Vegetable Beverages Hitting Mainstream

Gatorade Lime CucumberWould you drink a cucumber lime-flavored Gatorade?  How about blueberry mint-flavored water?  An article on Beverage Industry on emerging beverage trends claim that vegetable-flavored beverages are increasingly popular because of their “healthy halo” (article link here).  With everyone focusing on healthier options, it makes sense that vegetable flavors reach mainstream status and consumers seek to take in more vegetables.  After all, berry and other fruit-flavored beverages can only deliver so much momentum.  That said, the article describes that consuming a vegetable-only flavor is still in uncommon and many beverage options are a combination of both vegetables and fruits.  How will this particular flavor trend impact beverage makers?  Will these drinks ever reach a level of popularity to take down mainstream colas, juices, or waters?

Beverage manufacturers constantly monitor flavor trends and Pepsi has locked into this trend since 2011, when they launched a Cucumber Lime flavor under the Gatorade franchise.  Pepsi Japan’s limited-time releases of Pepsi Shiso and Pepsi Ice Cucumber also proves this point.  Since most (if not all) beverage organizations monitor consumption trends, it would not be surprising to see manufacturers build momentum and launch more vegetable-infused variants over the next few years.  It just needs to make its way into the North American market.  And this is beginning to catch on more in the U.S.; research firm Mintel tracked over 100 U.S. beverage innovations with vegetable or vegetable-fruit flavors launching in the past year, representing a 20% increase from 2013.  It still stands to be seen whether these vegetable-flavors will launch under the most popular and mainstream beverage lines like Gatorade, Coke, and Pepsi or launch under emerging beverage brands.  No matter the case, any approved product launch puts sales pressure on other items to perform or risk losing the shelf space.  This flavor trend may not have been successful replacing other products’ sales to justify shelf space though it looks that will soon change.

On the topic of reaching critical mass to take down mainstream product categories, it doesn’t look promising.  This isn’t to say that vegetable-flavored beverages will not reach mainstream status themselves, just that it will not overtake other mainstream categories.  For one, this is a flavor trend that integrates the product under a specific beverage segment; it is not a standalone beverage category in itself.  Consider these vegetable-flavored products to pattern after  Campbell’s V8 juices or Bolthouse Farm smoothies, where they represent a growing portion of a drink category (juices and smoothies, respectively) but are not large enough to overtake juices as a whole or smoothies as a whole.  Regardless, these healthier options will compete aggressively for retail shelf space alongside other beverage options.

Image courtesy of foodbusinessnews.net
Image courtesy of foodbusinessnews.net

The Beverage Industry article also describes other beverage flavor trends, include a growing preference toward sweet and spicy combinations.  Consumers increasingly look for flavors that will satisfy multi-sensory experiences.  Some examples include chocolate gojuchang tea (gochujang is a Korean spicy sauce),  spicy ginger mango juice, and mango jalapeno water.  So be on the lookout, soon enough you’ll see more cross-flavored beverages on store shelves.  Be in sweet and spicy or vegetable-fruit flavored, it will sound exotic but your taste buds and your body will thank you for choosing that over another drink.

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Pepsi Next May Find More Success in Canada

Pepsi Next Canada

After launching in other parts of the world for the past two years, Pepsi Next officially launched in Canada.  Unlike the American version that contains 60% less sugar compared to the regular Pepsi, the Canadian version contains 30% less sugar.  The difference is a function of the sweetener composition.  The American version is sweetened with artificial sweeteners such as high fructose corn syrup, acesulfame potassium, and sucralose.  The Canadian version is naturally sweetened with stevia extract. This difference affects how Pepsi Next is marketed on both sides of the border.  How will Canadian consumers respond to Pepsi Next and its marketing communications?  More curiously, how much of the marketing communication will be customized to the Canadian market?

Pepsi supported Pepsi Next’s introduction with a pre-launch promotion, partnering with the NHL and the Heritage Classic hockey game in Vancouver.  Here is part of the Canadian consumer reaction to the beverage as captured by Pepsi below.  The initial consensus indicates positive response to the beverage.

