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.
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.
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?
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?
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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.

Odwalla Upsizes and Updates Packaging

Odwalla's updated 2014 packaging.  Courtesy of facebook.com
Odwalla’s updated 2014 packaging. Courtesy of facebook.com

Odwalla’s most recent packaging update has upset some consumers.  The premium juice maker was considered a leader in sustainable packaging by using Coca-Cola’s PlantBottle technology, but the makeover has them abandoning the PlantBottle in favor of the regular plastic bottle used by other beverages (BevNet story here).  This update also sees Coca-Cola’s premium juice brand forsake their color-coded cap system implemented in their previous packaging update – just last year.  Does this imply that the 2013 changes were unsuccessful, and confused consumers?  Will that the recent changes return their competitive edge?

With consistent product packaging for six years prior to the 2013 update, it would seem that their 2013 changes were geared toward attracting new consumers to the Odwalla business.  After all, if the product was fantastic and equally adept at generating repeat purchases, why change it?  Introducing a color-coded cap system was designed to build the juice franchise through educating consumers on their product portfolio.  Green caps denote “superfoods,” red meant fruit smoothies, blue equaled proteins, orange represented juices, purple for quenchers and finally yellow communicated seasonal products.  Do you think six different cap colors for over 20 different juices and smoothies help educate the juice browser, or frustrate them to the point of walking away?  Despite good intentions, this packaging change likely turned consumers away rather than bring them into drinking Odwalla.

Part of Odwalla's updated 2013 packaging.  Courtesy of facebook.com
Part of Odwalla’s updated 2013 packaging. Courtesy of facebook.com

Rectifying this fiasco necessitated the 2014 packaging changes.  Though a stronger competitive set meant returning to the old system wouldn’t suffice.  Everyone (Evolution Fresh, Bolthouse Farms, Naked, and a host of other niche players) had larger bottles compared to the Odwalla 12oz (355ml) bottle.  In order to properly compete, Odwalla brought in a bigger bottle in addition to making it clear.  They also returned to green caps to (hopefully) simplify the consumer’s shopping process.

It’s hard to say if these packaging updates helps restore the premium juice maker’s competitive advantage, though it’s a step in the right direction.  Anything that simplifies the shopping process has a higher probability of getting sold.  What may also help them increase sales is securing produce placement, which is what they are trying to do.  The product section is a stronghold juices made by Bolthouse Farms, Arthur’s Fresh, and POM, so getting product placement in this area will certainly help Odwalla enter the conversation among premium juice purchasers.  Only time will tell if this new, simpler packaging will help move the needle for Coca-Cola’s premium juice brand.

Nestea and Lipton Go After AriZona

Nestea's new 695ml cans to compete head-to-head with AriZona.  Courtesy of facebook.com
Nestea’s new 695ml cans to compete head-to-head with AriZona. Courtesy of facebook.com

Each summer I pay a little more attention to monitor the Ready-to-Drink (RTD) tea segment.  Some of my beverage industry contacts say that AriZona’s dominance in the RTD tea segment have inspired other beverage companies to launch similar $0.99 tall cans to steal some of AriZona’s sales.  Most recently, I’ve noticed both Nestea and Lipton stock some competitive offerings.  Both have come out with tall cans of tea, with similar $0.99 price points labeled on the cans themselves.  Given that AriZona has made $0.99 teas their claim to fame and have been selling them for many years already, how successful will Nestea and Lipton be at stealing some sales?  More importantly, is selling tea at $0.99 profitable for Nestea and Lipton, or is there another reason for them to enter this segment?

Unlike AriZona, Nestea and Lipton have strong backers.  Nestea’s partnership with Coca-Cola provides them a robust distribution network.  Lipton also has a strong market coverage through their agreement with PepsiCo.  Both competitive brands would be able to leverage the sales and merchandising support of Coca-Cola and Pepsi to ensure retailer shelves are always stocked.  Beyond retail coverage, both Nestea and Lipton would get premium in-store placement locations.  Coca-Cola and Pepsi both own front-end cooler space as well as multiple locations within a grocery store, giving them the opportunity to stock products to their liking within these areas.  So unlike previous challengers, AriZona will face their strongest competition yet in Nestea and Lipton.  These two competitors have the necessary support and expertise to erode AriZona’s leadership in this segment.

