Coca-Cola Expands “Official” Olympic Drink Portfolio

Courtesy of eprize.com

It’s another year for the Olympic games, this time in Sochi.  For Coca-Cola, every Olympic year is a boon based on the event partnership agreement where they hold the distinction of official Olympic non-alcoholic beverage partner.  As one of the Olympics’ global partners, the beverage giant pays about $100M to monopolize non-alcoholic beverage serving rights in all Olympic venues (other global partners hold exclusivity in their respective industries).  In recent years, the definition of “non-alcoholic beverage” has expanded to include more than just carbonated soft drinks.  Coca-Cola has gained exclusivity to serve sports drinks (Powerade), juices (Minute Maid), and waters (Dasani, vitaminwater) over the past few Olympics games.  The “Olympic Wolrdwide Partner” logo has also started appearing on Coca-Cola’s ZICO coconut water brand lately.  So given the substantial cost, how beneficial is it for Coca-Cola to be a worldwide Olympic partner?  And with the expanded definition of “non-alcoholic beverage”, which product categories are next to gain Official Olympic product status?

Despite a cost of $100M each active Olympic year, Coca-Cola has renewed their Olympic partnership until 2020.  It would appear that this agreement delivers substantive returns.  For one, Coca-Cola has blocked out their global competitor in all product categories that the conglomerate participates in.  No Pepsi-branded soft drinks, Aquafina, Gatorade, or Tropicana can be served within all Olympic-event venues.  Brand visibility is another partnership benefit.  Every game or after-party event that becomes broadcasted will feature a Coca-Cola logo or Coca-Cola beverage product.  Live viewers and spectators may only celebrate with Coca-Cola branded products and nothing else.  Positive associations is another partnership benefit.  Spectators seeing their athletes win also see them hydrating themselves with Coca-Cola products.  These same spectators will associate hard work, performance, and winning all being supported by Coca-Cola.  From a qualitative perspective, these are invaluable benefits that Coca-Cola has been able to enjoy – reduced competition, brand visibility, and positive associations.

Courtesy of designyoutrust.com

With changing taste preferences among spectators and athletes alike, incorporating other product categories as “Official Drinks” certainly makes sense.  Some people will choose carbonated soft drinks, some will want flavored water, and still some people prefer juices.  With coconut water emerging as a beverage category, expansion to include this as an Olympic-approved beverage makes sense.  However, increased exposure of Olympic branding potentially cheapens the Olympic brand with broader availability on all products – not just beverages.  Furthermore, not all products will be suitable to display the Olympic logo on its packaging.  For example, energy drinks may be one category that could be denied Official Olympic product status given possible negative associations despite the category growth.  Within Coca-Cola beverage portfolio, it’s likely that liquid enhancers (Dasani Drops, Powerade Drops) and teas (Honest Tea, Fuze) could gain approval should they apply for it.  Both these categories are enjoying growth and have fewer negative associations portrayed by the media.

Coca-Cola has been one of many key sponsors that has supported the Olympic games through the years, and it appears that both parties are satisfied with the results.  2020 is still three more Olympic games away, but given the goodwill both parties have been generated, it’s very possible that this relationship goes well beyond 2020.

Pepsi Launches Liquid Enhancers: Aquafina FlavorSplash

The new Aquafina FlavorSplash line-up: sparkling water and liquid enhancers.  Courtesy of facebook.com
The new Aquafina FlavorSplash line-up: sparkling water and liquid enhancers. Courtesy of facebook.com

It’s been a few years after Kraft MiO revolutionized flavor enhancers, but Pepsi has finally launched their own liquid enhancers under the Aquafina water brand.  Following a beverage portfolio evaluation that lasted nearly 12 months, Pepsi will overhaul Aquafina FlavorSplash to include new sparkling water flavors and liquid enhancers.  On the liquid enhancer front, they will have three offerings: So Strawberry, Berry On, and World Peach.  Pepsi’s offerings are targeted toward a younger demographic primarily aged 13-19 years old (more on that later).  After waiting so long to enter this beverage segment, will Pepsi see success?