While mid-calorie soda is still an emerging product area for Canadians, it is certainly on point with what most people are looking for.  Canadian consumers are more health-conscious and more proactive at seeking out healthy food offerings.  Sugar intake and calories per serving are more top of mind for Canadians shopping within grocery stores.  A product that provides the same taste without any bitter aftertaste (like the American Pepsi Next) and contains less sugar helps to lessen the guilty burden.  Naturally sweetened with stevia also helps to increase adoption since artificial sweeteners are also perceived to be less healthy.  Consider Pepsi Next similar to the early successes of the vitaminwater Canadian launch.  The enhanced water brand pioneered a new segment with a health-based product positioning at a time when consumers were beginning to question what they eat and drink on a daily basis.  The beverage met their requirements given its appeal as a great tasting healthy product.  While Pepsi Next is still a soft drink and cannot be considered “healthy” in the traditional sense, it is healthier relative to the other soft drinks.

Following it’s launch, Pepsi Next has ran a TV commercial adapted from the American Pepsi Next “Baby” spot.  The Canadian version included some very noticeable differences.  The key components being the refreshed packaging, the slogan of “Taste It to Believe It”, and of course, the “30% less sugar”.  The call to action of “Taste It to Believe It” is clearly catering to the Canadian audience.  The American slogan is “Drink It to Believe It”.  The customized “Taste” instead of “Drink” speaks toward a different value system between the two countries.  “Drink” implies consuming the entire beverage.  “Taste” obviously imply giving the product a try.  Perhaps the Canadian population may be more cautious at first toward trying a new beverage, but adapting the slogan clearly shows customizing the message toward the Canadian audience.  In order for Pepsi Next to succeed in Canada, this is a great first step.

The truly telling piece will be how Pepsi Next is supported following the launch period.  We know from earlier articles that Dr Pepper TEN and Pepsi Next are not sustaining earlier launch-period sales following reduced media support (article here).  With less attention dedicated toward the product, consumer focus will shift toward other health option.  Pepsi Next can maintain its launch momentum and also continue its early success if it keeps advertising to maintain its awareness levels .  Let’s hope the Canadian marketing team learns from what happened in the U.S. and find more success than its neighbors south of the border.

Revisiting the Mid-Calorie Soda Segment

Courtesy of adage.com

Does anyone still remember Pepsi Next or Dr Pepper 10?  Anyone know how well these drinks are performing?  It seems that since their launch last year, not much has been said about these hybrid-sweetener sodas.  Pepsi has been focusing on their core offerings of Pepsi, Diet Pepsi, and Pepsi Max, while Dr Pepper has been left with the task of bringing news and excitement to the entire mid-calorie segment.  So far, it seems that mid-calorie sodas have taken a backseat to regular and diet cola products.  In the past two weeks, there has been some major stories from Advertising Age (link here), brandchannel (link here), and even myself at Canadian Grocer (link here) on how mid-calorie soda is doing.  While manufacturers recognizes the importance of this segment, it’s just not gaining momentum within the consumer market.  So what is wrong with mid-calorie sodas?  What will it take to make these drinks a success?

The jury is still out on whether mid-calorie soda is a success or a failure, but it’s certain that the beverage companies have not been supporting it at the levels necessary for long term success.  It seems that marketing efforts were most prolific during the launch period to gain awareness, but has not kept pace over time when it was most critical to win consumers over: the repeat purchase.  At release, news reports indicated that these drinks endured high rates of consumer sampling.  Pepsi and Dr Pepper gave away these carbonated drinks for free to stimulate trial.  However, the repeat rate has not been mentioned as much.  That is, how many consumers given a free can of mid-calorie soda ended up purchasing these particular drinks later?  Not much apparently.  Reports have indicated that the mid-calorie drinks’ sweetener leaves a bitter aftertaste and has led drinkers to stay away from it.  Therefore, people that were given that free can may have liked it because it was free, but would choose to drink another soda (or an alternate beverage) when they have to pay for it.

