vitaminwater zero Quietly Arrives in Canada

vw+vw0 canada line-up courtesy of @vitaminwater_bc

Has anyone noticed the subtle changes to the low-calorie vitaminwater lineup in Canada?  There used to be three vitaminwater10 variants available: go-go, resilient-c, and recoup.  Now they have quietly replaced the go-go and resilient-c 10 calorie offerings with zero calorie offerings.  The recoup (peach mandarin) doesn’t appear to be on the market anymore, in favor of a zero calorie version of XXX, renamed as XOXOXO (acai-blueberry-pomegranate).  It appears that the United States’ transition in December 2010 has finally made its way north of the border this past April.  As it stands right now, there are 9 regular calorie flavors of vitaminwater, along with the three new low-calorie offerings.

One has to wonder why glaceau did not simply launch the zero-calorie offerings from day one, rather than wait a year to eliminate the 10 calories inside the bottle.  How did the 10 calories get eliminated after a few months’ launch into Canada?  Was it fear that Canadians would not adapt to the zero calories right away and needed to be transitioned away from calorie-filled beverages?  Was there a delay in getting approvals on the ingredients, particularly the sweetener?  In any case, the complete Canadian vitaminwater line-up still stands at 12 flavors.

Having 12 flavors makes it challenging to manage the product portfolio.  The benefit of this vitaminwater zero transition is that it will not impact the overall shelf spacing – only the existing area that vitaminwater product occupies.  However, 12 flavors for any product is quite significant, and getting a retailer to list all 12 at the same time will certainly be difficult.  Take for example Red Bull, which has found success with only three variations (Red Bull, Sugar Free Red Bull, and Red Bull Total Zero).  Or Coca-Cola, which also has three offerings (Coke, Diet Coke, Coke Zero).  Both these brands have fewer flavors and have been very successful.  Monster Energy and Rockstar Energy are also successful as a result of their broad portfolio of products – but not all products get listed in the retailer.  The most successful brands have fewer variations and can command more shelf space.  They also tend to be leaders in their respective categories.  vitaminwater seems to be buck that trend.

Is vitaminwater a leader in the enhanced or flavored waters category?  Sales data would almost guarantee it as such.  Why would they need so many flavors, when traditionally four or five flavors will be enough?  The answer is portfolio shelf space relative to sales.  If the vitaminwater portfolio commands 40% of the category sales, they should be allocated 40% shelf space.  After all, the argument is that the cooler space should reflect market conditions for the consumer.  This is why in the summer there are less shelf space allocated to juices, but more to water and sports drinks.  Having a broader portfolios always gives you more opportunities to create shelf space and in turn sales.  Just look at how Gatorade has been able to gain more shelf space following its prime/perform/recover extensions.  So while the majority of sales may come from the most popular flavors, the less popular flavors also have a significant role to play in creating and extending shelf space for the vitaminwater total portfolio.  Imagine that the sale for one vitaminwater flavor was marginal relative to the total portfolio, but had two shelf facings.  That flavor still remains on shelf to “hold space” for other better performing flavors, and allow the retailer to reduce that flavor to one facing while increasing facings for another better performing flavor.

Optimizing the shelf space ultimately falls onto the beverage category manager’s responsibility.  As long as vitaminwater’s broad portfolio keeps making sales, it makes difficult for other enhanced waters like Aquafina Plus to gain shelf space.  Once you secure the shelf space, it’s up to you to structure and space out your products to protect your shelf space.

 

 

 

HappyWater Enters Vancouver’s Beverage Market

HappyWater – a premium alkaline-based bottled water product – is launching in Vancouver this summer.  From their Twitter account (@LiveHappyWater) and media kit, their bottled beverage can be described as a “100% blend of pure, natural spring and lithia waters from ancient Canadian mountain springs.”  Their Twitter feed also tweets where they’ll be around Vancouver this summer to sample out product to passerbys, so feel free to seek them out for a free bottle if you work downtown.

First of all, what is the difference between “alkaline” or lithia water relative to other types of water and beverages?  Scientifically speaking, there is a pH scale that determines the acidity and alkalinity of all beverage products. On a scale from 0 (acidic) to 14 (alkaline), 7 would be consider neutral.  Searching on the web revealed the following results on beverage acidity: soft drinks (~3.2), juices (~5.0) and coffee (~5.0) are acidic.  Waters have varying degrees of acidity or alkalinity depending on its manufacturing and purifying process.  Aquafina (~5.4) and glaceau smartwater (~5.9) are slightly more acidic on the scale while evian (~7.4) and Fiji (~7.6) are slightly more basic on the scale. HappyWater’s (~7.4) alkalinity puts it in the same arena as evian (~7.3) and Fiji (~7.6).  Since our stomach produces acid to break down our consumables, neutral (milk) and alkaline-based drinks would be some options to stabilize an upset stomach (or balance out the natural acids in our stomach).

Vancouver should be a good market to launch this premium product, given its local sourcing.  HappyWater originates from the Canadian Rocky Mountains, relative to evian (French Alps) and Fiji (Fiji Islands).  While I’m not sure if the location factors into the product pricing, they can be expected to be priced competitively with other premium waters.  Their current availability is localized to Vancouver and parts of the Lower Mainland at the moment, but national and American expansion would be a great opportunity given the premium waters potential in the marketplace.

