Having a 79 percent dollar share of any food or beverage category sounds impressive, even if it is a niche market like natural soft drinks. One might wonder who had a similar share of the craft beer market back in 1986, for comparison.
In 2014, Zevia LLC, Culver City, Calif., owns 79 percent of the natural zero-calorie soft drink sub-segment. That's a sub-segment has been around for just about seven years, and it's one that the company expects will grow.
“There are very meaningful differences between soda and any other beverage,” says Paddy Spence, Zevia's CEO. “With most other beverages, consumers don't mind the calories, because they see a nutritional benefit to those calories. That's not the case with soda, and because of that, consumers are drinking 20 percent less soda per capita than they did a few years ago.”
Diet soft drinks account for more than 25 percent of the overall soft drink market, according to market analysts, but concerns about artificial sweeteners are not as easily dismissed as they once were, and even the top diet soft drinks are in decline in the U.S. This is where Zevia and its competitors are finding an opportunity.
Stevia, monk fruit and erythritol are fairly new to the soft drink arena. Stevia as a food ingredient was affirmed GRAS in 2008. Used alone or in combination, these sweeteners can result in something that tastes a lot like diet Coke, but without a trace of aspartame or other artificial non-nutritive sweeteners. Beyond soft drinks, stevia might also be used to formulate significant (25-50 percent) reductions in the sugar content of beverages such as fruit drinks and even flavored milk.
Zevia, launched in 2007, sold 17 million cans in the second quarter of 2013. It is carried in 15,000 retail outlets across all major channels. Its success is largely attributed to a carefully formulated blend of stevia, monk fruit and erythritol. Combined, they hit the right sweetness and flavor spots, Spence says.
Beverage formulators have an array of ingredients to help them lowering the sugar content of their products, but getting the right combination and hitting a flavor target with deadly accuracy is crucial if a new or reformulated beverage is going to succeed with consumers.
Stevia vs. monk fruit
Stevia rebaudiana is a member of the sunflower family that originated in Paraguay. For more than 100 years – probably a lot longer -- its sweetening abilities have been known.
There are several potential extracts or glycosides. Rebaudioside A (reb-A) currently is the most popular. It's around 200 times sweeter than sucrose and has no calories.
Until recently, stevia and its derivatives could be sold in the U.S. only as dietary supplements. But companies with vested interests in the sweetener -- Cargill and its partner Coca Cola on the one hand and Pure Circle and PepsiCo on the other -- submitted research to FDA regarding reb-A’s safety and petitioned for it to become a generally regarded as safe (GRAS) ingredient. FDA granted GRAS status in December 2008.
While it didn't take off like a rocket because of some difficulties with formulation and aftertaste, stevia is gradually having a major impact on beverage formulation.
One of the original petitioners, Wayzata, Minn.-based Cargill, has the leading tabletop product, Truvia, and also has a proprietary stevia blend for other food processors. ViaTech stevia sweeteners are Cargill’s solution for achieving deeper sugar reductions with clean sweet taste.
“Beverage producers are constantly innovating and striving to develop products with the deeper calorie reductions and better taste that many consumers desire,” says Melanie Goulson, sweetness application manager at Cargill. “The higher stevia use levels necessary to accomplish these objectives can sometimes result in unwanted side tastes, like bitterness.”
“Many stevia products with high concentrations of rebaudioside A must be formulated with other sweeteners and masking agents because of rebaudioside A’s bitterness," says Amy Lauer, marketing manager at Tate & Lyle, Hoffman Estates, Ill. As many as 83 percent of consumers are sensitive to reb-A bitterness, according to sensory research by the company.
Tate & Lyle was a relative latecomer to stevia with its introduction of its Tasteva brand. But it was a relative pioneer in another beverage sweetener, monk fruit, also known by its Chinese name luo han guo.
Of course, not all natural soft drinks need to be zero-calorie.
BioVittoria LLC won GRAS certification for monk fruit as a sweetener in January 2010, then a year later forged an exclusive partnership and equity buy-in with Tate & Lyle. Tate & Lyle launched industrial products under the name Purefruit and more recently supplied BioVittoria's monk fruit to McNeil Nutritionals LLC, a Johnson & Johnson subsidiary, for Nectresse, a consumer/tabletop sweetener that is just rolling out nationally.
Blue California, Rancho Santa Margarita, Calif., went the other way chronologically. It was an early believer in stevia, having introduced Good&Sweet 99 percent reb-A in 2009. Then in early in 2012 the company debuted BlueSweet monk fruit extract, for which it also sees great potential. BlueSweet monk fruit extract "is a really good product but has a different profile than stevia," explains Cecilia McCollum, executive vice president.
New products are poppin' up
Denver-based Oogave Inc. was born of the frustrations of a restaurant owner who wanted a natural alternative syrup for his soda dispenser. Stephen Anson turned to agave, and soon began selling the syrup line. Bottled products were introduced in 2009.
Gannon Merrell now runs the company, which offers an extensive line of innovative flavors that come in around the 100 calorie mark. They are natural and organic and are accepted at Whole Foods Markets.
“Agave is the sole sweetener in the main line,” Merrell says, “so the products end up with no GMOs, no chemicals, and they are Kosher and vegan.”
The flavors include Watermelon Cream, Strawberry Rhubarb, Mandarin Key Lime and Grapefruit. Oogave also has a diet line that uses stevia and agave for about 10 calories per serving.