Nestea's new 695ml cans to compete head-to-head with AriZona.
Nestea’s new 695ml cans to compete head-to-head with AriZona.

Given these dynamics, it certainly appears that Nestea and Lipton stand as formidable opponents to AriZona and steal their sales.  However, both Nestea and Lipton are known best for their offerings in a different tea format: bottled tea.  By rolling out these $0.99 aluminum cans, don’t they risk cannibalizing their own sales from a more profitable tea format?  Wouldn’t this make the decision to launch 695ml tea cans with $0.99 printed on it hurt their total tea business?  Given the risk associated with devaluing sales potential, why come out with tall cans at all?  In the end, they are just as likely to steal sales from AriZona as they are on stealing their own sales.

Simply put, it may be better to get less dollars from the consumer, than get none at all.  If their market research indicates that the same consumers buy both bottled tea and canned tea, both Nestea and Lipton have much to lose by not having a canned tea offering themselves.  And given the price range of canned and bottled tea, it would appear that canned teas serve as the “value” segment to get people to buy a tea product.  Bottled tea appears to serve more as a “mid-value” or “premium” segment.  Should Nestea & Lipton leave AriZona to own the value tea, it will be much harder to steal that tea customer away at a later point when they are interested in moving up the value chain to premium tea.

As long as you can get them to buy (or try) your drink once, you’ll stand a chance to get them to come by as a repeat customer.  Even if the immediate value is $0.99, there could be opportunities to get these thirsty consumers to buy the more expensive bottled tea at a later time.

vitaminwater Refreshes Canadian Product Portfolio

The @vitaminwater_caa twitter headshot, current as of July 2014. Courtesy of twitter.com
vitaminwater Canada product line-up from their twitter page head shot as of July 2014.  Courtesy of @vitaminwater_ca (twitter.com)

It seems vitaminwater has recognized the limit on how many drink flavors can be sustained in the Canadian marketplace.  That number stands at twelve.  The hydration brand has quietly launched two new flavors under their Zero sub-brand, introducing Rise (orange) and Squeezed (lemonade) to build their calorie-free portfolio.  Very subtly, two of the previous zero-calorie flavors – Resilient-C (grape raspberry) and Recoup (peach mandarin) – are being phased out to make space for the two new offerings.  Beyond the zero-calorie product transition, Spark (grape blueberry) also is being phased out.  Notice the different flavors in the image above and below (Recoup has never been pictured).  It’s certainly interesting to see that the marketplace – and retailers – can sustain twelve flavor extensions.  Definitely not an easy feat to create shelf or cooler space for twelve items.

What is more interesting though, is vitaminwater’s approach to continuously refresh their product line-up.  While there has always been steady sales coming from popular flavors such as XXX, Essential, and Multi-V, there are “test” flavors launched into Canada.  From the hydration brand’s introduction, Rescue (green tea) was the first to be discontinued.  Through the years, other flavors have made brief appearances and slowly gone away, including Formula 50 (grape) and Sync (Berry Cherry).  And beyond these flavors that were expected to mainstays were limited-time offerings, such as the recent Glory (peach mango) flavor for the 2014 Olympics.  Regardless of all these other changes, the magic number – or limit – appears to be twelve flavors.

Despite a mixed response leading to varied success and failure, their constant innovation is admirable.  The company keeps on bringing flavors into the market to see what sticks with consumers.  It would be safe to say that vitaminwater has introduced up to twenty flavors at one point or another to the Canadian market.  Beyond the original eight flavors that accompanied the Rescue offering at launch, the most successful introduction has been Energy (tropical citrus).  Most of the grape flavors – Spark, Formula 50, Resilient-C – have only made brief and unsuccessful appearances.

vitwaminwater Canadian product line-up as of July 2012.  Courtesy of @vitaminwater_bc (twitter.com)
vitwaminwater Canada product line-up as of July 2012. Courtesy of @vitaminwater_bc (twitter.com)

Regardless of success or failure, it is a welcome sign to see a company continuously improve their product line-up.  Before an item can be launched, a company invests significantly behind research and development to determine its viability, demand, and sales potential.  And to consistently bring new products to the market, this is a sign that vitaminwater believes in the product’s longevity.  Even with product proliferation being a key concern that prevents retailers from stocking all the flavors, substituting new products in place of slower selling products helps both parties.

