Some Reasons on the Water Category’s Resurgence

BevNet’s Jeffrey Klineman recently detailed in a magazine article how the water category has returned to growth following some years of sales decline (link here).  His article first explains that some industry veterans left their original beverage ventures and found another company to apply their expertise to the water category.  In short, the water category has returned to healthy growing sales through packaging innovation and strategic partnerships.  One such company that has been growing sales through packaging innovation is 82go.

82go purely portable

82go developed a 100% recyclable plastic pouch package that contains 8 ounces of water, which can be folded down like a plastic bag when fully consumed.  Other than the sustainable benefits of the packaging, the innovation behind this is that the pouch uses the equivalent plastic of a bottle cap, and can be fully activated using only one hand.  Their core consumers are athletes like bicyclists and marathon runners where the user is always in motion and need to hydrate “on the go.”  The extension ranges for this package are broad in scope, as 82go only produces water at the moment.  Expansive opportunities may range from size variations (12 ounces, 16 ounces, etc) to product variations such as juices, teas and sports drinks (similar to the Gatorade pouch).

Consumers in general (not just athletes) are increasingly multitaskers so being able to multitask while hydrating in motion is a key benefit.  The makers of 82go have tapped into more than the functional benefits of its product; the convenience factor as well by taking into consideration what the user is doing while consuming its product.  The selling proposition focuses more on the usage benefits rather than the type of water (ie glacier water, icelandic water, etc).  It appears as though 82go realizes that water is mostly thought of as a commodity product, and that no matter the source of origin, water is still water.  Marketing the type of water is not a strong enough selling point as a result of this consumer perception.  However, advertising on the usage benefit presents a much stronger case by repositioning what the consumer focuses on – the packaging’s convenience.

While the downside may be a question on the package’s durability and resealability, the potential upside far outweighs the negatives.  And in a category that appears to be commodity in nature, 82go seems to have found itself an area to delivery growth.  One of the many things that they will have to look out for is competition since their packaging may not be patented, leaving room for other players to enter looking to replicate their success.

Jones Soda Expands Their Product Portfolio

Jones Soda Sparkling Water - courtesy of bevreview.comJones Soda recently put out a press release detailing their upcoming entry into the sparkling waters segment, launching three flavors of sparkling water under a product line titled “Au Naturel”.  The press release in its entirety is available here, and covered some additional information talking about other products that Jones has previously launched and/or re-introduced:  Jones Naturals, Jones GABA, and Whoopass Energy Drink among others.  The link to BevReview’s piece can be found here.   Jones Soda’s press release also indicated that the product line will be stocked in natural grocery stores, which mean that stores like Whole Foods, Choices Food Market, and Urban Fare may have these products in stock soon.

This is an interesting launch for Jones, since the most of their previous beverage introductions have been in the premium soda and energy drink categories.  That is not to say that 24C, Jones Juice and Jones Naturals are not successful, but they have not been able to capture the same level of publicity and success that the other launches recorded.  The launch of Au Naturel marks an entry into another completely new category, one with a different set of competitors and challenges.  The launch still provides a level of similarity for Jones Soda since their most successful product launches share the following characteristics: premium and niche.  For example, Jones Soda itself using sugar cane for a variety of their 12oz glass bottle sodas and Jones GABA doesn’t include caffeine.  This gives Jones experience with bringing premium beverages to market – the category may be different but the experience and skillset should be transferrable from premium sodas to sparkling water.  Also of significance is that sparkling water gives them a shelf presence in a different area of the grocery store, or in another set of grocery stores altogether.  Au Naturel will be distributed in natural grocery stores at first, but may expand to regular grocery stores if there is enough traction.

On the challenges that Jones will face, they may be similar to the challenges that Jones Soda faced with launching their Juice, Naturals and Organics products.  These other categories all have a different of competitors, and much more store-brand (private label) competition.  Unlike sodas, the markets are less regulated and monopolized, making competition more likely.  The category itself is more commoditized, and telling consumers to trade-up to premium sparkling water is a significant problem.  Despite bottled water sales growing this past year, the category is currently challenged with educating consumers on the added benefits between tap water and bottled water.  With all these challenges, does Jones Soda’s expertise with featuring premium soda transfer over into featuring sparkling water?  Will Au Naturel be a short-lived offering, an experiment to see how another category may provide diversification for the company?

Even with all the challenges that the water category brings, I feel that this product launch has a stronger chance of success that some of Jones Soda’s other launches.  The key difference is that water itself is seen as wholesome and healthy, and the market trends shows consumers increasingly prefer healthier alternatives.  In order to compete with the more established sparkling water players, Jones may need to look to alternative channels to gain distribution and popularity.  One suggestion may be to look for opportunities in the on-premise channel such as salad & health food joints, and smoothie & yogurt shops.  By stocking their sparkling water in these establishments, Au Naturel aligns themselves with healthier alternatives that shoppers want.  Gaining traction in the alternative channels leverages on these shoppers to look for their products in the traditional grocery store and gain more shelf space.

Since consumers expect their food and beverage options to become increasingly health conscious, Au Naturel’s entry into sparkling waters is preemptive and a good chance to diversify their product offerings.  Should Au Naturel see strong sales in their current grocery stores, it is likely that their expansion into more locations would come quickly.  Cross-border expansion may also be a possibility at that time, and hopefully that means I’ll be able to find Au Naturel locally rather than having to make a trip down to the U.S. to find it!

Powerade’s “Power Through” Campaign – Good for March Madness But What Next?

Powerade, which has been quiet on the marketing radar this year, is set to debut their new tagline “Power Through” and new commercial in this year’s NCAA Men’s college basketball tournament.

The main message (from Advertising Age article, link here) states that Powerade realizes they own the challenger status in the category and must work harder to reachthe level of success they want. Their research shows that their core consumers are young athletes, making March Madness and college basketball in general a great platform to reach this demographic. While most professional sports leagues have designated Gatorade as their official sports drink, gaining exclusivity with the college game is a great coup for Powerade. Each year an underdog team ends up getting farther than anticipated in the tournament and becomes a cinderlla story (George Mason in 2006, and Butler & Virginia Commonwealth more recently) – Powerade’s message will undoubtedly resonate strongly with audience that identify with those teams.

While Gatorade owns 70% of the isotonic category, recent statistics indicate the market leader is slipping and Powerade gaining market share. In spite of this, Powerade may be hard pressed to repeat Avis’ We Try Harder marketing campaign from the 1960s, where the challenger brand gained market share dramatically by telling everyone they try harder because they have to. The college platform is much smaller than any professional sports platform since its a shorter season and does not receive as much international exposure nor media support. Powerade itself is not a small or obscure player, and the category is not fragmented either. For every three buyers shopping the category, Gatorade will be chosen by two buyers and Powerade by the other buyer. That said, Powerade may likely see a market share bump especially during this month, but the total market impact may be negligible.

All in all, being the NCAA’s official sports drink helps Powerade gain an important space to connect with consumers and the audience in general, but it does not change too much of the sports drink category.