Sierra Mist Natural Gains Traction

Since re-launching last September 2010 as Sierra Mist Natural, Pepsi’s lemon-lime soda has been gaining traction and experiencing double digit sales growth in the latest quarter.  Jennifer Cirillo from Beverage World has more details on the beverage’s resurgence (link here).  Sierra Mist Natural replaced high fructose corn syrup with natural sugar and four other ingredients, as well as featuring updated packaging.  As the runner-up to Sprite in the lemon-lime soda category, Sierra Mist Natural had lost 14% volume in the two years before updating their package and formula (according to Beverage Marketing Corporation Data).

Sierra Mist Natural’s senior brand manager, Carlos Saavedra, says that the the refreshed formula boosted sales as consumers were leaving the category due to the unhealthy perceptions.  The belief that soft drinks contain artificial flavoring and high amounts of sugar and calories has turned people off, and with a natural offering Sierra Mist Natural has regained lost consumers and attracted new ones.  Saavedra says, “We realized that we really had a great opportunity here to take a great-tasting product, make it natural and use that to give consumers a really strong reason to pick [Sierra Mist] off the shelf.”  Sierra Mist Natural has 100 calories and 25 grams of sugar per eight-ounce serving and is offered at the same price point as Sierra Mist.

I’m not certain that this growth generates any additional profit for Sierra Mist Natural.  If sales had declined 14% in prior years, double digit growth would only be returning it to expected levels for 2009 volume.  Factoring in the amount of money that was spent to re-brand and update the formula for Sierra Mist Natural, PepsiCo has to consider the cost that went into the beverage and how long it will take to pay back or recoup their investment.

BevWire is not convinced that this growth will last or continue at a double digit growth pace.  Normally a repackaging option, price decrease, or formula adjustment lifts volume sales for a short time period only.  Once consumers experience the change effect, they will likely go back to their regular purchase patterns.  An advertised price decrease or formula adjustment calls attention to consumers to try the product, but that may not build a lot of longevity.  And while feedback for natural flavored products is increasingly positive, there is still desire for the beverage to be produced in its original formula.  Case in point: Pepsi’s Throwback beverage series for their trademark Pepsi Cola and Mountain Dew.  Why would you need to return to your roots if the product itself is popular and successful?  If it were to attract consumers that grew up with the original product, but left the product when it changed the packaging or formula, would they come back for a retro product that is only available for a limited time?  Furthermore, what would happen after the retro beverage is no longer produced again?

Overall, this is a long term investment for the Sierra Mist Natural.  Though double-digit growth for two quarters is step in the right direction, other factors would definitely need to be considered.  If all else fails, Sierra Mist Natural could always release a retro edition of their beverage to stimulate sales.

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.

Banned Alcoholic Energy Drinks Becomes Gasoline Additive

A few posts ago, BevWire reported that the United States’ FDA had banned the sale of alcoholic energy drinks (previous post link here).  Warning letters were sent to Phusion Projects (Four Loko), Charge Beverages Corp. (Core), New Century Brewing Co. (Moonshot ’69) and United Brands Company Inc. (Joose and Max) to pull the drinks off the shelves, and either reformulate the beverage without the stimulants or cease sales completely.  Though no specific instructions were given on how to dispose of these products, The National Beer Wholesalers Association’s spokeswoman Kathleen Joyce said the NBWA advised the manufacturers to work with state regulators to ensure the products were handled in compliance with the FDA directive and any state laws.  So what becomes of these drinks that can no longer be sold but are already produced?

It turns out these beverages are stripped down to its basic components, and converted into multiple products that’s safe for consumption and other usage.  Environmental facilities have been receiving cases of these alcoholic beverages to process and recycle.  the facility takes the beverages, distills the alcholic content and sells the converted product (fuel) to be mixed with gasoline.  The rest of the beverage shipments are also recycled; the aluminum cans, cardboard boxes, water, wodden pallets are sold to recycler.

Though none of these beverages are for sale in Canada and Health Canada has not officially banned the sale of pre-mixed alcoholic energy beverages either.  Canada’s Health Minister says an investigation is on-going on how these beverages will be regulated.  As an extension, the labeling requirements for regular energy drinks as natural health products will also be investigated to determine if the current ingredient table format is sufficient.  Stay tuned on as this story unfolds.

BevWire: 2010 Year in Review

WordPress sent me an e-mail earlier today to show me the data on how the beverage blog has been performing, and here’s what they said with a high level summary of BevWire:

The Blog-Health-o-Meter™ reads Wow.

Crunchy numbers

About 3 million people visit the Taj Mahal every year. This blog was viewed about 50,000 times in 2010. If it were the Taj Mahal, it would take about 6 days for that many people to see it.

In 2010, there were 47 new posts, growing the total archive of this blog to 95 posts. There were 61 pictures uploaded, taking up a total of 5mb. That’s about 1 pictures per week.

The busiest day of the year was May 25th with 321 views. The most popular post that day was Fanta updates packaging, add news formula.

Where did they come from?

The top referring sites in 2010 were redflagdeals.com, facebook.com, en.wikipedia.org, hungry-girl.com, and fancast.com.

Some visitors came searching, mostly for smart water, fanta, vitamin water, full throttle, and vitamin water zero.

Attractions in 2010

These are the posts and pages that got the most views in 2010.

1

Fanta updates packaging, add news formula April 2009

2

Glaceau’s smartwater coming to Canada August 2009
1 comment

3

vitaminwater10 to be repositioned as vitaminwater zero November 2009
21 comments

4

What’s Going On With Full Throttle? March 2010
3 comments

5

Coca-Cola to Release Gold Can Commemorating the 2010 Olympics March 2010
20 comments

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WordPress takes my 2009 year into account as well, so the traffic is slightly skewwed there – those posts would have generated more traffic since they are older than more recent posts.  However, the blog’s traffic is an indication of your interest in my blog’s topics.  Thanks for a great year!  If you have any specific topics you would like to know about, send me an e-mail and I’ll try to do some research on that topic.