren't happy with the packaging or the level of sales for the product, so we did a reformulation." The product debuted in April with redesigned packaging and a boosted nutraceutical content. "The Super Nectars had been about 6-7% of our sales," said Mr. Schaecher, "and that has doubled since the re-introduction." Included in the line are "Ginkgo Mango" and "Green Angel," which were revamped from the previous line, "Vital C," "Protein Smooth" and "Mama Calcium," which are improvements over their predecessors and "Guarana Buzz" and "Beta Carrot," which are new additions. Nantucket Nectars are available in 35 states and come in 33 flavors, as well as seven Super Nectars and five new squeezed products. The company has also debuted a new line of not-from-concentrate lemonades under the "Squeezed Nectars" name.

SoBe Beverages, Norwalk, CT, is another company in the mainstream category that has been extremely aggressive with new product introductions, catchy packaging and a lizard for a mascot. The company recently debuted "SoBe Lean Metabolic Enhancer," its first sugar-free product, which incorporates "ACE K" and a small amount of aspartame. The differentiation point of the line is the addition of "Citrimax" appetite suppressant, "Chrome Mate," a patented form of chromium and carnitine, which gives the product metabolic enhancement properties.

President John Bello commented on the introduction. "We had not wanted to get into the diet beverage area because it wasn't consistent with our positioning as a health beverage," he said, "but now with the SoBe Lean line we are able to be part of an effective weight management system, offering more than just the passive benefit of reduced calories." Mr. Bello said reception for the product, which started shipping April 1, has been very strong so far.

Additional new products are in the pipeline at SoBe. Expected out this month are a new protein-infused soy based juice for the "Qi," "Shen" and "Jing" Essentials products and three new flavors, "Lizard Fuel," "Drive" and "Karma." Lizard Fuel is an energy drink with yerba mate, astragalus and Siberian ginseng, Drive is a male potency drink with epimedium, muira puama, ginseng, zinc and selenium and Karma is a "more reflective" product with kava kava, St. John's Wort, valerian and vitamin B complex. Finally, expected out at year end is a seasonal drink, "Lizard's Own Frog Nog."

Also following the mass market route is AriZona Beverages, Lake Success, NY, which most recently introduced "Asia Plum Green Tea." The green tea product also contains plum juice, ginseng and honey.

Offering ready-to-drink teas that are "lightly sweetened naturally," Honest Tea, Bethesda, MD-which only entered the market about a year ago-makes seven teas-three caffeinated versions, two herbal teas, one fruit-based tea and one decaffeinated tea. The herbals are an organic peppermint tea and a cinnamon-based herbal. The company has not made the move into "nutraceutical" type products. "We really underplay the health benefits of our products," said President Seth Goldman. "With a name like Honest Tea you certainly don't want to exaggerate the benefits. There is a small 'P.S.' on our green tea product explaining about the antioxidant benefits of green tea."

Having said that, Mr. Goldman did say that Honest Tea's products are probably healthier than many of their competitors. "We use real tea leaves rather than powder and we use mineral water and organic cane sugar rather than high fructose corn syrup." Honest Tea will make soon the jump into the hot tea market, with the planned introduction of a tea bag line this fall.

The Republic of Tea, Novato, CA, which has been around since 1992, began with hot teas but bottled tea was always part of the original plan, said CEO Ron Rubin. "We like to say that we started the tea revolution," he said. "As a point of differentiation, we are working on food pairings with our teas, similar to wines," said Mr. Rubin.

The products, which are all natural and unsweetened, include some herbal teas and an organic line, but the concentration is on refreshment, not health. "It's not our philosophy to sell the teas for a specific health condition," he explained. "We're simply providing an extra benefit to consumers. We are adding good botanicals but we're not saying it does anything special for you. It tastes wonderful. We don't sell medicinal teas."

The company recently introduced a line of healthy "Chai Tea Lattes." The new line includes "Republic Chai," with cardamom, vanilla, cinnamon, honey and ginger and "Decaf Chai Latte," a decaf version, "Maté Latte Chai," with Brazilian yerba maté, Belgian chocolate and almonds and "Chai of Many Virtues," a green tea with echinacea, ginkgo biloba, goldenseal, ginseng, cinnamon, honey and ginger.

Also involved in both filter tea bags and the ready-to-drink area, Tazo, Portland, OR, got its start five years ago primarily targeting the food service area. The company expanded quickly, however, said Marketing Manager Amy Yukas, "The quality of our product opened doors for us in the retail channel, particularly in specialty grocery and natural food stores." Tazo was purchased in January by Starbucks, giving it 2000 new distribution points. The company plans to continue to target niche areas.

