Just for Kids: Odwalla Smoothies

Odwalla Smoothies for Kids - courtesy of bevbet.comOdwalla recently launched Odwalla Smoothies for Kids, a fruit juice smoothie that comes in a kid-friendly juice boxes (link here).  This is a departure from the Odwalla beverages that are currently available.  Not only are they gearing part of their product portfolio towards youth, they are also developing new packaging that kids are accustomed to using.  Is targeting kids a good strategy for the beverage manufacturer, or will there be cannibalization from their base business: the environmental-friendly plant bottle smoothies?  Will Naked, Arthur’s Fresh, Bolthouse, and other smoothie producers follow Odwalla, and segment their business to market towards youth?

From a marketing standpoint, BevWire believes this to be a good strategy.  Distribution is one area where Odwalla can leverage upon to succeed for the new launch.  Aside from on-premise locations like coffee shops and food courts, Odwalla’s bottled smoothies currently has distribution in natural food stores,  high end supermarkets and specialty outlets.  These products’ availability in grocery shopping outlets help the juice boxes succeed since the typical household grocery shopper is the mom.  If moms already consume Odwalla products, she may introduce the healthy beverage to her children.  However, the bottled smoothies pose a challenge since the serving size are meant for adults and the resealable container’s caps are meant to be opened by stronger hands.  Kids can consume the smoothies but only in the presence of adults.  The Odwalla Smoothies for Kids goes after an entirely different consumption occasion – one that does not require the presence of mom to help open and close the bottle.

It is also because Odwalla is going after a different consumption occasion that will limit cannibalization.  Adults rarely drink from juice boxes so the cannibalizing effect will be minimized.  In fact, this may expand the business really well since the purchaser will be buying the bottled smoothie for herself, and buy the juice box version for her children.

Naked Juice 10oz bottle

How will the competition react?  It appears as if Odwalla is actually reacting to another competitor’s actions.  Naked Juice may have already thought about targeting the younger demographic, just differently.  While the typical on-premise serving size of these smoothie are 450ml (15.2oz) bottles, Naked Juice does have a smaller serving size container: the 295ml (10oz) bottle.  These bottles can be found in Starbucks coffee shops among other locations, but the rationale would be that moms get their coffee beverage while their children get the Naked Juice small bottles (most recently O.N.E. Coconut water has also appeared in Starbuck’s refrigerated coolers, but that’s a story for another topic).  Bolthouse Farms, another competitive smoothie manufacturer, also makes smoothies in the 450ml bottle variety.  They do have a smaller serving size, but only for the acai juices.  This would indicate that Bolthouse Farms currently does not have an offering available toward kids and the in-school drinking occasion.

Local Canadian manufacturer Arthur’s Fresh also produces smoothies and competes against Odwalla and Naked Juices.  With single bottles that have serving sizes of 325ml and 900ml, they are not marketing toward in-school drinking occasion nor are they going after the kids.  Happy Planet also only has their smoothies available in the 450ml (or larger) sizes, meaning that they have also not produced a product that kids can drink without their parents assistance.  However, their next move may be to push out new packaging designs or smaller sizes, since the category’s leading manufactures have products in smaller serving sizes and packaging that attract kids.

While Odwalla’s new products may not change the super premium juice and smoothie landscape completely or at all, they do have the other manufacturers thinking about cateringtoward a different drinking occasion or a different demographic.  It might not be a juice box that caters to kids.  But it could very well be caffeine-infused smoothie to target a completely different demographic.  Or it could be a new and even more friendly product package.

Whatever it is, Odwalla’s Smoothies for Kids offers a refreshing perspective on how creativity and market segmentation have helped expand a product category and maintain (or further accelerate) its growth rate.

XYIENCE – Front and Center on May 5 UFC

Xyience 2012 Lineup Collectors - GSP and BonesBevNet recently detailed that Xyience, the UFC-affiliated energy drink, will have their logo featured in prime position for the May 5 UFC matches (link here).  Xyience’s logo will be at the octagon’s center stage for the May 5 broadcast, offering both live and home television viewers many opportunities to connect the beverage’s partnership with the mixed martial arts league.

Xyience has always shown a willingness to invest marketing dollars in product placements and sports sponsorships as well as emphasizing traditional marketing.  These unconventional methods help the manufacturer grow smartly, reaching their target demographic (males 18-34) without any other similar products present.  Product placements work typically because the audience sees the product’s functionality in a normal setting without any strong promotions, whereas an poster/commercial will be overtly selling the product.   Since Xyience is a title sponsor for the UFC events, it would also be common for the athletes to be hydrated with Xyience products.  A better relationship to help the product grow will certainly ensue if the match’s winner drinks a can of Xyience upon victory.

