Rockstar Energy To Launch Energy Waters

At the National Association of Convenience Stores (NACS) show earlier in October, Rockstar Energy revealed that they plan on launching a line of energy water.  While the timeline has not be revealed, the initial assortment listed on the sell sheet image include the following flavors:  Tropical Citrus, Blueberry Pomegranate Acai, Orange Tangerine.  BevNet has some more information and a quick video on Rockstar Energy’s new products from the show (link here).

This launch from Rockstar Energy pits them against Coca-Cola’s glaceau vitaminwater lineup, and PepsiCo’s SoBe Lifewater and Aquafina Plus lineups.  The question becomes how Rockstar Energy can differentiate themselves against these already established brands.  Despite their positioning as “energy water”, it will be difficult for them to be considered a dissimilar product from flavored water.  It is still an enhanced water beverage and may very well be shelved alongside Aquafina Plus or SoBe Lifewater (Rockstar Energy products are distributed by Pepsi).  And since consumers already have certain expectations for the price point, the new energy waters will have to be priced in a similar range.  There really isn’t that much room for differentiation given what we already know.

So with Product, Place, and Price (the 4 P’s of the Marketing Mix) already determined and largely out of their control, Promotion is the remaining lever Rockstar Energy can use to stand out.  Even then it is still a uphill battle.  In Canada, Aquafina Plus has constantly been on price promotions, to the point where there’s also expectations for feature price points.  In the U.S., many retailers had ran similar promotions but also drove unit sales with a “$10 for 10″ feature strategy.  How can Rockstar’s Energy Water stand out?  Featuring on price – especially for a new entrant – will only upset the market dynamics and reduce profitability.

One option may be co-promoting with their energy drinks, which has an established presence that is much stronger than that of Amped, Nos or Full Throttle (possibly only Amped and Nos in the future, read about Full Throttle’s de-emphasis here).  Leveraging on their stronger identity in energy drinks, they can offer consumers an alternative or additional Rockstar beverage when they are in-store.  Enhanced waters also do not carry the negative stigma that energy drinks have, so transitioning the “energy” equity from energy drinks to energy water may be a tactic to completely re-position themselves.

Another option would be to fully leverage their entertainment and sponsorship properties to feature this new product – in tandem with their energy drinks.  Offering samples of their energy water at their music and sporting events will increase their exposure to a captive audience.  Especially when their competitive products (vitaminwater, lifewater, aquafina plus) are shut out from these venues.  Especially when they offer a differentiated product than Red Bull and Monster Energy, should it be a multi-sponsor event.

While this is a very unique expansion from Rockstar Energy haloing off their “energy” brand association, it will be interesting to see how it can defend against the pressures of larger and more established brands.  This impending product launch has a chance to succeed, but only if they can carve out their own niche against glaceau, SoBe, and Aquafina Plus.

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.

 

 

 

vitaminwater spark…Yet Another Flavor

Regular readers of the blog will know that though I’m a fan of vitaminater as a brand, my belief is that this many varieties of vitaminwater undoubtedly cause cannibalization.  vitaminwater spark launched in mid-February, bringing the total count to 11 (9 vitaminwater flavors and 2 vitaminwater10) flavors.  spark is a blueberry grape flavor and has all the natural ingredients and healthy benefits that the other alternatives possess – it’s just a different flavor.

Unless spark has a niche following of open wallet consumers, it may follow vitaminwater rescue to be discontinued after some time on the market.  In any case, there is only so much demand for vitaminwater, or enhanced waters as a whole.  A consumer  that chooses any number of flavors will eventually stick to one or two, and keep on going back to these trusted choices.  Some (not all) of the remaining flavors may be popular but not to the same level as the favorites.  These flavors also remain on shelves contributing to incremental sales.  But since a grocery store has limited shelf space and must determine planograms, it is unlikely that all 11 flavors will be on shelf.

