It seems that Nestea is primed to enter the liquid enhancers space soon (link here). In a segment that grows increasingly crowded with strong brand names like Kraft MiO, Crystal Light Liquid, Dasani Drops, Powerade Zero Drops, is this the right decision by Nestea to enter with their own liquid enhancer? Aside from the well-known branded players, a host of grocery retailers already have their own store brand (per this BevReview article, Walmart, Supervalu and Winn-Dixie all have their own versions). Can this beverage segment sustain another branded player? With various offerings available and finite space in the grocery aisle, will this launch actually be beneficial? It depends on who you talk to.
First, let’s take a look at what Nestea is introducing to the marketplace. Nestea Liquid Water Enhancer will arrive exclusively to Target in three flavors: Iced Tea with Lemon, Iced Tea with Peach and Half & Half Iced Tea. Another flavor will hit the rest of the market afterwards: Green Tea Citrus. The Nestea Liquid Water Enhancers will be available in 26-serving bottles. Because there is no other tea-based liquid enhancer in the marketplace, the Nestea product is unique and certainly adds value to the grocery aisle. The consumer will now be able to find their Nestea drink mixes in both powder and liquid formats. So Nestea benefits from this product launch, giving themselves a broader consumer reach. Now that Nestea has a unique product, they just need to go and “sell” it to the grocery retailer that their product is beneficial for them too.
Retailers, however, may interpret this as more of a headache than anything. With liquid enhancers expanding so rapidly, it looks like manufacturers just want to launch a product and get in on the gold rush. With another product added to the overall consideration set, the retailers must decide which ones to carry and help them grow their business. Do they maintain the same space in the grocery aisle for these products? Or should they rationalize some other products? The retailer may simply pass the problem on to manufacturers, and have them create the most compelling sell story to gain retailer distribution. What may ensue should certainly benefit consumers and retailers: manufacturers will undoubtedly be offering some form of pricing and promotional support to get them to take their product in-store.
For liquid enhancers and the consumer, Nestea’s entry is a positive addition. Nestea’s entry carves out a niche for tea-based liquid enhancers, similar to how Powerade Zero Drops and MiO Fit created the sports niche. Despite further fragmenting liquid enhancers into more beverage segments, this launch will be beneficial to the category. As more marketing dollars get behind liquid enhancers, this may spell opportunity for even more product launches. If consumers are willing to mix water with enhancers for caffeine, electrolytes, and tea, what else may they be interested in? How about juices? Or carbonated soda? In due time, consumers may be able to find liquid enhancers for any beverage that is currently available in can or bottle format.
While the Nestea launch further crowds the liquid enhancer market, it still benefits everyone. Consumers get another liquid enhancer choice. Nestea improve their consumer reach. And retailers linking these two groups together will be rewarded with more profits.