Pepsi Slips To Number 3

2010 Coke and Pepsi Market Shares, courtesy of adage.com

A few weeks ago, Beverage Digest posted the latest market share statistics for the US carbonated soft drinks (CSD) category and we found out that Pepsi had slipped to number 3 (see stats here). Industry analysts had predicted that this market share change was coming as Pepsi had lost share in the last few years, as Coca-Cola has stayed the course with their beverage unit and maintained marketing Diet Coke in traditional media (TV/print/radio) while Pepsi started promoting other beverages in traditional media, and invested in other forms of marketing

It seems that as Pepsi sought to maintain a balance beverage portfolio by promoting other beverages (such as Pepsi Max, Sierra Mist, Aquafina Plus10, Mtn Dew, Gatorade, etc) that they forgot to keep promoting Pepsi itself.  Their NFL sponsorship was recently changed from Pepsi to Pepsi Max, Superbowl advertisements followed the same course, and even the main TV commercials started promoting a Coke Zero vs. Pepsi Max cola war instead of focusing on Coca-Cola vs. Pepsi.

Was this the right decision for Pepsi – to focus on other beverages instead of their core product?  Despite Pepsi’s balanced portfolio making them more formidable to withstand declines in any one category if they promote other products, the CSD category is still the largest beverage category.  Even within the CSD category, promoting Pepsi Max, Mtn Dew, and Sierra Mist helps these brands gain traction and spread their risk if any one product sees slow sales.  However, CSDs as a category is in decline, and Pepsi has been declining more than the category.  And according to the Beverage Digest rankings, it’s not just Pepsi that lost market share, it’s also Diet Pepsi.  Your two core products are in decline, while your competitor’s two core product maintain market share in a declining market, meaning they now own a bigger share in the CSD category.  Even Sprite, another core product for Coca-Cola passed Diet Pepsi in the market share rankings.

Although this decline cannot be fully traced back to any one particular issue, I would answer that Pepsi’s decision to experiment  with their marketing and promote other brands was a bad decision.  The core of your business where you make the most money is still Pepsi and therefore you should be promoting Pepsi.  In the largest marketing venues, Pepsi should be promoted and not Pepsi Max.  Though whether they should allocate more spend at the expense of other brands is still questionable, promoting their core product more and through effective traditional media is a must.

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Natural Sweeteners for Beverages – Stevia

Stevia Plant

With the growing health-conscious trend, both consumers and organizations are placing an increased emphasis on limiting the calorie content in a beverage.  First it was using cane sugar and high-fructose corn syrup (HFCS) to replace sucrose, and now it’s using natural sweeteners to replace cane sugar and HFCS.  Since stevia is the main natural sweetener used for beverages, BevWire is writing a short piece on the stevia natural sweetener.

First of all, what is stevia and why are we using it?  Stevia is a plant-based sweetener and is 200-300 times sweeter than sugar.  Extracted from plant leaves, stevia in its original form is found in the western parts of North and South America.  In addition to being sweeter, stevia also contains less calories (practically zero calories) making it a great alternative to replace cane sugar, HFCS, and sucrose.   With product commercialization and increased approvals from countries, stevia is now widely used in many countries as natural sweeteners, food additives and dietary supplements.  In North America,  stevia has been approved for use by Canada (Health Canada) and the US (FDA) in consumer goods.  Some notable names consumers may have heard are Truvia, PureVia, and SweetLeaf.  Truvia is the stevia brand that Coca-Cola uses in vitaminwater 10.  PureVia is the consumer brand of stevia found in Pepsi’s Aquafina Plus 10.

With all the health benefits related to stevia, why is it not being used by more companies and products?  One reason is cost.  It is not as widely cultivated as cane sugar or HFCS, and the product is still in the early acceptance stage, therefore making it more expensive to use compared to the other products.  Also, despite the health-conscious trend, consumers are still slow to accept natural sweeteners in replacement of their current beverage options.  The Sprite Green stevia-sweetened drink is a hit and miss depending on who you ask because the taste is different from what consumers are used to.  BevWire’s readers also commented that vitaminwater zero tasted vastly different from vitaminwater10.  Once consumers accept stevia as the healthy, low calorie sweetener for their beverages, the products manufactured with stevia will grow in number quickly.

vitaminwater10 arrives in Canada

vitaminwater10 gogo and recoup

BevWire recently recently wrote about new vitaminwater being introduced to the Canadian market (read here) and it turns out it was true but slightly inaccurate.  It turns out that yes, there will be more vitaminwater, but now it’s in the 10-calorie per bottle format.  Same bottle, similar packaging, and promising the same great taste with less calories.  In order to bring the calorie content down to 10, these two new flavors are naturally sweetened with Truvia (a plant based sweetener).

Two flavors are entering the Canadian market – Recoup and Go Go. Recoup will be a peach-mandarin flavor, and Go Go being a mixed berry flavor.  Recoup’s side label copy – (cue: movie trailer voice guy) in a world of neurotic bosses, in-laws, dying cell phones and agonizing relationship talks, one bottle stands alone.  naturally sweetened with only 10 calories per bottle and armed with vitamins b3, b5, b6, & b12 this tasty force of hydration can help you cope with whatever life throws your way, coming to tastebuds near you. And Go Go’s side label copy – how can you possibly be reading this label right now? isn’t there a meeting that you should be in? a gym you’ve been paying for? when everyday is a marathon something’s gotta give.  fortunately, this delicious source of hydration you’re holding has some vitamins and nutrients to help motivate you towards your daily finish line.  and to sweeten – or naturally sweeten – the deal,  we made it with only 10 calories.  now hurry and go – you’re already late! These two new flavors can be found anywhere your regular vitaminwater is sold – grocery stores, supermarkets, convenience stores, and mass merchandisers.

