Updated Minute Maid Single Serve Packaging

 

It’s long overdue in the implementation process, but the new Minute Maid bottles have phased into the Canadian marketplace.  Originally launched in the U.S. in 2009/2010 for the full Minute Maid assortment, the single serve bottles appear to be the last ones to be change over to the new packaging.  This may be a result of the labeling changes as well, since the adhesive labeling is now replaced with the plastic shrink wrap.  Here in Canada, that change from paper labels to plastic shrink wrap only took place this past June (could be earlier, but that’s when it was noticeable in coolers and store shelves).  Judging that there has been no backlash on Minute Maid like the Tropicana fiasco, it would appear that this change is a success in the Canadian marketplace.

Ultimately it’s a sleeker looking bottle that places more emphasis on the bottle’s images than the bottle’s content.  With more of the content behind this whole bottle plastic wrap, this makes the product more dependent on the imagery and colors – sliced oranges and leafy green colors.  The bottle itself is also streamlined – gone are the wavy grooves from the previous iteration and replaced with a smoother grip-friendly shape.

While it may not change sales all that much, the new bottle certainly makes the juice brand more current by adapting to the stronger emphasis placed on beverage packaging.

Packaging: Glass or Plastic?

There’s always been the debate about beverages moving away from glass bottles and replacing it with plastic bottles.  It happened to Minute Maid juices, it happened to Sobe, and for a short time it happened to Nestea (during the Vancouver 2010 Olympics all the Nesteas came in plastic bottles within Olympics venues).  Consumers have been divided on this issue because glass bottles preserve the taste better, but plastic bottles are much better for the manufacturer and retailer.  Plastic bottles are cheaper to produce, lighter to transport from the bottling plant to the retailer’s shelf and cooler, and also less likely to break.  Not to mention, profits are also higher with plastic bottles.  So in the end, who wins?

More often than not, it would seem that the manufacturers wins.  When Minute Maid juices changed their packaging, consumers either had to embrace the change, or switch to Tropicana, Dole, Sunkist, or private label juices.  Although some consumers switched to another juice product, all the offerings used plastic bottles.  So in the end, the packaging change still saw consumers embrace this change.

However, as sustainability and recycling has become forefront issues, consumers are seeing the benefits of plastic bottles.  In an article by Beverage World’s Andrew Kaplan, eco-sensitive packaging can be found in almost all beverage categories (link here).  Dr. Benjamin Punchard, Euromonitor International’s head of global packaging research says, “From what we see, the main response to environmental need is still lightweighting.  This is not a new development as producers have long understood the cost savings that lightweighting can deliver, but there is now increased imperative to take lightweighting the extra mile. The knowledge that this can be communicated to the client as an environmental benefit has seen lightweighting move from a covert action to an overt advertising opportunity.”  Lightweighting refers to is the transition from glass to plastic bottles.

What  Dr. Punchard reports about packaging change being an overt advertising opportunity is very true.  Take Coca-Cola for example, where they publicly advertise about the plant bottle used for Coca-Cola Classic, Diet Coke, Coke Zero, Sprite, and Odwalla.  Since consumers are more environmentally conscious, publicizing their eco-friendly packaging serves as a fantastic selling point to recruit and maintain customers.  One has to wonder what the effect this newer sustainable packaging has had on their sales.

It’s not certain whether remaining glass bottle beverages will be making the change to plastic, as each format has it’s own unique benefits.  With the exception of premium waters (San Pellingrino, VOSS, Perrier) and specific beverage lines (Nestea, New Leaf tea, Jones Soda, and Orangina), almost all single serve bottled beverages within a grocery store’s cooler have changed to plastic bottles.  Though taste preferences are strong factors in determining what you drink, if a beverage changed to a plastic bottle, would this alone make you want to purchase the product more than before?  Manufacturers and retailers are betting yes on this.

Another Lawsuit: Coca-Cola Company Sues Pepsico

Bloomberg News reported a June 2011 trial date between The Coca-Cola Company and Pepsico for trademark and patent infringement (link here).  The product in question is Pepsico’s Trop50 juices (pictured on the left), which The Coca-Cola Company claims has packaging copying their Simply juices.  The Trop50 – a low-calorie line of juices which was introduced around the same time last year as the Tropicana packaging disaster, was in the newer packaging (ie. Tropicana brand name down the side of the label, glass of juice instead of straw in orange).  Despite the newer packaging , Pepsico’s Tropicana unit ultimately decided to change up the format by converting from tetra pack carton boxes to plastic bottle packaging with a big green cap.

Coca-Cola Company lawyers said in a statement that the new packaging for the low-calorie Trop50 brand will “likely deceive consumers and dilute the quality” of Coke’s own brand of premium juices, called Simply.  Another line from the their lawyers was, “PepsiCo chose packaging that closely mimics the distinctive and nonfunctional Simply trade dress and patented Simply closure, ostensibly to revitalize PepsiCo’s fledgling Trop50 brand.”