In terms of products, Tazo has nine filter bag offerings and seven ready-to-drink teas. It also offers a chai product, which Ms. Yukas described as an exploding category. Its "Zen" green tea product has been the number one seller across all teas. The company also has one organic tea and will be launching more this fall.

A brand new company in the ready-to-drink tea market, Te Nation was started in February by Brian Ross, formerly of Oregon Chai. The company began with three products, "Echinacea Te," "Ginger Te" and "Throat Te" and will be introducing four new ones-"Good Night" with valerian, "Eve's Tea" with women's herbs, "Good Day" with St. John's Wort and "Green Elixir" with green tea-this fall.

"I believe people appreciate the convenience factor of ready-to-drink teas versus brewing and the same idea applies to medicinal teas," said Mr. Ross. "To get the full benefits of medicinal herbs, you generally need to steep tea for 30 minutes. Consumers aren't going to do that, so we're doing it for them." The teas are sold in aseptic packaging and are applicable for hot or cold tea applications."We consider that we're creating another category-medicinal teas in a ready-to-drink format," said Mr. Ross.

An updated product line for spring was the focus at Oregon Chai, which introduced "Organic Chai" and "Chai Charger" to its line of tea concentrates at March's Expo West show. Organic chai is the company's first organic product, while Chai Charger incorporates ginseng, ginkgo biloba and guarana.

Also at Expo West, the Stash Tea Company, Portland, OR, introduced a line of premium organic teas including a green tea, a chamomile herbal and a chai blend. The company also debuted "Lemon Ginger Sharpness Herbal Tea," which is fortified with ginkgo, and a decaffeinated green tea.

Three new herbal beverages debuted from Drinks That Work, San Francisco, CA. "Kava: Root of Peace" incorporates kava into a lighted carbonated fruit brew; "Forza: Sustainable Energy" adds bitter orange, rose root, Panax ginseng and St. John's Wort to a tropical fruit juice tonic and "Luna: Delicious Sleep" begins with a milk of grain and soy and adds valerian root, passion flower, chamomile and griffonia seed.

New at Expo West from Pacific Foods of Oregon, Portland, OR, were three new varieties of chai tea under the "New Moon Chai" name. The new products include Original, Orange Blossom Green Tea and Caffeine-Free Herbal Mint.

An old timer by today's standards, Hansen's Naturals, Corona, California, has been around since the 1930's, originally beginning as a fresh juice supplier. The company, which makes both teas and juices, has been busy recently with line expansions and new product introductions.

In the tea area, the company is adding a ready-to-drink oolong and a chai tea to its line, which already includes green tea, a market that has done well at the company since its introduction in 1997. The smoothie market is also a focus, with an Energy Smoothie doing well since its introduction in 1996. This will also be an area of expansion during 1999, said Rodney Sacks, Hansen's Chairman. "We will introduce four new smoothie products," he said, "an updated 'Energy Smoothie,' with higher ingredient concentrations than our previous offering, a 'Power Smoothie,' a 'Vita-Smoothie' with multiple vitamins and a 'Protein Smoothie.' All will contain 50% fruit juice.

While activity has been strong in all product areas, functional drinks has been the strongest area at Hansen's. "The main kick in the company's performance came in 1997 when we launched our functional drinks. The format, an 8.2 ounce can, was a point of differentiation for us," Mr. Sacks explained. "This is a drink that is closer to being a supplement than to being refreshment. We want to deliver something credible; that's the stength of our brand." The original line includes "Energy," with taurine and ginseng, "Anti-Ox," with vitamins A, C, E, echinacea and selenium, "d-stress" with kava kava, St. John's Wort and tyrosine and "Stamina" with CoQ10, carnitine and bee pollen. Added late last year was "Power," which incorporates creatine, glutamine and red Panax ginseng. Next on the schedule will be a weight control drink as well as two others, which will debut by early next year.

Last month Hansen's also debuted its premium sodas, functional drinks and smoothies into the Canadian market. The products will be distributed through an agreement with Brio Industries, British Columbia.

A Cup Of Benefits
In the hot tea segment, the big names in the mass market such as Lipton and Bigelow remain on the fringes of the "health" tea market, examining the evidence and watching sales soar. Lipton's Mr. Emory described the nutraceuticals industry as the "Wild West" in terms of the regulatory environment right now, adding that Lipton will not risk its brand identity until this situation changes. However, he said, "There is a lot of research going on right now into the health benefits of tea and it is an area we are looking at closely."

Lipton and Bigelow are capitalizing in the green tea area, however, which Mr. Emory described as having exploded since the summer of 1997. Lipton's product, which has been available for years, currently has half the market at the supermarket channel and this month Lipton is introducing a decaffeinated green tea product as well as a variety of flavors of green tea. Bigelow, Fairfield, CT, also has done well in the green tea area, which has been growing exponentially for the company.