After all the product substitution, let’s just hope that vitaminwater eventually finds a grape flavor product combination that will stick in the Canadian marketplace.

At-Home Carbonation Reaching Critical Mass

It wasn’t that long ago that all we knew about at-home carbonation soda was Sodastream following their banned SuperBowl ad in 2013.  In the years since, Coca-Cola has joined up with Keurig and Pepsi has partnered with Bevyz to develop home brewing units and syrups.  We can now add another known competitor to the mix.  Sparking Drink Systems (SDS) International has a product called Viberation that produced carbonated soda all within one beverage pod.  It’s entirely possible that other companies are developing at-home carbonation units with its growing appeal.  Consuming carbonated beverages in an environmental-friendly way helps remove some guilt by reducing the plastic waste.  Sugar intake is another problem, but that’s a focus for another day.  As more competitors enter this expansive home-brewed beverage space, what will define their success?

The SDS Viberator, carbonating beverages within a single beverage pod.
The SDS Viberator, carbonating beverages within a single beverage pod.  Modified image via sparklingds.com.

One of the stronger products in the marketplace would be the SDS Viberation.  This Viberation has the capability to produce sparkling and enhanced waters, carbonate sodas, and even carbonate alcoholic beer without a CO2 cylinder.  The elimination of a CO2 cylinder increases the usability of the device, and possibly increase its adoption rate.  At this time, the Viberation is distributed across a variety of regional US-based distributors.  In order for this device to succeed, it must gain more exposure through securing distribution, marketing, and innovation.  Gaining distribution brings the Viberation to consumers that shop in bricks and mortar stores, or online.  Marketing efforts educate the consumer on the product benefits and its unique selling proposition (great-tasting carbonated beverages without a separate CO2 device).  Innovation makes meeting the consumer needs paramount with more flavors and assortment.  All three could end up being done through collaboration.  With a branded player (ie Starbucks? Dr Pepper Snapple Group) helps increase its reach, awareness, and appeal.

SodaStream’s main challenge appears to be part of its business model: carbonation cylinders.  With the competition’s ability to carbonate a beverage without any CO2 tanks, the Israeli-based company is facing an uphill battle to innovate.  Despite their recent marketing efforts at the SuperBowl to gain worldwide exposure, their growing stable of branded syrups, and their international distribution, the product still requires customers to invest in purchasing a CO2 device.  As the market shifts toward “all-in-one” devices, SodaStream’s may need to develop an at-home carbonation unit that can brew soda without a CO2 cylinder.  One of the core challenges SodaStream now faces is understanding whether their business model is still viable given the competitive landscape.  The C2 cylinders is a lucrative revenue stream, but it is also the barrier toward their adoption with more home-brewing appliances available.

The CO2 cylinder presents a great revenue source for SodaStream, but is also prevent fast product adoption. Sourced from coolest-gadgets.com.

Coca-Cola’s partnership with Keurig brought greater attention to this product segment.  Distribution and innovation likely are not challenges for the world’s largest beverage manufacturer.  In fact, these areas exist as its core strengths.  Keurig Cold will have the ability to not only brew Coca-Cola carbonated drinks, but also produce teas, sports drinks, juices, and a host of other Coca-Cola-manufactured beverages.  Marketing may actually be where Coca-Cola’s Keurig Cold device sees the biggest challenge.  The majority of their marketing dollars still reside with bottled beverages, and intensely promoting Keurig Cold will cannibalize their sales.  Another marketing challenge would be Coca-Cola’s ability to create the demand for beverage format when their bottled format is so successful and widely available.  Similar to Kraft MiO entering the liquid enhancers space first and Coca-Cola following, SodaStream pioneered the at-home carbonation space.  The challenge for Coca-Cola within liquid enhancers is not their product assortment, but their marketing efforts to create the demand for the liquid enhancer form of their beverages.  Coca-Cola beverage pods may endure the same fate as their liquid enhancers: broad assortment and distribution but limited marketing funds preventing the product line from reaching its full potential.

