Annual flavors survey: Part II: the flavor industry is more than trendy tastes and designer drinks, it is a niche market created to expand the demographics of tea and coffee drinkers alike. By evaluating the three most important aspects of the industry: the consumer, the market and the product, we can gain insight into where the flavor industry has been and where its professionals see it going.

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Competition is highly recognized in the coffee and tea world. With a saturation of retail shops and an overwhelming amount of products found on the shelf, it is no wonder these industries must constantly evolve to keep up with their competitors. However, the struggle to be a leader does not end with just coffee and tea companies, but on the contrary, leaks out to flavor companies who are also feeling the contest. It was only about 20 years ago that offering specialty coffee could supply the boost needed to raise you above the rest. These days, specialty coffee has become so common it can be found in the "mega chain stores," in all its varieties, and in all its glory. According to Jeff Nichols of Flavor & Fragrance Specialties, located in New Jersey, "The only place flavored coffee exists is in specialty coffee-with flavored coffee making up about 30% of the whole market." With this in mind, if flavored coffee takes up such a large percentage of specialty coffee, and specialty coffee is becoming more popular and competitive, this must mean that flavors for coffee (and tea) are following the same trends.

The Consumer

Coffee and tea can easily be considered two of the most versatile drinks. They can be consumed at different temperatures, with different methods of brewing, they can be different strengths, different varieties and origins and, of course, different flavors. Tea and coffee can be had on your way to work for a morning pick-me-up, or after dinner as a drinkable dessert. People will drink the beverages for different reasons at different times, hoping the multitude of varieties offered will fulfill their ever changing purposes. Firmenich is a global flavor and fragrance company founded in 1985 in Geneva, Switzerland. Firmenich acquired the flavor division from Danisco in July 2007 and research within the company has helped them put more emphasis on understanding consumers' needs and how they apply to the flavor industry. Jeannie Christodoulou, of Firmenich explains, "Flavors have evolved; it's not just your basic chocolate or vanilla anymore. Now, its white chocolate with raspberries or Tahitian vanilla with honey. But even that is not quite enough for some consumers. Emotions are playing a part in flavor choices. It not only has to taste good, but it has to appeal to the mood the consumer wants to feel. We have tied flavors into emotions--curry for thrilling, chocolate for pleasure, champagne for luxury and more. Consumer palates have become more sophisticated so flavor blending has become more advanced and consumer research is more important."

While the consumer's emotion may play heavily into their flavor favorites and experimental extent, the common, everyday taste preferences (especially in coffee drinks) can also determine the direction of the flavor industry. "Flavored coffee drinkers don't necessarily like the taste of coffee," explains Nichols. "Whether its too bitter, too strong, too astringent, etc, consumers will load up on the cream and sugar to change the taste profile. By and large, the industry emerged because it attracted people that wouldn't normally drink the product." Flavor & Fragrance Specialties has seen that knowledge and understanding of their client base equals success. "Our consumers mostly flip-flop between flavored coffee and lattes (or other dairy-based coffee beverages)," says Nichols. "The taste memory has changed their taste expectations. They are drinking both products for different reasons, and it can become hard to disassociate the success criteria for one over the other. Latte is a darker roast, with exposure to sweetness, creaminess and dairy notes. This is certainly impacting their taste expectations." With this information, Nichols and his staff basically "redesigned" their product line to enhance the "creamy, sweet and dairy notes" in their flavors. Therefore, flavored coffee can become a similar option to the dairy-based coffee beverages, costing less money and being lower in "caloric density." "Flavored coffee can then become that normal, everyday staple replacement product. People don't prefer one over the other, they see the merit in both, but now they are given a choice," declares Nichols.