Courtesy of Forbes.com

Both sodas companies should have maintained marketing support to focus on championing the benefits of these new products.  Despite the bitter aftertaste, the fact remains that fewer calories are consumed per serving.  Pepsi Next and Dr Pepper 10 should have talked up these benefits relative to other sodas in order to win over consumer perception of a bitter aftertaste.  Instead, they continued on leveraging against the humor (Pepsi Next with their Baby commercials) and gender exclusivity (Dr Pepper 10 with their Manliest Man commercials).  It would have been better to educate the consumer as an alternative to other beverage segments with an identical amount of calories, or other sodas that were sweeter but contained the most calories.

So how can they make these beverages and the overall mid-calorie segment a success?  Or are these drinks primed to quietly disappear like so many other beverages before their time?  Does anyone still remember Coca-Cola Blak?  Or Pepsi XL? Or Orbitz?

Advertising and promotions.  Both Pepsi and Dr Pepper should keep up their mid-calorie advertising efforts to maintain brand awareness.  It seems like an obvious solution to ensure mid-calorie sodas stay alive long enough to see their potential through.  However, in organizations where performance is judged by quarterly performance and not much else, there is no room for tweaking unless it’s on-the-fly.  The interim period from when a new mid-calorie sweetener will be introduced is very crucial for manufacturers to preserve their shelf space.  These beverages must be afforded marketing support and in-store promotions to drive repeat purchases.  Without consumer incentives to stimulate purchases, retailers will have no choice but to remove slow sellers from the aisle.

The fact remains that health groups have picked out carbonated soft drinks as a strong contributor to obesity.  Consumers are also more focused on the sugars and calories they put in their bodies.  Mid-calorie sodas taps into these trends very well.  These soda innovations contribute less to obesity (relative to their full calorie counterparts).  It will also meet the needs of calorie-conscious individuals that want less sugars.  Whatever the case, mid-calorie sodas are here to stay and are crucial for the survival of the soda segment.  If not Pepsi Next and Dr Pepper 10 this time, it will be something else in the near future.

Diet Coke Advertisement: Aspartame is Safe

It seems that the beverage manufacturers have to continually defend the health & safety of their products in order to keep it selling.  Most recently, energy drink manufacturers like Red Bull, Monster, and Rockstar had to defend the caffeine content of their products as well as provide a recommended daily dosage.  Prior to that, Coca-Cola ran a campaign calling for unification behind calorie consumption, to defend general claims that soft drinks contributed to obesity.  The latest defense comes from Diet Coke, defending the safety of their chemical sweetener: aspartame.

Here’s their print ad that they ran in some American publications.

Coca-Cola's Diet Coke print ad, describing the safety of aspartame from 200+ studies over the last 40 years.

While the safety debate continues to polarize consumers and manufacturers alike, it’s interesting to note the timing of the advertisement itself.  Aspartame controversies have been around since the 1970s when diet soda products have also been around, why the need to make a statement to calm consumers down?  It turns out that Diet Coke’s sales are slipping – faster than the average rate of decline itself.  When a category is in decline, the best case scenario is that your product is outperforming the category benchmark.  That is, your product itself is still growing and outpacing category performance or at least declining at a slower rate than the category.  It seems that Diet Coke is down 6% and is losing sales at a faster rate than the category.  This in effect makes this advertisement a campaign to stimulate sales, where calming aspartame fears is a means to an end.  If Diet Coke is able to change the negative consumer perception toward aspartame, it looks like they may be able to reverse their fortune.

In the meantime, Pepsi’s portfolio of products have not done anything to unite and combat against calories nor dispel the fears toward diet products.  Pepsi may be content to let Coca-Cola do the heavy lifting on these media campaign, while reaping the benefits of success if the campaigns work.  After all, if consumers regain confidence for aspartame as a sweetener, Diet Pepsi also stands to see a sales increase.

