By Jill Rivkin

When a down market, tough economic times and all-around uncertainty strike, consumers change many of their behaviors, often not because they want to, but because they have to. And when they’re feeling down about it all, what do most do? Fortunately, many of them find solace in food and drink, and that’s good news for beverage manufacturers and brand owners across a number of segments.

“During tough economic times, people still eat and drink,” says Nicole Lemus, director of sales, contract manufacturing, at Sparta, Wis.-based Century Foods International. She points out, however, that while drinks are still selling, there is a slight shift in the variety and the targeted consumer group. “We are seeing an impact on the types of products that are being launched, but not the quantity,” she adds. “A higher-end product designed for a specific consumer with a higher price point may be reformulated to appeal to the mass consumer, for example.”

Pete Grego, director of contract manufacturing and new business development at West Sacramento, Calif.-based Nor-Cal Beverage Co. Inc. agrees: “Historically, the beverage industry does well in good times and bad,” he says, however noting that, “This last year has proved even tougher for everyone in the beverage business.”

Healthy Alternatives and a Healthy Outlook

According to reports from Chicago’s Euromonitor, certain segments of the beverage industry are faring better than others. Most will ride out the economic storm and see future growth in the near future, but not all. Carbonated soft drinks, for one, are “expected to decline at an accelerated rate,” Euromonitor reports. The segment is expected to drop 8 percent through 2013 compared to a 3 percent drop from 2003 to 2008. This downward trend in carbonates is spurred by consumer interest in healthier beverages, Euromonitor reports. As consumers move from high-calorie soft drinks to diet versions and other alternative beverages, this means good news for waters, teas and other beverages that are infused or boosted with value-added ingredients.

“Drinks definitely have to be functional now,” says Audrey Reed, account manager at ProCore Laboratories, Coppell, Texas. “No longer is cola good enough for quenching your thirst, now it has to provide a dose of vitamins, too! And enhanced waters are here to stay – they refresh and have a light flavor for the taste buds.”

“Bottled water is still the simplest and most appealing alternative to carbonates among consumers,” according to Euromonitor, pointing to total bottled water sales expected to increase 9 percent through 2013. By combining flavors and added nutrients, “functional waters” are expected to shoot up 71 percent through 2013, Euromonitor reports.

“The trends are toward alternatives to standard carbonated soft drinks,” concurs Steve Fay, executive vice president and sales team leader at Berner Food and Beverage Inc., Roscoe, Ill. “Countless water options touting an array of benefits have come to market and found a consumer base.”

Satisfying consumers who want to drink something natural and more flavorful than most water options, ready-to-drink tea beverages also have created a strong presence in the beverage industry as a refreshing drink with a very healthy and natural image. Euromonitor expects ready-to-drink teas to increase by more than 24 percent from 2008 to 2013 and credits “superfood” flavors such as pomegranate and acai with helping to drive interest and growth in this segment.

“Super fruits” that not only add good flavor but also great nutrients, anti-oxidant abilities and overall healthy attributes are contributing to growth in many beverage segments, in fact.

For one, energy drinks are “super-charged” now, according to Corey Schiff, vice president of sales and marketing at Melrose Park, Ill.-based Tone Products Inc. “By that I don’t mean more ingredients to give consumers a stronger ‘buzz’, but by adding minimum daily requirements of various vitamins,” he says. “We are making the drinks now with super fruits – pomegranate berry, acai berry energy drinks have been two of the more recent and very successful additions.”

ProCore Laboratories’ Reed points to some newer super fruits including yum berry, camu camu and baobab fruit as the newcomers to the original super fruits which are: mangosteen, acai, pomegranate, noni and goji, she says.

As the movement to get more out of a beverage than simply refreshment continues, some manufacturers anticipate consumer demand for beverages that will not only help with thirst, but help with beauty and anti-aging efforts from the inside. Reed says “beauty drinks” are up and coming, “aimed at reversing aging and maintaining a youthful look with some key ingredients,” she says.

Packaging That Sells and Satisfies

Because the popularity of on-the-go beverages has soared over the years, the beverage industry – and the bottled water segment, in particular – has been chastised for its negative impact on the environment because of tremendous amounts of packaging, as well as the manner and cost of distribution. And as more and more mainstream consumers try to live a “greener” lifestyle by generating less waste and opting for reusable bottles, the approach to beverage packaging has changed, and will continue to do so.

“An increase in aluminum packaging use will come as a result of its tremendous recyclability and its sustainability index,” Fay forecasts. “Glass is heavy and adds cost to the supply chain. Plastic is difficult to recycle, especially in multi-barrier versions. Aluminum, on the other hand, is light in weight, recycles at more than 70 percent and indexes very high on the sustainability index.

“Having said that, the kinds of differentiations that can be made with molded plastics are a huge temptation for marketers to differentiate themselves with and seem to be the leading option for many of the functional waters that have been introduced,” he adds.

There is no doubt that packaging sells product in today’s retail environment where consumers are inundated with choices and messages. So brand owners and contract manufacturers finding creative solutions that fit into today’s sustainability movement and a brand’s message will find a win-win solution.

“Our customers try to differentiate their product through proprietary bottle designs and creative shrink-sleeve or wrap-around labeling,” Century Foods’ Lemus says.

In addition to selling product and building branded messages, many of the packaging evolutions in recent years have come out of necessity given the pressing financial impact of packaging solutions on the supply chain. Manufacturers and brand owners certainly want packaging to drive purchasing decisions, but it also needs to contribute positively to the distribution process and the overall health of the company.

“More and more companies are finding that they are becoming more eco-friendly by default,” Reed says. “’Recycling, reducing and reusing’ is the mantra that is no longer just hip, but necessary in the quest to keep costs down.”