Chilling out on fresh

When it comes to juices and smoothies in Europe, it's a market of two halves. While western Europe is relying on innovation and premium pricing to bolster stagnant sales, increasingly affluent consumers in the eastern countries are buying more juice, as well as nectars with a higher fruit content.

"On average, most east European markets are showing double-digit growth, but in western Europe growth in the traditional juice segment is over. It's stagnating and in some volume markets such as Germany it is even regressive," says Christopher Beck, vice president of marketing in Europe for ingredients supplier Wild.

Natalie Cording from market research company Zenith International agrees: "Eastern Europe has been experiencing fantastic double-digit growth over the past few years. We are expecting this to slow down, but we anticipate strong, single-digit growth through until at least 2011. Western Europe, on the other hand, has seen limited growth of around 1% over the past couple of years. This is expected to continue through until 2011 at least."

The picture for overall juice consumption in western Europe is grim. Beck cites figures from Canadean, which show that the 2bn-litre German market shrank in 2006, while the 1.3bn-litre UK market grew just 0.6%. France showed healthier growth of 4.8% in its 1.2bn-litre market, but that's because French consumers are embracing innovative products. In general, east Europeans are not only drinking more juice, they're also consuming fruit drinks with an increasing juice content, according to Beck. "In the past, juice drinks in eastern Europe had a rather low juice content, because most consumers had no spending power. Now we're seeing good growth in juice drinks with 20-30% fruit content."

Overall, Europeans drank their way through 15,431M litres in 2006, according to Zenith. But in terms of volume, eastern Europe is still playing catch up. Western Europe accounts for 66% of total European consumption of juices and nectars, while eastern Europe (including non-EU countries) consumes 34%.

With western Europe still taking the lion's share, manufacturers are relying on quality and innovation to boost interest among jaded consumers. The biggest switch is away from from-concentrate (FC) ambient drinks to not-from-concentrate (NFC) chilled alternatives.

"The west is becoming increasingly more about chilled NFC juice," says Cording. "This is particularly true of the UK, where the split between chilled and ambient tipped in favour of chilled for the first time in 2006. It is even beginning to make inroads into the German market."

In Germany, more than half of all non-alcoholic beverages are sold through discounters such as Aldi and Lidl, says Beck. "In Germany we're seeing a slight trend among discounters to the chilled NFCs and fruit smoothies in the chilled cabinet."

East European countries have been a stronghold of ambient FC juice until now, partly because of lower prices and partly because the chilled distribution chain has not been in place to support NFC chilled products. But Cording is convinced that is set to change, with NFC variants emerging from major east European manufacturers, including Maspex in Poland, Lebedyansky in Russia and Pascual in Hungary. "NFC is starting to penetrate east European markets - around 2-3% across the region," she says.

Smoothies are another big growth area in the west, especially in the two biggest markets. Beck says the UK smoothie market grew from 34M in 2006 to 70M litres in 2007. This is an impressive 106%. In Germany, the growth was from 7M to 20M litres over the same period - an even bigger 186%.

Preservation is the chief technical challenge for manufacturers of all these premium chilled products. The EU's 'Healthy Structuring' project aims to finds ways to sterilise fruit and vegetable products while maximising their nutritional value. Processing and packaging giant Tetra Pak is involved in the project, but believes that heat will continue to be the technology of choice for the foreseeable future.

"For the time being, we do not see any of the novel preservation technologies to be feasible for volume liquid food products, due to the high cost and limited deactivation of spore-forming bacteria and enzymes," says Boel Thuresson, marketing and communications manager, Tetra Pak. "High-pressure processing is today too expensive and too limited in capacity for the smoothie and juice market, as these products are usually produced in high volume. The scale of operation is much larger than high pressure systems can currently accommodate. However, high-price niche producers may be interested in exploring these techniques."

Thuresson also says novel techniques could well have a role to play in treating fractions of the product, such as a concentrate, and for products that are difficult to treat using conventional heating. "A product with high viscosity has less effective heat transfer compared with low viscous products. This means that it takes longer to heat the product to sterilisation temperature and that the total heat load will be higher on these products. If the product contains particles, the time in the holding cell must be long enough for the heat to penetrate into the centre of the particle. The consequence is that the liquid part of the product gets over-treated."

novel and exotic on the rise

In terms of flavours, novel fruits and exotic blends are on the rise. Zenith's Cording says: "Orange and apple are still the favourites across Europe. However, their total percentage share of consumption is being cannibalised as consumers accept new flavours, such as pomegranate, blueberry, mango, açai and goji."

So-called superfruits, such as cranberries, blueberries, pomegranate, açai and goji berries, are set to be real winners, both in terms of volume growth and premium pricing. The critical value is the oxygen radical absorbance capacity (ORAC), which indicates the fruit's potential to hoover up damaging free radicals. Wild's Beck says: "Superfruits with a high ORAC value are the next big thing in juices. Even though the effects can't be measured in the human body so far, those fruits are so loaded with a beneficial image that consumers believe in their functionality. The value-generating concept is astonishing."

For example, pomegranate sells for around three times the price of premium orange juice in the US.

Fruit shots such as Compal's Essencial range - which packages juice plus pulp in packs equivalent to a portion of fruit - are another way that companies are successfully adding massive margins.

For example, Unilever's Knorr Vie is selling around 160,000 litres a month in the Netherlands alone, even though the price is euro 6.63 per litre. Similarly, Hero Foods' Fruit2Day sold 25M 200ml bottles in Germany in its first year at euro 6 per litre. Compare that with standard orange juice, which sells in Aldi for less than euro 1.

Added functional ingredients are the other area of great potential. Of course, traditional functionals have been around for years, such as the German ACE orange and carrot drinks. But these established products have been slipping and manufacturers are being forced to respond. For example, Wild has launched a functional ingredient pack that uses vitamins from natural extracts, rather than synthetic sources. The blend uses provitamin A from carrots, vitamin C from the acerola cherry and vitamin E from soya concentrate. "We already have a good example, where a company relaunched its ACE product using our combination and saw a new peak in sales last year," says Beck.

'New-age functionals' such as gingko and ginseng and 'true functionals' such as soy and omega-3 also promise future growth potential. Cording says: "The major drinks manufacturers have recognised the growing importance of the functional juice category across Europe. Most ranges now have a functional juice, whether it is enriched with omega-3, calcium or vitamins."

But the success of early adopters has been mixed. Scottish company The Natural Fruit and Beverage Company has seen disappointing sales of its Supajus orange and omega-3 drink, launched in 2004. Md Gerry Dunn says: "We positioned Supajus as a juice drink and we've ended up with expensive juice. But Supajus is an inexpensive source of omega-3, so we're going to have a rethink about it."