Pepsi’s Bevyz partnership will release an at-home carbonation unit to the market sooner than Coca-Cola.  The Pepsi Bevyz Fresh Machine was launched in the U.S. this past May.  Despite first-mover advantage, one of their core challenges appears to be marketing.  The market has not heard of Bevyz, and the majority still do not know Pepsi has developed an at-home carbonation unit.  While the product’s distribution and innovation are strengths, the marketing aspect seems to be the most significant barrier to overcome.  Despite the product’s versatility to carbonate beverages, produce teas, juices, and waters, and even serve as a water cooler, consumers are simply unaware of this machine.  Check out their 2011 Bevyz in Action video below.  Pepsi has been slow to react when Coca-Cola moved first in other spaces, such as in liquid enhancers and intelligent fountain units.  If Pepsi continues to think methodically before acting, they may stand to lose more ground to Coca-Cola and other competitors.

Each competitor faces their own challenge within this home-brewing beverage space.  Roadblocks toward growth include marketing, distribution, and innovation – it just depends on your business stage.  What is certain is more organizations are dedicating resources to small home appliances to help consumers make their own beverages.  This in turn helps the segment approach critical mass toward being available in every consumer’s kitchen counter space.

Starbucks Brings Teavana Into Coffee Shops

Starbucks baristas now brew Teavana ice teas for Starbucks locations. This is the start of a
Starbucks baristas now brew Teavana ice teas for Starbucks locations. This is the start of a “shake up”. Image courtesy of http://www.ispot.tv.

Not sure if anyone has noticed the latest Starbucks commercial.  The coffee giant is now featuring their Teavana shaken iced tea as a summer drink.  Why is this important?  This TV commercial shows Starbucks baristas making the beverage, and showing the ice teas as available within Starbucks locations.  This is different from their initial strategy for Teavana.  The Seattle-based coffee company stated that Teavana operations would be completely separate from Starbucks, and increase the Teavana standalone locations.  While they continue to open Starbucks and Teavana locations, is bringing Teavana-branded offerings under the Starbucks locations the right thing to do?

Starting with the recent Oprah collaboration, Teavana products have increased exposure within Starbucks locations.  Beyond the handcrafted Oprah products, Starbucks customers would start seeing Teavana tea packages and mugs available for sale.  It certainly looks like the bringing Teavana-branded beverages into Starbucks locations will help increase Teavana’s exposure.  This cross-branding effort strengthens the Teavana brand and opens up more possibilities for Starbucks.  While Starbucks had always served iced teas within the retail establishments, they were never branded.  This changes as they now brand them under Teavana.  The coffee giant has the platform to brand a variety of beverages within their retail locations.  Starbucks has built up Teavana and Tazo for tea, Evolution Fresh for juices, Ethos for bottled water, and Clover for premium coffee.

With more Teavana locations opening up, this provides Starbucks with greater opportunities.  Though the strong smell of coffee may prevent it from being brewed inside a tea establishment (likely the same reason that Starbucks locations only serves Teavana iced teas), water and juices could be strong candidates for increased distribution.  Ethos and Evolution Fresh may only require a cooler for refrigeration and do not emit strong aromas like coffee or tea.

Starbucks’ acquisition of Teavana came with retail locations that created potential scale for the beverage organization.  Now we can clearly see how cross-promotional opportunities exist between Teavana and Starbucks.  As Starbucks has also supported Evolution Fresh in standalone locations, it is highly likely that the organization’s continued expansion will involve Starbucks or Teavana products within Evolution Fresh juice stations as well.

Here’s the Starbucks Teavana ice tea commercial called “Shake Up”.  Though the commercial itself is simple and showing baristas creating Teavana iced teas, the name could be symbolic.  Starbucks continue to position itself to “shake up” the beverage landscape.

Pepsi Spire’s Launch Fuels Competition and Innovation

Pepsi's range of the Spire. There are three different sizes and versions (1.1, 2.0, 5.0) to help customers cater to their consumers' needs.
Pepsi’s range of the Spire. There are three different sizes and versions (1.1, 2.0, 5.0) to help customers cater to their consumers’ needs.  From left to right: Pepsi Spire 1.1, Pepsi Spire Ice Dispenser, Pepsi Spire 2.0, Pepsi Spire 5.0 counter top unit, Pepsi Spire 5.0 freestanding unit, Pepsi Interactive Vending Machine, and Pepsi Smart Cooler.

