AQUAhydrate Grows Through Distribution and Celebrity Partnerships

Has anyone noticed the amount of press that AQUAhydrate has gotten recently?  After their rebranding effort in 2012, they have reached some significant milestones.  Most recently, they gained more national availability in the grocery channel with new distribution agreements at Safeway and Kroger’s.  They secured even more publicity after Mark Wahlberg and Sean “P. Diddy” Combs announced they were partnering with AQUAhydrate to help develop and execute the beverage brand’s business strategy.  What does all this mean for the brand and for Canadian consumers?  Will their continued success lead to stronger availability in Canada?  And how will celebrity partnerships help the beverage refreshment perform better?

Let’s answer the latter question first: will celebrity partnerships with Mark Wahlberg and Sean “P. Diddy” Combs help deliver stronger business performance?  It all starts with making the right choices; there must be mutual benefits beyond previous arrangements like the celebrity endorsement compensated financially.  When you are endorsing a beverage or any other product, you are mainly communicating the product or service benefits to the public.  There is no guarantee that you believe in its success or benefits – you are simply saying what you’ve been paid to say in order to make money.  However, what more and more companies realize that without any vested interest from the celebrity, it’s mainly a one-way transaction.  There is no passion for the refreshment beyond the financials.

Mark Wahlberg and Sean Comb speak to the media at the AQUAhydrate press conference. Courtesy of AQUAhydrate’s facebook page.

Through this realization, more companies are finding celebrities that truly believe in the product’s success.  Diet Coke found Jean-Paul Gaultier, Taylor Swift, and Marc Jacobs.  Pepsi found Beyonce.  Evian has been doing this for years, and has found a plethora of fashion designers willing to put their mark on collectible glass bottles each year.  All these celebrities are not just being paid to talk up their favorite beverage, rather they are involved with the business in some shape or form.  Beyonce is involved with Pepsi’s creative process and how the soda brand is represented to music fans worldwide.  In a similar sense, Wahlberg and Combs are expected to be involved with the business strategy component for AQUAhydrate.  They are expected to actively participate in helping get AQUAhydate into more grocery stores and more consumer shopping carts.  The fact that both celebrities chose to partner with AQUAhydrate, they must believe in the beverage’s business prospects and how they can add value.  Therefore, this business partnership should stand a very high chance of success.

To answer the former question on what this means to Canadian retailers and consumers, the new distribution arrangements should help.  Safeway is a grocery chain with an American presence as well as a Canadian presence, so the incremental distribution for AQUAhydrate could likely be the result of having the refreshment merchandised in Canadian Safeway grocery stores.  Some research and a quick question to the AQUAhydrate team revealed that the water beverage is indeed found in Safeway stores, as well as most Canadian GNC and Quebec Couche-Tard outlets.  Some readers have said that the beverage brand was also found in high-end grocery stores, so it can be expected that AQUAhydrate will continue to expand its Canadian presence.

Since its September rebranding effort, AQUAhydrate has rebounded and made some great strides forward.  With its expanded distribution and strong celebrity partnerships, there’s no doubt that the beverage brand is primed for even more success in the future.  With Walhberg and Combs on board to help with the business strategy, who knows what celebrity wants to sign on next with the brand to help propel it to new heights?

Coke Zero Targets Men For 2013 March Madness

Have you seen the latest Coke Zero commercial?  If not, click on the link below, also found from Advertising Age’s article detailing Coke Zero’s new advertising agency, Droga5.

Unlike last year’s Powerade commercial, this year’s March Madness commercial by Coca-Cola features Coke Zero.  The question is why focus on a soda rather than the sports drink?

Inherently, the message and audience is geared toward a completely different type of beverage consumer.  The Powerade commercial was a signal to Gatorade that Powerade realizes that they are the underdogs in the sports drink segment, and they must work harder in order to compete with the sports drink giant.  It was targeted toward the athlete.  This year’s March Madness commercial broadens the reach by focusing on men, not just athletes in particular.

An office worker drinks a Coke Zero to confirm it’s not his fault he’s working on the March Madness brackets during work time. From creativity-online.com.

