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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Help Jones Soda Make A Commercial

Jones Soda looks to crowdsource a commercial for the Super Bowl.  Image courtesy of jonessoda.com
Jones Soda looks to crowdsource a commercial for the Super Bowl. Image courtesy of jonessoda.com

Each year more companies try to jump on the bandwagon with Super Bowl advertisements.  The challenge is that not all companies can afford to purchase a time slot for the Super Bowl, which projected to cost $4 million for 30 seconds of air time in 2014.  Coupled with production costs for these commercials, it’s clear that only the biggest names in the industry can afford these price tags.  To get around these extravagant prices, companies create an event that helps them enter the Super Bowl conversation without actually being part of the event’s roster of TV commercials.  This year, Jones Soda aims to do just that with their commercial contest.  Given that Jones Soda only plans to release their commercial on their website during Super Bowl halftime, how can they generate enough attention to make this truly worth it for them?  Beyond the problem of creating enough awareness for this ad, the heart of the issue is whether this is even a good idea for the premium craft soda brewery.

Discussing the problem first, Jones Soda must explore more methods to raise awareness than a website commercial during Super Bowl halftime.  Viewers are used to looking at multiple screens during the game but the most expensive Super Bowl TV commercials are during halftime.  Most eyeballs focus on the TV screen during halftime and not on phones, tablets, or laptops.  Migrating people to a second screen for their commercial will be a challenge unless they have a TV presence to funnel viewers online.  Since the original challenge is the cost of getting on television, Jones Soda must ramp up their social media engagement to circumvent this problem.  At the time of writing their current Twitter handle (@jonessodaco) didn’t show that many tweets about making a commercial.

To create more attention for the crowdsourced commercial, Jones Soda should release a subset of their preferred commercials before the game.  They should ask their Facebook fans or Twitter followers to vote for the best among the five and publish the tally to create more awareness and competition.  Leveraging the commercial’s creators to ask for votes will help Jones Soda get the word out to a broader audience.  This increases everyone’s attention for Jones Soda, and earns them more free publicity.  For a company that asks the public to send in photos for their soda bottles, this tactic would be right in line with generating strong levels of engagement.

Regardless of how much attention Jones Soda could generate for their Super Bowl commercial, is this even a good idea?  It would be – but only if Jones Soda is in a position to react quickly based on Super Bowl events.  Companies that benefit are those that react the fastest based on Super Bowl events.  Coca-Cola had created two versions of their polar bear ads and would air only version depending on the winner of the Super Bowl.  SodaStream benefited from releasing a banned version of their ad online while also releasing a toned version for the Super Bowl.  Oreo, Tide, Audi, and a host of companies capitalized on the Super Bowl blackout that occurred back in 2013.

Simply releasing a commercial on their website without seeding strong engagement beforehand is a miss.  Jones Soda differentiates itself as a consumer-oriented company with people submitting pictures for their soda labels.  Releasing a Super Bowl commercial should be the same thing.  Asking consumers to submit videos is good, and having them create awareness of these videos for you is even better.  With Super Bowl days away, Jones Soda can still make some changes to make this event work harder for them.  To win big, Jones Soda needs to be proactive right now, and quick to react on February 1st just like Oreo did back in 2013.

[tweet https://twitter.com/Oreo/status/298246571718483968 ]

Pepsi Next Changes Its Packaging

Pepsi Next undergoes a facelift, changing the packaging from blue to green.  Courtesy of facebook.com.
Pepsi Next undergoes a facelift, changing the packaging from blue to green. Courtesy of facebook.com.

Pepsi Canada ushered in 2015 with a packaging change to Pepsi Next.  Previously packaged in light blue, the product packaging transitions to green and harmonizes with the Pepsi True product packaging in the U.S.  This change is logical since Pepsi True (in the U.S.) and Pepsi Next (everywhere except the U.S.) are formulated the same way: both versions are sweetened with stevia and contain fewer sugar and calories.  While this packaging change harmonizes Pepsi’s cola representation in many markets, two questions remain.  The first being what should Pepsi do to simplify their cola portfolio in the U.S., should they discontinue Pepsi Next so consumers are not confused with the many versions of Pepsi available?  The second question is whether more harmonization is on the horizon, where Pepsi keeps only one brand name (Next or True) across all marketing areas?

