How Fuze Became a Billion Dollar Brand

Coca-Cola's Fuze tea joins the company's growing roster of billion dollar brands.  Fuze surpassed a billion dollar in annual sales in 2014.  Image courtesy of coca-colacompany.com.
Coca-Cola’s Fuze tea joins the company’s growing roster of billion dollar brands. Fuze surpassed a billion dollar in annual sales in 2014. Image courtesy of coca-colacompany.com.

Per Coca-Cola’s news release a couple weeks back, the soda giant’s Fuze brand has joined the company’s billion dollar club this year (story here).  Fuze expanded into teas back in 2012 and surpassed one billion dollars in annual sales just two years later, which may make it one of the fastest brands under Coca-Cola’s stewardship to achieve this milestone. Regardless of their geographical footprint (40 markets and growing) or product assortment (30+ Fuze skus between juice, tea, and liquid enhancer flavors), reaching one billion dollars this quickly is surprising.  A key question to answer may be what happened in the past two years to help Fuze become one Coca-Cola’s roster of 20 billion dollar brands.

In 2007, Coca-Cola bought Fuze and promptly brought the juice brand into their beverage roster.  At that time, Fuze existed as a primary competitor to SoBe’s line of fruit juices owned by Pepsi.  The importance of tea in the brand’s portfolio emerged in 2009 when Fuze tea was part of the fountain drink options in Subway’s sandwich franchise restaurants.  Since then, the hydration brand has emphasized tea more than juices.  Securing distribution in Subway was a critical step toward Fuze’s current status.  Not only were they earning sales across Subway locations, their availability increased consumer exposure to Fuze as a ready-to-drink tea and a viable alternative to Coca-Cola’s soda offerings.  Even Samir Bhutada, Coke’s global director of tea and ready-to-drink coffee, mentioned that part of Fuze’s popularity was related to beverage trends around the ready-to-drink tea category because it delivers on great testing refreshment and natural goodness.

Another important step in Fuze’s history came in 2012, when Coca-Cola and Nestle Waters amended their Beverage Partners Worldwide distribution arrangement.  Save for Canada and a few other geographies, Nestle Waters would retain distribution rights for Nestea.  This in turn allowed Coca-Cola to redeploy efforts to their own stable of healthy refreshments.  Gold Peak and Fuze became the main benefactors of the company’s increased support.  This support materialized in both marketing and trade support.  With Nestea returning to Nestle Waters’ distribution network, this opened up more space for other beverages to grow their footprint within Coca-Cola’s distribution network.  As a result of this, Fuze cultivated a stronger international presence.

Coca-Cola Canada's Fuze Tea Drops: Green Tea Mango, Peach, and Raspberry.
Coca-Cola Canada’s Fuze Tea Drops: Green Tea Mango, Peach, and Raspberry.

The Coca-Cola system also support the brand by cranking out drink flavors built on its foundation of green tea and black tea.  With over 30 Fuze tea variants, consumers looking for tea options would not have any trouble picking a tea under the Fuze portfolio.  Most recently, Coca-Cola has extended the Fuze brand beyond bottled juices and teas.  Coca-Cola launched Fuze Tea Drops in the Canadian marketplace, building more momentum behind this brand with three flavors of liquid enhancers.  To support this rollout, the company activated Fuze Tea Drops with in-store signage and branded merchandising racks across participating Canadian retailers.  It’s also telling that Fuze was one of the select brands among Coca-Cola’s liquid enhancer portfolio, joining Dasani, Powerade, and Minute Maid as beverages available in this format.

In Canada, Nestea is still being distributed by Coca-Cola so Fuze tea may be limited in its availability.  Most Canadians only experience Fuze as a bottled juice unless they choose the brand where Coca-Cola Freestyle machines are available or purchase Subway sandwiches.  With Fuze tea drops, Canadians are one step closer toward experiencing Fuze the way other consumers get to enjoy it.  If Fuze tea drops sell well and Freestyle machines back up the brand’s popularity, there may be finally be Fuze tea coming to Canada.  At that time, Canadians will join other countries that further contribute to Fuze’s annual sales of a billion dollars.

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?

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 ]

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.

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.

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.

Coca-Cola Builds a Monster

Image courtesy of brandchannel.com
Image courtesy of brandchannel.com

Looks like Coca-Cola realizes what it’s good at and what it isn’t good at.  Their increased stake in Monster Beverage proves as much.  With $2.1 billion invested, Coca-Cola now owns 17% equity in the energy drink behemoth, and in turns switches up their product portfolios.  Coke will give Monster their own acquired or homegrown energy drink brands, which includes Nos, Full Throttle, and Burn among many others, while Monster trades them their non-energy drink products, such as Hansen’s Natural Sodas & Juice Products, Peace Tea and Hubert’s Lemonade.  This deal brings together the world’s largest soda manufacturer and the U.S.’s largest energy drink manufacturer.  Although both sides got a great win out of this, but who needed this deal more – Coca-Cola or Monster?  Let’s start by seeing what each side actually gets out of this arrangement.