Since 2013, Pepsi has been testing an interactive fountain unit similar to Coca-Cola’s Freestyle.  It looks like the testing is complete and they chose to launch the interactive fountain dispenser as Pepsi Spire (after trademarking Pepsi Touch, Pepsi Fusion, and Pepsi Smart Cooler).  The Pepsi Spire comes in three sizes offering restaurant customers up to 1,000 beverage combinations, here’s the media release from Pepsi.  It is currently available in over 50 locations in the U.S.  Spire’s launch comes nearly five years after Freestyle, but Pepsi has taken this time to tweak issues that were present during Coca-Cola’s launch: customer frustration and social integration.

Pepsi launched Spire with three different sizes, relative to Coca-Cola’s Freestyle launch in only one size.  This will certainly be pleasing to restaurant owners.  One of the initial concerns for Coca-Cola’s Freestyle was that some restaurant may not have strong enough customer traffic to justify the available flavor combinations.  This would exclude the Freestyle’s availability for smaller restaurant.  Having smaller units with fewer combinations solves this problem.  This leaves only the top flavors and most popular combinations available for the smaller unit (40 combinations for Pepsi Spire 1.1), and offers the broadest assortment for the largest unit (up to 1,000 combinations for Pepsi Spire 5.0).

Pepsi also understood that the “maker” movement is both interactive – and social.  Despite no direct mention of social media integration, Pepsi has demonstrated the ability to incorporate the usage of mobile phones, Facebook, Twitter and other social platforms with their equipment.  While it is widely understood that most dining experiences are social, Pepsi found a way to make this experience more inclusive with your peers.  Pepsi’s smart equipment also has the ability to provide the restaurant customer with popular beverage combinations at that location, further integrated social and local demographics.

Pepsi Spire 2.0 – the interactive fountain unit integrated with smart equipment to provide popular beverage combinations as well as real-time insights for restaurant owners.

The launch of Pepsi Spire has spurred Coca-Cola to improve the Freestyle.  Coca-Cola recently introduced a mobile app allowing users to share their drink combinations with other users and pre-mix drink combination to scan at the Freestyle unit.  Coca-Cola also announced two smaller Freestyle fountain units coinciding with the Spire’s launch.  To minimize market news and maintain a competitive landscape against the Pepsi Spire, Coca-Cola’s Freestyle has also introduced smaller Freestyle units that dispense 35 drink combinations or 80 drink combinations.

The Pepsi Spire’s adoption rate should be relatively quick given their unit size flexibility as well as their own customer exclusivity contracts.  Beyond customer push tactics, consumer trends and social integration will help pull the Pepsi Spire into more on-premise locations.

The Cola War heats up again with the arrival of Pepsi Spire, this time on the fountain unit frontier.

POM Wonderful and Coca-Cola sue each other

Courtesy of foodindentityblog.com.  Is the Minute Maid juice label misleading?
Courtesy of foodindentityblog.com. Is the Minute Maid juice label misleading?

The food & beverage landscape may undergo significant changes shortly if a lawsuit between POM Wonderful & Coca-Cola is decided in POM’s favor. POM is suing Coca-Cola for misleading packaging for its Minute Maid Pomegranate Blueberry juice.  The labeling suggests that the beverage is a 100% fruit juice flavored with a combination of five fruit juices.  The beverage contents are primarily apple and grape juice, containing only 0.3% blueberry juice, 0.2%. pomegranate juice, and 0.1% raspberry juice.

The crux is whether one organization can sue another for misleading labeling that was deemed permissible by the Food & Drug Administration.  The FDA has decided that the beverage contents and the name itself satisfies their labeling requirements.  That said, the governing body allows companies to name the product based on the flavor even if trace amounts were used to produce the flavor.  Volume quantification is not necessary for the product contents.  Linda Goldstein, a partner with Manatt, Phelps and Phillips prefaced the following to AdWeek (full article here):

“Depending on how the Supreme Court rules, the ramifications could be broad. This is a huge case for the food and beverage industry.  No one has asserted that Coca-Cola violated FDA rules and law. The issue is whether the FDA regulations are the floor or the ceiling. Pom says it’s the floor and that the label can still be misleading.”

Should this case be decided favoring Coca-Cola, the food & beverage industry’s product labeling practice is kept intact.  POM will have made an even larger name for itself and Coca-Cola will carry on business as usual.  In the end, this could serve as a win for both Coca-Cola and POM Wonderful despite the court ruling in Coca-Cola’s favor and everyone paying exorbitant legal fees (the case has been around since 2008).

