evian Smart Drop: Buy Water From Your Fridge

evian Smart Drop Magnet 

Evian is launching a home delivery service through an innovative fridge magnet.  The water droplet shaped magnet is called “Smart Drop” and connects through your WiFi network for ordering the type of water you want, and your choice of delivery day and time.  It is currently being tested in parts of France right now, specifically Paris.  There has been no plans to launch the Smart Drop outside certain parts of Paris and close by suburbs, but we would have to wonder how successful this magnet can be if it comes to Canada.    This may be a good idea based on European’s consumer and shopper behavior, would this item find success in Canada?   The Smart Drop essentially cuts out the retailer to make buying water easier at home, so how does this affect Canadian retailers?

Retailers may react unfavorably toward the Smart Drop’s launch in Canada.  evian would now be competing directly against the customers where they list their products.  As a function of retailer consolidation in Canada, Canadian retailers typically hold more power than their European counterparts.  Losing one retailer in Canada (ie. Loblaws/Superstores or Wal-Mart) could prove to be very significant.  In addition to losing the evian bottled water sales, retailers are also afforded less opportunities to build a grocery trip sale with the “evian consumer”.  This potentially takes out sales from fruit, bread, and a broad assortment of other grocery products.

On the other hand, it may not have as dramatic an affect as described above.  evian could alleviate the problem by incorporating location services into the Smart Drop magnet, suggesting closely located retailers that may have evian on hand.  This way, evian would be partnering with the retailer to reach the consumer rather than competing for the same consumer.  Better yet, evian would branch out to become the delivery service for the retailer, helping deliver not only evian water but a variety of items to the consumer at home.

At the end of the day, this may simply be a novelty item for consumers to play with once or twice.  It may not be sustainable since consumers still end up going to the grocery store for other products and bottled water exists as a grocery list item.  The only consumers that may end up using this Smart Drop magnet long term would be die-hard evian consumers, but even then they would still need to go to buy other grocery products.

Retailers should have less to worry about than the worst-case scenario described above.

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Kraft MiO Enjoying Exclusivity in Canada…For Now

Kraft’s liquid beverage enhancer MiO is now available in Canada, after being available in the U.S. for over a year.  My earlier post detailed the MiO’s impact on the American market, how it has led to line extensions as well as inspired copycats (link here).  While MiO is still in a state of infancy in Canada and offers very few challengers, it’s worthwhile to look at the example south of the border to see what type of impact it may have in Canada.  Here’s the first MiO commercial for Canada, followed by the American commercial link below.

American MiO commercial link here.  The differences are quite obvious in its message and communication, since each ultimately caters to different audiences.  Kraft Canada has decided to target 18-34 year old males with the MiO (article from Strategy Magazine details MiO’s Canadian strategy here).   With regard to the business impact, will the MiO inspire copycat products from Coca-Cola or Pepsi?  Will it also lead to caffeine-infused line extensions like MiO Energy?

While there exists a template in the United States, it’s important to note that the two markets are decidedly different.  As we’ve already seen, Canadians do not react to the same type of messaging and need customized advertisements.  Further to the differences, Canadian regulations also stipulate stronger focuses on health-consciousness (ie calorie listings on packaging) and product compositions (ie  mandatory nutritional tables).  This all boils down to the point that what may works in the United States may not work here in Canada.

Kraft Canada will work to grow the category of liquid flavor enhancers, and this will lead to copycats.  With Kraft bearing the education costs and the initial market research, other beverage organizations will be able to see what type of opportunities exist in this category.  Judging by how the American market is performing, the category does have growth potential and can sustain more than one branded manufacturer.  Understanding their own production & distribution capabilities, the entry of Coca-Cola, Pepsi, and even Dr Pepper Snapple Group in Canada seems just like a matter of timing.  Currently on grocery store shelves, the MiO sits by itself with powdered drinks like Crystal Light, Kool-Aid, Nestea without any store brands.  It would appear  that at this time, even private labels are hesitant of coming into the market and are watching to see how the MiO will perform first before jumping into the category.

How about the MiO Energy, will it enter Canada?  It is an intriguing product because the user can personalize their beverage and control the amount of caffeine they would like in their drink.  However, with the increased attention on energy drinks, their high caffeine content, and their adverse effects, will this product be successful if launched in Canada?  My perception is that it will extend into Canada, but their success hinges on their market positioning. Positioning it as a customizable caffeine drink against coffee, rather than energy drinks may be more successful.  Coffee is generally more acceptable as a caffeinated beverage over energy drinks due to their lower caffeine concentration.

In the meantime, Canadians still have the regular Kraft MiO to enjoy in four flavors pending more introductions.  Enjoy the exclusivity while it last MiO, because it appears that you’ll have to defend your shelf space soon enough.

Coca-Cola Freestyle Pilots in Canada

Coca-Cola Freestyle - courtesy of timeoutchicago.comCoca-Cola recently launched their Freestyle touch-screen fountain machine in Canadian test markets.  Launched just over a month ago (May 2012), the fountain unit has been spotted at fast food establishments like Wendy’s and Hero Burgers, as well as entertainment venues like Canada’s Wonderland and the Scotiabank Theatre.  I was able to locate one of the units at a Hero Burger, but did not try it out since I was actually head to dinner at another location close by.  It will be a trip for another meal.

The Coca-Cola Freestyle fountain unit can dispense up to 104 different beverage flavors through small flavor cartridges housed by the machine.  Compared to a regular fountain unit that typically holds 8 or 10 fountain heads connected to large syrup bags, this extends the amount of variety and selection greatly for the consumer.  The touch screen function also allows the user to mix and match their own flavors, while the flavors selected become data collected by Coca-Cola.