Also important to note is that Pepsi may see this momentary weakness of Diet Coke and look to restore their position as the Number 2 soda behind Coca-Cola.  If that is the goal in mind, they will indeed need to concentrate their resources on Pepsi, rather than join up with Coca-Cola to combat the negative perception toward aspartame.

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.

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.

POM Wonderful In the Headlines For Good & Bad Reasons

POM FTC Ruling Ad

Pomegranate juice manufacturer POM Wonderful has frequently been in the headlines these past few weeks, and not all are positive headlines.  Earlier this month the juice company extended their product line to include a smaller single serving bottle: the 236ml (8oz) bottle (one of many new articles link here).  Just last week they were involved in headlines for supposedly losing a Federal Trade Commission (FTC) ruling on deceptive advertising; it’s really about perspective as POM Wonderful believes they have won a considerable measure from the ruling (link here).  What does the FTC ruling mean for POM Wonderful now?  Will consumers still see the same advertising health claims from?  And is the 8oz bottle extension good for business, given that size proliferation eventually leads to product rationalization?

On the issue of the FTC ruling, POM Wonderful’s first reaction was to roll out some advertisements celebrating the judge’s ruling.  While they can no longer claim to prevent heart disease or prostate cancer without scientific research, the ruling agreed that there are indeed significant health benefits.  Beyond the first wave of advertising response, POM Wonderful may likely ramp up their health claims to test the limitations of the FTC ruling.  However, there will be a paragraph about how there was scientific research conducted to prove the particular health claim. The real question then becomes whether it will affect how other beverage products are advertised in the media (ie energy drinks with their claims of alertness, or energy shots claiming no crash, etc).

POM line-up

Relating to the introduction of the 8oz bottle, this line extension should fit well with the rest of the line-up.  One might argue for cannibalization, but the 8oz is going after a different consumer segment and a different consumption occasion.  Unlike soft drinks which has sizes like 8oz, 10oz, 12oz, 14oz, etc, the next largest size from the 8oz bottle is twice as large (16oz).  There stands to be more cannibalization between the 16oz and the 24oz bottle than the 8oz and 16oz formats.  Also, POM Wonderful appears to be targeting the health-conscious parent that wants their kids to think and drink healthy.  The 8oz bottle is perfect for kids, where parents can pack the beverage into lunchboxes or even be sold in school vending machines.   Even at such a small serving size, the bottles are resealable so the actual consumer (children) can use the bottle throughout the day.  In terms of grocery location, the 8oz bottle may not lead to product rationalization just yet; it may not even appear in the same location as the other POM products.  At such a small size, the 8oz bottle may appear in impulse coolers or ice barrels near the checkout where thirsty shoppers may want something tasty, small, and inexpensive to quench their immediate thirst.  The added benefit is then that POM Wonderful now has a secondary location to attract the shopper’s purchases.

In all likelihood, the 8oz bottle should sell well individually and not hurt the sales of other products in line-up.  Given that it is a single serve bottle that is targeted at youth, the natural line extension beyond the single bottle would be a multi-pack like 6x8oz bottles or 12x8oz bottles.  We’ll have to wait and see when that time comes, and what type of advertising health claims the communication shows.

Bolthouse Farms For Sale, Campbell Soup Company Interested

Bolthouse Lineup

Bloomberg – a business news source – recently cited that baby carrot and juice manufacturer Bolthouse Farms is on the market (link here).  Private-equity firm Madison Dearborn Partners LLC (Bolthouse Farms’ parent company), has received an initial offer from Campbell Soup Company among other bids.  While Madison Dearborn analyzes the different offers, I will assess the Campbell Soup bid to see if it makes any sense.

For a company that is famous for  canned soups, this may seem like a strange portfolio diversification to get into carrots and juices.  However, is it really that strange for a soup company to acquire Bolthouse Farms?   Aside from canned soup, the Campbell Soup Company manufacturers a variety of sauces, crackers and beverages (see their worldwide produce portfolio here).  Campbell Soup Company already has expertise in beverage manufacturing and marketing from its V8 line of juice products.  And Bloomberg’s article hints that V8 will be afforded more resources and receive a stronger focus, given their rising sales while the soup business’s performance is softening.  And it appears that if the deal was approved/concluded, Bolthouse Farms’ juice products would fall under the beverage division while the carrot farms and food processing would be integrated into a vertical supply chain for Campbell Soup Company.