So how many flavors does a grocery store carry of vitaminwater, and how much shelf space does vitaminwater get?  Without getting into too much detail, vitaminwater’s top 4 flavors make up nearly 60% of their overall sales in the 20oz bottle size.  If the store manager or a category manager must make decisions to cut out flavors or keep only the best selling flavors (to make way for new products), usually 4 flavors of vitaminwater are kept.  So far, spark is not generating as much sales as XXX, focus, multi-V or essential.  Though its still very new to the market, I doubt it will match any of those item’s sales.

Therefore, it is like that there are no volume thresholds that spark must meet in order for glaceau to keep it on shelf, except providing their hydration experts (sales representatives) with incentives to keep pushing this product.

Next time you head into a grocery or convenience store where this product is sold, take a quick count of what flavors of vitaminwater are on shelf, and if spark is among those.  If the two new introductions before spark are not even on shelf, then it’s likely that the particular retailer does not have  an appetite to try any more vitaminwater flavors.

vitaminwater10 arrives in Canada

BevWire recently recently wrote about new vitaminwater being introduced to the Canadian market (read here) and it turns out it was true but slightly inaccurate.  It turns out that yes, there will be more vitaminwater, but now it’s in the 10-calorie per bottle format.  Same bottle, similar packaging, and promising the same great taste with less calories.  In order to bring the calorie content down to 10, these two new flavors are naturally sweetened with Truvia (a plant based sweetener).

Two flavors are entering the Canadian market – Recoup and Go Go. Recoup will be a peach-mandarin flavor, and Go Go being a mixed berry flavor.  Recoup’s side label copy – (cue: movie trailer voice guy) in a world of neurotic bosses, in-laws, dying cell phones and agonizing relationship talks, one bottle stands alone.  naturally sweetened with only 10 calories per bottle and armed with vitamins b3, b5, b6, & b12 this tasty force of hydration can help you cope with whatever life throws your way, coming to tastebuds near you. And Go Go’s side label copy – how can you possibly be reading this label right now? isn’t there a meeting that you should be in? a gym you’ve been paying for? when everyday is a marathon something’s gotta give.  fortunately, this delicious source of hydration you’re holding has some vitamins and nutrients to help motivate you towards your daily finish line.  and to sweeten – or naturally sweeten – the deal,  we made it with only 10 calories.  now hurry and go – you’re already late! These two new flavors can be found anywhere your regular vitaminwater is sold – grocery stores, supermarkets, convenience stores, and mass merchandisers.

Is this a good time for glaceau to launch vitaminwater10?  While they are the market leader in the enhanced waters category, they are late to join the 10 calorie niche.  Aquafina Plus10 stepped into the Canadian market nearly a year ago and vitaminwater10 is only being made available?  We know that vitaminwater10 will be successful when it enters, but why take so long to come out with the innovations?  And will this mean that there will be less regular vitaminwater flavors now that there’s a 10 calorie version?

It turns out that Aquafina Plus10 has been experiencing a natural transition from the regular Aquafina Plus to the Aquafina Plus10 and also slightly growing market share.  This is likely related to a few factors: healthier perception of a lower calorie alternative, discontinuing slower moving Aquafina Plus options, and no innovations from its competitor.  Sources indicates that Aquafina Plus10 accounts for nearly half of their enhanced water sales since its launch in 2009.

That being said, vitaminwater figures that they were due for some innovation launch and should also release a lower calorie alternative to compete and regain lost market share.  However, the market can only sustain so many flavors and options for beverages – does this spell the end for some other flavor of vitaminwater? Aquafina Plus discontinued a few flavors when they launched the Plus10.  There will be a total of eleven glaceau vitaminwater and vitaminwater10 options if they do not delist something – definitely too much for the marketplace in my opinion.  That said, we have yet to see any vitaminwater10 in stores yet so either glaceau will be taking some flavors off the shelf themselves or grocery stores will do the delisting for them.

So my parting question for this week’s blog psot: if you were to discontinue one or two flavors of vitaminwater, which flavor would you choose?

