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.

 

 

 

How Big Can Recovery Beverages Grow?

Initially piggybacking off of energy drinks, beverage experts are now defining recovery drinks to merit their own category (BevNet article here).  BevWire also previously reported on Lush Recovery Drink (recently rebranded to Amara Recovery Beverage).  As recovery drinks are still in its infancy along the beverage product life cycle, how can this category grow?  Who are the major players and what is being done to bring news/attention to the category?

The more well-known major players are energy drink manufacturers that each have their own line of recovery beverages such as Monster Rehab and Rockstar Recovery.  However, as Monster and Rockstar are companies that have built their name associated with “energy”, Rehab and Recovery may find it hard to grow within the companie’s beverage portfolios.  Despite their organization’s international distribution network, marketing budgets are devoted to the energy drinks since there’s more competition and the larger energy drink brand’s awareness needs to be maintained.

Given these circumstances, there are high reward opportunities for lesser known manufacturers to drive awareness to their recovery drinks.  Amara builds awareness through event sampling where the consumer can firsthand understand and experience the functions of the recovery beverage.  Also interesting about Amara is that their rebranding effort also included coating their aluminum cans with flourescent material so the packaging will glow when it’s on the shelf and in coolers.  BevNet’s article describes GTOX as another recovery drink manufacturer that is driving awareness for their product with Dennis Rodman as a spokesperson.  Code Blue is another manufacturer that is trying to re-position itself as more than just a hangover recovery beverage by targetting exercise recovery and hydration.  Although not all these beverages have national distribution, each of them are driving news and awareness to this category.

The theory is that companies that bring awareness to the category bring awareness to the product, and consumers are likely to reward these companies with their business.  It happened with Coca-Cola and Pepsi with carbonated soft drinks, it also happened with Red Bull, Monster and Rockstar with energy drinks.  Consumers also rewarded vitaminwater with their business for growing the enhanced water category.  The market leader for each of these respective beverage categories are typically those that started off bringing attention to the category.

On the original question on how big can this emerging category get, one needs to look at the path of the coconut water category.  The major players that drove category awareness – O.N.E. Zico, and Vita Coco – either purchased or signed partnership agreements with PepsiCo, Coca-Cola Refreshments and Dr Pepper Snapple Group in the past two years.  The beverage conglomerates recognized the potential of coconut water and quickly brought on experts in the business.  Even AriZona has gotten into the game (link here).  That said, it is still not time to put a dollar figure on the category worth of recovery drinks, but it certainly draws parallelisms to coconut water. There are only a few main players for now, but all the potential lies with names that are not nationally known.

The next time you go into your grocery store or convenience store, look for where they stock the Monster Rehab and Rockstar Recovery, and keep an eye out for other recovery drinks.

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.

Pepsi Throwback in Canada

Regular readers of my blog may remember that I reported on Pepsi Throwback and Mountain Dew Throwback last year, but mainly as a American limited-time only beverage.  Well I was thirsty and went into a Shoppers Drug Mart a few weeks back and was surprised to notice that there was Pepsi Throwback here in Canada.  In addition to being a soft drink that was only released in the United States, I remember that the beverage being a few years old.

After some googling, it turns out that the Pepsi Throwback was made part of Pepsi’s permanent line-up because of their strong sales and recipe.  It was also launched in Canada early 2011.  Throwback tastes different from the current Pepsi cola in that it has no citric acid and uses real sugar, compared to High Fructose Corn Syrup in the “new” Pepsi.

Initial feedback has been great for Pepsi Throwback, but as my critiquing tendencies go, do they really need another permanent Pepsi?  It almost appears that they are trying to blanket-cover the calorie and sweetness spectra with their offerings.  Pepsi, Diet Pepsi, Pepsi Max, soon to be launched Pepsi Next, and now Pepsi Throwback.  How much cannibalization will occur?  The expanded line-up means some drinks within the portfolio gets less sales.  Pepsi should beware of what vitaminwater is doing in terms of having so many available options for a consumer to choose from.  vitaminwater’s consumers to this day still gravitate toward 5 flavors out of a possible 11 flavors, making more than half of them slow movers and hard for retailers to justify the shelf space.  This isn’t to say that having Pepsi available in 5 different options is a bad idea, but each of the 5 option must be unique to avoid duplicity.  Pepsi’s differentiation between Pepsi Cola, Diet Pepsi, Pepsi Max and even Throwback would be significant, but Pepsi Next…not so much in my opinion.

While I didn’t buy a Pepsi Throwback that day (settled for vitaminwater instead) I am still interested in finding out what it tastes like and how it compares to the new Pepsi.  Has anyone ran a taste test to try both, and care to give me your two cents?

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.