Remember actor Ed Begley Jr.? He's now a soda entrepreneur. Begley's and Bill's craft sodas, Orange, Calif., is a new launch from him, wife Rachelle Begley and partner Bill Sabo. The soft drinks contain a proprietary blend of stevia and erythritol, and come in at just 8 calories.
Honest Beverages, Bethesda, Md., recently introduced Honest Fizz, a line of zero-cal soft drinks that is sweetened with Truvia.
The entire Zevia line is zero-calorie. Spence believes the move away from artificial sweeteners such as aspartame, acesulfame potassium (ace-K) and sucralose, combined with the 20-plus year growth of zero calorie products, make this the only space for growth in the gargantuan soft drink market, where massive leading brands have been steady at best.
But in order to do well, a natural zero-calorie soda has to taste just like the Diet Coke and Diet Pepsi.
“When I bought Zevia, we were using stevia that wasn't as pure as what is available now. It was about 80 percent reb-A,” he says. “What we use now is 99 percent reb-A, but that's only half of the equation.”
Stevia, when used in the high levels need to produce a carbonated soft drink, can produce a bitter aftertaste. One reason is its low volume; even at high usage levels, stevia is a tiny fraction of the equivalent volume when using sucrose. Without the bulk of 38g of sugar, a zero calorie soft drink is so thin that bitterness is more easily perceived.
“High intensity sweeteners have no brix,” Spence says. “What monk fruit [and erythritol] allow us to do is to really boost that sweetness and eliminate any of the bitter notes.”
Erythritol is a sugar alcohol similar to xylitol and mannitol. It has about 6 percent of the calories of sucrose and about 70 percent of its sweetness, so in low percentages it can be used in a zero-calorie soft drink. (In Zevia, erythritol is just 3 percent of the sweetening power; stevia is 83 percent and monk fruit is 15 percent.)
“Erythritol is a little less sweet than sugar, but it has bulk," Spence says. “By using 4g of erythritol, we get some of the bulk back and that helps to round out the mouthfeel.” That leads to a sweet flavor and no bitter perception.
Before buying Zevia in 2010, Spence, a Harvard MBA graduate, served as vice president of sales and marketing at Kashi Co., and founded market research firm SPINS.
Food in your drink
In 2007, as carbonated soft drinks were being blamed for obesity and tossed out of public schools across the country, the dairy industry voluntarily went to work on reformulating flavored milk as a way to avoid the same fate. New nutrition guidelines meant that some beverages would not eligible to be offered as part of a school lunch menu.
The resulting chocolate milk with less sugar is not only offered in schools but is doing well in the supermarket dairy case, where it appeals to parents and weekend athletes. Dairy's checkoff organizations have promoted chocolate milk as a good recovery beverage that offers protein, calcium and other nutrients and replenishes muscles after a workout.
“Flavored milk is geared to the youngest consumers and they have a very fickle pallet," says Thom King, president of Steviva, Portland, Ore. – which, by the way, supplies Oogave. "Once you give them sugar, moving them to a non-nutritive replacement it is tough. But I would think that a 25 to 30 percent [maybe] a maximum 50 percent reduction would be possible.” But he thinks beverage formulators may have only scratched the surface on what they can do with stevia.
Fruit juice marketer Old Orchard Brands, Sparta, Mich., is finding out if you can simply remove the sugar from children's beverages. Its recently introduced Old Orchard Kids line has 50 percent less sugar than other fruit juices, simply by reducing sugar levels, not by adding any non-nutritive sweeteners.
Lowering sugar and calories is not the only strategy of beverage marketers. Beverages have the ability to offer more than refreshment. Soluble whey protein has been available to beverage formulators for years as a tool for boosting protein in a nondairy beverage. These kinds of beverages can be shelf stable and can be produced in most beverage plants.
Real fruit ingredients continue to be a positive selling point. At the recent Natural Products Expo West, superfruits continue to find their way into drinks. An all-American superfruit, the blueberry, has been making inroads.
“Perhaps the most unique value blueberries bring to a beverage is the fact that beverage formulators know they can put blueberries on the label and take advantage of the image of blueberries as a healthy, delicious fruit,” says Thomas Payne, spokesperson for the U. S. Highbush Blueberry Council.
With whole food plant sources like blueberries, beverages can supply natural antioxidants and other beneficial nutrients from plants, which are most efficiently absorbed by the body.
The deep sweetness of blueberries can make a positive contribution to overall beverage flavor when used in concert with other flavors. Blueberries with their natural high sugar levels help to remove sour or bitter tastes in some beverages and naturally sweeten the product. “The fresh appeal is also attractive to health-conscious consumers. Now drinkable yogurts are utilizing blueberries and blueberry purée to impart a natural taste and blue appeal.”
Tate & Lyle offers customers a prototype blackberry-peach sparkling beverage that has an additional feature: fiber. The company now markets an ingredient called PromOat Beta Glucan, which helps support healthy cholesterol levels for individuals with cholesterol in the normal range. Made from non-GMO oats, the beta glucan can be described on the ingredient deck as “oat bran fiber.”
The company says PromOat is produced as a creamy white, neutral-tasting powder that integrates easily into recipes, and is acid- and heat-stable. In beverages it is soluble and clean-tasting and it can also contribute to mouthfeel and smoothness.