Analysis of Trends and Demand for Super-Premium Fruit and Vegetable Beverages

Abstract

Super-premium beverages are a fast-emerging product subcategory. While often promoted for its nutritional properties, this subcategory does not conform to the definitions of 100% juices and juice drinks used for providing dietary guidance to consumers. Therefore, it can be difficult for consumers to apply the recommendations from the dietary guidelines and existing research findings to the super-premium subcategory. In light of this context and the lack of existing research related to super-premium beverages, understanding the market and demand for this particular subcategory is timely and relevant.

This study uses retail-level scanner data from 2007-2012 to analyze retail sales and pricing trends and demand for super-premium beverages as well as 100% fruit juices, fruit drinks, and vegetable juices. Results from this research indicate that total sales of super-premium beverages more than doubled between 2007 and 2012, with approximately 16% average annual growth, far outpacing the other subcategories included in the study. This high growth happened, despite the fact that these super-premium products have much higher prices compared to other juice and juice drink subcategories, reflecting consumers’ willingness to pay for its differentiated characteristics. Demand estimation is conducted with the Quadratic Almost Ideal Demand System (QUAIDS) model of Banks, Blundell, and Lewbel (1997) and used to calculate elasticity values. Super-premium beverages were found to be considerably more responsive to changes in own price compared to other subcategories.