How Fuze Became a Billion Dollar Brand

Coca-Cola’s Fuze tea joins the company’s growing roster of billion dollar brands. Fuze surpassed a billion dollar in annual sales in 2014. Image courtesy of coca-colacompany.com.

Per Coca-Cola’s news release a couple weeks back, the soda giant’s Fuze brand has joined the company’s billion dollar club this year (story here).  Fuze expanded into teas back in 2012 and surpassed one billion dollars in annual sales just two years later, which may make it one of the fastest brands under Coca-Cola’s stewardship to achieve this milestone. Regardless of their geographical footprint (40 markets and growing) or product assortment (30+ Fuze skus between juice, tea, and liquid enhancer flavors), reaching one billion dollars this quickly is surprising.  A key question to answer may be what happened in the past two years to help Fuze become one Coca-Cola’s roster of 20 billion dollar brands.

In 2007, Coca-Cola bought Fuze and promptly brought the juice brand into their beverage roster.  At that time, Fuze existed as a primary competitor to SoBe’s line of fruit juices owned by Pepsi.  The importance of tea in the brand’s portfolio emerged in 2009 when Fuze tea was part of the fountain drink options in Subway’s sandwich franchise restaurants.  Since then, the hydration brand has emphasized tea more than juices.  Securing distribution in Subway was a critical step toward Fuze’s current status.  Not only were they earning sales across Subway locations, their availability increased consumer exposure to Fuze as a ready-to-drink tea and a viable alternative to Coca-Cola’s soda offerings.  Even Samir Bhutada, Coke’s global director of tea and ready-to-drink coffee, mentioned that part of Fuze’s popularity was related to beverage trends around the ready-to-drink tea category because it delivers on great testing refreshment and natural goodness.

Another important step in Fuze’s history came in 2012, when Coca-Cola and Nestle Waters amended their Beverage Partners Worldwide distribution arrangement.  Save for Canada and a few other geographies, Nestle Waters would retain distribution rights for Nestea.  This in turn allowed Coca-Cola to redeploy efforts to their own stable of healthy refreshments.  Gold Peak and Fuze became the main benefactors of the company’s increased support.  This support materialized in both marketing and trade support.  With Nestea returning to Nestle Waters’ distribution network, this opened up more space for other beverages to grow their footprint within Coca-Cola’s distribution network.  As a result of this, Fuze cultivated a stronger international presence.

Coca-Cola Canada’s Fuze Tea Drops: Green Tea Mango, Peach, and Raspberry.

The Coca-Cola system also support the brand by cranking out drink flavors built on its foundation of green tea and black tea.  With over 30 Fuze tea variants, consumers looking for tea options would not have any trouble picking a tea under the Fuze portfolio.  Most recently, Coca-Cola has extended the Fuze brand beyond bottled juices and teas.  Coca-Cola launched Fuze Tea Drops in the Canadian marketplace, building more momentum behind this brand with three flavors of liquid enhancers.  To support this rollout, the company activated Fuze Tea Drops with in-store signage and branded merchandising racks across participating Canadian retailers.  It’s also telling that Fuze was one of the select brands among Coca-Cola’s liquid enhancer portfolio, joining Dasani, Powerade, and Minute Maid as beverages available in this format.

In Canada, Nestea is still being distributed by Coca-Cola so Fuze tea may be limited in its availability.  Most Canadians only experience Fuze as a bottled juice unless they choose the brand where Coca-Cola Freestyle machines are available or purchase Subway sandwiches.  With Fuze tea drops, Canadians are one step closer toward experiencing Fuze the way other consumers get to enjoy it.  If Fuze tea drops sell well and Freestyle machines back up the brand’s popularity, there may be finally be Fuze tea coming to Canada.  At that time, Canadians will join other countries that further contribute to Fuze’s annual sales of a billion dollars.

Sparkling ICE Comes to Canada

Sparkling ICE’s flavored water line-up. Will all 11 flavors come into Canada through Sun Rype?

Two West Coast companies are joining forces to introduce Sparkling ICE to Canadians.  Sun Rype, a Kelowna-based manufacturer and distributor of beverages and snacks, will become Sparkling ICE’s exclusive Canadian distributor.  Through Sun Rype’s network, the Washington-based flavored water brand gains access to Canadian grocery, drug, and convenience channels.  Both organizations have described this arrangement as a strong strategic fit that makes sense for their respective companies.

Kevin Klock, CEO of Talking Rain Beverage Co., parent company for Sparkling ICE says:

“Canada is a critical first step in our strategic plan to make Sparkling ICE an international brand, and we are thrilled to find a partner like SunRype who aligns seamlessly with our brand message and goals.  We are confident that Sparkling ICE’s brand proposition of bold flavors and zero calories, combined with a best-in-class distribution partner like SunRype, will spell success in Canada.”

Dave McAnerney, CEO of Sun-Rype Products Ltd. explains why this will become a successful joint venture:

“In the highly competitive Canadian beverage market, we are seeing a real trend toward zero calorie, lightly carbonated beverages.”

After securing a strong position in the domestic U.S market, expanding into Canada marks a logical next step in Sparkling ICE’s evolution.  With so many similarities between the two countries, making Sparkling ICE available in Canada certainly solidifies their North American presence.  Another question that may have to be decided is whether the brand makes its entire product line available in Canada.  Beyond 11 flavored of zero-calorie water, the brand also offers 6 lemonade options and 3 iced tea options.  As Klock suggests, this would only be the first step toward building up Sparkling ICE as an international success.   In order to make Canada a true success they should make all products available.  Let consumers vote with their wallets and decide what flavor and product they prefer.  Like many other markets, Canadians would prefer zero-calorie beverage options so long as taste and value are not marginalized.  If Sparkling ICE is truly success in Canada, it gives the company a successful launch case study to implement across other markets.