Is this a good time for glaceau to launch vitaminwater10?  While they are the market leader in the enhanced waters category, they are late to join the 10 calorie niche.  Aquafina Plus10 stepped into the Canadian market nearly a year ago and vitaminwater10 is only being made available?  We know that vitaminwater10 will be successful when it enters, but why take so long to come out with the innovations?  And will this mean that there will be less regular vitaminwater flavors now that there’s a 10 calorie version?

It turns out that Aquafina Plus10 has been experiencing a natural transition from the regular Aquafina Plus to the Aquafina Plus10 and also slightly growing market share.  This is likely related to a few factors: healthier perception of a lower calorie alternative, discontinuing slower moving Aquafina Plus options, and no innovations from its competitor.  Sources indicates that Aquafina Plus10 accounts for nearly half of their enhanced water sales since its launch in 2009.

That being said, vitaminwater figures that they were due for some innovation launch and should also release a lower calorie alternative to compete and regain lost market share.  However, the market can only sustain so many flavors and options for beverages – does this spell the end for some other flavor of vitaminwater? Aquafina Plus discontinued a few flavors when they launched the Plus10.  There will be a total of eleven glaceau vitaminwater and vitaminwater10 options if they do not delist something – definitely too much for the marketplace in my opinion.  That said, we have yet to see any vitaminwater10 in stores yet so either glaceau will be taking some flavors off the shelf themselves or grocery stores will do the delisting for them.

So my parting question for this week’s blog psot: if you were to discontinue one or two flavors of vitaminwater, which flavor would you choose?

Canada’s Enhanced Water Category in 2010

As of November 2009, the Canadian enhanced water beverage market was around $50 million dollars, and nearly half of that was Glaceau Vitaminwater sales.  Aquafina Plus controlled about 35%, and the remaining percentages was divided between Aquafina Flavor Splash, Dasani Essentials, Nestle Pure Life flavors, and the private label brands.

Some notable brand’s disappearing in 2010 include Dasani Flavors and Propel, with Dasani Essentials possibly being discontinued as well.  Not that it’s a surprise, but the overall number of players in this category are mainly Glaceau Vitaminwater and Aquafina Plus.  And Glaceau Vitaminwater has been gaining market share consistently since their release – while the enhanced water category itself grew nearly $20 million dollars, Glaceau Vitaminwater increased by close to $25 million dollars.  Not only is Glaceau Vitaminwater growing this category, they are taking it away from its competitors.  As a result, both Aquafina and Nestle have resorted to compete through pricing promotions, trying to limit their losses and temporary maintain their market share.  In the end however, both Aquafina and Nestle may be perceived as inferior brands because  of this.  They will be selling more product but still make less money, and consumers will still choose Glaceau Vitaminwater because it’s the “premier” brand of enhanced water.

So as we go forward into 2010 (actually when BevWire posts this it will already be 2010), what will happen to the enhanced water category?  BevWire sees the market stabilizing and continued growth, albeit at a slower rate.  Barring any major player coming in the landscape won’t change too much.  Sobe Lifewater does not have an expansion plans into Canada yet (maybe PepsiCo will run Sobe Lifewater and Aquafina Plus in the US, and just Aquafina Plus in Canada) so they aren’t a major factor.  Smartwater is still slowly being launched and promoted across Canada, and they are still not listed at a majority of retail chains which limits their market impact.

Any one want to venture a guess of what might happen to this category in 2010?

Pepsi releases Aquafina Plus 10 in Canada

AquafinaPlus10BevWire has found all the news articles and press releases about Pepsi launching Aquafina Plus 10 in Canada and the portions of the release are pasted below:

PepsiCo Canada has launched Aquafina Plus Vitamins 10 Cal – the nation’s first low-calorie vitamin-enhanced water to feature stevia extract all-natural sweetener, called PureVia.

Stacy Reichert, president of PepsiCo Canada, said: “We are extremely proud to be the first and only nationally available beverage in the country to feature PureVia as a zero calorie, natural sweetener. Consumers have long anticipated a zero calorie natural sweetener and are seeking healthier beverage choices.”

“Our hydration portfolio, including Aquafina Plus+(R) vitamin-enhanced water, has seen explosive growth in Canada, and the Aquafina Plus Vitamins 10 Cal brand is going to further that leadership position. Being the first to offer a great-tasting, low-calorie option with a natural sweetener is a big deal, and we are excited about sharing it with health-conscious Canadians,” added Ms Reichert.

It’s interesting how Ms. Reichert claims that Aquafina Plus has the leadership position in Canada.  BevWire would think that Glaceau’s vitaminwater has the leadership position for this beverage category (enhanced water).  Is Ms. Reichert talking about litres sold (volume) or dollars?  Aquafina Plus has a lower price point compared to vitaminwater and has ran more aggressive promotions than vitaminwater as well.  If we’re talking about volume, then Aquafina Plus would most definitely have more market share.  However, if we’re alluding to dollars and absolute profit, then BevWire believes vitaminwater has the leadership position.

Finding out some Nielsen market share numbers was not easy but  BevWire managed to get some statistics.  As of late August 2009, Aquafina Plus’ year-to-date market share  (dollars) was closer to 3.5%, while vitaminwater hovered around 5%.  In year-to-date market share (volume), Aquafina Plus has sold over 300,000 bottles litres more than their main competitor.

With the release of Aquafina Plus 10 in Canada and vitaminwater10 still only available in the United States, Aquafina Plus does stand to gain some market share with its healthier beverage.  Still, if vitaminwater10 was ultimately released into Canada, BevWire believes that the leadership position will belong to vitaminwater.