Potential market

PART B: valorisation plan

SECTION I: The product

 

1a

The innovation potential of this product is related to:

 

  • Technology-driven innovation (under the influence of the development of science – the market is not ready for the product)
  • Market-driven innovation (as a result of market surveys, the market expects the product)
  • Replacement of existing product
  • Product related to cost reduction
  • Radical new product
  • Other, what…
-          Market-driven innovation – the proposed pilot Lab for functional N2O aerated drinks is a consumer driven innovation. Consumers want new exciting and healthy products related to their dynamic lifestyle and leisure activities.

-          Radical new product – the innovation brings two new features to the existing production practices of drinks and food additives thus resulting in radically new products like new recipes of highly purified and concentered extracts of Biologically Active Substances and N2O functional drinks with smoother texture and stimulating effect.

-          Replacement of existing product – absorption of N2O in alcohol drinks like beer for instance can reduce the alcohol content by keeping the consumers expectation for the pleasing effect.

 

 

 

 

1b

What added value for end-users does the product hold?
• higher quality
• Better technical characteristics
• Other …
The produced N2O sparkling drinks will have higher quality in terms of taste, odour, as well as additional healthy effects due to the existing Biologically Active Substances (BAS)

The removal of CO2 from the traditional sparkling drinks eliminates the production of carbonic acid in the gastrointestinal tract thus prevents some harmful effects to the mucosa of the intestines and the dilatation of the heart ventricles and wall. It also reduces the negative effects of the CO2 sparkling drinks on the teeth.

The energizing and euphoric effect of the N2O introduced in spirits can be used for the reduction of their alcohol level without compromising their taste or stimulating effects and by reducing the unwanted side effects.

The Pilot lab can be used as single installation for the production of galenic phytoproducts with pharmaceutical qualities or to complement existing production lines for beverages like beers, juices, tees, etc.

 

1c

What is the Unique Sales Proposition of the potential product?
 

Globally, beverages are forecasted to be the fastest-growing segment and to assume the largest share of the market (56 percent in 2013). Two key drivers are consumer preference for the convenience and versatility of beverages and the relative ease of creating tasty products and innovative packaging.

 

Functional drinks with N2O content are products with an easy-to-feel mood-enhancing effect. They can follow the popularity and growing pattern of the energy drinks where consumers also can quickly feel the benefit. Some innovative modes of packaging such as “daily dose can” or branding that communicates a specific health benefit can be applied to differentiate N2O functional drinks products and enable their premium pricing.

 

For achieving functionality drinks has to be enriched with Biologically Active Substances.

Extraction of BAS can be relatively costly and sophisticated task by requiring significant R&D capacity and specialized technologies. The Pilot Lab along with the methodology and set of defined new recipes for phytoextracts allows for building in-house capacity for designing new types of drinks or for outsourced development of novel products by contracts.

 

 

 

 

 

SECTION 2: The Market

 

 

2a

What is the target market for the product?

National ×

European ×

Global ¨

Please describe the characteristics of your target market.

The Pilot lab for functional N2O drinks can be licensed to national and European companies for beverages production or for production of pharmaceutical products. Among the target markets is the brewery production where N2O sparkling beer with smoother texture and lower alcohol level can be easily produced by adding two modules to the existing production lines.

 

 

 

2b

How the product is characterized from the following options? Number of companies producing similar products in the field.

• Base – applied by all companies in the industry

Leading – applied by a single or limited number of competitive companies

• Key –at a development stage, but has already proven its potential

The Pilot Lab and the produced functional N2O sparkling drinks can be featured as leading – applied by a single or limited number of competitive companies. N2O enriched drinks are produced thus far only by some global producers of energy drinks like Monster and Red Devil by their in-door engineered installations. Currently there are no commercial products combining BAS substances from phytoextracts and N2O for holistic stimulation of physical and mental health. Furthermore a free market niche for N2O beer, N2O juices and N2O tees exists allowing for vast variety of brands and trademarks development.

 

 

 

2c

What type of market demand will be satisfied?

• Existing demand – the market is already developed

• hidden (latent) demand – the market has yet to be developed

The innovation proposed will satisfy both an existing demand for healthy, yet energizing and exciting products and will open a potential for the development of new gourmet drinks, or for significant shift in taste and flavor of existing brands of drinks. The new N2O products can be introduced within the developed markets of cold tee products, juices and energy drinks as part of existing famous brands. Careful management of the consumers’ expectations along with information campaign on N2O effects on health has to be considered.