Celestial Seasonings, Boulder, CO, is one company that has successfully crossed over with strong sales in both the health food and mass market channels. The company has a seven-item line of wellness teas within its hot tea line, including a "Wellness Sampler" that debuts this month. As an aside, Celestial Seasonings recently changed the name of its echinacea-based tea from "Echinacea Cold Season" to "Echinacea Complete Care" to answer FDA concerns about the word "cold." Green tea and chai are also growing rapidly.

Traditional Medicinals, Sebastapol, CA, is another tea manufacturer that has been around a long time and has a strong reputation in the business. The company made the major move to February to transform 95% of its line into dietary supplements. According to Ms. Sadler, "We have researching this for the last two years to have the necessary substantiation behind the claims. We've made major changes to labels as a result of the change." Traditional Medicinals has 30+ products and Ms. Sadler reports the cold and flu products have always been the strongest. "Echinacea has been the number 1 selling tea for three years," she said. "St. John's Good Mood has also done well. In general growth mirrors the more popular herbal supplements."

Organics and green tea have also been growing segments for the company; it currently sells two green teas and will introduce two more this fall. Also coming this fall at Traditional Medicinals are an organic Golden Ginger tea, which incorporates chamomile and ginger, an organic Echinacea Elder blend with elderberry and organic Chai, which is also a growing category, according to Ms. Sadler. It already has a guarana chai, which has been available for a year and a half and is doing very well.

Yogi Teas, Eugene, OR, is a smaller tea company that concentrates on the whole tea experience. "The beauty of Yogi Teas is that they were developed by a yogi (Yogi Bhajan) as an evolution of his teaching," explained Jagat Joti Khalsa, Sales Manager. "The company started out with a chai tea, then got into flavored teas, then it bought a tea bagging machine and finally got into healing formula teas, which is where the growth has been," he explained. All of Yogi Teas' teas are organic and there are no fillers or artifical flavors. "We have a committed effort to our lifestyle and if we can bring that to the consumer for a few minutes each day as they're having tea, then we've succeeded. It's better than taking a St. John's Wort pill; it's all about the experience. Our hope is that consumers will build on this; it's one brick in the wall of healthier health."

Fresh Squeezed Profits
In the fresh juice category-which remains primarily a regional business-there are four main manufacturers in the U.S. On the West Coast, Naked Juice, Glendora, CA, is a wholly-owned subsidiary of Chiquita Brands. Eight years ago Chiquita purchased Ferraro's and Naked Juice to make one company. Ferraro's concentrates on fresh vegetable juice while Naked Juice manufactures fresh juice for mass market and health food channels. A main goal is expanding its distribution.

New to the company is its herbal line, the first three of which debuted in April 1998. These products-"Nirvana" with astragalus, Siberian ginseng, St. John's Wort and kava kava, "ZippiTea," a green tea blend with Siberian ginseng, gotu kola, bee pollen and ginkgo biloba and "Wise Guy" with cranberry juice, ginger and ginkgo biloba-did so well that the company in January introduced "Herbal Well Being," which includes echinacea, astragalus, vitamin C and zinc.

The company has also done well in its "Super Foods" line, for which it debuted "Mojave Magic" at Expo West. Mojave Magic incorporates nopal, aloe vera and agave cacti with psyllium for a digestive aid that is also cholesterol lowering. Mojave Magic joins "Green Machine" and "Protein Zone" in the Super Foods line. Paul Johnson, Director of Marketing, talked about these products. "Green Machine is a beverage industry phenomenon," he said, "both in terms of its uniqueness and in the way it's been received. It contains 11 different superfoods, including spiruline, blue green algae and chlorella and it tastes good," he said. "I haven't met a person who does not like it."

At Odwalla, Half Moon Bay, CA, the dairy-free category has been a hot one recently; the company is concentrating primarily on its soy drinks at this time. Odwalla has also introduced three new flavors of its "Future Shake" line; the flavors are "Inner Chai," "Dutch Chocolate" and "Cafe Latte." The drinks incorporate soy milk, organic oat milk and banagas and mangos.

In the Midwest, Fantasia Fresh Juice Company, Rosemont, IL, debuted about 18 months ago with the mission to deliver fresh juice products to the Midwestern customer. The company has about 20 flavors, with about 50% of its product line dedicated to functional products. The line includes "Millennium Mix," with ginkgo biloba and gotu kola, "Power C" with extra vitamin C, "Protein Machine" with 10 grams of soy protein, "Planet Green," with spirulina and blue green algae and "The Great ACE," with antioxidant vitamins A, C and E. Hot sellers recently have been ginseng and echinacea products.

