Kraft To Launch New Liquid Water Flavorers

Kraft is set to launch it’s first new product in 15 years, and it’s a zero-calorie, liquid water flavor enhancer called Kraft MiO.  Available in six flavors (berry pomegranate, fruit punch, mango peach, peach tea, sweet tea, and strawberry watermelon), MiO is packaged in a water droplet-shaped plastic bottle that will yield 24 servings.  Nutritional information on the Kraft MiO’s Facebook page (link here) says that it’s no calories, no artificial flavors, and no caffeine.  However, as USA Today pointed out in their report on MiO (link here), it does contain artificial colors, sweeteners, and preservatives.  The product – which is similar to Kraf’ts Crystal Light powder – will launch March 7 in the United States, but no word yet on whether it will come up to Canada.

While some the news reports and Kraft propaganda claims that this product will revolutionize the water enhancers category, I’m not fully convinced.  Will consumers see this only as a novelty item, try it once and not re-purchase?  And since water enhancers are mainly in powder form (with Kraft having a large market of the powder water enhancer category), how much cannibalization will occur?  Will consumers want to trade up from the less expensive powder format, for the more expensive liquid format?  The idea of a liquid water flavor enhancer is fantastic, and if Kraft is able in getting consumers to adopt MiO beyond the trial stage it will be a huge success for both the product and the category.  Right now, Kraft is not only trying to introduce a new product, but educate the public on the new method of flavoring their water.  The majority of consumers that flavor their water uses a powder, so changing behaviors and habits might take a lot of marketing.  And on the cannibalization factor, getting consumers to switch away from powder to liquid will see consumers leaving Crystal Light (hopefully for MiO), just how many will be the question.  In the end, anyone consumer that trades the powder format for liquid will likely be trading to MiO since there are not too many other substitutes on the market right now.  However, unless the cost to product MiO is significantly lower than Crystal Light, Kraft may actually be taking in less profit.  A package of 30-count Crystal Light currently retails for $13, working out to 43cents each serving, while a 24-serving of Kraft MiO will retail for $3.99 (breaking down to 16cents each serving).  Consumers that work out these calculations will see that MiO gives more value than Crystal Light and switch to MiO, leaving Kraft with savvier consumers, but less profits.

MiO can work, but you really have to wonder if it’s in Kraft’s best interests to have it work.

Coca-Cola Formula Revealed

 

This past week, news sites have reported that the secret formula for the original Coca-Cola beverage has been discovered, but the formula is meaningless since it’s not the same Coca-Cola formula that we find in our current  beverages (more on this story here).  The report makes some very interesting and valid points, since the secret formula is likely to have been altered numerous times in the past few decades.  How can a beverage withstand public pressures of calorie amount, health perceptions, and competitive actions without modifying its formula at all – for the last 125 years?  The formula is different from country to country based on the approval of the country’s health regulations (ie. use of corn syrup or other sweeteners versus real sugar), so it’s really hard to say which version of the beverage is “The Real Thing” anymore.

From a marketing perspective, the most valuable point that Mark Pendergrast made was at the end of the article about the secret of Coca-Cola is rooted in its branding.  With the changing public opinion on what’s healthy and acceptable (ie. sugar content, alcohol, cocaine, etc), Coca-Cola really has had to re-invent itself many times over the years to keep up.  Even it’s packaging has changed numerous times to keep pace with expectations and demands.  At this point, the items that really stick in the minds of consumers are the iconic bottle shape and the color red (to a lesser extent, polar bears and Santa Claus also remind consumers of Coca-Cola).  Over numerous advertising campaigns throughout the years, these four things remain included in the advertisements.  The beverage’s recipe can change over and over, but consumers will believe it’s Coca-Cola that’s in the bottle as long as these four items are included.  That’s why Coca-Cola has fought hard to keep the iconic bottle trademarked, and that’s why the color red, Santa Claus, and polar bears are used in the commercials.  As long as the the beverage comes from a red bottle in that iconic shape, consumers will believe it’s Coca-Cola.

The formula may have changed over the years, but the marketing remains as strong as ever.  These associations bring consumers closer to the beverage, and create a connection that has the consumer believing the beverage is the original recipe.  Can you think of any other associations that Coca-Cola has created with the consumer through their branding?

ZICO Gains Distribution in Target Stores

Scanning the news headlines the past few days, I found an interesting article saying that ZICO will be the only coconut water sold in Target stores (link here).  This has interesting implications for the natural health beverage in Canada for the coming years, as last month the news reported that Target will be entering Canada by taking over Zellers locations.  With roughly 1,700 US locations and 200 future Canadian locations, Target will make a strong impact for ZICO as well as many other products.

What’s also interesting is that ZICO is part of Coca-Cola’s portfolio of products through an investment deal.  Coca-Cola has a business unit that searches for emerging drinks and invests these beverages.  They pour financing into them and further develop the beverage through a separate distribution network, until it gains critical mass and warrant distribution off of their own distribution network.  Currently, ZICO coconut water is not delivered off of their trucks, but with the beverage’s acceptance into Target critical mass may have been achieved and warrant retailer distribution through Coca-Cola’s delivery trucks.

Though mainly in the United States for now, once Target enters Canada I’d expect the product offerings that Target has in the U.S. would be carried north of the border as well.  The question then becomes how the other two main players Vita Coco (owned by Dr. Pepper Snapple Group) and O.N.E. (owned by PepsiCo) would react to this news.  If there is no exclusivity agreement with Target, will the other two companies seek to gain distribution through the retailer as well?  If there is exclusivity, will these coconut water companies then seek a partnership agreement with other retailers (Whole Foods, Loblaws, etc) as their sole provider for coconut water?

Coca-Cola Advertises Minute Maid Again

With all the recent acquisitions and new product focus, Minute Maid promotions seem to have been lost in the fold.  Not anymore, as Coca-Cola says they will start ramping up advertising support their Minute Maid juices again.  And they will be going after a new demographic with their advertising this time around.  Advertising Age has more information on this article, which discusses Minute Maid’s inclusion of another demographic for their advertising (link here).

Ad Age’s article discusses a few points that stand out.  First of all, Minute Maid is branching out by targeting male consumers.  In what the article describes as “going after the consumer versus the purchaser”, Minute Maid is increasing their focus on men since the research shows that men are also drink orange juices.  However, the traditional purchaser is still the older female (ie. your typical mother with younger children), so how would influencing males generate more sales to regain lost market share for Minute Maid?  It just happens that the highest volume growth is seen in a channel where men typically shop – convenience and gas.  Men frequent convenience stores to make the quick and easy purchase for the impulse item, so juices growing in this channel may result more from male purchasers than female purchasers.  It’s also one of the few channels where men make purchases for themselves since as women mainly decide what to buy for family groceries and they buy it from supermarkets.  However, focusing on men to buy orange juice will not help Minute Maid recover lost market share.  Which leads to the second point.

Minute Maid is looking to gain share by increasing consumption occasions.  As the analyst indicated that orange juices have been relegated to the breakfast table, there are more opportunities to grow the brand by increasing its demand at other times of the day.  What should you drink right before going on a flight, how about some Minute Maid orange juice?  How about drinking some Minute Maid orange juice after an intense workout instead of water or sports drinks?

All in all, a good plan for Minute Maid to enlarge their target demographics.  It’s not easy to target two different groups of buyers (older females for one buyer group, and male consumers for the other) without alienating one or the other.  If Minute Maid succeeds in re-gaining lost share, it’s because they have found a way to strike a healthy balance when targeting these two different groups.