Coke Zero wants to identify with the spectators, not just the athletes.  The message is that even the casual sports fan can enjoy everything and participate in March Madness by drinking Coke Zero and picking the winners.  The change in Coke Zero’s focus is understandable, given that CSDs (carbonated soft drinks) are a larger segment than sports drinks and offers greater sales potential.  Also, why would you fight from the position of an underdog (Powerade) when you can  fight from a position of strength, and build on your leadership (Coke Zero leads zero-calorie CSD market)?

Keeping in line with Coca-Cola’s theme on focusing on the intangibles, there is no mention of calories.  Notice how Coca-Cola’s tagline is “Open Happiness” and Diet Coke’s tagline is “Stay Extraordinary”?  There is no focus on tangible attributes, and tries to position the beverage as a lifestyle choice.  For Coke Zero, men do not want to be reminded that they can “Enjoy Everything” by consuming a beverage without any calories.  The less the messaging focuses on calories (and more on sports or happiness), the better it should perform.

All in all, the winning potential is great, and offers them the ability to leverage themselves from a position of strength.  Smart move to switch the focal point from athlete to casual fan and spectator.

Everyone Wins With Up-Sized Fanta

BevWire recently noticed that Coca-Cola’s Fanta flavors has made some subtle changes to their packaging.  The take-home 1.5L bottles were upsized and replaced with 2L bottles to align with the rest of their take-home offerings like Coke, Diet Coke, Sprite, and so on.  I believe their packaged cans were also 10 to a case before, and now those have been increased to 12 cans per case.  Not sure what led to this decision, but it should be viewed as a good move all around.  Manufacturer, retailers, and consumers alike should all be happier at the end of the day.

The increased 500ml for Fanta will provide cost savings for Coca-Cola.  They no longer have to source a different shape & size for their take-home bottles.  With the exception of the Canada Dry Green Tea Gingerale, all of Coca-Cola’s take-home bottles all take the iconic Coke contour shape.  This will also provide for stronger brand recognition as a Coca-Cola beverage product since this bottle shape is patented, and only Coca-Cola products can be bottled in this format.  The cost savings also transfer onto the production floor.  The up-sizing for both bottles and cans means that the automated assembly lines do not have to refitted to bottle and package different sized products.  Delivery to customer also also made easier as the case stacking inside the delivery trucks are are uniform.  Pretty much a no-brainer for the beverage organization, which leads me to wonder…why was this not done in the first place?

At the retailer level, the shelf sets don’t appear to be affected (see image above).  The pricing also does not really change since it must line-up with the rest of the 2L take-home bottles.  Ultimately, it’s business as usual for the retailers.

Among consumers, this may be an unexpected bonus when they intend to buy this refreshment.  Coming in-store and to the beverage aisle, the shopper may very well expect to pick-up a 1.5L bottle of Fanta and instead find that Fanta has given them an extra 500ml.  Will this lead to stock-up behavior?  Possibly.  There will also be some form of short-term gain when larger value is perceived (in this case, more Fanta for the same price).

The next step for the Coca-Cola would be the align their single-serve Fanta bottles with the rest of the single-serve assortment.  The Fanta bottle contains 473ml, while the rest of the beverage manufacturer’s single-serve portfolio houses 591ml.  With the cost savings seen for the take-home adjustment, wouldn’t there be even more cost savings if the changes were applied to the entire Fanta assortment?  Retailers wouldn’t notice too much of a difference in terms of stocking, but this may lead to a short spike in sales.  Your move, Coca-Cola – just putting the idea out there.

vitaminwater zero Quietly Arrives in Canada

Has anyone noticed the subtle changes to the low-calorie vitaminwater lineup in Canada?  There used to be three vitaminwater10 variants available: go-go, resilient-c, and recoup.  Now they have quietly replaced the go-go and resilient-c 10 calorie offerings with zero calorie offerings.  The recoup (peach mandarin) doesn’t appear to be on the market anymore, in favor of a zero calorie version of XXX, renamed as XOXOXO (acai-blueberry-pomegranate).  It appears that the United States’ transition in December 2010 has finally made its way north of the border this past April.  As it stands right now, there are 9 regular calorie flavors of vitaminwater, along with the three new low-calorie offerings.