V8 Brand - courtesy of http://www.campbellsoupcompany.com/our_brands.asp

Adding Bolthouse Farms beverages to the company’s beverage portfolio will improve scalability and distribution for both.   There will definitely be opportunities to optimize the two distribution networks since Bolthouse Farms products may be listed in retailers where canned soups may not be available (ie convenience/petroleum stores, organic/natural food grocery stores, etc).  Even if both Bolthouse Farms and Campbell Soup products are listed at the same grocery story, Campbell Soup still gains an incremental area of influence within the store.  Bolthouse Farms refreshments anchors the fresh produce aisle in grocery stores while Campbell Soup products typically resides within the non-perishable shelf stable aisles; and penetrating the fresh produce aisle will pay dividends based on the grocery consumer’s shopping habits.  Fresh produce are located near the entrance so there is an opportunity to influence the consumer immediately when she comes in.  And Campbell Soup can leverage Bolthouse Farms juices to scale up promotions by attaching a coupon to offer a different Campbell Soup product (ie V8 juices, Campbell’s Soup, Pepperidge Farm Goldfish crackers, etc), which are located in an alternate section.  When the shopper wheels the shopping cart down the various aisles, they may be more likely to purchase the Campbell Soup product since there’s a coupon offer.

Campbell Soup Company will further solidify the company’s positioning as a manufacturer of healthy and family-friendly products.  The company’s current portfolio of products are already healthy, while adding Bolthouse Farms juices and smoothies further cements their reputation as a company that provides nutritious products.

Campbell Soup Company has been seeking to broaden its consumer appeal beyond canned soup.  While the company is called Campbell Soup Company, the company portfolio extends well beyond soups.  Their soup portfolio alone has come up with some new innovations, such as the microwaveable soup cups and soup pouches.    This is an indication of a company that recognizes where it needs to innovate and where it needs to acquire; internal growth can only add so much value before the organization must look for outside options.  Given its strong positioning on healthy and family-friendly products, bringing Bolthouse Farms into the mix makes great sense.

All that matters now is to how Bolthouse Farms’ parent company assesses the bids from interested companies.  While combining the two companies’ businesses makes sense from my analytic perspective, there are obviously other business and financial considerations.  However, if Campbell Soup does end up acquiring Bolthouse Farms, I can see many positives from this acquisition.

Canada Changes Energy Drink Regulations

energy drink shelf - via cbc.caHappy Thanksgiving Weekend, Canadian readers!  From my twitter feed a few days ago, I provided a link on regulation changes for energy drinks; what I didn’t do was elaborate on what those changes were and how it affects the category.  A quick summary on the changes that will be implemented in the next 1-2 years:

  • caffeine in an energy drink limited to 100 mg per 250 ml serving, with a maximum amount of 180 mg for any single serving of 591 mL or less
  • provide warnings that energy drinks should not be mixed with alcohol and are not recommended for children, pregnant women, breastfeeding women and individuals sensitive to caffeine
  • re-classified as food products (currently a natural health product) therefore must list out ingredient contents and ensure that vitamins and minerals are within safe levels

This pretty much puts energy drinks in the same atmosphere as alcohol and cigarettes, where there are warning labels and limitations on the ingredient levels.

The interesting fact is that most of the major energy drink manufacturers like Red Bull, Monster, and Rockstar already have their caffeine content within the new guidelines (Red Bull – 80mg/250ml, Monster and Rockstar – 160mg/473ml).  There are a few beverages that surpass the new limit and will have to be re-formulated to meet the standards (Monster Import, Jones Whoopass, and Nos energy drinks according to the Vancouver Sun’s energy drink article – link here).  So the main changes that apply would really only affect their packaging when they have to list out the ingredients and provide a warning label to not mix with alcohol content.