Related Post: U.S. Cola War Continues with Pepsi True Launch

Pepsi Next was launched to much fanfare in the U.S. and kickstarted with a Super Bowl commercial featuring Beyonce.  Despite the amount of marketing support and retail space Pepsi dedicated to this launch, sales of Pepsi Next has not set the world on fire.  Many consumers still find the aftertaste hard to stomach as a result of the artificial sweeteners.  It would make sense to discontinue Pepsi Next since its performance fell short of expectations.  While discontinuing Pepsi Next helps Pepsi True secure retail shelf space, this will be a tough decision for Pepsi.  The mid-calorie soda launched in 2012 – roughly on the market for two years – and rationalizing the drink so quickly after its launch could damage Pepsi’s reputation for flawless product launches and create trust issues within their customer relationship.  Since Pepsi True was introduced in 2014, discontinuing this product would undoubtedly create trust issues and severely damage Pepsi’s reputation in the marketplace.  Regardless of difficulty, it’s important that Pepsi simplifies the U.S. cola portfolio.  Rationalizing Pepsi Next would be easier than Pepsi True.

Related Post: Pepsi Next May Find More Success in Canada (Than The U.S.)

Pepsi Next's new packaging, in green. Image courtesy of facebook.com
Pepsi Next’s new packaging, in green. Image courtesy of facebook.com

Pepsi would also have to address the product name of Next or True if it wants to achieve the greatest marketing scale and build the strongest brand equity.  If cost was the sole consideration, keeping the Pepsi Next brand name is least costly since Pepsi True is only available in the U.S., whereas Pepsi Next is sold and recognized across the Americas, Europe, and Australia.  However, the marketing perspective suggests that it would be make more strategic sense to keep the stronger brand name, and the name that translates best across multiple geographies. It’s possible that Pepsi keeps both names, as some products are branded with a different name in international markets.  For example, North American brands Bounty (paper towel) and Becel (margarine) are recognized internationally as Plenty and Flora, respectively.  It would just cost more to Pepsi as they market the product across closely tied geographies, like Canada and the U.S.

Changing the Pepsi Next packaging in Canada to match the U.S. Pepsi True packaging is a good first step toward reducing confusion, but the work isn’t done for Pepsi.  Consumers should be on the lookout for some more changes to Pepsi Next (or Pepsi True if you’re in the U.S.) in the coming months.

Mountain Dew Dewito: An Example of Perfectly Targeted Messaging

A college student samples Mountain Dew Dewito - a Doritos-flavored Mountain Dew soda.  Image courtesy of reddit.com.
A college student samples Mountain Dew Dewito – a Doritos-flavored Mountain Dew soda. Image courtesy of reddit.com.

By now most people have heard of Mountain Dew testing a Doritos-flavored variant of their popular citrus soda.  Among a variety of flavors the soda brand was also testing out, this flavor garnered the most attention for its shocking combination of tortilla chips, cheese, and citrus soda.  Many people (including myself) believed that Mountain Dew would eventually launch this flavor nationwide.  It seems we were all tricked by the soda brand – thankfully.  Per Bloomberg BusinessWeek’s Venessa Wong, the “Dewito” flavor was merely part of a flavor test on college campuses but there were no definite plans for broader release (article link here).  Depending on its success, the Dewito flavor would have moved onto the next phase of product introduction though that now seems unlikely based on the chatter it created on social media.

The fact that the flavor stood out among other similarly surprising flavors (ie habanero mango, rainbow sherbet, and lemon ginger) is a sign that individuals talk and share what is most surprising to them.  And more importantly, it’s a sign that Mountain Dew recognizes how to reach their target consumers and leverage them to help create media attention.  As much as the BusinessWeek article states that this is not a PR stunt, it certainly seems like it was a PR stunt.  And ultimately a PR stunt that was successful at helping it garner significant press for a shocking soda flavor.

Understanding that Mountain Dew’s core demographic are millenials, the soda brand found a way to connect with this demographic break.  Mountain Dew could have announced flavor testing through a traditional press release, but instead had their Dew fans break the news via the news channels they are most likely to pay attention to.   It’s no surprise that millenials are heavy users of Reddit, Twitter, and Instagram, where news of the Dewito flavor first broke.   Mountain Dew could have chosen to sample less shocking flavors, and at more generally high traffic areas.  Instead, sampling took place on college campuses where strong concentrations of young adults exist.  All in all, this seems Mountain Dew providing its fans a chance to help generate some buzz.