 

 

 

 

 

 

 

2d

What is the current stage of the product’s market life cycle?

Implementation, implementation in production (leading to a radically new product offers)

• Growth (rapid spread within the industry or outside it)

• maturity (parameters of the technical characteristics of manufactured products reached their maximum, higher-grade products can be manufactured on the basis of technological substitution)

The market life’s cycle stage of the Pilot Lab and the N2O functional drinks can be characterized as transiting from implementation to growth. The installation and the related methodology lead to the production of radically new products and lifestyles. They can be easily introduced to different production lines of beverages and pharmaceuticals thus leading to wider spread within existing industries and markets.

 

 

 

2e

Strategic partnerships (existing or potential).
The inventor has good contacts within the pharmacy community in Bulgaria. The big brewery companies are the next strategic partners to be contacted due to the user-friendly adoption of the nitrogenizing modules to the existing production lines and the popularity of beer as everyday drink.

 

 

 

 

 

 

SECTION 3: The Competition

 

3a

What is the competition within your target market?
Competitors in the field of drinks production are the global leaders in energy drinks like Monster, Red Devil and High Performance Beverage Company. The first energy drink ever to be nitrogenated (released in 2009 in US) is the Nitrous Monster Energy drink. In the drink a combination of N2O with CO2 was injected in the normal Monster Energy formula for achieving unique texture, smooth drinkable flavor and the so called “buzz” effect. The N2O NITRO is a trademark by Red Devil applied under the primary class for beers, mineral and aerated waters and other nonalcoholic drinks; fruit drinks and fruit juices; syrups and other preparations for making beverages. The NOS Energy Drink is produced by the High Performance Beverage Company, and licensed by Holley Performance, which owns the trademark.

Recently there are no big producers of N2O beer, N2O tees and N2O functional drinks with Biologically Active Substances. The fully-fledged project on the Pilot Lab for N2O functional drinks provides proven recipes, methodology and technical documentation to meet all requirements for GMP.

 

 

3b

What competitive advantages will the introduction of the new product ensue?

• lower prices based on lower production costs

• product differentiation (uniqueness of the product proposal)

The proposed Pilot Lab requires significant initial investments for its complete construction. Separate installation modules at lower costs can be attached to existing production lines to create new variations of basic products like nitrogenated beers or cold tees. The methods of obtaining, purifying and nitrogenating phytoextracts with BAS allows for numerous combinations of new flavours, textures, medicinal qualities and energizing effects resulting in radically new products and markets.

 

 

3c

Potential products relate to the following price range:

• High price range

• Average price range

• Low price range

The Pilot Lab installation can be positioned in the average price range for such equipment by considering the certification and licensing costs.

The produced N2O functional drinks can be marketed through the entire price spectrum depending on the complexity of the phytoextracts used and the costs for the raw plant material, especially in the case of rare herbs and oils. In general functional foods and drinks are marketed at about 30% higher prices than the respective conventional products. The N2O functional drinks are very marketable and advertisement-friendly (usually N2O is associated with the chemical additive used to boost power engines of racing cars) thus allowing different selling strategies.

 

 

 

 

3d

Potential products will be marketed:

• To regulated markets (e.g. heat supply, water supply, universal telecommunication services, agricultural products, fishing industry, architectural services)

• To markets operating on the principle of free negotiation between agents on the market

The variety of N2O functional drinks will be placed on the regulated markets for food and beverages, food additives and pharmaceuticals.

There is no specific body for regulating N2O functional drinks but being considered beverages in general they are subject of the respective EU food safety regulations. N2O functional drinks with energy enhancing effects can be sold in supermarkets, drugstores, and major retailers or online. The drinks with more concrete medical properties and recommended doses shall be distributed via pharmacies and hospitals.

 

 

 

SECTION 4: Indicators

 

Estimated cost of the new products 260 000 EUR for the Pilot Lab
Expected market volume (potential / maximum number of users) 10-30
Expected sales volume Hard to estimate
Expected market share of the company (proportion between sales and total company sales in the relevant market) Hard to estimate

 

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