Functional Beverages: Would You Like Wellness with That?

In the beverage industry, the move towards refreshment and function has been steadily gathering momentum for the past several years, and shows no signs of slowing anytime soon. Indicative of this is the fact that earlier this month, Anheuser-Busch announced the formulation of their 9th Street Beverages, LLC subsidiary. Noting A-B’s non-alcohol portfolio was up 77% this year, they decided it would be beneficial to establish a clear separation between their beer and non-beer businesses.

As consumers become more health and wellness savvy, they are becoming increasingly aware of the effects that foods and beverages have on their overall wellbeing. Naturally, consumers have begun to seek more than mere Snickers and Gatorade (hunger and thirst satisfaction) from the items they ingest; they now demand multi-tasking from everything they consume. This trend has increased sharply over the past five years, leading the “functional foods” industry to reach a staggering $25 billion.

In 2007, functional beverages accounted for nearly 1/3 of overall sales in the functional foods category. Some attribute this growing trend towards a healthier lifestyle to increased consumer knowledge of herbal and natural ingredients, which logically leads to demanding such ingredients from their lifestyle products.

With that in mind, what does the future hold for this industry segment?

Innovation will be key in the industry expanding and keeping in touch with ever-changing consumer tastes. The sports drink and energy beverage sectors have been around for years, but there is significant opportunity to expand beverages into other arenas, utilizing nutrients that many lack in their daily consumption. This includes calcium, potassium, foliate, and vitamin D. The challenge will come in devising new recipes that use those ingredients, but continue to meet taste standards.

Industry participants continue to innovate to meet the new taste challenge and to create more functionality, and exciting product enhancements, while the category continues to experience explosive growth.

Now Where do I go for a Monte Cristo?

The first thing I thought when I heard about Bennigan’s closing was “OK. Now where do I go for a Guinness and a Monte Cristo?” When I got over the initial shock of knowing I could never indulge in this fried delight again (unless home-made, of course), my thoughts moved to “…well what does this mean for the restaurant industry as a whole?” Why did Bennigan’s (and sister-company Steak and Ale) fold while limited-service chains such as Potbelly, Panera, and Chick-fil-A saw drastic growth?

In this downturn economy, few industries have been hit harder than the restaurant industry. Rising fuel costs have drastically increased operating expenses while simultaneously slashing the disposable income available to consumers, leading to a sharp decline in the frequency in which people dine out. Most affected by this inflation have been the mid-spectrum casual dining chains, which are losing customers to home-cooking and lower-end fast food establishments.

I recently read an article where Bill Perry, Vice President of Governmental Affairs of the Oregon Restaurant Association, said that food prices rose at a rate of 7.6% last year – a 23-year high – and prices have already risen 8.5% this year as compared with the first quarter of 2007. That is a huge amount of inflation! Unfortunately for us, the restaurant-going public, the costs get passed down to us in the form of higher menu prices.

Restaurants now struggle to overcome both a higher cost of doing business (and lower consumer income) as well as changing consumer tastes just to stay viable. While scrolling through FoodNavigatorUSA, I read columnist Laura Crowley’s take on emerging flavor trends. She says, “Consumer interest in ethical consumerism, including sustainable, organic, local and natural foods, will continue to rise.” As the move towards healthier foods and lifestyle continues to push forward, how can the stereotypical American family restaurant with kitschy décor survive? Keeping in touch with the public’s wants and wishes as well as adjusting expenses to maintain competitive prices will certainly help. In the case of Bennigan’s, a dated menu and excessive overhead lead to its downfall.

The Great Jalapeño Scare of 2008

Beginning with the tomato-related scare earlier in the summer, salmonella and bacterial infections have been thrust into the consciousness of the American public. This has been the largest reported salmonellosis food poisoning outbreak in the U.S. since 1985, and naturally has caused most of us to reexamine the food we eat and how that food is handled before it gets to our table.

The most common source, in widespread outbreaks, occurs when water used for irrigation becomes contaminated by animal waste. However, salmonella can also be spread when food preparers fail to properly wash their hands and work surfaces; creating ideal conditions for cross contamination. While the source of this recent outbreak is still unknown, the FDA believes it to be from a crop of jalapeño peppers grown in Mexico and imported to a Texas processing facility. It remains unclear as to whether or not the peppers were contaminated at the farm or at the processing facility.

Unfortunately, there really is no way to completely eliminate the risk of salmonella. However, washing vegetables thoroughly before consuming, as well as cleaning food preparation surfaces will help to reduce the chance of becoming ill. Also, by cooking vegetables, the risk of contracting a bacteria-related infection goes down tremendously. This is why the concern has been with fresh jalapeños, and not canned or pickled produce.

Not to fear, my fellow food-lovers, a great substitute for the jalapeño lies with the Poblano pepper. Packing about the same amount of heat as the jalapeño, the Poblano will give your dishes the kick you seek and spare you the threat of salmonella.

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