For Coca-Cola, acquiring a larger stake in Monster and then trading energy drinks for teas & juices serves as a win in itself.  With consumer habits and preferences changing, fortifying their product portfolio to keep pace with these changes was a necessity.  And with key brands generating bad press lately (think Diet Coke slogan fiasco), Coca-Cola could not afford to keep beverage products that carry high negative publicity potential.   Nos, Full Throttle, and the like most certainly qualify given the category requires caffeine content regulation following linkages to caffeine poisoning.

Energy drinks didn’t necessarily fit into the brand image that Coca-Cola wanted to sustain.  Energy drinks focus around an extreme sports lifestyle, with key sponsorships across mountain biking and motor biking.  Distancing the brand from energy drinks better promotes Coke’s image as a family-oriented product manufacturer.  Furthermore, their marketing acumen is better leveraged across Monster’s non-energy products given Coca-Cola’s existing strength across juices and teas.  Coca-Cola has already made a strong name for itself behind Minute Maid, Simply, Odwalla, Nestea, and Honest Tea.  Giving up energy to return focus to juices and teas helps Coca-Cola stay sharp and work on what they’re good at.

Hubert's Lemonade, now part of the Coca-Cola family.  Will this lemonade brand grow exponentially?  Image courtesy of hansens.com
Hubert’s Lemonade, now part of the Coca-Cola family. Will this lemonade brand grow exponentially? Image courtesy of hansens.com

For Monster Beverages, this deal unlocks a stronger global distribution network to grow their product base.  They’ve also added some larger name-brand energy drinks to complement Monster.  A strong competitor like Nos now becomes a fantastic ally.  Full Throttle owns a cult following despite Coca-Cola’s neglect and has a very good chance of being resurrected.  This arrangement gives Monster a wide assortment of products to target energy drink consumers, both locally and internationally.

Monster has also done a better job at marketing energy drinks than Coke because they’ve invested in resources to build out an entire lifestyle.  Energy drinks are more integrated into a consumer’s lifestyle than some other beverages, given their wide target in terms of drinking occasions.  The soda drink manufacturer was not prepared to build out a 24/7 lifestyle like how Monster, Rockstar, and Red Bull have.  Though Monster’s success isn’t a defined blueprint, they already have the infrastructure in place for one energy drink and this could be scaled up for other energy drinks.

It’s really hard to say who needed this more though Coca-Cola benefits more in this new arrangement.  The soda maker had more to lose because they were never going to catch Red Bull, Monster, or even Rockstar with their homegrown products.  Giving up distribution bought them expertise and healthy beverage brands.  Similarly, Monster’s true success existed in the energy drink segment, so much that they even changed their company name to halo off some brand equity.  Their strength in energy drinks would have prevented them from properly developing their nonenergy product portfolio.

Regardless of who benefited more, this only proves that larger companies must take creative approaches to keep growing.  In the past, it was about building strong brands.  Now, it’s about buying a brand that’s already been built, and making it stronger.

Canadians Share A Coke

Share a Coke Jason

A marketing campaign’s success in one part of the world certainly merits consideration to be repeated in other parts.  As such, the initial Australian Share a Coke campaign has been repeated in many other countries, recently coming to Canada earlier this month.  The Canadian campaign customizes 591ml/16oz bottles of Coca-Cola, Diet-Coke, and Coke Zero with people’s names on them.  One side will feature the customized name while the other side still says Coca-Cola.  Coca-Cola will be putting nearly 300 popular Canadian’s names on their bottle labels and then shipping them out to retailers.  Sadly, my name (Jason) does not qualify for one of the 300 most popular Canadian names (find out whether yours is here) so I’ll have to go to a kiosk machine to actually get my name printed on a bottle.  These kiosks will be available all through summer, in Calgary, Edmonton, Montreal, Vancouver, and Toronto.

Funny enough – or smartly – Coca-Cola has provided some parameters around naming, at least for the online portion.  Words that do not exist in their word bank are met with a question mark and an invitation to add the name to their word bank (must be reviewed first).  This prevents people from abusing the labeling system or from using it for malicious intent.  Seems like they’ve learned their lesson from the vitaminwater fiasco from earlier in the year.

Coca-Cola does have safeguard parameters to prevent abuse.  Even the word "Hello" cannot be printed on the label for sharing since it's not in the word bank.  Courtesy of shareacoke.ca.
Coca-Cola does have safeguard parameters to prevent abuse. Even the word “Hello” cannot be printed on the label for sharing since it’s not in the word bank. Courtesy of shareacoke.ca.