As an edgy brand that puts its customers in a position to choose future soda flavors and create branded content for them, Mountain Dew has to take the good with the bad.  This Dewito example helped Mountain Dew generate a lot of positive publicity as a soda brand that listens to millenial consumers and anticipates their preferences.  Back in 2013, a partnership with Tyler the Creator to help the brand create commercials didn’t go over so well.  The commercials generated similar levels of media attention for racial stereotypes and downplaying violence against women (article link here).  Mountain Dew has been successful through leveraging fans to create content and carry out its brand communication, so there will be hiccups along the way.  For the most part, these are all examples of the soda company pinpointing content and communication channels that resonates with its audience.

The most surprising thing is that all this buzz was generated for a test product, not even one that was planned for limited release.  Mountain Dew never needed Dewito to be a successful soda – it just needed it to help it tap into their target demographic.

Amazon Wins Big with Coke & Pepsi Exclusive Launches

amazonlogo

Looks like Coca-Cola and Pepsi are both experimenting with new frontiers to the Cola War.  This time, they are taking the battle to the online retail channel by enlisting Amazon.  Earlier in September, Coca-Cola announced that they were bringing Surge for a limited release and selling it exclusively through Amazon.  For those that aren’t aware of Surge, it competes against Pepsi’s Mountain Dew as a caffeinated citrus soft drink.  Within hours of it appearing on  the Amazon website, the resurrected soft drink sold out.  It sold out a second time quickly after its reinforcement shipments were made available.  Fortunately for Surge fanatics, the drink is still available on Amazon with replenished inventory (link here for US readers).  After the Surge news release, Pepsi announced that they were introducing Pepsi True – a stevia-sweetened lower calorie Pepsi soft drink – also exclusively on Amazon.  It seems that both soft drink makers want to test and see which beverage would sell better online, enabling them to claim the lead position for online sales.  At the end of the day, the test  may not represent anything more than a traffic driver for Amazon and a creative approach to launching new products for Coca-Cola and Pepsi.

For Amazon to have secured exclusive launches with Coca-Cola and Pepsi is fantastic for the online retailer, but the test may not been as rewarding for both beverage companies.  The launch results so far (see below image).  Surge has claimed leadership not only against Pepsi True, but also against all other soft drinks, ranking as the #1 Best Seller for Soda Soft Drinks category.  Indicated by the customer reviews and ratings, the re-introduction can be counted as a huge success.  Pepsi True also ranks #1, among newly released items in Soda Soft Drinks.  It’s worth noting that Pepsi True’s 1-star rating is the result of a smear campaign by environmental activists, inundating the product page with over 3000 negative reviews and 1-star ratings (link here).  From a sales and popularity point of view, Coca-Cola Surge has benefited from launching exclusively through Amazon.  Pepsi True, not so much.  So what was the difference between the two drink launches?

Coca-Cola Surge & Pepsi True's ratings on Amazon thus far.
Coca-Cola Surge & Pepsi True’s ratings on Amazon thus far.
Coca-Cola Surge, available exclusively through Amazon.com.  Image courtesy of Amazon.com
Coca-Cola Surge, available exclusively through Amazon.com.  Image courtesy of Amazon.com

The chances that Surge would fail were extremely low.  After the drink was discontinued in 2002, the Surge Movement facebook page popped up and has been slowly gaining popularity.  While Coca-Cola credits the fan page for resurrecting the drink, launching exclusively through Amazon shows that Coca-Cola understands the customer and the market conditions. Consumers that remember Surge are at least in their late 20s, meaning they are comfortable with technology (ie social media, online shopping, etc).  More importantly, these fans are scattered across the U.S., meaning a product push into retailers may have resulted in less than stellar sales.  Coca-Cola’s bottler network may also be less interested in carrying this product over other drinks with a proven sales history.  Retailers themselves may also have been less inclined to give up shelf space and fridge space for a decade-old discontinued soft drink.  The Amazon launch solves all these problems.  Fans can order Surge online with free shipping that delivers a case of the drink to their doorstep.  Bottlers are not inconvenienced to sacrifice truck space and would still get a percentage of sales profits for Surge sold in their districts.  Retailers did not have to give up any shelf space, though I’m sure many are now interested in listing the soda in their stores.  In fact, the Surge Movement facebook page encourages fans to request their local retailers to stock the drink.  Surge had a lower chance of failing simply because of its history and cult status, which is still paying dividends post-launch.

