April 15, 2013 Leave a comment
Honest Tea has extended their beverage assortment by launching youth-specific drinks titled Honest Splash in mid-March. These 70-calorie juice offerings are offered exclusively in Target U.S. until June, when it will be open to other retailers to order and stock. BevNet has more information on the launch here, while the official press release from Honest Tea is available here. Since both sources have focused on the benefits of the product itself, I won’t dwell anymore on what has already been discussed. What is interesting is how Honest Tea has decided to push this product out to the marketplace. They exclusively partnered with Target for this launch, while their other previously launched product – Honest Fizz – was released through an exclusive partnership with Whole Foods. Available in Berry Good Lemonade, Goodness Grapeness and Super Fruit Punch, Honest Tea makes these offerings available exclusively to Target’s 1,250 locations. Why is Honest Tea launching exclusively in one retailer over another retailer? Does this help them, or is this a decision that Target wanted?
For today’s retailer landscape in Canada and the United States, it’s important to drive consumers to your banner because it implies that they will be spending their total grocery dollars in your store rather than at the competitors. As such, exclusive offers or “first-to-market” offerings are typically used to give one retailer a leg up over the competition. It’s important to note that this type of exclusivity doesn’t work with all types of products and services. For Honest Tea to receive this kind of attention from a national retailer is impressive. Target certainly views that the Honest Splash is strong enough to sway consumer purchases, similar to how a hot new video game may drive purchasers to buy it from one electronics stores over another. I would characteristic this as a joint decision to launch this exclusively in Target.
What about why they chose Target, versus any other mass retailer or grocery store? Why not Whole Foods? Or Walmart? Or Walgreen? What is it about Target that makes it the best choice for Honest Splash to launch there? All these other retailers are national and well-known, so what makes Target so special? To answer this, let’s start by eliminating those retailers that I detailed above.
Although Whole Foods seems like a great choice to consider another exclusive arrangement, Honest Tea has already done one with the premium grocery retailer (the aforementioned Honest Fizz from January to mid-March). Offering two successive exclusive items may damage your relationship with other retailers. It may give the impression that you “prefer” Whole Foods more than other retailers and could potentially lead to shelf space reductions or delistings.
Walgreen could be a great choice given their core focus on healthy offerings, but they are in fact a pharmaceutical retailer and thus beverages do not comprise a large portion of their overall store focus. The focus is more health and wellness shelf stable items.
Walmart is a price-conscious retailer and would not be the most suitable place to launch an exclusive, premium offering. Even their U.S. slogan “Save Money. Live Better” hints at lower prices than other retailers and launching a new product that effectively competes on price from day one would be inappropriate.
While Target’s slogan of “Expect More. Pay Less.” is similar to Walmart’s, the emphasis is the “Expect More” portion and thus positions less on price. As a mass merchandiser retailer that also offers grocery and pharmaceutical items, Target is more suitable than Whole Foods and Walgreens. Consider also the Target shopper profile, which skew heavily to moms that want what’s best for their kids and thus making Honest Splash a perfect offering. Their shoppers are also tend to define value through strong offerings at reasonable prices, which means that they will not have to compete solely on price.
This is a good choice for an exclusive offering between Honest Tea and Target. Ultimately it looks like something that both companies wanted to make happen. It’ll be interesting to see the results of whether the Honest Splash beverages actually drives shoppers to forsake their grocery retailers for Target.