If the court ruled in POM’s favor, this sets the stage for increased vigilance toward product package labels.  Beyond the direct impact where Minute Maid must augment the product label, other food & beverage products currently on the market will be availability for scrutiny.  According to Goldstein in the AdWeek article, the fact that it could lead to a class action litigation suggests that many products do not satisfy the labeling requirements.  The precedent would be set that an organization can reduce the competitor’s advantage by scrutinizing their packaging claims.  Will this ultimately lead more companies to sue other companies for the sake of labeling challenges?

The genesis of POM’s lawsuit was Coca-Cola’s introduction of this Minute Maid Pomegranate Juice at a lower price point relative to POM’s products.  Given Coca-Cola’s distribution and marketing muscle, it’s understandable that POM would want to level the playing field as much as possible.  However, be careful what you wish for.  POM is also currently in appeals with the Federal Trade Commission over their own misleading advertising claims (full article here).  Through all of this, both beverage organizations’ focus has been on reducing the competition’s advantage.  Let’s hope that they return to their core business functions sooner rather than later: selling refreshing beverages.

Powerade’s 2014 World Cup Campaign Highlights Real Heroes

Courtesy of endomondo.com
Courtesy of endomondo.com

I wasn’t following the 2010 FIFA World Cup close enough to notice when advertising started appearing, but it looks like Powerade and other advertisers want to get a head start for the 2014 FIFA World Cup promotions.  With the World Cup starting in June, Powerade has already released FIFA World Cup commercials.  Here’s the full-length 60-second ad found on YouTube that features both professional and amateur soccer players, launched on YouTube more than a month ago.

This commercial happens to be the first time that Powerade has featured amateur soccer players in a global campaign.  The Powerade advertisement includes five amateur soccer players selected from the U.S., Spain, and Brazil.  These individuals star alongside Spain’s Andres Iniesta, who famously put scored the winning goal in the 2010 World Cup.  Since the tagline is “There’s Power in Every Game”, it makes sense to include other soccer players at different competition levels to help forge a stronger connection to the sport and to Powerade.

Similar to the Procter&Gamble “Thank You Mom” campaign where mothers of Olympic athletes were highlighted to add more context, bringing in amateur soccer players helps humanize the athlete and focus on how they train and prepare.  More importantly, it shines a light on the different adversities athletes must go through in order to attain success.  The spot brings this adversity even closer to home, weaving a story line where the amateur soccer players and Iniesta encounter similar  events during the course of their soccer game.  As one player is tripped during a game, so is Iniesta during one of his games.  As another player is training or resting to prepare for a soccer match, so too is Iniesta.

As a global campaign, there is customization that caters to the local geography.   Powerade has created different backstories for each of the amateur athletes to run in key geographies.  Each player has a different theme that Powerade showcases to help them find their inner power and overcome a challenging situation.  They are featured in a two-minute video where the athlete discusses the challenges they’ve had to personally overcome.  The feature ends with a callout to publicize the theme each athlete represents.  With the U.S.’s Nico Calabria, the common characteristic is “Power in Purpose”.  For Brazil’s Haboubakar Amadou Conde, this theme is translated as the “Power in Determination”.  Spain’s Erik Flores is presented as the “Power in Confidence”.  With Brazil’s Marcelo Lyras, it becomes “Power in Preparation”.  And for Spain’s Karlota Planas, the characteristic is “Power in Pushing Yourself”.  These videos indicate that “Power” is represented differently for each athlete, and conveys the message that everyone defines their motivation in a unique way.

In some ways, soccer is an escape from their personal struggles.  Within these feature videos, Powerade describes additional themes that athletes must “Power Through” to get to their current state.  Athletes continue to defy expectations and failure, in addition to overcoming challenges that deter them from pursuing their goals.

Here’s one of the struggles that Powerade highlights, that of Haboubakar Amadou Conde.  Conde had to overcome language barrier, failure, and homelessness in order to continue playing soccer.

As companies continue leveraging on emotion in their marketing campaigns, the key to success  lies in execution.  If executed perfectly, the beverage brand can foster a strong and genuine connection with many viewers.  I believe this campaign to be well-delivered and creates the emotional link Powerade wants to create.  Check out the Powerade YouTube channel for the other feature videos.