Energy drinks’ game changer – Jones GABA?

gabaJones Soda Co. announced their US launch of a functional beverage today called Jones GABA, available in spring 2009.  GABA doesn’t contain any caffeine, but utilizes PharmaGABA, a naturally occurring amino acid (Gamma Amino Butyric Acid).  A 12oz can contains 150mg of GABA, which increases the productivity of alpha waves to help relieve stress and improve focus.  This beverage will launch four flavors initially: Grapefruit, Nectarine, Lemon Honey, and Fuji Apple.

The difference between Jones’ new beverage and the other available products is the type of ingredient to give the drink its “kick.”  Many functional beverages on the market right now belong in the caffeinated energy-drink category, and the side effects almost certainly mitigate the drink’s effectiveness after a few hours.  Users that have consumed energy drinks before and tried a GABA notice the difference, saying that there is a greater ability to maintain focus and suffer no crash at the end.

Does the new drink change the energy-drink market playing field? In order to gain a strong hold on the market, GABA must deliver a strong communication effort to advertise its unique benefits compared to its competitors, namely Red Bull and Monster.  The majority of energy-drink consumers look for brand rather than actual functional benefits, so if the message is carefully crafted to highlight the benefits and present a robust brand message, consumers may start looking into GABA.  Here’s hoping that their marketing message is strong and connects with consumers. It’s about time the energy-drink market faces develops a beverage that promises no crash, instead of advertising more caffeine to power you through the day.

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Out with the New, in with the Old

Tropicana recently underwent a package redesign in late 2008. The new packaging replaces the straw-in-orange on the front, changes the typeface, and also turns the word “Tropicana” sideways. At the same time, the 1.89L carton’s cap changes to a curvy orange twist cap.

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After about 4 months, Tropicana has decided to revert back to the old packaging. It appears that complaints have sprouted up immediately following the news of the redesign. Critics deadpan that the new packaging is a big mistake and makes the market leader look more like an upscale private label brand. The new twist cap also received complaints as being less user-friendly. Supermarket shoppers looking for Tropicana even inquired as to whether the grocery store was out of stock of the product!

Some feel that Tropicana redesigned for the sake of redesigning. It appears that the old packaging – the straw-in-orange packaging – conveys the juice’s main selling proposition: freshness. Whereas the new packaging – a glass of juice – doesn’t showcase the product’s main benefit. Also, a curvy twist cap is definitely less user-friendly than the old cap.

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In consumer products it can be a double-edged sword when updating the product packaging. On the positive side, consumers will relate better to the product with the new design’s imagery, fonts, and shape. Also, this is a good way to introduce an innovation to the market with the support of the entire brand backing it. However, the negative side can see consequences similar to what Tropicana suffered here. Consumers confused over the brand’s identity and the product’s functionality reduced. Looks like the Tropicana executives are going back to the drawing board.

Rockstar changes distributor to Pepsi bottlers

rockstar1Pepsico announced today that Rockstar will be switching to Pepsico as their energy drink distributor, allowing Pepsico’s main bottling operations to distribute their line of energy drinks.  Rockstar is still under a distribution agreement with The Coca Cola Company’s bottlers until the end of 2009, but will have the ability to cancel the agreement with 30 days’ notice.  This switch comes four months after Monster energy announced they will have The Coca Cola Company’s bottling companies distribute their energy portfolio.

monster1After Monster’s agreement was announced in October 2008, Coca-Cola began distributing Monster energy in mid-January 2009.  A similar time frame is expected for Rockstar to transition from Coke’s distribution system over to Pepsi’s.  Therefore, it is most likely that Rockstar will be coming off Pepsi bottlers’ trucks in April or May 2009.

Of the top five energy brands, Rockstar currently holds the third-highest market share in terms of volume sold (14.2%), with Monster (29.2), Red Bull (25.2%), Amped (8.6%), and Full Throttle (6.7%) making up the other four market leaders.  The Coca-Cola Company owns the Full Throttle energy brand, while Pepsico owns the Amped energy brand.

So how does this affect the business landscape for the major energy drink giants, Red Bull, Coca-Cola and Pepsi?  Coca-Cola definitely wins in the short term, as they will distribute three of the top five energy brands for a span of three or four months, owning half of the energy drink market.  In the long term when Rockstar will be distributed through Pepsi, Coca-Cola will be in a tougher position to win market share.

At the transition point, Coca-Cola will still lead the market at 36% market share, while Red Bull comes in second at 25%, and Pepsi in third with 23% market share.  Red Bull has stepped up their efforts to re-gain lost market share volume by introducing of a new product size.  Pepsi has also heavily advertised their Amped energy brand (Dale Earnhardt Jr. Nascar sponsorship, introduced three product extensions). Monster will be releasing a new product (energy shots) soon.  Rockstar will be releasing two new flavors and two energy shots soon.  However, Coca-Cola has not made any significant marketing efforts to grow their in-house energy brand.  Therefore, among the five major players, Full Throttle stands to lose market share while Rockstar is the most likely candidate to gain market share through their product introductions.

Coming soon: More Vitaminwater

There is more Vitaminwater coming – Vitaminwater will be introducing Vitaminwater10.  This drink promises to have the same taste, but with only 10 calories per serving.  Available to the United States in March, the enhanced water beverage will be available in 4 flavors: xxx, energy, multi-v, and essential.  These four flavors will be packaged in 4-pack 16oz bottles and single 20oz bottles.

vitamin-waterVitaminwater is currently available in 13 flavors (2 were discontinued) and 3 package formats.  Although the brand is successful and popular, how many more flavors do we need?  A consumer has a limited amount of money to spend, and there are enough choices as it is.  The more choices there are for the consumer, the greater the possibility for cannibalization between the flavors.  Maybe it is better to lose the money to cannibalization than to lose it to a competitor; at least the money is coming to the company in one way or another.  The distribution channels may also feel the need to rationalize which particular flavors to carry.

