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.

Bolthouse Farms Very Likely To Expand

Bolthouse Lineup

A few weeks ago I detailed a post where Bolthouse Farms had put up their “for sale” sign and solicited bids from interested companies (article link here). Not surprisingly, Campbell Soup Company was one of the bidders and the latest news indicated that it is now a closed deal – Campbell Soup Company has bought Bolthouse Farms for $1.55 billion dollars. With deeper corporate pockets, Bolthouse Farms now emerges as an even stronger competitor in the premium juice & smoothie beverage category. The linked article above detailed the benefits toward Campbell Soup Company and how it would impact retailers. But what we have not yet discussed is how it would affect the competitive landscape. Which manufacturers and brands will be impacted? Will this change anything in the retail environment?

The premium juice & smoothie beverage segment can count a few niche players as well as two large players. Arthur’s Fresh, Happy Planet, and the not-yet-in-Canada Evolution Fresh juice brand serve as the niche brands. At the other end of the spectrum you have Odwalla (owned by Coca-Cola) and Naked Juices (owned by Pepsi) as your national premium juice & smoothie makers. Bolthouse Farms previously stood closer to the niche end despite its broad distribution in Canadian grocers. Their primary operating space was in the fresh produce section in a grocery store, sitting on the shelf next to Arthur’s Fresh and Pom Wonderful products. This deal will not change where Bolthouse Farms is located, but it will help them on negotiating power and price their drinks more aggressivley because of their newfound corporate support.

Naked Juice 10oz bottle

The larger affect will happen outside of grocery stores, in channels such as drug, convenience, and on-premise. These channels are typically dominated by Coca-Cola and Pepsi drinks, and will likely include Bolthouse Farms products in the near future. Bolthouse Farms products are already in grocery for the most part, so their expansion plans would involve exploring new channels of growth. And if Bolthouse Farms provides their own branded coolers, then their channel penetration should speed up. Given that Coca-Cola & Pepsi both manufacturer other beverages where the public may view negatively (ie. soft drinks contributes to obesity), retailers may also be more willing to work with Bolthouse Farms with its clean company image.

While the expansion to other channels are immiment, I believe the prime targets to be the Canadian drug channel (ie Shoppers Drug Mart). With this retailer’s expanding its grocery offerings and abundant cooler spaces, Bolthouse Farm should see this retailer as a great expansion opportunity. To further help this fact is that drug stores typically have a healthier perception in the Canadian market (they have pharmacies, cater to the senior demographic, etc).

The sale to Campbell Soup Company just happened and it will take some time to integrate Bolthouse Farms’ operations. Once they have settled in and are ready to expand, be ready to find Bolthouse Farms at your local drug store, convenience store or local food joint.

Just for Kids: Odwalla Smoothies

Odwalla Smoothies for Kids - courtesy of bevbet.comOdwalla recently launched Odwalla Smoothies for Kids, a fruit juice smoothie that comes in a kid-friendly juice boxes (link here).  This is a departure from the Odwalla beverages that are currently available.  Not only are they gearing part of their product portfolio towards youth, they are also developing new packaging that kids are accustomed to using.  Is targeting kids a good strategy for the beverage manufacturer, or will there be cannibalization from their base business: the environmental-friendly plant bottle smoothies?  Will Naked, Arthur’s Fresh, Bolthouse, and other smoothie producers follow Odwalla, and segment their business to market towards youth?

From a marketing standpoint, BevWire believes this to be a good strategy.  Distribution is one area where Odwalla can leverage upon to succeed for the new launch.  Aside from on-premise locations like coffee shops and food courts, Odwalla’s bottled smoothies currently has distribution in natural food stores,  high end supermarkets and specialty outlets.  These products’ availability in grocery shopping outlets help the juice boxes succeed since the typical household grocery shopper is the mom.  If moms already consume Odwalla products, she may introduce the healthy beverage to her children.  However, the bottled smoothies pose a challenge since the serving size are meant for adults and the resealable container’s caps are meant to be opened by stronger hands.  Kids can consume the smoothies but only in the presence of adults.  The Odwalla Smoothies for Kids goes after an entirely different consumption occasion – one that does not require the presence of mom to help open and close the bottle.

It is also because Odwalla is going after a different consumption occasion that will limit cannibalization.  Adults rarely drink from juice boxes so the cannibalizing effect will be minimized.  In fact, this may expand the business really well since the purchaser will be buying the bottled smoothie for herself, and buy the juice box version for her children.

Naked Juice 10oz bottle

How will the competition react?  It appears as if Odwalla is actually reacting to another competitor’s actions.  Naked Juice may have already thought about targeting the younger demographic, just differently.  While the typical on-premise serving size of these smoothie are 450ml (15.2oz) bottles, Naked Juice does have a smaller serving size container: the 295ml (10oz) bottle.  These bottles can be found in Starbucks coffee shops among other locations, but the rationale would be that moms get their coffee beverage while their children get the Naked Juice small bottles (most recently O.N.E. Coconut water has also appeared in Starbuck’s refrigerated coolers, but that’s a story for another topic).  Bolthouse Farms, another competitive smoothie manufacturer, also makes smoothies in the 450ml bottle variety.  They do have a smaller serving size, but only for the acai juices.  This would indicate that Bolthouse Farms currently does not have an offering available toward kids and the in-school drinking occasion.

Local Canadian manufacturer Arthur’s Fresh also produces smoothies and competes against Odwalla and Naked Juices.  With single bottles that have serving sizes of 325ml and 900ml, they are not marketing toward in-school drinking occasion nor are they going after the kids.  Happy Planet also only has their smoothies available in the 450ml (or larger) sizes, meaning that they have also not produced a product that kids can drink without their parents assistance.  However, their next move may be to push out new packaging designs or smaller sizes, since the category’s leading manufactures have products in smaller serving sizes and packaging that attract kids.

While Odwalla’s new products may not change the super premium juice and smoothie landscape completely or at all, they do have the other manufacturers thinking about cateringtoward a different drinking occasion or a different demographic.  It might not be a juice box that caters to kids.  But it could very well be caffeine-infused smoothie to target a completely different demographic.  Or it could be a new and even more friendly product package.

Whatever it is, Odwalla’s Smoothies for Kids offers a refreshing perspective on how creativity and market segmentation have helped expand a product category and maintain (or further accelerate) its growth rate.