Do you consider the two different juice lines similar to one another?  Coca-Cola’s Simply juices are pictured here on the right.  I believe Coca-Cola has a strong case here, since the big green cap and the bottle’s shape are similar.  Once you have the juice within the bottle filling up the clear space, the Trop50 could legitimately pass for a bottle of Simply Orange.   It’s interesting to see that Tropicana has changed their packaging twice in the last two years.  One would think that consistency is key for consumers to recognize your product and turn it into a regular repurchase.  With the constant packaging changes in the marketplace, Tropicana risks having consumers confuse their juices with other brands of juices out there.  And in a grocery store where consumers are looking for juices based on packaging and price, they will likely choose a different product if they don’t recognize Tropicana’s juices.

This is just adds another chapter to the list of lawsuits between the two beverage companies.  BevWire last covered a lawsuit when Pepsico sued The Coca-Cola Company over sports drinks, where POWERade claimed to be the complete sports drink for rehydration.  Not sure how this lawsuit will turn out, but my initial thoughts would be that The Coca-Cola Company wins this one due to the similarities between the two juice bottles.  But I’m not a judge and I’ve been wrong a few times, so we’ll wait to find out in June 2011 to see who wins this one.

Odwalla’s New PlantBottle

Odwalla, the natural health beverage company announced that starting in March 2011, it will be transitioning their single-serve bottles to PlantBottle packaging.

“Plants do such a good job of making our juice, Odwalla hired them to help make our bottles,” said Alison Lewis, President, Odwalla. “Doing good things for the community and building a business with heart are core guiding principles of Odwalla’s vision. PlantBottle packaging is just the latest step in our continued commitment to the environment.”

PlantBottle packaging consists of material derived from molasses and sugarcane juice. It has the same performance as traditional HDPE and PET bottles: no differences in shelf life, weight, composition or appearance. PlantBottle™ HDPEcan be recycled again and again in today’s recycling facilities. The redesigned plastic represents a significant step in sustainability efforts and in protecting the planet.

This seems like a great move step for a health beverage company – not only is your beverage natural, but your packaging as well.  Another interesting fact is that Odwalla is bottled and distributed by Coca-Cola in Canada.  Some might remember that Coca-Cola also introduced plant-based packaging late last year in prepration for the 2010 Vancouver Olympics.  That said, Coca-Cola is environmentally conscious and supports the PlantBottle as well, so having Odwalla transition to sustainable packaging represents a step in the right direction.  Not sure what the cost is on this type of packaging, but if Coca-Cola can bottle their products using this type of packaging and their competitors stick to the traditional PET bottles, this further reinforces the fact that they are the leading beverage company.  So what else should Coca-Cola try to distribute using the plant bottle?  Nestea?  Minute Maid Juices?  Powerade?  My recommendation is to distribute the Minute Maid Juices in the PlantBottle as well. It seems like the right thing to do since Minute Maid juices are also a healthy beverage offering.

Question is, will Pepsi bottle any of these beverages using this type of packaging?  The Tropicana and Naked Juices product lines, as well as the Lipton tea series seems like suitable candidates to be transitioned to sustainable packaging.  If Pepsi also bottles their products using the PlantBottle packaging it might negate one of Coca-Cola’s selling points to consumers right now.  In a time when it matters to consumers not only what is within their drinks but how it is produced, packaging innovation is a natural progression of their curiosity.  And supporting a company that cares for the environment while providing you with what you need (in this case liquid refreshments) beats one that only cares about making money.

Your move, Pepsi.

U.S. Juice Market: Coke is No1, Pepsi No2

Advertising Age’s recently published article on the U.S. Juice Market Share now indicates that Coke’s Minute Maid and Simply juices have taken over the first position.  Pepsi’s Tropicana and Dole brands dipped in market share a little bit this past year, and coupled with Coke’s growth in this category the overall net effect was a switch of their positions.

Many insist that Tropicana’s package redesign contribute to the decline in sales, where consumers confuse the No1 brand with a private label.  Company executives indicate otherwise, saying the decline in sales resulted from economic downturn and thus switched consumers to private label brands instead of name brands.  There is truth to this theory as Information Resources Inc., reported that more units sold compared to a lower dollars sales.  However, there is a almost a 4% absolute change here, as Coke’s sales did increase while Pepsi’s sales decreased.  So even though private label products did sell more, even though there was an impact from the economic downtown, the package redesign has damaged Tropicana.

Over at TheDieline.com, their article by Ted Mininni here indicates that Tropicana’s redesign efforts were not very well thought out.  By updating their packaging (or as Pepsi likes to call it, “refresh everything”), Pepsi has essentially taken away the message and recognition that the consumers know so well for something similar to a foreign, control brand orange juice.  And this is important because Coke’s Minute Maid has recently undertaken a redesign of their packaging as well.