Now that the fountain unit can be found in Canada, will it have the same sort of excitement and impact that it had when launched in the United States?  My interpretation is that it will not reach identical levels of excitement relative to the United States.  The excitement is only limited to the  Greater Toronto Area where selective establishments have the Freestyle, whereas the United States it is available nationally.  Simply put, consumption is much less here in Canada, so releasing it to an even smaller test market limits the amount of excitement that can be generated.

Freestyle Touch Panel

The interesting component for the Freestyle unit is the impact it may have in Canada.  The 104 flavors available in Canada are a smaller, similar set to the 125 flavors available in the United States.  This alone has far-reaching implications since Coca-Cola’s product portfolio in Canada is much smaller than our neighbors down South.  Through the Freestyle, Canadians can now enjoy a multitude of flavors that were previously unavailable.  Heard of Coca-Cola Orange, or Coca-Cola Cherry Vanilla?  Both these obscure flavors are available through the fountain machine.  Heard of Pibb, Diet Barq’s, Fanta Zero and Hi-C?  All these products plus various other flavors are also available.  Environics, Coca-Cola Canada’s communications company, has the full assortment of flavors available here.

The availability of these flavors have strong implications for the company in Canada.  The consumption information collected will show Coca-Cola not only consumer taste preferences, but also what products to launch next.  For example, Canadians may prefer citrus more and this will lead to a variety of citrus-infused products on store shelves.  Or there may exist a stronger preference for zero-calorie products and these will replace slow movers on store shelves as well.  Coca-Cola can also leverage the data gathered to target consumers with attractive flavors more precisely.  Using the data, Coca-Cola can see what flavors interact the most, and launch these flavors in bottles/cans rather than being available exclusively through the Freestyle.  These flavors will have a better chance of success than previously launched failures flavors (ie Coke Blak, Sprite Zero, Dasani Essentials).  Grocery retailers may also be more welcoming of these flavors should data prove that existing consumers actively prefer these flavor combinations.

Is the Freestyle machine a game changer for the beverage industry in Canada, more than it is for the United States?  The type of machine is a game-changer, since there are many more flavors that are not available here in Canada.  There’s no doubt that Pepsi has a machine similar to the Freestyle (BevReview has the story here) so both beverage companies can influence the future of the beverage landscape in Canada.

We’ll know for sure that the rollout strategy is a success when the pilot testing extends nationally.  And we’ll know that the impact when we see grocery stores selling flavors we had previously only found through the Freestyle.

Pepsi Canada Brings Back the Taste Test

Pepsi UTC - courtesy of facebook.com

Pepsi Canada has brought back the taste test, launching a Canadian-specific summertime promotion titled the “Pepsi Ultimate Taste Challenge” and supported through facebook both online and offline (link here).  Facebook offline support includes a map showing locations where Pepsi will be conducting the taste test and at which times. The online component runs a digital challenge testing you on various cultural components linked with Pepsi (slogans, word scrambles, celebrity endorsements, and more).

For those unfamiliar with the previous taste test formats, interested consumers would line-up and drink to cola samples (one Coca-Cola and one Pepsi) and guess which one was Pepsi.  The purpose of this test was to prove to consumers that in the absence of branding (red Coca-Cola packaging, blue Pepsi packaging), consumers actually preferred Pepsi more.  The test was a big success for the organization when they first ran it in the 1970s and 1980s, leading Coca-Cola to change its formula and launch New Coke (which has since become a worldwide case study on the company’s blunder).  Pepsi gained market share through its taste test and Coca-Cola’s reaction was to alter its formula, which led to pandemonium as consumers rushed to buy as much Coca-Cola as they could before it was phased out of the market.  Coca-Cola eventually caved to consumers and re-launched the original Coca-Cola (called Coca-Cola Classic).  So why would Pepsi Canada want to re-launch this taste test, have they not learned their lessons from the past?  Will this iteration of the taste test change anything?

The current taste test shouldn’t have the same adverse effects for Pepsi that they encountered in the 1970s and 1980s.  Times have changed and so have consumer soft drink preferences.  Both companies have learned their lessons and moved on from that point.  While the Pepsi Ultimate Taste Challenge is on display on a national scale, it is not in the United States.  This point alone isolates the effect that the taste test can have.  American consumption versus Canadian consumption has roughly a 10:1 ratio, therefore it would be equivalent to a 10% impact in the United States (similar to a large scale pilot test market in the United States).  Similarly, Coca-Cola has learned what would happen if they reacted to taste testing and changed their formula.  In this aspect, the Pepsi taste test should only affect Pepsi and the summer sales for both brands.

In addition, the current version’s taste test should deliver stronger results to the overall Pepsi franchise, rather than only to the Pepsi brand.  The 2012 version incorporates both Diet Pepsi and Pepsi Max, pitting the entire Pepsi franchise against Coca-Cola, Diet Coke, and Coke Zero (neither Pepsi nor Coca-Cola has a mid-calorie offering in Canada…yet).  This caters to the current beverage trends, giving calorie-conscious and sugar-conscious consumers a chance to take part in the taste test as well.

The underlying effects of this taste test should go a long way toward helping both brand’s summer soft drink sales.  The comparisons would not only increase exposure and sales for the Pepsi franchise, but also for Coca-Cola’s franchise.  Summer is definitely the season for sampling, and bringing awareness back to soft drinks at this time benefits everyone.  After all, if not promoting soft drinks during the summer, when else can it be promoted?