The East Coast fresh juice supplier is Fresh Samantha, Saco, ME, which is also doing well in the functional juice market. The company's latest product is "Oh Happy Day," a fruit juice product with St. John's Wort; it joins the company's "Protein Blast," with 10 grams of soy protein isolate, "Get Smart" with ginkgo biloba and gotu kola, "Super Juice" with echinacea, "Desperately Seeking C" fortified with antioxidants and "Big Bang," a fruit juice that contains green superfoods such as chlorella and spirulina, as well as sea vegetables, wheat grass, royal jelly and bee pollen.

Saratoga Beverage Group, Saratoga Springs, NY, recently launched an expansion of its "Saratoga Juice" with a new "Smoothies" product and a new fortified juice under the "Fruit for Thought" brand name. The Smoothies products include six crushed fruit blends; flavors include strawberry-banana, berry-peach, blackberry, banana and raspberry. The eight Fruit for Thought flavors include "Spirulina Spin," "Berry Brain Boost," "Mellow Mango," "Vita-Buzz," "Power Pick-up," Chromium High," "Ginseng Zing" and a seasonal blend "Anti-up."

In the mainstream juice category, Tropicana, Bradenton, FL, leads the pack with its orange juice with added nutrients. The company debuted "Tropicana Pure Premium with Calcium and Extra Vitamin C" as a relaunch in August 1997; from then through the end of 1998 it has experienced 173% growth. According to Carla McGill, Ph.D., Nutrition Scientist at Tropicana, fortified orange juice is growing at a rate six times faster than the regular chilled orange juice category. The new Pure Premium Product includes "FruitCal" calcium citrate malate from Procter & Gamble; it also has a new package design, with a conservative claim that simply says "as much calcium as in a glass of milk." The products were also introduced in Canada in early May.

In February 1999, Tropicana expanded its line with "Tropicana Pure Premium Grovestand Calcium," a pulpier calcium-fortified orange juice and "Tropicana Pure Premium Ruby Red Grapefruit Calcium," the only grapefruit juice that offers more calcium than milk. The new orange juice product contains 35% of the daily value for calcium and 180% of the daily value of vitamin C. The new grapefruit juice has 40% of the daily value for calcium and 160% of the daily value for vitamin C.

In the cranberry juice area, frontrunner Ocean Spray, Middleboro, MA, is repositioning its "Wellfleet Farms" line of 100% juices as "Ocean Spray Premium" 100% juice and also adding two new flavors to its product portfolio. The Ocean Spray Premium 100% Juice line is a premium line of 100% cranberry juice blends that combine cranberries with other fruits; the line includes Cranberry, Cranberry and Granny Smith Apple, Cranberry and Georgia Peach and Cranberry and Key Lime. These products were available under the Ocean Spray name last month. Debuting later this year is Cranberry and Concord Grape and Cranberry and Pacific Raspberry.

The top player on the health store scene in shelf stable juices is Knudsen's, Chico, CA, which has done well with its line of "Simply Nutritious" juice augmented with nutritional supplements. President Bill Knudsen discussed the products. "We have what is generally considered an efficacious amount in the juices," he said. "It's not just a whiff of echinacea." The lemon ginger echinacea juice, for example, has 79 mg of echinacea.

Knudsen's has also been successful in the organic area, which Mr. Knudsen said percentagewise has been the fastest growing part of the business in the last couple years. "The 'Santa Cruz' organic line, which has been out since 1990, has really taken off. Simply Nutritious and Santa Cruz are our two star areas and we have participated heavily to encourage the establishment of regulations for organics."

"Recharge Plus"-the new addition to its "Recharge" line of fluid replacement drinks-is the company's latest offering. Recharge Plus supplies vitamin E, selenium and chromium picolinate. It is available in berry and lime flavors.

Hansen's Naturals, mentioned above for its involvement in the tea area, has also been busy in the juice market. Recent news from the company includes the introduction of its "Healthy Start" 100% juices with added supplements. The four product line-"Antiox," a carrot and tropical fruit juice with grapeseed extract, "Immunejuice," an aronia and cranberry offering with echinacea and zinc, "Vitamax Juice," an orange pineapple blend with 15 vitamins and minerals and "Intellijuice" orange and tomato juice with ginkgo and hawthorne-was recently rolled out to the health food store trade and will be expanded later this year in single serve bottles.

Finally, two new products have been added to the line of fruit and vegetable juices from Vruit, Saline, MI. The "Berry Veggie Blend" and "Tropical Blend" are 100% natural and contain a full fruit and vegetable serving under the Five-A-Day for Better Health Program from the Natural Cancer Institute. The juices are available nationwide at conventional grocery stores as well as health food stores and specialty retailers. NW