TheDieline.com quotes Guy Wollaert, general manager for Coca=Cola’s global juice center, as saying, “Based on the research we’ve done, we’re quite confident we’re on target. It’s been amazing, the consistency in the brand equity cues.  The new Minute Maid packaging features fruit fresh from the trees with a sliced piece resting on top of whole fruit. The brand identity is strong and dominant. Beneath that, a vertical swath of color with the fruit variety appears. At the bottom of the front panel, a green vertical bar states: ’100% Pure Squeezed Orange Juice’.”

Mininni gives it his stamp of approval because it provides a clear message leaving the important factors unchanged for easy consumer interpretation.

The graphics for the old package has a half-sliced orange over numerous whole fruits, in front of a rising (or setting) sun with a sky-blue background in the distance.  The old package conveys fresh orange juices – whole oranges taken from their natural element and then squeezed into juices.  Whereas the new packaging with the white background and green leaves may take some time to get used to.  It does convey fresh orange juice and 100% squeezed, but BevWire still prefers the old packaging, maybe for nostalgia.  With Minute Maid’s sales holding steady so far, it shows the package redesign is a success.

At least this hasn’t brought about the magnitude of attention and press coverage as Tropicana’s redesign.

PepsiCo’s bid for Pepsi Bottling Group labelled “inadequate”

Pepsi Bottling Group (PBG) announced yesterday that the board of directors has reached an unanimous decision to reject the PepsiCo bid to buy out the bottling group.  PBG’s CEO Eric Foss sent a letter to PepsiCo’s CEO Indra Nooyi stating the following:

May 4, 2009
Indra Nooyi
Chairman and Chief Executive Officer
PepsiCo
700 Anderson Hill Road
Purchase, NY 10577

Dear Indra:

We are writing to respond to your proposal of April 19 to acquire all of the outstanding shares of common stock of The Pepsi Bottling Group, Inc. (“PBG”) not owned by PepsiCo. A Special Committee of the Board of Directors of PBG (“the Special Committee”), comprised entirely of independent directors, has carefully reviewed your proposal with the assistance of independent financial and legal advisors. Based on the unanimous recommendation of the Special Committee, the Board of Directors of PBG has concluded that the proposal is grossly inadequate and not in the best interests of PBG and its stockholders.

PepsiCo’s proposal substantially undervalues PBG for many reasons, including:

* Opportunistic Timing: Your proposal was made shortly before the public release of PBG’s strong first quarter 2009 earnings on April 22. As you know, PBG exceeded Wall Street expectations for the quarter, raised its full-year guidance for earnings per share and operating free cash flow, and provided details of its plans to achieve over $250 million in cost and productivity savings in 2009 on a standalone basis.
* Inadequate Value: The value of your proposal is substantially below PBG’s intrinsic value, as well as the value that would be implied by comparable transactions. Your offer is at virtually no premium to market given PBG’s first quarter earnings and upward revision to full-year EPS and operating free cash flow guidance. Transaction premiums, especially those including cash consideration, have been very substantial since the market dislocation last September.
* Understated Synergies: We believe you have substantially understated the synergies that would be available through the combination you have proposed. As you know, PBG has thoroughly analyzed the savings and efficiencies that could be achieved through a transformation of the Pepsi system. Based on our analysis, we are confident that readily achievable synergies are multiples of the $200 million you referenced.

PBG values its longstanding relationship with PepsiCo, but the PBG Board will not agree to a proposal which does not reflect the true value of PBG. Accordingly, based on the Special Committee’s unanimous recommendation, the Board has taken customary steps to protect PBG and its stockholders from opportunistic acquisition attempts.

We remain confident that PBG’s continuing efforts to strengthen its brand portfolio, further improve its performance through operational excellence, and capitalize on geographic growth opportunities position PBG to create substantial value well into the future.

Sincerely,
Eric J. Foss Ira D. Hall
Chairman of the Board and CEO Chairman, Special Committee of the Board of Directors
The Pepsi Bottling Group, Inc. The Pepsi Bottling Group, Inc.

PBG is rightfully portraying its value to PepsiCo saying that the bid is inadequate.  Some analysts have pegged the cost savings to be around $600 million, rather than the $200 million that PepsiCo believes it will recoup by acquiring their bottler.

Now the ball is in PepsiCo’s court, and they must decide how determined they will be in pursuing this acqusition.  Analysts are confident that PepsiCo will submit a higher and more attractive offer, and it makes sense to acquire PBG to gain cost savings and  increase efficiency.  However, what is the price at which this will settle?

PepsiAmericas, the other major Pepsi bottler, still has not responded to PepsiCo’s offer yet.

Stayed tuned for further developments…