Pepsi True, sold exclusively online. Initially only through Amazon.com but now also available through Walmart.com. Image courtesy of Amazon.com
Pepsi True, sold exclusively online. Initially only through Amazon.com but now also available through Walmart.com. Image courtesy of Amazon.com

Pepsi True is a different story.  Launching online was a calculated approach since retailer resistance and bottlers’ willingness to carry Pepsi True were likely problems just as they were for Coca-Cola Surge.  Without historical significance or a cult following, Pepsi True was left to target health-conscious soda consumers.   However, this consumer segment is also niche, possibly with little loyalty among any particular soda drink.   Pepsi would have to invest heavily into consumer marketing to educate the public on Pepsi True’s unique benefits, while also competing with Coca-Cola Life which launched into the same stevia-sweetened soda segment.  Have you seen any Pepsi True commercials or any Coca-Cola Life commercials?  Launching online was clearly the most cost-efficient for Pepsi True.  But their circumstance is very different from Surge, and they also have to deal with more competitive products.  As a silver lining, Pepsi True is now also available on Walmart’s website.  This could be a sign that retailers are slowly stocking the stevia-soda.

I would still term Amazon as the ultimate winner in this scenario, gaining exclusivity for two product launches.  After this test, Coca-Cola may be more inclined to try out introducing new beverages or reviving discontinued sodas with Amazon.  Pepsi may be just as willing, but hopefully they will fair much better.

Pepsi Creates Caleb’s Kola By Recycling Pepsi Natural

Caleb's Kola - Pepsi's craft soda made with kola nut, cane sugar, brown spices, and citric acid.
Caleb’s Kola – Pepsi’s craft soda made with kola nut, cane sugar, brown spices, and citric acid.

The declining trend for soft drink consumption has not deterred Pepsi from launching a craft soda to attract an elusive demographic: millenials.  Maybe five years is long enough for everyone in the beverage industry to forget, so it may be worth reminding readers of Pepsi’s history.  It wasn’t that long ago that Pepsi launched Pepsi Natural (Pepsi Raw if you’re in United Kingdom) patterned the same way, with its natural ingredients and glass bottles.  Are Pepsi Natural and Caleb’s Kola essentially the same thing?  If yes, does Pepsi stand a better chance of making Caleb’s Kola a success five years after the Pepsi Natural failed?

From the ingredient list and glass bottle packaging, Pepsi Natural and Caleb’s Kola look very much alike.  Both sodas are made with kola nut and cane sugar, and come in glass bottles to highlight its authenticity.  Both drinks are also available through limited distribution, with Caleb’s Kola only available through Costcos in Maryland, New York, Virginia and Washington, DC.  Both products came off Pepsi-branded delivery trucks.  And both are produced in Pepsi bottling facilities rather than Caleb’s Kola being made by small, localized independent bottlers.  It seems that many aspects of the product and business practices are identical between the two.  A key point of differentiation does exist between them – which could help Caleb’s Kola succeed – is the marketing.  Branding the product as Pepsi may have been a factor of the Pepsi Natural’s failure.  The overt association with Pepsi may have made the “natural” aspect of their product less believable.

Prior to its launch, Pepsi Natural’s UK team gave out product samples for 6 weeks.  Results were favorable.  More than 1.2 million bottles were sampled and over 80% of samplers claimed they liked the taste.  An additional 75% of respondents stated they would be purchase the soda.  As we now know, the sales results did not mirror the sampling efforts.  Pepsi Natural was discontinued quickly after its launch.  Pepsi UK discontinued the natural soda in 2010.  Norway had it for nine months before ceasing sales support in 2011.  In the US, its end date is unknown by certainly by 2011 Pepsi had moved to focus on other sodas.  It certainly looks like the odds are stacked against Caleb’s Kola, but times have changed and it may actually fare better than Pepsi Natural with its new name.

Maybe Caleb’s Kola will find more success in 2014 than its 2009 predecessor.  Millenials and consumers generally have valued healthy consumption more highly in the years since.  Branding the product under a different name also limits the association with Pepsi.  And tools to market Caleb’s Kola are better than the ones available to promote Pepsi Natural.  If Caleb’s Kola is to be a success, let’s hope Pepsi has learned from its failures with Pepsi Natural.

