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The growth in sales of New Age beverages has slowed dramatically from the high-flying trend of a couple of years ago, and that seems to be especially true in supermarkets. But makers and marketers of the hip concoctions also known as "alternative" and "functional" drinks insist that they're making new headway in the grocery aisles -- partly due to their promotion of larger package sizes -- and that

The growth in sales of New Age beverages has slowed dramatically from the high-flying trend of a couple of years ago, and that seems to be especially true in supermarkets. But makers and marketers of the hip concoctions also known as "alternative" and "functional" drinks insist that they're making new headway in the grocery aisles -- partly due to their promotion of larger package sizes -- and that their products will simply continue to pour into the American mainstream.

Supermarkets are harboring plenty of skeptics these days about Snapple, SoBe, AriZona and other teas, juice blends and carbonated drinks that tout herbal ingredients and a variety of other elements and purport to promote everything from an increase in vitality to greater mental alertness to a decline in melancholy. As much as Americans in general are embracing more and more such elixirs that previously were on the cultural fringe, shoppers in the typical supermarket apparently still aren't going out of their way to look for functional beverages, which so far mostly come in single-serve packaging that is more popular at convenience stores and other "up-and-down-the-street" outlets.

"That category really has had difficulty taking off in our stores," says Gary Price, vice president of merchandising for Minyard Food Stores, a Coppell, Texas-based regional supermarket chain. "Even when we run promotions designed around New Age beverages, there just doesn't seem to be much consumer response."

Doug Murphy, director of grocery merchandising for Martin's Super Markets, a South Bend, Ind.-based chain of 16 stores, adds that he's starting to see that whole category flatten out compared with the growth from a couple of years ago. "I think we may be seeing some of that consumer interest go into bottled water as a healthy alternative to sodas and all other kinds of drinks," he said.

Quantification of the trend is hard to come by. Information Resources Inc., the Chicago-based SKU-data tracker, doesn't have a New Age or functional-beverage category per se. The closest its figures come to the category are ready-to-drink teas, but the classification includes traditional iced-tea stalwarts such as Lipton and Nestea brands. Total category sales were up nearly 13% for the 52 weeks ended July 18, 1999, according to IRI.

But some close watchers of the beverage business are convinced that functional-beverage makers have come to a significant roadblock in their growth. "It's not consumer interest in the beverages that is the problem, because there's good packaging, and prices are becoming reasonable," said Tom Pirko, president of Bevmark, a New York City-based product-development and marketing consultancy. "It's a business problem: Many of these suppliers haven't yet figured out how to work with the powers that be in retail. They are small companies that don't know how to put together the right kinds of promotions and deals, and they're not willing to pay the price to get on the shelves.

"Retailers are used to dealing with big companies who know how to play their game. These small companies haven't geared up yet in terms of relationships so they can be a regular feature."

Some in the functional-brew business confirm that sales overall are leveling out. For example, John Bello, chief executive officer of South Beach Beverage Co., a fast-growing major player and innovator in the segment, maintains that the entire New Age category would be flat without growth by his Norwalk, Conn.-based company. According to IRI, sales of South Beach's SoBe brand of canned and bottled teas grew 235% for the 52 weeks ended July 18, to about $13 million, giving it a No. 9 share in that category. Overall, Bello says, including the many Sobe functional products that aren't classified as teas, South Beach's sales have gone "from zero to $200 million a year in three years."

And other analysts disagree with Pirko's less-than-sanguine view of the New Age niche. They note, for example, strong sales in supermarkets of the new Elements line by Snapple, the renascent brand that has become a new-product powerhouse since Triarc Cos. took over the product line from Quaker Oats Co. a couple of years ago. While Snapple's existing products are juice blends that the company doesn't promote as being particularly unconventional, Elements puts the brand squarely into the functional category.

AriZona Beverage Co. also is mounting a stronger play for supermarket sales these days. Its overall tea sales were up 7.6% for the 52 weeks ended in July. But Francie Patton, a spokeswoman for the Lake Success, N.Y.-based concern, notes that as much as one-quarter of AriZona's sales now are in supermarkets compared with a negligible portion just two years ago. "We weren't very strong a couple of years ago," she concedes, "and a big part of that was just having single-serve containers."

Recently, AriZona introduced one-liter bottles of various tea varieties including honey lemon, and diet peach tea as well as plastic one-gallon containers of lemon tea, green tea and ginseng tea. And in Western markets, AriZona now offers a four-pack package of 16-ounce cans that is a strong seller in supermarkets.

"The public is always looking for something new in this category, and so our gallon containers have become really popular," says Patton. "The single-serve packaging can get expensive, if you have four kids and they all like the product."

Bello, of South Beach, agrees that new supermarket-oriented serving sizes are important in New Age beverage makers' continuing efforts to penetrate the grocery aisles. So South Beach next year will introduce a box of six 20-ounce bottles of SoBe varieties in West Coast markets. "The marketplace is ready for the mainstreaming of functional products," Bello says, "but it is multiple-serve kind of marketplace."

But both Patton and Bello assert that - in a category that has become as accustomed to change as the functional-beverage business - a continuing stream of new products will remain the primary sales driver.

That's why AriZona, for example, has just introduced in test markets in New York and Florida its new Rx Stress Elixir, a decaffeinated mixture of green and black teas, ginseng, chamomile, other herbs and vitamins and minerals.

South Beach also continues to crank out new products such as its new Soy Essentials, a line of protein-infused fruit blends enhanced with supplements of herbs. "Consumers are aware that soy is very desirable for its health benefits," Bello says. "It's rich in protein and is an excellent source of isoflavones, which function as powerful antioxidants to help prevent cancer and fight heart disease.

Such innovation and responsiveness are among the reasons that Pirko, the consultant, believes that it's very possible for the New Age category to become a stronger long-term player in supermarkets. "The product is good enough, and consumers have developed enough of a buying pattern in other outlets, that they'll buy it in supermarket venues if it can be presented reasonably," he says. "It's a matter now of developing the business."