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Appealing to the flavor demands of the consumer is a challenge that exists not just in the coffee world, but for the tea drinker as well. Wolfgang Hidding of Martin Bauer located in Germany describes his company's efforts towards better understanding their consumers: "We are a pure B2B supplier, but we try very hard to keep our feel for the pulse of the consumer. We monitor beverage markets closely and taste interesting products from all segments. What we learn there helps us develop the right blends. As all our products are tailor-made, we can combine our know-how with the knowledge of our client."

The Market

Now that we understand what it is the consumer is looking for when turning to flavored teas and coffees, the question could arise: "How do these companies attain the needed information?" One sure fire way to find out what the consumer wants is to go directly to the source. Market research can help companies learn about the new tastes, trends and expectancies of the consumers specific to the flavored tea and coffee industries. Martin Bauer, for one, is part of the nature network, a globally acting network of 20 companies. Worldwide, the nature network offers its customers products and services based around plants and herbs. Being part of this network supplies Martin Bauer insight into their customers, from not just their company's perspective, but from other companies also in the network. "As part of the nature network," explains Hidding, "we also have much experience in developing products for Ready-to-Drink beverages; and through exchanging our experiences, both sides profit greatly."

WILD Flavors, Inc., located in Erlanger, Kentucky, is also part of a larger group that assists them with their market research and awareness. Jessica R. Jones-Dille, industry trend manager at WILD Flavors explains this affiliation. "WILD utilizes a unique group, the N.E.X.T. (New Emerging Exciting Trends) Team, to drive and support innovative concept, brand and product ideation. The N.E.X.T. Team offers a competitive advantage to WILD'S customers, helping them transform trend-awareness to seamless product movement from concept to market. This team is comprised of individuals from all levels and backgrounds within the organization."

Other companies, like Flavor & Fragrance Specialties like to conduct their own market research, and feel their findings could be key to increasing popularity. "The metamorphosis that we're seeing is that 20 years ago, people liked all flavor, no coffee with the lightest of roast," says Nichols, "now, we've done a focus group and seen people want the taste of coffee but without the harsh, bitter astringent taste." Nichols adds, "These are not black coffee drinkers, they are learning to tolerate more of a coffee note, and we are weaning people more in that direction. We have the ability to attract people to coffee that wouldn't normally drink it." As Nichols points out, the only way to be sure a consumer is going consumer their opinions. "When a flavor chemist develops a flavor, it's like their baby. Sometimes you have to eat humble pie--letting people take an objective stab at it, then readjust your objectives to get closer to the wants and needs of the consumer," Nichols continues. "We've done it several different ways: internet surveys, focus groups, home use tests (reason being when you go into a focus group you taste about 1 oz of a product and make your decision. A home test sends them home with the flavored beans and allows them to get a better sense of the product)."

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Firmenich also considers understanding the market the key to their success. "We do a lot of our own internal research, surveys and consumer panels," states Christodoulou. "Mostly, we do a lot of flavor tracking from trade shows, customer requests and flavors currently selling in the market place. We combine all of these with our long-term experience to predict future market and flavor trends."

In general, the most important thing to acknowledge about the flavor market is the amount of good companies producing quality products. As Nichols puts it, "The consumer is now exposed to a great deal of choice. They are highly sophisticated, very educated and much more discriminating. If you are a retailer, you know consumers have a choice, and the choice happens to be very good since everyone keeps moving the bar up and up. Success means bringing your 'A game.' Even the places that used to be thought of as 'second class,' can now deliver great coffee. With that, you can't rely on old morals. What you knew 10 years ago about the industry isn't necessarily still correct ... the game has changed."

The Product

If one is partial to a French vanilla blend, or an orange pekoe tea, their options within that specific flavor are seemingly endless. As coffee and tea drinkers become acquainted with the more popular flavorings, they are venturing outside of "their comfort zone" and trying new tastes and combinations." The coffeehouse trend along with a consumer trend toward customization has increased the consumer preference towards flavored varieties of coffees and teas. Consumers like to create products that are 'just for them' and ready-to-drink flavored coffees and teas have followed suit with uniquely flavored products," says Jones-Dille.