How much shelf space would this brand need if a retailer was to carry all the different product varieties?  Store managers undoubtedly will have to de-list the slower movers that are underperforming in favor of the top sellers.  This puts enormous pressure for each product to perform in order to be an average mover in order to avoid being de-listed.

Does the consumer really need that many options for a product as simple as enhanced water?  Is this just really a cash-grab?  Sooner or later, the brand will become over-extended.  At that point, consumers may migrate to a new drink that makes it easier for them to enjoy it without the complexities of choosing between a flavor, caloric-content, nutritional content, functional benfit, and package format.

What happened to Happy Planet?

happyplanet-extgr2Some might remember that Happy Planet was an organic juice/smoothie that was sold in coffee shops, supermarkets, and convenience stores.  One of the main locations where this drink can be found was inside Starbucks.  Happy Planet was an alternative to the range of caffeinated beverage inside a Starbucks coffee shop.  However, Starbucks now carries something called Naked instead of the Happy Planet smoothie.  Is Happy Planet no longer produced?  The answer may be “Pepsi.”

Pepsi Bottling Group (PBG) produces and distributes Naked, a Pepsico owned beverage.  They also happen to produce and distribute a variety of beverages for other companies, one of which is the Starbucks Frappuccino.  So what have happened is that PBG and Starbucks have signed an agreement to carry and distribute each other’s products.  PBG will bring the Starbucks Frappuccino into their customer accounts, while Sarbucks will replace Happy Planet with Naked as the coffee giant’s smoothie.

The benefits for both parties are significant.  For the Pepsi Bottling Group, getting into Starbucks with their smoothie gives the beverage giant an additional distribution channel.  Not everyone going into Starbucks looks for coffee, so their healthy alternative beverage is now a Pepsi product.  For Starbucks, having PBG distribute their beverages is a clear winner.  Starbucks can continue focusing on what they do best and leave the rest to Pepsi.  And having a larger distribution network and dedicated sales force to bring your product in front of the customer doesn’t hurt either.  Not to mention that the Starbucks Frappuccino is not limited to coffee shops, but now available in supermarkets, convenience stores, and other grocery stores.

An excellent arrangement to Pepsi Bottling Group and Starbucks, but not to Happy Planet.  Happy Planet can still be found at most places like coffee shops and supermarkets, just not at Starbucks.  And there goes another little company being shut out by the big corporations.

Coca-Cola Classic, Classic no more

Coca-Cola is removing the word “Classic” from their packaging for the Coca-Cola Classic soft drink.  The idea behind this is that Coca-Cola Classic is not so “Classic” anymore.  You may or may not remember the Coke versus Pepsi taste wars in the 1980s, but Coca-Cola launched a new formula for the Coca-Cola beverage in response to the taste wars when people said Pepsi tasted better.  This launch set off enormous amounts of public protest and Coca-Cola ultimately re-launched the original formula as Coca-Cola Classic, while slowly phasing out New Coke.

new-cokeSome people say that Coca-Cola and “Classic” are interchangeable terms and taking out Classic will effectively remove a part of Coca-Cola’s history and also weaken the beverage giant’s brand.  Others say that removing the “Classic” will wipe clean the embarrassment of the failed product launch.

Those that are old enough to remember the taste wars don’t go around asking for Coca-Cola Classic when they want to buy a can of Coke.  They know the soft drink simply as Coca-Cola and whether the “Classic” label is attached or not, the taste remains the same and people still buy it.  Will anyone stop buying Coke if they remove “Classic” from the name?

Furthermore, those that don’t remember the taste wars only know Coca-Cola Classic as Coca-Cola.  There is no memory of the New Coke fiasco in our relationship with the brand, and therefore the term “Classic” is irrelevant.

Something else to consider may be the soft drink’s positioning.  Pepsi appears to be cornering the younger demographics through their communication as a hip, young, and edgy beverage.  Coca-Cola, on the other hand, appears to be advertising nostalgia and an enjoyable lifestyle to the consumers.  Nostalgia can only take the brand so far, and those that are nostalgic are getting older.  For the rest of us, the younger consumers, what is there to be nostalgic about?  Therefore, Coca-Cola needs to create some more memories with the younger consumers in order to renew those nostalgic feelings later on in their lives.  Maybe Coca-Cola will be called Coca-Cola now, and then in about another 20 years they will rename it as Coca-Cola Classic again.  Just for old time’s sake.

Coming soon to Canada – the proliferation of energy shots

Anyone ever feel like they just need a boost of energy during their day? Most people go and buy a can of Red Bull, or some other form of energy drink. Lately, the craze has been energy shots. These shots are 2-3 ounces in size and will give you the same boost of energy as a regular energy drink. They pack more caffeine and the boost comes sooner.

5_hour_energy_berryThese energy shots are stored at room temperature and are kept right at the cashier on plastic racks. The retail price on these drinks are the same as a regular can of energy ($2.99 for a 473ml can), so my guess is the margin is pretty high since there is less raw materials needed to product and package the beverage. Their size also makes them much more convenient because it can be consumed in a few seconds or it can be easily stored in your pocket or purse.

The growth is fueled by market leader Five-Hour Energy (see left) as there are no other major players in the market. All the other companies still are waiting on food safety approvals or production capacities. However, the market will soon be saturated as companies like Monster, Rockstar, Full Throttle, and Beaver Buzz bring in their own energy shots.

Get ready to see the battle as these companies battle for your money when all you really wanted was an energy drink to refresh yourself and give you a quick boost.