Until their expansion out East or me making a trip to Vancouver, I’ll just wait to try a HappyWater.

Bolthouse Farms Very Likely To Expand

Bolthouse Lineup

A few weeks ago I detailed a post where Bolthouse Farms had put up their “for sale” sign and solicited bids from interested companies (article link here). Not surprisingly, Campbell Soup Company was one of the bidders and the latest news indicated that it is now a closed deal – Campbell Soup Company has bought Bolthouse Farms for $1.55 billion dollars. With deeper corporate pockets, Bolthouse Farms now emerges as an even stronger competitor in the premium juice & smoothie beverage category. The linked article above detailed the benefits toward Campbell Soup Company and how it would impact retailers. But what we have not yet discussed is how it would affect the competitive landscape. Which manufacturers and brands will be impacted? Will this change anything in the retail environment?

The premium juice & smoothie beverage segment can count a few niche players as well as two large players. Arthur’s Fresh, Happy Planet, and the not-yet-in-Canada Evolution Fresh juice brand serve as the niche brands. At the other end of the spectrum you have Odwalla (owned by Coca-Cola) and Naked Juices (owned by Pepsi) as your national premium juice & smoothie makers. Bolthouse Farms previously stood closer to the niche end despite its broad distribution in Canadian grocers. Their primary operating space was in the fresh produce section in a grocery store, sitting on the shelf next to Arthur’s Fresh and Pom Wonderful products. This deal will not change where Bolthouse Farms is located, but it will help them on negotiating power and price their drinks more aggressivley because of their newfound corporate support.

Naked Juice 10oz bottle

The larger affect will happen outside of grocery stores, in channels such as drug, convenience, and on-premise. These channels are typically dominated by Coca-Cola and Pepsi drinks, and will likely include Bolthouse Farms products in the near future. Bolthouse Farms products are already in grocery for the most part, so their expansion plans would involve exploring new channels of growth. And if Bolthouse Farms provides their own branded coolers, then their channel penetration should speed up. Given that Coca-Cola & Pepsi both manufacturer other beverages where the public may view negatively (ie. soft drinks contributes to obesity), retailers may also be more willing to work with Bolthouse Farms with its clean company image.

While the expansion to other channels are immiment, I believe the prime targets to be the Canadian drug channel (ie Shoppers Drug Mart). With this retailer’s expanding its grocery offerings and abundant cooler spaces, Bolthouse Farm should see this retailer as a great expansion opportunity. To further help this fact is that drug stores typically have a healthier perception in the Canadian market (they have pharmacies, cater to the senior demographic, etc).

The sale to Campbell Soup Company just happened and it will take some time to integrate Bolthouse Farms’ operations. Once they have settled in and are ready to expand, be ready to find Bolthouse Farms at your local drug store, convenience store or local food joint.

Enjoy Everything with Coke Zero

Coke Zero’s latest TV commercial continues touting the taste aspect of a full-calorie Coca-Cola with zero calories.  Released during the 2012 BET Awards, it may have went over the top in proving its point.  Normally that would be true, but given the audience and the spokesperson featured Ken Jeong (from Hangover, TV’s Community, and other movies) it appears to be just right.

Tagging Ken Jeong to champion Coke Zero seems like a perfect match.  Jeong is easily recognized among the BET Awards viewers (demographic target are teens & young adults) and is over the top himself when it comes to proving a point.  So the first step of a successful ad campaign is there – the audience is paying attention and not tuning out (provided that they haven’t left their couches or changed the channel already).

The main message of reinforcing true Coca-Cola taste and zero calories resonates well among the viewers that want to have it all, but fails to inspire any call to action.  Beyond comedic entertainment and grabbing attention, the messaging may fall on deaf ears.  It’s important to remember that the targeted demographic are teens – an age segment where calories are not a main concern.  If you were a teen, calorie content may be one of the last things on your mind.  Teens want to have it all and given that taste and brand matters, but why go for a lesser-known brand like Coke Zero when you can have Coca-Cola instead?  Brand trumps taste in this scenario.  Even if the target consumer viewing the commercial understands the messaging, they may not be inspired to go out and purchase Coke Zero. The message communication simply does not apply to them.

Would Coke Zero be better off engaging in the zero-calorie Cola Wars with Pepsi Max?  Certainly not, because they are still the leading brand in this beverage segment and should not play down to their competition.

Does the commercial need to be to tuned?   Coke Zero could adjust their focus on the next older age demographic: young adults (20-30 year olds).  Consumers in this age range are at the time where they are faced with sacrificing taste for lower calories due to slower metabolism and stronger health focus.  However, doing so would alienate a profitable demographic and tying the beverage in with the beginning of their purchase life cycle.  The most probable case would be adjusting the positioning toward teens and young adults, where brand appeal is touted in addition to the zero calorie component.

Does this commercial make you want to buy a Coke Zero, and why?

On Vacation!

BevWire is on vacation this week in Vancouver and will resume posting shortly.  In the meantime, catch up with me on twitter @BevWire, I’ll still be posting updates and interesting beverage images I come across.