One has to wonder why glaceau did not simply launch the zero-calorie offerings from day one, rather than wait a year to eliminate the 10 calories inside the bottle.  How did the 10 calories get eliminated after a few months’ launch into Canada?  Was it fear that Canadians would not adapt to the zero calories right away and needed to be transitioned away from calorie-filled beverages?  Was there a delay in getting approvals on the ingredients, particularly the sweetener?  In any case, the complete Canadian vitaminwater line-up still stands at 12 flavors.

Having 12 flavors makes it challenging to manage the product portfolio.  The benefit of this vitaminwater zero transition is that it will not impact the overall shelf spacing – only the existing area that vitaminwater product occupies.  However, 12 flavors for any product is quite significant, and getting a retailer to list all 12 at the same time will certainly be difficult.  Take for example Red Bull, which has found success with only three variations (Red Bull, Sugar Free Red Bull, and Red Bull Total Zero).  Or Coca-Cola, which also has three offerings (Coke, Diet Coke, Coke Zero).  Both these brands have fewer flavors and have been very successful.  Monster Energy and Rockstar Energy are also successful as a result of their broad portfolio of products – but not all products get listed in the retailer.  The most successful brands have fewer variations and can command more shelf space.  They also tend to be leaders in their respective categories.  vitaminwater seems to be buck that trend.

Is vitaminwater a leader in the enhanced or flavored waters category?  Sales data would almost guarantee it as such.  Why would they need so many flavors, when traditionally four or five flavors will be enough?  The answer is portfolio shelf space relative to sales.  If the vitaminwater portfolio commands 40% of the category sales, they should be allocated 40% shelf space.  After all, the argument is that the cooler space should reflect market conditions for the consumer.  This is why in the summer there are less shelf space allocated to juices, but more to water and sports drinks.  Having a broader portfolios always gives you more opportunities to create shelf space and in turn sales.  Just look at how Gatorade has been able to gain more shelf space following its prime/perform/recover extensions.  So while the majority of sales may come from the most popular flavors, the less popular flavors also have a significant role to play in creating and extending shelf space for the vitaminwater total portfolio.  Imagine that the sale for one vitaminwater flavor was marginal relative to the total portfolio, but had two shelf facings.  That flavor still remains on shelf to “hold space” for other better performing flavors, and allow the retailer to reduce that flavor to one facing while increasing facings for another better performing flavor.

Optimizing the shelf space ultimately falls onto the beverage category manager’s responsibility.  As long as vitaminwater’s broad portfolio keeps making sales, it makes difficult for other enhanced waters like Aquafina Plus to gain shelf space.  Once you secure the shelf space, it’s up to you to structure and space out your products to protect your shelf space.

 

 

 

Pepsi Canada Brings Back the Taste Test

Pepsi Canada has brought back the taste test, launching a Canadian-specific summertime promotion titled the “Pepsi Ultimate Taste Challenge” and supported through facebook both online and offline (link here).  Facebook offline support includes a map showing locations where Pepsi will be conducting the taste test and at which times. The online component runs a digital challenge testing you on various cultural components linked with Pepsi (slogans, word scrambles, celebrity endorsements, and more).

For those unfamiliar with the previous taste test formats, interested consumers would line-up and drink to cola samples (one Coca-Cola and one Pepsi) and guess which one was Pepsi.  The purpose of this test was to prove to consumers that in the absence of branding (red Coca-Cola packaging, blue Pepsi packaging), consumers actually preferred Pepsi more.  The test was a big success for the organization when they first ran it in the 1970s and 1980s, leading Coca-Cola to change its formula and launch New Coke (which has since become a worldwide case study on the company’s blunder).  Pepsi gained market share through its taste test and Coca-Cola’s reaction was to alter its formula, which led to pandemonium as consumers rushed to buy as much Coca-Cola as they could before it was phased out of the market.  Coca-Cola eventually caved to consumers and re-launched the original Coca-Cola (called Coca-Cola Classic).  So why would Pepsi Canada want to re-launch this taste test, have they not learned their lessons from the past?  Will this iteration of the taste test change anything?