Xyience 2012 Lineup Regular Line-up

Also helping their growth is their distribution strategy – BevWire detailed in a previous post that Xyience has gotten distribution in nutrition stores (link here).  Not only is the brand being found in your traditional grocery supermarkets, but they are also being found where shoppers look for nutritional foods and supplements.  This definitely expands their reach that is atypical for a brand their size.  Rockstar and Monster may have extreme event partnership and cooler barrels at these events, but the key to growth is to be top of mind with the consumer even when they are not at these events.  In this regard, Xyience may be beating their larger competitors because of their broader and more varied distribution network.

Xyience is making all the right moves to develop their brand and growth stronger, given their smart partnering and distribution ventures.  As energy drinks matures as a category, consumer may become bored of your traditional energy drink and look for options.  This UFC-affiliated beverage is certainly well-positioned to make a move with those bored consumers as they continue on their current path.

Second Dr Pepper Ten Commercial: Just As Manly

Dr Pepper has put out their second commercial and it’s just as male-focused as the first one.  Using other stereotypical testosterone-based examples, such as drill bits, desert target practices, and big TV screens, the commercial further enforces the point that it is a man’s drink.  The tagline remains the same, ending with “It’s Not For Women”.

As Dr Pepper spokepeople and industry insiders indicate that the low-calorie soft drink is a success at gaining new trial users at minimal cannibalization, Dr Pepper needs to remind consumers that it’s a better option than some of the more calorie-heavy drinks – it needs to increase its repeat consumption among men.  It’s main competition right now appears to be defending against the Pepsi Next launch, which was launched nationally in U.S. late last month.  At a point when awareness is high and feedback for Next isn’t completely positive, Dr Pepper inserts their low-calorie offering into Next trial users’ consideration set to let them know there is an alternative out there.  One that may taste similar on the taste curve (full flavor sweetness on the initial palette, followed up sour aftertaste from the aspartame sweetener).

On a pure business and marketing standpoint, it seems as if the launch of the second Dr Pepper 10 commercial came at the best time possible.  Not only because it seems to be a blocker/flanker-type to remind people that Dr Pepper’s low calorie offering is better than Pepsi Next, but also from an expansion and continuity perspective. While they may not reach the same levels of awareness and trials as their first commercial, the product is now available nationally and can translate sales in more U.S. markets (larger market size may equal lower awareness levels, but generate more sales dollars because of the sheer size).  For continuity, it also halos off their first commercial with the same shocking tagline of “It’s Not For Women”, so there will be some viewers that are reminded it is a male-specific soft drink like the first one.

One of the key sales barriers may be that the  grocery shopper of the household is still the mom or wife, not the men that the product is targeting.  It may ultimately serve a purpose similar to the H&M David Beckham 2012 SuperBowl commercial, which targets women to buy the undergarments for their men.  For the most part, the men might now take part in putting the product on the weekly grocery list, or are moved to purchase the product themselves when they make the rare supermarket trip (although not that rare anymore according to Ad Age – article link here).

So why hasn’t Canada received the Dr Pepper 10 yet?  The Canadian market still only has Pepsi Max and Coke Zero competing in the zero-low calorie soda space.  One would suggest that given the healthier trends penetrating the Canadian market and our affinity toward lower calorie alternatives, that Dr Pepper should launch Dr Pepper 10 in Canada.  Alas, the situation is not that simple because Dr Pepper does not have it’s own distribution network here in Canada.  As per their distribution agreement with Coca-Cola and Pepsi, Dr Pepper Snapple Group’s various liquid refreshments come off of both manufacturer’s delivery trucks in Canada.  That said, Dr Pepper 10 may have a good chance to make it on the delivery trucks once the distribution contracts are up for renegotiation, or they find a tertiary distribution network if the contracts permit that.

Until then, Canadians looking to try Dr Pepper 10 will likely have to look toward grocery stores that bring their product in from south of the border, or make the trip down south themselves to find the product.

Kraft MiO: Dasani Drops and Other Copycats

Kraft MiO

This week’s post focuses on the growing trend of liquid water enhancers.  Earlier this week, the Wall Street Journal, Bevnet.com, and BevReview.com all broke news that Kraft MiO will be expecting some branded competition fairly soon (BevReview’s article has some more information, and links to the other two articles here).  While the current market in the United States for liquid enhancers includes MiO and some smaller players, the entry of Coca-Cola’s Dasani Drops signals that the category is viable and ready for more competition.  After all, MiO has been in the market for just over a year and has extended their product line to include caffeine content to reach out to users that want an energy boost in their beverage options as well (MiO Energy).

As the leader and only well-known branded player, Kraft had to invest significant dollars into educating users and bringing attention to the category.  Their product can only be successful with more awareness about the product and liquid water enhancers market.  As a result of increased awareness, private label manufacturers have benefited greatly from MiO’s innovations by driving shoppers into grocery supermarkets and the beverage aisle.  Grocery stores have introduced their own version of the product and placed them side-by-side with MiO but at lower prices.  Shoppers originally came in-store to buy a MiO liquid water pack, but switch to a less expensive option at the shelf because they do not want to sink in so much money into an unknown product.  And now Kraft MiO’s growth and category promotion has attracted Coca-Cola’s Dasani to enter the market.