Will these changes drastically affect sales?  In my opinion, not really.  Despite some health lobbyists saying that these drinks target youths which should not be taking in such high caffeine levels, there really is not expectation on the retailer’s part to supervise the sale of energy drinks – only the manufacturer and purchase are held accountable here.  And since the manufacturers will be adjusting their products to the new regulations, they have upheld their end of responsibility.  The purchaser – be it someone that is 15, 21, or 27 – can still freely purchase the beverage without being asked for identification (like alcohol and cigarettes) or seeing a pharmacist (like prescribed drugs or medication).  Without these limitations, the energy drinks will still be available on all store shelves, putting the purchase decision responsibility with the shopper.  At the end of the day, energy drinks will still be purchased and consumed at the same rate now as before the regulations.

 The new regulations are slated to be phased in over the next two years, so there may be time for much stronger regulations to be implemented as well.  Do you think the Canadian health advisory board has gone far enough with the changes, or would you like to see some more changes to be made?

New “Trim” Can Coming Amid Stronger School Beverage Guidelines

Ball 250ml Can - courtesy of Ball.com

Ball Corporation, a supplier for beverage cans and bottles, says they have manufactured a new smaller beverage 8oz can package.  This new size is slightly smaller than their 8.4oz (250ml) can (popularly used by Red Bull), and will still store up to 8oz (237ml) of liquid.  For production purposes, this new can will not need refitted or modified lines as it will use the same production line as the current 8.4 oz cans.

So why is this important?  Apparently, the ABA (American Beverage Association) passed new restrictions to limit the serving sizes of beverages in schools to 8 ounces.  Similar to how Canada has school guidelines on beverage serving sizes, American schools have now established guidelines for their elementary, middle, and high schools.  These organizations both have similar restrictions set up, allowing certain sizes for milk, juices and water and prohibiting the sale of other caloric beverages like soft drinks, energy drinks and sports drinks.  With this new size, beverage manufacturers will be able to enter elementary schools with their juices in the new smaller-sized container.  Robert M. Miles, VP Sales for Ball’s metal beverage packaging division for the Americas, comments, “Ball’s 8-oz. trim can is a sustainable solution for customers looking to stand out in the marketplace and tap into incremental distribution channels.”

With Miles’ comment, does this mean that there will be more competition for selling healthy beverages in schools?  In Toronto Canada, this has already happened.  The Toronto School Board has voted to give an exclusive vendor contract to a company called HealthVendCanada (HVC).  HVC will sell water, milk and juices in Toronto schools that meets the new guidelines.  Selling points to the school board was HVC’s variety of 60 different beverages (compared to 12 of Coca-Cola and Pepsi), their milk offerings, and agreement to sell water for $1 (compared to $1.50).  With the increased focus on health standards, HVC was able to move quickly and meet these guidelines before Coca-Cola or Pepsi, gaining exclusivity in schools for at least the next two years.  Even if the two companies were able to meet the guidelines, their beverage portfolio may put them at a disadvantage compared to smaller suppliers given their limited offerings.

Another thing to consider: why did the guideline regulate a package size but not on the package itself (aluminum cans vs. plastic bottles)?  Though aluminum cans are faster chilling, they are not nearly as durable as plastic bottles nor resealable.  In order to get an answer, I e-mailed the ABA to find an answer.  Their response was the following:

“Our industry guidelines uses a variety of packaging types – including PET, aluminum and glass – all of which are good options for bringing beverages to market.   However, these guidelines do not address packaging type.  “

 What this means is that while they regulate the serving sizes, the containers they come in are not a concern.  Undoubtedly, because production lines do not have to refitted and material costs for can packaging may be lower, aluminum cans were the choice among manufacturers.

In the end, the main concern is the serving size of healthy beverage options, as well as limiting the unhealthy beverage alternatives in a school environment, which the ABA and Refreshments Canada has successfully achieved.  Ball Corporation, the maker of the trim can, stands to benefit greatly with their packaging innovation regardless of which manufacturer supplies the school with the refreshments.