The current taste test shouldn’t have the same adverse effects for Pepsi that they encountered in the 1970s and 1980s.  Times have changed and so have consumer soft drink preferences.  Both companies have learned their lessons and moved on from that point.  While the Pepsi Ultimate Taste Challenge is on display on a national scale, it is not in the United States.  This point alone isolates the effect that the taste test can have.  American consumption versus Canadian consumption has roughly a 10:1 ratio, therefore it would be equivalent to a 10% impact in the United States (similar to a large scale pilot test market in the United States).  Similarly, Coca-Cola has learned what would happen if they reacted to taste testing and changed their formula.  In this aspect, the Pepsi taste test should only affect Pepsi and the summer sales for both brands.

In addition, the current version’s taste test should deliver stronger results to the overall Pepsi franchise, rather than only to the Pepsi brand.  The 2012 version incorporates both Diet Pepsi and Pepsi Max, pitting the entire Pepsi franchise against Coca-Cola, Diet Coke, and Coke Zero (neither Pepsi nor Coca-Cola has a mid-calorie offering in Canada…yet).  This caters to the current beverage trends, giving calorie-conscious and sugar-conscious consumers a chance to take part in the taste test as well.

The underlying effects of this taste test should go a long way toward helping both brand’s summer soft drink sales.  The comparisons would not only increase exposure and sales for the Pepsi franchise, but also for Coca-Cola’s franchise.  Summer is definitely the season for sampling, and bringing awareness back to soft drinks at this time benefits everyone.  After all, if not promoting soft drinks during the summer, when else can it be promoted?

Pepsi Re-Focusing on Soda For 2012

Industry sources reveal that PepsiCo is undergoing a business review that will end with marketing budgets increasing up to 20% for their core beverages: carbonated soft drinks (source article here).  The article further details that the reason of the CSD re-focus is a direct result of shareholders wanting PepsiCo to split up its food and beverage offerings – similar to how Kraft separated their food and confectionery business.  By increasing their marketing budgets for the core beverage offerings, PepsiCo is reported to be cutting employees to balance out the spending.  If PepsiCo were to split up its food and beverage business, would it really be better for the company?  As the focus of my blog is beverages, would splitting up be beneficial for the company’s beverage unit?  Will more marketing funds to help promote their beverages work to revive their soda business?  How should these marketing funds be used to reinvigorate the refreshments portfolio, particularly carbonated soft drinks?

Although the split may be better for the company as a whole and for the snacks portfolio, this split would not really help the beverage unit.  It may make business sense to separate the two units since  it would allow the snack unit to realize its full value, but it would ultimately depreciate the beverage unit’s total value.  The beverage unit is underperforming at the moment, after losing the second place soda position to Diet Coke, while general health trends have most consumers choosing waters, teas and juices over soft drinks.   However, a split to separate the beverage division does not help their CSDs’ revival.  PepsiCo strongly believes in  ”Power of One”, which translate value to both divisions by providing a total snacking solution.  Separating the two companies will not allow them to realize full benefit of their unique market position – a hand in both food and drinks. When a shopper reaches for a soft drink, they also likely reach for some chips or granola bars as well – both products that PepsiCo offers.  Other companies like Coca-Cola and Dr Pepper would need look outside their own companies to find a willing partner to co-promote.  Keeping the two distinct divisions in one company provides a stronger support system and more opportunities to revive the underperforming beverage business.

With regard to the second part of the post, more marketing support certainly helps with the soft drinks department’s revival.  Relating to execution, Pepsi may be advertised more frequently and more ubiquitously, exploring other areas to prominently feature their products in addition to TV, online and mobile devices.  The additional funding may also be used to support trade activity to make it an even more convincing option for shoppers in the beverage and snack aisles to pick Pepsi over Coca-Cola.  So many more opportunities when people say, “If only I had more money, or had a bigger budget!” that were previously limited can now be explored.  While larger marketing budgets may also mean more market research to understand consumers, it’s very likely that some of the dollars will translate to what consumers can see at the end of day.  Keep an eye out for more soft drink advertisements following their Superbowl spots.  Pepsi may have previously been constrained to display more ads following a large campaign, but now they may be able to consistently advertise their products everywhere.