This week's beverage industry headlines revealed some interesting happenings regarding beverage companies Britvic PLC (LSE:BVIC), PepsiCo (NASDAQ:PEP), Monster Beverage (NASDAQ:MNST), Coca-Cola (NYSE:KO), and Nestle (OTC:NSRGY) that help shed light on the direction of the industry.
The British invasion
Beverage companies continue their push into the healthier drinks territory. For example, British soda company Britvic PLC teamed up with PepsiCo Americas Beverage to expand its Fruit Shoot brand. According to a Drinks Business Review article, Fruit Shoot will launch in 41 states next year. Previously Britvic launched the brand in Spain and plans to take the product to India in the middle of 2014. Also hailing from the United Kingdom, British supermarket chain William Morrison Supermarket PLC wants to ban people under the age of 16 from buying energy drinks that contain at least 150 mg per liter according to the Daily Mail UK. This would include Monster and Coca-Cola's Relentless energy drinks which contains 338 mg and 320 mg respectively. This could set a global precedent as nervous retailers all over the world could begin setting minimum age limits to appease local governments itching to regulate any beverage deemed unhealthy.
Other healthy beverage news
Observing the success of coconut water in recent years, Coca-Cola acquired the majority of Zico Beverages which produces and sells Coconut water according to Drinks Business Review. Zico, backed by the distribution resources of Coca-Cola, will now scale up its marketing, distribution, and innovation capabilities according to the article. Also on the water front, an article in Beverage Industry analyzes Nestle Waters North America's leadership position in the bottled water category. Nestle Waters North America's predecessor company Perrier Group of America launched its soda bottled water in the late over 30 years ago and proved "an instant success". This provided an option for people at Cocktail parties who didn't want alcohol and wanted to look "cool". Currently Nestle commands a 32% volume share in bottled water in the United States according to statistics cited from the Beverage Marketing Corporation. Nestle executives believe it's a matter of "when not if" bottled water will outsell carbonated soda drinks. They go on to talk about how water already outsells the bubbly drinks in "15 U.S. grocery markets". In addition, they expect Nestle Pure Life bottled water to double sales within the next decade. Finally Nestle Waters North America wants to increase its market presence in the tea category with Nestea.
Coca-Cola's Honest Tea released its "2013 Mission Report" detailing its activities in areas such as sustainability according to Beverage Industry. The report highlights Honest Tea's increased purchases of organic ingredients by "500,000 pounds in 2012" along with putting more organic juice content in its Honest Kids line. The report suggests that the company is always working toward sustainability indicating that no one ever reaches 100% social responsibility. Score one for Coca-Cola on public relations attempts on Honest Tea.
Investors will benefit, in the form of market beating returns, from companies that make an effort to bring healthier and eco-friendly products. However, the consumer shift to the more commoditized healthier drinks will make it harder for companies like Coca-Cola and PepsiCo, who benefited from secret formula sodas, to maintain a competitive edge. Innovation will be the key to future success for any beverage company.