A subset of the products that Sun Rype manufacturers and distributes in Canada. Soon, Talking Rain’s Sparkling ICE beverages will be distributed by Sun Rype in Canada.

For Sun Rype, distributing Sparkling ICE makes perfect sense.  The Kelowna-based company is well-respected and already brings healthy beverages and snacks to Canadian retailers.  Their product assortment gives them experience in dealing with retailers across multiple healthy food & beverages categories, from juices to portable snacks.  Having another healthy refreshment in their portfolio to offer retailers doesn’t hurt, especially one that has phenomenal year-over-year sales results to support it.  Sparkling ICE is a brand that has won recognition as a best new product, and has seen substantial sales growth in the U.S. the past few years.  Selling it to retailers should be less challenging than selling other products that have less awareness or public recognition.

It’ll be interesting to see what Sun Rype and Talking Rain do to bring Sparkling ICE to Canadian retailers and consumers alike.  Success for the zero-calorie flavored water brand in Canada may not be a question of “if” but a matter of “when.”  Their future success hinges on the support that both organizations provide.  With both organizations suggesting the arrangement to provide strategic benefits, you can bet that Talking Rain and Sun Rype will be paying alot of attention to ensure Sparkling ICE wins in Canada.

Is Mountain Dew Kickstart Taking on Gatorade?

Mountain Dew Kickstart’s line-up: Fruit Punch, Orange Citrus, Pineapple Orange Mango, Strawberry Kiwi, Black Cherry, and Limade. Image courtesy of stupiddope.com.

Following on one of their most successful drink launches in recent memory, Mountain Dew has added two additional offerings under their Kickstart drink portfolio.  The Kickstart offshoot started to segment drinks by dayparts in 2013 and brought out two beverages targeting morning consumption.  In 2014 they followed on the morning drinks with two more flavors catered toward evening occasions.  Their most recent offerings – Pineapple Orange Mango and Strawberry Kiwi – are infused with coconut water (full press release found here), but does not overtly fit an actual drinking occasion.  This makes the latest launch appear off strategy because it’s not geared specifically toward the morning, afternoon, or evening.  How do these two drinks fit into the Kickstart portfolio?  What is the purpose of this launch?

The “fit” debate may very well go back to the purpose of coconut water.  Coconut water was targeted as a healthier alternative to sports drinks like Gatorade and Powerade.  On an equivalized volume comparison, coconut water contains similar amounts of electrolytes but fewer calories and sodium, making it a strong substitute for the sports drinks marketed toward fitness-oriented consumers.  In essence standalone coconut water is meant for hydration and recovery purposes.  When mixed with Mountain Dew’s caffeinated citrus sodas, these drinks could be positioned as competition to sports drinks.  A lightly carbonated energy drinks – with juice flavors and coconut water – can be termed as a hydration drink to compete with the Gatorades and Powerades out there.  These latest release of Mountain Dew Kickstart would not need to fit under a daypart segmentation.  It could be a morning drink for people that exercise in the morning, or it could also serve an evening recovery drink after workout or recreational sports.

Mountain Dew’s Kickstart newly launched flavors: Pineapple Orange Mango and Strawberry Kiwi. Both variants are infused with coconut water. Image courtesy of PRNewswire.com.

If this is Mountain Dew Kickstart’s positioning around the new offerings, the only challenge would be where caffeine fits into the equation.  Sports drinks are supposed to replenish what the body loses during sport events (electrolytes, sugars, salts, liquids) and caffeine would not fall under this criteria.  While the body may craves some energy following an intense workout, it could be debated that the workout itself provides energy as a result of the activities.  Caffeinated sports drinks may not be detrimental like alcoholic energy drinks but it’s relevance is questionable due to the caffeine.  This may ultimately be an attempt to expand the Mountain Dew masterbrand beyond soda and energy drinks by reaching toward athletic consumers.

Or is it?

This brings us to the purpose of launching these two flavors of Mountain Dew Kickstart.  Bevnet’s Neil Martinez-Belkin suggested this launch had more to do with creating success for O.N.E coconut water brand than extending Mountain Dew’s reach (article link here).  Martinez-Belkin reminds us that months ago PepsiCo expressed intentions to include coconut water as an ingredient across multiple lines of business.  Driving Kickstart infused with coconut water is simply a method of increasing coconut water;s public exposure.  It may be because after buying O.N.E. coconut water that the beverage brand is still lacking robust market exposure.  This make senses given both Coca-Cola and Pepsi – owners of ZICO and O.N.E – have re-deployed efforts to focus on their core business: carbonated soda.  Marrying a powerhouse brand like Mountain Dew with coconut water increases coconut water’s consumer relevance without having to fully invest behind coconut water as a beverage brand.  This is not to say that Pepsi may not be supporting O.N.E. coconut water in the future, it just means they are looking for creative options to build up the coconut water segment.

The Mountain Dew Kickstart launch raises a few eyebrows though it helps coconut water more than it appears in the public eye.  For a global beverage manufacturer where many products fighting to keep their budgets, this is a creative way to grow a business that may be losing the fight to maintain funding against other beverages in Pepsi’s portfolio.  O.N.E. coconut water would justify increased budgets if these two new Kickstart flavors sold well.  And if this experiment is a hit between Mountain Dew and coconut water, we could see Tropicana infused with coconut water or even Pepsi cola infused with coconut water in a few years.  If that does happen, you can point to the success of Mountain Dew, which has been one of Pepsi’s increasingly consumed soda brands despite the overall declines in soda.

 

The O.N.E. coconut water line-up for Canada. Is the U.S. looking to grow this brand by marrying up coconut water with more lines of product?