Relaxation Drinks: Fad, Trend Or Niche?

Beverages get a lot of buzz, but will sales follow?

Positioned as a counter trend to energy drinks and a solution to stressed-out lifestyles, relaxation beverages with catchy — or suggestive — names such as "drank," Mary Jane's Relaxing Soda, Dream Water and Vacation in a Bottle, have received a bunch of press.

Their long-term prospects, though, are still in question.

"It's a very curious situation where we have loads of entries but no verification yet that we have a viable category," said Gerry Khermouch, editor of Beverage Business Insights. "That will only come when some brand breaks out into a broad presence and decent velocity at retail."

Still, the North American market for relaxation drinks is small, with 33 stock keeping units launched in 2010 as of press time, 32 in 2009 and 21 in 2008, according to Datamonitor's Product Launch Analytics, which did not have figures for how many of those products are still being sold. Among the key players is "drank," which sold 7 million cans from spring 2008 to the fall of 2009, and recently expanded into Canadian 7-Eleven stores.

"There is definitely momentum with some of the brands," said Jeff Cioletti, editor of Beverage World. "But at this point it is probably more buzz with a bit of potential. It's really too soon to see how long they will be around."

With the segment packaging and formulations expanding from cans to shots, Cioletti said the makers are "definitely following the energy drink playbook," with some manufacturers putting out both energy and anti-energy drinks. "They want to have their fingers in both pies."

An April 2009 Datamonitor survey of U.S. consumers found a significant proportion have an interest in stress-relieving products. While only 18 percent of U.S. consumers said they were actively buying food and drinks designed to help them relax, 57 percent said they were interested, but not actively buying, according Consumer Analyst Vicky McCrorie.

Despite the interest, relaxation drinks haven't taken off as well as, say, Silly bandz. The president of a small chain in the Midwest told CSNews her stores weren't carrying the beverages, but in Grand Junction, Colo., Feather Petroleum Co.'s Dan Rotherham said he plans to try "a few brands" in the company's Stop 'n Save stores when the chain remerchandises its cooler sets later this year. "Right now, energy is still king for us," he said.

Still, at JJ's Convenience Store in Memphis, Tenn., owner Jay Lee said relaxation drinks are selling better than anticipated. The store has sold "drank," which pioneered the category, for more than a year, and added Unwind, a low-calorie relaxation drink, a few months ago. The drinks were given a few facings and retail for $2.49 — somewhere between a market low of $2.29 and high of $2.99.

"I think the [segment] will last. I use them myself," said the retailer, who is a body builder. He sells eight to 10 24-can cases per week, though he believes he picked up little incremental sales by adding a second brand. "I do think the Unwind sales will pick up though, since it is new. There are energy drinks that come in the last half of a year, and then disappear or the vendor stops selling them. When "drank" came out, I thought it may be the same thing, but I was proven wrong. I know it is marketed as an urban drink, but I have older people in their 70s buying it and using it as a sleep aid."

Despite anecdotes like these, the segment faces a few limitations, according to Datamonitor's McCrorie. "Stressed lifestyles mean consumers show more of a desire for energizing products than relaxing ones," she noted. "Plus, energy drinks that have natural-based alternatives to caffeine and lower sugar are increasingly emerging, and there are other relaxation aids already known, such as milk, cocoa or alcohol."

Another possible hurdle is uneasiness with some of the drinks' name origins and marketing strategies. For example, "drank" and Purple Stuff are associated with "purple drank," a mixture of cough syrup and grape-flavored soda popular in Southern hip-hop circles.

"Some of these drinks put themselves out as legitimate drinks, but still court the controversy a little bit," Cioletti said. "Whatever gets them headlines. Obviously, the people who created Mary Jane were winking at the connotation. But the distributors and retailers don't seem to by shying away from it."

Others may be uncomfortable with the drinks' ingredients. Some contain herbal or plant extracts, including rosehips, valerian root or kava root, others contain natural human hormones such as melatonin, which has come under regulatory scrutiny. The FDA has already issued a warning letter to the marketers of "drank," which contains melatonin.

"Depending on how that's resolved, that could have implications for the marketing and also for the potential of an exit, since the big beverage players tend to be leery of getting involved in brands based on ingredients that have run afoul of the government," Khermouch said.

Similarly, Cioletti noted energy drinks have been the lightning rod for some of the flack. "Relaxation drinks put themselves out there more stealthily while all the attention was on energy drinks' ingredients," he noted.

Relaxation drinks, however, can come in many forms (see chart below). Some functional drinks, for instance, have the same active ingredients as relaxation drinks but don't market themselves the same way.

"Energy drinks took off so well, why not try to capitalize on that?" said Mintel's Lynn Dornblaser. "But I would guess, big picture, these types of drinks are going to remain niche products, appealing to 18- to 24-year-olds.

"Consumers who are older have other sources to go to for relaxation benefits, such as chamomile tea or decaf flavored coffee. This is for the dedicated energy drink user, the soda drinker who is not a coffee drinker, giving them options that are not designed to get them wound up."

Even if the drinks are just fads, retailers and manufacturers can still profit from them. "I think about low-carb and how many companies made so many missteps — getting in late, staying in too long," Dornblaser said. "The key is to get in and out without losing a lot of money. For retailers, there isn't much to lose by putting in a few SKUs."

For comments, please contact Barbara Grondin Francella, Senior Editor, at [email protected].

The Bottom Line

• Relaxation drinks have gotten media attention as anti-energy drinks.
• The segment is small, but new entries are gaining distribution.
• Sales haven't matched the segment's "buzz" to date.