TWO RECESSIONARY TRENDS--FEWER NEW PRODUCT INTRODUCTIONS AND consumers' thinner wallets--are affecting beverage formulation overall, and the organic and natural beverage market in particular.
From 2007 to 2008, the number of new beverage launches that were organic, all natural, or contained organic and natural ingredients increased almost 28 percent, according to Chicago-based Mintel International's New Products Database. For the first three months of 2009 compared to the same time period for 2008 and 2007, new organic and natural beverage launches were down 60.6 percent and 22.8 percent, respectively.
At a time when many beverage-makers are focusing on ingredient cost optimization, organic ingredients might be the riskier option for a new product rollout.
"Organic is anywhere from 15 to 30 to 40 percent higher in cost and price point, so it's definitely affecting the number of rollouts and development that is going on in that sector," says Walter Postelwait, vice president of marketing and sales at BI Nutraceuticals, Long Beach, Calif.
"Organic growth is really a function of what consumers can afford and what also the ingredient sector can make realistically, meaning if the majority of a certain crop is not grown organically, then obviously there is a very limited supply for that particular crop. The organic industry has always been chicken-and-egg: 'I want to roll this type of new product out with these types of ingredients, but because it is new, the supply chain hasn't been put in place yet because there isn't a market for it yet.'"
Organic ingredients and their use in processed products will be impacted by the recession, as those materials continue to …
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