With another household name entering the segment – be it Pepsi or Aquafina – liquid enhancers as a segment benefits from more media support.  Like Coca-Cola, Pepsi has their own distribution network as well as their own merchandising and cooler units.  Having your own branded equipment assets are important for consistent communication, and even more crucial to ensure flawless execution.  As we have seen Powerade Zero Drops and Dasani Drops merchandised within Coca-Cola coolers, we can expect Pepsi to do the same with Aquafina FlavorSplash droplets.  This will help Pepsi get prime location space within grocery channels and restaurant establishments to display their newest products.

Aquafina FlavorSplash Berry On flavor.  Courtesy of facebook.com
Aquafina FlavorSplash Berry On flavor. Courtesy of facebook.com

By targeting a younger demographic, Pepsi aims to introduce consumers to their beverages at earlier life stages.  While appealing to the product’s purchaser (moms) is a different challenge, Pepsi hopes teens will be able to influence the purchase decision.  If not, Aquafina FlavorSplash may be something teens can still buy in school.  AdAge’s article detailing the Aquafina FlavorSplash interviews Pepsi’s CMO Simon Lowden, which describes the possibility at getting Aquafina FlavorSplash stocked in high schools as well (article link here).  The younger demographic puts Pepsi’s liquid enhancer in a niche where no other competitive liquid enhanced is targeting.  So far, young adults, athletes, and tea drinkers have been the general target.

The product packaging itself will spur interest, as the candy-colored packaging is brightly colored that will attract the demographic’s attention.  With unique flavor names – unlike the many berry-pomegranates and mango-peaches on the shelf – the flavors should stand out among the competitive set as well.

As a new player enters the segment, retailers and consumers will benefit from all the healthy competition for their dollars and chance to quench their thirst.  Pepsi will see success within this segment, given messaging toward an audience where no other brand is explicitly communicating toward, their own equipment assets that allow for prime product placement opportunities, and a product that is on part with market trends.  Even with all the competition within the liquid enhancer landscape – Kraft, Dasani, Powerade Zero, Crystal Light, and Nestea to name but a few – Pepsi’s Aquafina FlavorSplash should be able to garner healthy sales.

HappyWater Enters Vancouver’s Beverage Market

HappyWater – a premium alkaline-based bottled water product – is launching in Vancouver this summer.  From their Twitter account (@LiveHappyWater) and media kit, their bottled beverage can be described as a “100% blend of pure, natural spring and lithia waters from ancient Canadian mountain springs.”  Their Twitter feed also tweets where they’ll be around Vancouver this summer to sample out product to passerbys, so feel free to seek them out for a free bottle if you work downtown.

First of all, what is the difference between “alkaline” or lithia water relative to other types of water and beverages?  Scientifically speaking, there is a pH scale that determines the acidity and alkalinity of all beverage products. On a scale from 0 (acidic) to 14 (alkaline), 7 would be consider neutral.  Searching on the web revealed the following results on beverage acidity: soft drinks (~3.2), juices (~5.0) and coffee (~5.0) are acidic.  Waters have varying degrees of acidity or alkalinity depending on its manufacturing and purifying process.  Aquafina (~5.4) and glaceau smartwater (~5.9) are slightly more acidic on the scale while evian (~7.4) and Fiji (~7.6) are slightly more basic on the scale. HappyWater’s (~7.4) alkalinity puts it in the same arena as evian (~7.3) and Fiji (~7.6).  Since our stomach produces acid to break down our consumables, neutral (milk) and alkaline-based drinks would be some options to stabilize an upset stomach (or balance out the natural acids in our stomach).

Vancouver should be a good market to launch this premium product, given its local sourcing.  HappyWater originates from the Canadian Rocky Mountains, relative to evian (French Alps) and Fiji (Fiji Islands).  While I’m not sure if the location factors into the product pricing, they can be expected to be priced competitively with other premium waters.  Their current availability is localized to Vancouver and parts of the Lower Mainland at the moment, but national and American expansion would be a great opportunity given the premium waters potential in the marketplace.

Until their expansion out East or me making a trip to Vancouver, I’ll just wait to try a HappyWater.

Kraft MiO: Dasani Drops and Other Copycats

Kraft MiO

This week’s post focuses on the growing trend of liquid water enhancers.  Earlier this week, the Wall Street Journal, Bevnet.com, and BevReview.com all broke news that Kraft MiO will be expecting some branded competition fairly soon (BevReview’s article has some more information, and links to the other two articles here).  While the current market in the United States for liquid enhancers includes MiO and some smaller players, the entry of Coca-Cola’s Dasani Drops signals that the category is viable and ready for more competition.  After all, MiO has been in the market for just over a year and has extended their product line to include caffeine content to reach out to users that want an energy boost in their beverage options as well (MiO Energy).