CalebsKolaCheers

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.

U.S. Cola War Continues with Pepsi True Launch

Pepsi True

It seems the Cola Wars continue to expand across the calorie spectrum.  Where Coke and Pepsi used to spar over full calorie soda (Coke vs Pepsi) and zero-calorie soda (Diet Coke vs Diet Pepsi, Coke Zero vs Pepsi Max), the two beverage giants now go to war over the middle.  The contestants are Coca-Cola Life and Pepsi True, two sodas sweetened with sugar and stevia, with less calories, and green packaging.  That may be where the similarities end in this round though, because this iteration is very different from prior rounds.  Their product launch tactics differ greatly, and this particular fight appears to be highly contained with the United States.

What some people may forget is that Pepsi already has a stevia-sweetened mid-calorie soda on the market – just not in the U.S.  Remember Pepsi Next?  The American Pepsi Next contains artificial sweeteners whereas other countries with Pepsi Next have a stevia-sweetened version.  Unless Pepsi decides to discontinue the existing stevia-based Pepsi Next everywhere, this Cola War will only exist in the U.S.  And it is likely that the Pepsi True launch is primarily relevant to Americans given Pepsi Next’s presence elsewhere.  So in effect, this should be termed more of a Cola “battle” rather than a Cola “War”.  Pepsi Next against Coca-Cola Life in markets outside the U.S., while the U.S. battle will be between Pepsi True and Coca-Cola Life.

Related Post: Pepsi Next May Find More Success in Canada

Both companies are also more cautious in their launch approach.  Coca-Cola Life has experimented in multiple countries outside the U.S. first to measures its market viability, and only recently started rolling out in U.S. regions this past August.  The American rollout isn’t national and they have yet to provide marketing support welcoming Coca-Cola Life to America.  Pepsi True is taking a similarly conservative approach by not even stocking this product in traditional channels.  Pepsi’s mid-calorie soda variant is set to launch exclusively through Amazon, where shelf space is limitless, operating costs are lower, and product delivery does not come from their distributor network.  After all, Pepsi distributors work with limited storage space and a delivery system optimized for sales and profitability; carrying Pepsi Next could mean sacrificing sales of other better-selling products.  To satisfy American distributors, Pepsi indicated that they will reimburse distributors for Pepsi True sales in their regions.

Related Post: Coca-Cola Life Commercial Review: Open Your Good Nature

It makes sense for both beverage manufacturers to take baby steps first.  Launching anything in the mid-calorie segment has been challenging for over a decade.  The 2004 introductions of C2 and Pepsi Edge marketing sucralose as a sugar alternative proved unsuccessful.  The 2012 Dr Pepper Snapple Group TEN-calorie soft drink line-up hasn’t received marketing support to keep up its launch momentum.  Earlier this year, Coca-Cola’s vitaminwater reverted back to its original formula after consumer complaints about its stevia formula.  The beverage industry’s history is littered with more failures than successes when companies attempt to bring mid-calorie refreshments to the consumer.  And as much as Pepsi Next could be deemed a global success, the results undoubtedly vary between markets.

Going forward, the road will only become more difficult.  Consumer perspective toward mid-calorie soda in general has not been overwhelmingly positive.  Taste is always the first consideration and most stevia-sweetened beverages contain a bitter aftertaste.  Consumers have also persisted in choosing drinks that offer health benefits and less calories over mid-calorie soda.  Regardless of consumption trends, soft drinks are still a significant part of the beverage landscape.  Even though the Cola War has evolved, both Coca-Cola and Pepsi will find new frontiers to wage their battles.

Code Red Joins Mountain Dew’s Canadian Flavors

Mountain Dew Canada adds Code Red as a permanent sku to join Voltage as a fan-voted flavor.  Image courtesy of Mountain Dew Canada's facebook page.
Mountain Dew Canada adds Code Red as a permanent sku to join Voltage as a fan-voted flavor. Image courtesy of Mountain Dew Canada’s facebook page.