All in all, not a bad campaign to extend beyond Australia.  When the customized name campaign first rolled, media outlets and consumers alike picked up on this.  It was categorized as a strong success given the increase in awareness and social media engagement.  The Canadian campaign is decidedly different from the original campaign.  For one, social media engagement plays a different role in Canada than Australia.  The Australian components allowed consumers to create a custom commercial through their Facebook album as well as enter to win $50,000.   More interestingly, the campaign also included customized “name songs” that could be downloaded, which showed a personalized touch between Coke, music, and the individual.  The Canadian iteration of this campaign focuses more on social engagement to share the customized label, but removes the contest and name songs.

Another key difference between the original and Canadian campaign is the product assortment.  Our Canadian campaign includes naming labels for Diet Coke and Coke Zero as well.  This is a sound move whereby Coca-Cola understands the geographical differences and taste preferences of Canadians.  Many consumers prefer Coca-Cola, but there are a growing number of Canadians that are looking for lower calorie soda alternatives.

Considering the campaign’s objective to be identical to the Australian objective of raising awareness and driving sales, this one likely is another success story for Coca-Cola’s marketing campaigns.  Personalized labels and engagement across social platforms help to increase Share a Coke’s publicity.  And consumers seeking out these custom bottles will certainly help fuel sales, where they get the added benefit of finding their own, customized bottle of refreshment.  This certainly fits into their overarching “Over Happiness” campaign.  Here’s the first clip to highlight The Sharing Begins.

Nestea and Lipton Go After AriZona

Nestea's new 695ml cans to compete head-to-head with AriZona.  Courtesy of facebook.com
Nestea’s new 695ml cans to compete head-to-head with AriZona. Courtesy of facebook.com

Each summer I pay a little more attention to monitor the Ready-to-Drink (RTD) tea segment.  Some of my beverage industry contacts say that AriZona’s dominance in the RTD tea segment have inspired other beverage companies to launch similar $0.99 tall cans to steal some of AriZona’s sales.  Most recently, I’ve noticed both Nestea and Lipton stock some competitive offerings.  Both have come out with tall cans of tea, with similar $0.99 price points labeled on the cans themselves.  Given that AriZona has made $0.99 teas their claim to fame and have been selling them for many years already, how successful will Nestea and Lipton be at stealing some sales?  More importantly, is selling tea at $0.99 profitable for Nestea and Lipton, or is there another reason for them to enter this segment?

Unlike AriZona, Nestea and Lipton have strong backers.  Nestea’s partnership with Coca-Cola provides them a robust distribution network.  Lipton also has a strong market coverage through their agreement with PepsiCo.  Both competitive brands would be able to leverage the sales and merchandising support of Coca-Cola and Pepsi to ensure retailer shelves are always stocked.  Beyond retail coverage, both Nestea and Lipton would get premium in-store placement locations.  Coca-Cola and Pepsi both own front-end cooler space as well as multiple locations within a grocery store, giving them the opportunity to stock products to their liking within these areas.  So unlike previous challengers, AriZona will face their strongest competition yet in Nestea and Lipton.  These two competitors have the necessary support and expertise to erode AriZona’s leadership in this segment.

Nestea's new 695ml cans to compete head-to-head with AriZona.
Nestea’s new 695ml cans to compete head-to-head with AriZona.

Given these dynamics, it certainly appears that Nestea and Lipton stand as formidable opponents to AriZona and steal their sales.  However, both Nestea and Lipton are known best for their offerings in a different tea format: bottled tea.  By rolling out these $0.99 aluminum cans, don’t they risk cannibalizing their own sales from a more profitable tea format?  Wouldn’t this make the decision to launch 695ml tea cans with $0.99 printed on it hurt their total tea business?  Given the risk associated with devaluing sales potential, why come out with tall cans at all?  In the end, they are just as likely to steal sales from AriZona as they are on stealing their own sales.

Simply put, it may be better to get less dollars from the consumer, than get none at all.  If their market research indicates that the same consumers buy both bottled tea and canned tea, both Nestea and Lipton have much to lose by not having a canned tea offering themselves.  And given the price range of canned and bottled tea, it would appear that canned teas serve as the “value” segment to get people to buy a tea product.  Bottled tea appears to serve more as a “mid-value” or “premium” segment.  Should Nestea & Lipton leave AriZona to own the value tea, it will be much harder to steal that tea customer away at a later point when they are interested in moving up the value chain to premium tea.

As long as you can get them to buy (or try) your drink once, you’ll stand a chance to get them to come by as a repeat customer.  Even if the immediate value is $0.99, there could be opportunities to get these thirsty consumers to buy the more expensive bottled tea at a later time.