As the leader and only well-known branded player, Kraft had to invest significant dollars into educating users and bringing attention to the category.  Their product can only be successful with more awareness about the product and liquid water enhancers market.  As a result of increased awareness, private label manufacturers have benefited greatly from MiO’s innovations by driving shoppers into grocery supermarkets and the beverage aisle.  Grocery stores have introduced their own version of the product and placed them side-by-side with MiO but at lower prices.  Shoppers originally came in-store to buy a MiO liquid water pack, but switch to a less expensive option at the shelf because they do not want to sink in so much money into an unknown product.  And now Kraft MiO’s growth and category promotion has attracted Coca-Cola’s Dasani to enter the market.

Wal-Mart's store brand of liquid water enhancers - courtesy of bevreview.com

Smart move by Coca-Cola to wait a year and then enter the market.  Let Kraft do all the work to bring attention to the category and products, monitor their sales and consumer reaction, then enter the category since it merits investment from the beverage giant.  Now they only have to focus on featuring their own product, while promoting the category becomes secondary since all the education costs were bore by Kraft in the previous year.  Kraft MiO will also benefit from the competition that Dasani Drops creates, since that will lead to more dollars spent on promoting products in the category overall.  The stronger category awareness is, the more chances that Kraft can sell their product without promotional dependence.

It’s likely that Coca-Cola’s entry will spark an entry from Pepsi and Nestle Waters in the near future.  When that happens, Kraft MiO will likely see diminishing returns since the category will have grown so much that now their focus will be product differentiation so shoppers are choosing their brand versus that of Dasani, Aquafina, Nestle Waters or some other product (note: there is no confirmation that Pepsi will be launching a liquid flavor enhancer, let alone extend the Aquafina name to the category – this is just a thought).

In Canada, the only liquid water enhancer that I’ve heard of comes from a company called Drink Intuition, which positions their product along the health and wellness trends of stress relief and detoxification.  The liquid water enhancer market would benefit greatly with more category promotion, but Intuition really is a niche player and does not appeal to everyone.  Canada could benefit greatly as MiO and Dasani potentially compete to see who can bring their product into the Canadian marketplace first.  With distribution all set up, it may only be a matter of adjusting their packaging and messaging to meet Canadian guidelines: including French copy and a nutrition table.

Until the product enters Canada, it looks like BevWire will still have to head south of the border to try and find some Kraft MiO and MiO Energy. Soon enough, I will also be looking for Dasani Drops.

Coca-Cola to make more eco-friendly plastic bottle

In a race to be more environmentally friendly, Coca-Cola is planning to introduce to a plastic bottle made partially from plants.  The bottles will be made with up to 30% of plant-based materials, converting  sugar cane and molasses components into polyethylene terephthalate (PET), the material that is used to make the plastic.

Coca-Cola’s first product to use this eco-friendly “PlantBottle” will be the company’s Dasani water brand, and expand to include vitaminwater and certain CSD sparkling beverage brands by 2010.  These certain CSD sparkling beverages are likely to increase Coke, Diet Coke, Coke Zero, and Sprite.  Coca-Cola will provide special on-package and in-store messages to alert consumers of this new type of bottle.

Coca-Cola’s decision to use Dasani as the first brand when introducing this bottle is a good move.  Coca-Cola hopes to promote a healthier perspective, thus choosing Dasani as the first product to launch this new bottle.  By reinforcing this bottle launch with their best-selling beverages, Coca-Cola ensures that the message will reach the maximum amount of consumers.  In addition, these flavors’ wide distribution ensures that more plastic will be saved.

The war between the beverages companies to be more eco-friendly has stepped up.  Among the bigger bottled-water companies, Nestle uses less plastic resin in their water bottles, while PepsiCo recently released an eco-friendly bottle themselves.  PepsiCo has been bottling their Aquafina in these bottles since March.

So far, Coca-Cola says that only sugar cane and molasses can be used to develop this “PlantBottle” but are exploring the use of other plants to create the PET plastic.  Stay tuned for updates on ongoing developments!