It looks like Mountain Dew Canada’s crowdsourcing contest has brought another drink flavor to grocery shelves for permanent distribution.  Following their win in Canada’s first Backed By Popular DEWmand, Code Red (Cherry) will return to shelves alongside Mountain Dew, Diet Mountain Dew, and Voltage (Raspberry Citrus).  Code Red had been available in the U.S. since 2002 and is considered one of the brand’s most successful extensions, so it should not be a surprise that it won the contest.  That said, after bringing in another flavor extension – and essentially doubling their assortment from two items to four items – what will Mountain Dew do next year in Canada?  Should they (or will they) repeat this consumer activity, or give a rest to avoid fatigue?

More info: Voltage Wins Canada’s first DEWmocracy

We can look toward the American crowdsourcing contests for some insights.  The first DEWmocracy ran in 2007, and again in 2009.  Backed by Popular DEWmand ran in 2011 to resurrect a flavor for a limited duration.  Beyond those three consumer activities that helped launch (or re-introduce) new soda variants, it appears Mountain Dew had abandoned the promotion in favor of other marketing activities.  A BrandWeek interview in 2010 with Brett O’Brien (Pepsi’s Marketing Director) described that the key objective was to openly and honestly communicate with Dew fans and consumers (link here).  It could be that Mountain Dew learned to focus on developing an entire social platform (ie Green Label) to engage with their fans on a sustained basis, rather than support crowdsourcing contests that generated a short term surge in conversations and awareness.

On the Canadian front, running this contest again in 2015 may induce fatigue.  Having ran the social media contests so close together (back-to-back years of 2013 and 2014), repeating this campaign for 2015 may lead beverage enthusiasts tuning out.  Worse yet, so much repetition may lead consumers to consider the brand as boring and unimaginative.  Despite the gap in available flavors, the Canadian team could decide to execute some other initiatives to launch new drink flavors or drive consumer engagement.  At the very least, their campaign findings could be compared with the American counterparts to determine next steps.

Ultimately, Mountain Dew’s crowdsourcing campaigns have delivered them two years of success and made many people happy along the way – consumers and retailers alike.  And the main message that they may have learned?  Is that Canadians and Americans alike are passionate about Mountain Dew.

Big Red Buys Xyience, Ends UFC Partnership

Xenergy Lineup

It seems the beverage industry continues to go through some form of consolidation.  Big Red Inc. – one of North America’s Top 10 beverage organizations – has acquired Xyience effective immediately.  Xyience – one of the more well-known energy drink brands through their sports sponsorships – now joins a drink portfolio that includes Big Red Soda, Hydrive Energy Water, Nesbitt’s, and Thomas Kemper Soda.  While many things may change for Xyience in the future, one thing has already changed as a result of this acquisition: Xyience has ended its UFC sponsorship.  Will ending this sponsorship hurt Xyience’s growth among their core demographic?  How else will their communicate to this group of consumers?  Will the gains from being part of Big Red’s system outweigh Xyience existing as a standalone energy drink company?  What benefits Xyience in this arrangement?

One major factor: Big Red’s national footprint.  Xyience had been working well to gain distribution, winning more doors and regions over the past few years.  However, most of these distribution gains have occurred along the coasts.  There are many areas within the U.S. that Xyience products cannot be found.  Joining Big Red gives Xyience national distribution by piggybacking off of Dr Pepper Snapple Group (DPSG), which is a national distributor and delivers to three-quarters of all Big Red retail accounts.  This change alone provides significant gains for Xyience, allowing the energy drink to challenge Red Bull, Monster, and Rockstar across more geographies.  The best part is that this is organic growth, where Xyience can rely on their brand name to help them do some of the work.

Beyond distribution gains, another growth opportunity for Xyience would be to broaden its target audience.  While the energy drink manufacturer owns a niche following among a select group of consumers, appealing to more consumer groups will help this brand evolve from its current state to a much larger energy drink player.  Hence ending their UFC sponsorship.  Gary Smith – Big Red’s CEO – said as much:

“I’m just gonna soften it (their image) up a little bit, make it a little less hardcore than the image that it’s got today.”

Ending the sponsorship won’t immediately alienate their niche consumers, but provides the opportunity to reach other consumer groups.

If managed properly, Xyience may be primed for explosive growth following its Big Red acquisition.  The brand is very recognizable and will be available in more places where consumers will recognize them.  And in the distant future after new consumer marketing content is built, they will certainly be challenging Red Bull, Monster, and Rockstar for share of mind in addition to share of shelf.