At-Home Carbonation Reaching Critical Mass

It wasn’t that long ago that all we knew about at-home carbonation soda was Sodastream following their banned SuperBowl ad in 2013.  In the years since, Coca-Cola has joined up with Keurig and Pepsi has partnered with Bevyz to develop home brewing units and syrups.  We can now add another known competitor to the mix.  Sparking Drink Systems (SDS) International has a product called Viberation that produced carbonated soda all within one beverage pod.  It’s entirely possible that other companies are developing at-home carbonation units with its growing appeal.  Consuming carbonated beverages in an environmental-friendly way helps remove some guilt by reducing the plastic waste.  Sugar intake is another problem, but that’s a focus for another day.  As more competitors enter this expansive home-brewed beverage space, what will define their success?

The SDS Viberator, carbonating beverages within a single beverage pod.
The SDS Viberator, carbonating beverages within a single beverage pod.  Modified image via sparklingds.com.

One of the stronger products in the marketplace would be the SDS Viberation.  This Viberation has the capability to produce sparkling and enhanced waters, carbonate sodas, and even carbonate alcoholic beer without a CO2 cylinder.  The elimination of a CO2 cylinder increases the usability of the device, and possibly increase its adoption rate.  At this time, the Viberation is distributed across a variety of regional US-based distributors.  In order for this device to succeed, it must gain more exposure through securing distribution, marketing, and innovation.  Gaining distribution brings the Viberation to consumers that shop in bricks and mortar stores, or online.  Marketing efforts educate the consumer on the product benefits and its unique selling proposition (great-tasting carbonated beverages without a separate CO2 device).  Innovation makes meeting the consumer needs paramount with more flavors and assortment.  All three could end up being done through collaboration.  With a branded player (ie Starbucks? Dr Pepper Snapple Group) helps increase its reach, awareness, and appeal.

SodaStream’s main challenge appears to be part of its business model: carbonation cylinders.  With the competition’s ability to carbonate a beverage without any CO2 tanks, the Israeli-based company is facing an uphill battle to innovate.  Despite their recent marketing efforts at the SuperBowl to gain worldwide exposure, their growing stable of branded syrups, and their international distribution, the product still requires customers to invest in purchasing a CO2 device.  As the market shifts toward “all-in-one” devices, SodaStream’s may need to develop an at-home carbonation unit that can brew soda without a CO2 cylinder.  One of the core challenges SodaStream now faces is understanding whether their business model is still viable given the competitive landscape.  The C2 cylinders is a lucrative revenue stream, but it is also the barrier toward their adoption with more home-brewing appliances available.

The CO2 cylinder presents a great revenue source for SodaStream, but is also prevent fast product adoption. Sourced from coolest-gadgets.com.

Coca-Cola’s partnership with Keurig brought greater attention to this product segment.  Distribution and innovation likely are not challenges for the world’s largest beverage manufacturer.  In fact, these areas exist as its core strengths.  Keurig Cold will have the ability to not only brew Coca-Cola carbonated drinks, but also produce teas, sports drinks, juices, and a host of other Coca-Cola-manufactured beverages.  Marketing may actually be where Coca-Cola’s Keurig Cold device sees the biggest challenge.  The majority of their marketing dollars still reside with bottled beverages, and intensely promoting Keurig Cold will cannibalize their sales.  Another marketing challenge would be Coca-Cola’s ability to create the demand for beverage format when their bottled format is so successful and widely available.  Similar to Kraft MiO entering the liquid enhancers space first and Coca-Cola following, SodaStream pioneered the at-home carbonation space.  The challenge for Coca-Cola within liquid enhancers is not their product assortment, but their marketing efforts to create the demand for the liquid enhancer form of their beverages.  Coca-Cola beverage pods may endure the same fate as their liquid enhancers: broad assortment and distribution but limited marketing funds preventing the product line from reaching its full potential.

Pepsi’s Bevyz partnership will release an at-home carbonation unit to the market sooner than Coca-Cola.  The Pepsi Bevyz Fresh Machine was launched in the U.S. this past May.  Despite first-mover advantage, one of their core challenges appears to be marketing.  The market has not heard of Bevyz, and the majority still do not know Pepsi has developed an at-home carbonation unit.  While the product’s distribution and innovation are strengths, the marketing aspect seems to be the most significant barrier to overcome.  Despite the product’s versatility to carbonate beverages, produce teas, juices, and waters, and even serve as a water cooler, consumers are simply unaware of this machine.  Check out their 2011 Bevyz in Action video below.  Pepsi has been slow to react when Coca-Cola moved first in other spaces, such as in liquid enhancers and intelligent fountain units.  If Pepsi continues to think methodically before acting, they may stand to lose more ground to Coca-Cola and other competitors.

Each competitor faces their own challenge within this home-brewing beverage space.  Roadblocks toward growth include marketing, distribution, and innovation – it just depends on your business stage.  What is certain is more organizations are dedicating resources to small home appliances to help consumers make their own beverages.  This in turn helps the segment approach critical mass toward being available in every consumer’s kitchen counter space.