Wal-Mart's store brand of liquid water enhancers - courtesy of bevreview.com

Smart move by Coca-Cola to wait a year and then enter the market.  Let Kraft do all the work to bring attention to the category and products, monitor their sales and consumer reaction, then enter the category since it merits investment from the beverage giant.  Now they only have to focus on featuring their own product, while promoting the category becomes secondary since all the education costs were bore by Kraft in the previous year.  Kraft MiO will also benefit from the competition that Dasani Drops creates, since that will lead to more dollars spent on promoting products in the category overall.  The stronger category awareness is, the more chances that Kraft can sell their product without promotional dependence.

It’s likely that Coca-Cola’s entry will spark an entry from Pepsi and Nestle Waters in the near future.  When that happens, Kraft MiO will likely see diminishing returns since the category will have grown so much that now their focus will be product differentiation so shoppers are choosing their brand versus that of Dasani, Aquafina, Nestle Waters or some other product (note: there is no confirmation that Pepsi will be launching a liquid flavor enhancer, let alone extend the Aquafina name to the category – this is just a thought).

In Canada, the only liquid water enhancer that I’ve heard of comes from a company called Drink Intuition, which positions their product along the health and wellness trends of stress relief and detoxification.  The liquid water enhancer market would benefit greatly with more category promotion, but Intuition really is a niche player and does not appeal to everyone.  Canada could benefit greatly as MiO and Dasani potentially compete to see who can bring their product into the Canadian marketplace first.  With distribution all set up, it may only be a matter of adjusting their packaging and messaging to meet Canadian guidelines: including French copy and a nutrition table.

Until the product enters Canada, it looks like BevWire will still have to head south of the border to try and find some Kraft MiO and MiO Energy. Soon enough, I will also be looking for Dasani Drops.

Honest Tea Modifies Packaging To Benefit Consumers

Honest Tea's new bottom - courtesy of mnn.com

Honest Tea typically produces their beverages in plastic bottles that have a dome-shape at the bottom of it, but this dome-shaped bottom has caused some consumers that Honest Tea is tricking them in relation to the actual amount of liquid inside each bottle.  While the bottom says 16.9oz (473ml) liquid is inside each bottom, some are wondering if there’s actually less.  As a result, they’ve issued a statement on their website to clarify this:

We recently switched to a thinner bottle, one which is 22% lighter. This saves us money and saves the world resources. The only problem is that the thinner bottle had the risk of getting dented. In fact, this was a real problem that forced us to redesign the bottle. To help keep its shape, the inside must be under pressure. When the bottle is filled with hot tea, the liquid expands and the plug on the bottom pops out. (If you squeeze real hard, you can make this happen.) Then as the tea cools, the plug pops back in and creates the pressure on the inside that prevents the bottles from being damaged. The thinner plastic means we needed more pressure and hence the bigger plug. There really is 16.9 oz. inside and we aren’t trying to pull a fast one. But we can see how you could get confused or could think that we are trying to be deceptive. We clearly need to do a better job explaining why the bottle has this design. In the next label run we plan to say something to explain this to our customers. We hope that makes you feel that you can still trust us and will stick with us.

Honest Tea has since switched to new, flatter bottom bottles to make it less confusing for their consumers.  This packaging adjustment is great timing as their parent company, Coca-Cola Refreshments, is exploring growth opportunities to increase Honest Tea’s visibility and awareness. Nestea will be distributed by Nestle Waters (Nestea’s original parent) starting sometime in 2013.  This means that the tea category is poised to be shaken up slightly with more competition as Nestle Waters will undoubtedly be promoting Nestea vigorously to gain sales (bevwire article link here).

Honest Tea flat bottom

For Honest Tea, paying attention to what their users are saying is just the entrance fee into the growing tea category.  The packaging change-up shows their current users that the company has heard what they are saying, but it does not bring in any new users.  What Honest Tea does in addition to this adjustment is what may help them gain more space in the category.  As they look for growth opportunities and try to gain more space at the retailers, their conversations and results with the retailer’s buyer are paramount.  They must show the retailer that they have a better product, a more profitable product, or both (which would be the best scenario).  In which case, showing them consumer demand is up for tea products and how Honest Tea best satisfies the most is what determines whether they will win or lose.

 For Honest Tea to have success, switching to flatter bottoms is just the first of many steps.  Most retailers may already have their 2012 summer shelf and cooler spacing planned, but if a product not in the planning set shows potential, it can merit a replacement of a slow selling product.  If Honest Tea can convince that they deserve more shelf space at retailers this summer, that would go a long way to helping them out gain space when Nestea comes of a competitor’s delivery truck.