By Walid Fouda, Sub-Regional Leader, Middle East & Turkey, IFF
If you’re a beverage producer, you could be feeling the squeeze. From the growing number of national sugar taxes on one hand to consumer demand for nutritious and delicious choices on the other. As more and more countries in the Middle East follow Saudi Arabia to introduce sugar tax, beverage companies are looking at reformulating their products.
From a business standpoint, both are compelling reasons for reducing the added sugar in juice-based, carbonated, and energy drinks. And that’s before you’ve even begun to think about what consumers are demanding.
Since Saudi Arabia government implemented a 50% excise tax on all sugar-sweetened beverages in 2019, many GCC countries have and are expected to do the same making sugar taxes and regulations a significant challenge. Moreover, the ‘affordability’ factor in- light of inflation – is a challenge?
In 2022 as per GlobalData, “Egypt, South Africa, United Arab Emirates, Israel, and Saudi Arabia are the major economies in the MENA region. With a consumer price inflation of 9.9%, Egypt and Saudi Arabia were the most inflated countries in the MENA region. The average consumer price inflation for the selected countries was 6.3%.” (Link)
Even from a commodity perspective, the Trading Economics platform reported that, since early 2020, global sugar prices have continuously surged upwards. In other words, the price of sugar-containing drinks is only going to increase further1.
A Choice More Suited for ‘Optimized Self’
While affordability remains a top concern, clearly, there is another key market trend which makes the consumers explore more. The desire to consume healthier drinks, which are nutritious and sugar free or have less sugar, but without compromising on taste and texture. Before the pandemic hit, people were already conscious about their health; however, Covid accelerated this lifestyle trend- as health becomes the new wealth. Physically or mentally consumers now aspire to attain their best possible self and are consciously taking full ownership of their health and wellness. As per the International Food Information Council around 72% of consumers, globally were trying to limit their sugar intake in 20212.
Products that focus on healthier alternatives and provide guilt-free hydration, refreshing recovery, energy and immunity have fast made a place in consumer’s basket. ‘Free from’, less calories, and less fat claims reflect a healthier choice to consumers. As per PWC, post pandemic, 41% consumers in Middle East are ready to pay more healthier food & beverages and adopt a better diet3.
Breaking the Norms and Routine by Amplifying the Experience
Consumer taste is constantly evolving and expanding, and people the world over are discovering an array of flavors. Consumers are now seeking guilt-free indulgence especially post-covid; hence they have turned to fruit juices, carbonated drinks, smoothies and nectars.
While today affordability and health concerns do rank among the top three drivers of beverage purchases, taste remains the number one driver, with price coming in second. Citrus flavors like orange and lemon, along with seasonal fruits, ginger, herbs, and berries – among others – are the ingredients that consumers associate most with health and wellness. Citrus in particular is associated with immunity, and it benefits from its refreshing taste characteristic. In fact, 13% of all seasonal and limited offerings in Summer of 2021 included citrus fruit as an ingredient, focusing on lemon, orange and pink grapefruit. Altogether, beverage manufacturers face a complex cocktail of needs. But what do they mean in practice?2
Re-Thinking Beverages for Today’s Consumer
A key consumer need is sugar reduction or replacement of sugar with sweeteners. This in general is a complex undertaking for product developers for a number of reasons. First, reducing sugar means reducing the intensity of sweetness and delaying sweetness onset. This is accompanied by a diminished mouthfeel and flavor delivery. Second, sugar often plays an important role in balancing bitterness and acidity in beverages. When you remove sugar, these off-notes can become more prominent in the product. Adding botanical extracts, vitamins and functional ingredients in the formulation also impart off-taste which become more detectable in products with reduced sugar.
Fortunately, flavors & ingredient technology does exist to help beverage manufacturers in value-addition of nutrients and most importantly overcome the sensory issues of sugar reduction. At IFF, for example, IFF FLAVORFIT™ technologies are available for improving the overall taste of sugar-reduced products. IFF FLAVORFIT™ consists of tools such as sweet modulators, maskers, juicifiers, and mouthfeel enhancers. Along with the use of hydrocolloids and natural sweeteners, manufacturers can create great tasting healthier products that consumers can enjoy!
These flavor ingredients are now fast finding their way into beverage systems, with the sole purpose of modifying taste and bringing down costs to meet the demands of today’s consumer. All these are some of the good reasons for beverage companies to partner with their flavor & ingredient supplier next time if there’s a challenge on the horizon.
2 Mintel GNPD
3 PWC 2021