Is More vitaminwater Coming to Canada?

BevWire has learned that there may be more vitaminwater flavors on the way.  Speaking with some industry sources and then browsing through the trademark database, BevWire has found that there’s two new flavors registered with the Canadian trademark database – Balance and Endurance.  In the United States, Balance is a Cranberry-Grapefruit flavor and Endurance is a Peace-Mango flavor.  Will these flavors be the same in Canada, or are they merely the same names for other flavors (ie. Mega C in Canada is Power C in the U.S., Restore in Canada and Revive in the U.S., and so on)?

BevWire has always been very critical of a product over-extending its reach and this is a classic example of this scenario.  With these two new flavors entering the Canadian market, that brings the total number of vitaminwater flavors up to eleven. What threshold is vitaminwater using to determine that there is enough sales potential to release additional flavors?  Will these two new flavors replace two older flavours, and which ones will be replaced?

While the enhanced beverage category is still growing, it’s at a decreasing growth rate.  This indicates that vitaminwater is still increasing its sales and has not reached a market saturation point, but the saturation point may be close.  At the end of March 2010, the enhanced beverages market was over $6 million in sales.  Vitaminwater garners about 60% market share, thus accounting for $3.6 million overall and $400 000 for each flavour (rough numbers since some sell better than others).  If that’s the case, then a simple threshold to pass would require than each flavour sell at least $400 000 in order to stay on the market – without accounting for cannibalization.  BevWire thinks that $400 000 for new flavors may be difficult to hit, and therefore some flavors must be discontinued to make way for Balance and Endurance.  The question then becomes which flavors currently underperform and justify being removed from the shelf?

In any case, no word on official launch dates yet.  The trademarks have been approved and are awaiting registration (pending official complaints from other people over these names).  Keep an eye on for which flavors disappear from the shelves when these two hit the market.



Will Sobe Lifewater Come to Canada?

In the past, BevWire has blogged about glaceau’s vitaminwater leading the Canadian enhanced water beverage category, but what about Sobe Lifewater?  The current enhanced water category really only has two players right now, Coca-Cola’s glaceau vitaminwater, and Pepsi’s Aquafina Plus.  Vitaminwater has pretty much dominated the market landscape with more than 50% market share, stealing Aquafina Plus’ market share hand over hand.  What if Pepsi were to launch Sobe Lifewater into Canada?  Would that combat the market share decline for Pepsi in this category?  In the United States, while vitaminwater is the leader, Sobe Lifewater is a strong second.

In Canada, Aquafina Plus has done everything it can to try and appear like a strong second compared to vitaminwater.  They have made a bottle adjustment to provide easier grip (and also copy the Sobe Lifewater bottle shape).  They have changed the packaging copy to show more focus on the vitamins.  They have changed and enhanced the formula to include natural sweeteners and lower the calorie content (Aquafina Plus10).  Aquafina Plus has also gone to price reductions such as Buy One Get One offers to give consumers incentives to buy their product over glaceau vitaminwater.  However, these actions have only really led to a temporary increase in sales and market share.  Most of all, when the product is on a price reduction consumers that are price sensitive will choose Aquafina Plus and when the price rises again they will choose something else.

The Sobe brand itself has morphed a lot from when it was first introduced on the market as a ready-to-drink tea beverage.  It has also become an energy drink and an enhanced water.  The Canadian marketplace’s strongest brand association is tea, but even then Sobe had to re-brand itself.  Sobe has to revive the tea offerings through re-packaging from glass bottles to plastic bottles.  This indicates that even though Sobe’s strongest association in Canada is with tea, they are not the leader in this category (having to revive the brand and change the packaging).  Therefore, this may be the perfect time to introduce the Lifewater series and provide a stronger competitor against vitaminwater than Aquafina Plus.  And seeing Sobe Lifewater’s strength in the United States, Pepsi should strongly consider introducing this enhanced water beverage into Canada as well.