Since the explosion of vitaminwater on to the beverage scene years ago, momentum appears to have subsided for the brand and enhanced waters. It seems that a variety of market conditions has reduced excitement for vitaminwater to just another product on the shelf. There are certainly more reasons behind the brand’s continued decline, but BevWire will detail three major contributing market conditions.
Market Condition #1 – vitaminwater has benefited and been obstructed by being a part of Coca-Cola’s beverage family. As highlighted briefly in an earlier post about Zevia, vitaminwater saw immense benefits from the Coca-Cola acquisition. The enhanced water brand entered a broader distribution network that vastly improved the brand’s availability. At the same time, their initial marketing strategy was to be driven by “consumer demand”, relying on key influencers to spread word for the product. This type of demand ensured that consumers and retailers were willing to pay a premium, and made discounting less unnecessary. However, as Pepsi’s Aquafina Plus (in Canada) and SoBe Lifewater (in the U.S.) kept on promoting at enormous discounts, vitaminwater was compelled to react. Without their premium positioning, vitaminwater became just another brand in Coca-Cola’s portfolio that had to fight for promotional dollars. And with Coca-Cola focused on growing its sparkling business of Red (Coca-Cola), Silver (Diet Coke), and Black (Coke Zero), a host of beverage brands lost promotional funding. After initial success in the Canadian market from 2007 to roughly 2010, the vitaminwater has slowly lost market visibility as advertising support shifted more to other Coca-Cola properties.
Market Condition #2 – shifting consumer trends and preferences, highlighted by more juice, tea and energy drink entrants. Since 2010, we have seen more product releases coming out from the juice, energy drink and ready-to-drink tea segments. Starbucks was a strong force that expedited this trend. Their acquisitions of Evolution Fresh and Teavana, along with their Starbucks Refreshers product launch gave them greater market coverage and allowed them to capitalize on the consumer trends. In energy, the big three of Red Bull, Rockstar, and Monster all had product innovations enter the marketplace. And also some negative media attention that led to consumers increasingly purchase these products to find out what whether all the extra attention was merited. With consumers increasingly empahsizing health benefits – and vitaminwater also paying attention to this with their vitaminwater zero production introduction – the natural benefits of juice and tea became top of mind. Because vitaminwater was relatively less healthy than these other products in the emerging segments, consumers shifted their purchase dollars from enhanced waters to juices, teas, and energy drinks.
Market Condition #3 – retailers react to new reality of people’s purchase habits. Following the economic recession (that some still think we’re in), many Canadians buying behavior has focused more intensively on price. That is not to say that they are not willing to pay more, but the value-benefit equation is more influential of their purchase decision. Retailers have long pressured manufacturers for price concessions and finally Coca-Cola gave in to price promotions on vitaminwater in 2010 – around the time its descent began. What happened next was more price cutting by its competitors to maintain their own sales – Aquafina Plus discounts became much deeper than before. Ultimately this leads to the current situation, which is reduced segment value. Since vitaminwater is no longer the premium brand that it once was, retail support started to transfer to other segments. Shelf space for vitaminwater was compromised, and sku rationalization also start to slowly creep in.
While these three conditions do not represent the entirety of why vitaminwater is losing steam, it summarizes what is happening. There are both internal and external contributors. However, all hope shouldn’t be lost on the segment itself. More competitors will look to redefine the value equation because the market leader is down. Bottled water sales itself is on the incline. And other vitamin beverages like Karma, Activate, and even Rockstar Energy Waters look to carve out their own niche in the marketplace. Liquid enhancers such as Dasani Drops, Kraft MiO, Crystal Light Liquid are also seeing sales gains too.
Just wait to see how vitaminwater will react to the competitive pressure and what they might do to revive the one-time darling of the beverage industry.