Increase Customization to Satisfy Soda Shopper Needs

It’s no surprise that carbonated soft drinks have been on a sales decline for the past few years.  Subjects such as stronger health-focus, lower calorie sodas, and government-proposed taxes are just a few examples of contributing factors toward the category’s decline.  So what has beverage conglomerates done to respond to this challenge?  Increase their product assortment – especially in the low calorie segment – and expand their package ranges among existing flagship brands.  One such example of proliferating the package range is delivering even more customization at a grocery retailer.

Over the last few months, we have seen examples of this customization from both Coca-Cola and Pepsi.  Beverage Digest tweeted about Coca-Cola’s partnership with Kroger’s to deliver a retailer-specific merchandizing strategy, where individual 12oz (355ml) cans of soda were lined up in racks for shoppers to choose their desired composition for an 8- or 10-pack.

Want to be a soft drink bottler? Not quite. But Coke Kroger test allows creation of custom can multi-packs. twitter.com/BeverageDigest…

— Beverage-Digest (@BeverageDigest) March 19, 2013

Shortly after that, BevReview.com’s readers tip off a customized offering from Pepsi, offering a mix of both Pepsi and Mountain Dew in one 28- and 30-pack offering.

On the Shelf: Pepsi & Mountain Dew 28 Can “Combo Pack” bit.ly/15QDyOr

— BevReview.com (@BevReview) April 25, 2013

Both types of offering are examples of increased customization and are intended to satisfy more of the shopper’s needs.  Both are trying to ensure that the grocery retailer fulfills most (if not all) of their buyers’ soft drink requirements on that one shopping trip.  Coca-Cola’s offerings are also eliminating the fear of expired cans simultaneously.  After all, as a grocery shopper that previously had to buy a 12-pk of Tab but really only wanted 4 cans of Tab can now get these 4 cans, along with a couple cans of Fanta Orange and Fanta Grape.  Pepsi’s combo pack meets shoppers’ needs a little differently, but still offers customization since you can purchase both top-selling beverage brands in one case pack.

These custom offering are likely the end result of valuable shopper insights on consumption behavior.  What’s also interesting about Coca-Cola’s create-your-own-pack initiative is that it mimics their Coke Freestyle machine.  To remind some readers, the Coke Freestyle is the beverage manufacturer’s fountain unit that offers over 100 flavors of soda.  The important part to note for this machine is that in addition to allowing the thirsty consumer to create their own beverage mix, it also provides the Coca-Cola with information on what flavors are dispensed the most and possibly satisfy a previously unmet beverage need.  Creating your own multipack allows them to do the same thing, by monitoring shipment levels of individual cans and tracking the point-of-sale scanned data.

For Coca-Cola and Pepsi, this is an example of passing influence to the purchasers while maintaining their own product control.  By giving customers more choices and customization, they have effectively satisfied more of the shoppers’ needs and benefited themselves in the process with rich information.  Everyone wins in this scenario.

Everyone Wins With Up-Sized Fanta

BevWire recently noticed that Coca-Cola’s Fanta flavors has made some subtle changes to their packaging.  The take-home 1.5L bottles were upsized and replaced with 2L bottles to align with the rest of their take-home offerings like Coke, Diet Coke, Sprite, and so on.  I believe their packaged cans were also 10 to a case before, and now those have been increased to 12 cans per case.  Not sure what led to this decision, but it should be viewed as a good move all around.  Manufacturer, retailers, and consumers alike should all be happier at the end of the day.

The increased 500ml for Fanta will provide cost savings for Coca-Cola.  They no longer have to source a different shape & size for their take-home bottles.  With the exception of the Canada Dry Green Tea Gingerale, all of Coca-Cola’s take-home bottles all take the iconic Coke contour shape.  This will also provide for stronger brand recognition as a Coca-Cola beverage product since this bottle shape is patented, and only Coca-Cola products can be bottled in this format.  The cost savings also transfer onto the production floor.  The up-sizing for both bottles and cans means that the automated assembly lines do not have to refitted to bottle and package different sized products.  Delivery to customer also also made easier as the case stacking inside the delivery trucks are are uniform.  Pretty much a no-brainer for the beverage organization, which leads me to wonder…why was this not done in the first place?

At the retailer level, the shelf sets don’t appear to be affected (see image above).  The pricing also does not really change since it must line-up with the rest of the 2L take-home bottles.  Ultimately, it’s business as usual for the retailers.

Among consumers, this may be an unexpected bonus when they intend to buy this refreshment.  Coming in-store and to the beverage aisle, the shopper may very well expect to pick-up a 1.5L bottle of Fanta and instead find that Fanta has given them an extra 500ml.  Will this lead to stock-up behavior?  Possibly.  There will also be some form of short-term gain when larger value is perceived (in this case, more Fanta for the same price).

The next step for the Coca-Cola would be the align their single-serve Fanta bottles with the rest of the single-serve assortment.  The Fanta bottle contains 473ml, while the rest of the beverage manufacturer’s single-serve portfolio houses 591ml.  With the cost savings seen for the take-home adjustment, wouldn’t there be even more cost savings if the changes were applied to the entire Fanta assortment?  Retailers wouldn’t notice too much of a difference in terms of stocking, but this may lead to a short spike in sales.  Your move, Coca-Cola – just putting the idea out there.

Mid-Calorie Sodas – Successful or Not?

It’s been over a year that Pepsi Next has first launched in test markets, and almost six months since it’s been available nationally in the United States.  Dr Pepper 10 will also soon be lapping it’s one year national launch in the market place.  These national launches proves that Pepsi and Dr Pepper both believe in the viability of the mid-calorie cola segment.  However, what are the results of this launch, and can it be considered a success so far?

For Pepsi Next, results so far can be considered average at best.   Wall Street Journal reported the Next to have gained 1% market share on US dollars (link here), although product reviews indicate that the aftertaste (end part of the Pepsi Next’s taste curve) is unpleasant and definitely feels like the artificial sweeteners (link here).  In spite of all this, Pepsi has launched two (limited for the summer) line extensions of the mid-calorie soft drink: Paradise Mango and Cherry Vanilla (pictured above).  That said, the launch can be considered a success so far, but the real test is converting these initial trail users into returning customers.

The line extensions and the continued advertising support for Pepsi Next would be much needed in order to help the brand sustain its momentum.  After all, it takes some time for a product to be accepted in the market – remember that it took Coke Zero & Pepsi Max a few years and some trying rebranding and repackaging before it caught on with consumers?  Beyond that, let’s hope for more products to enter the mid-calorie segment, and bring more attention to the category.

For Dr Pepper 10, test results have been similar to Pepsi Next.  On the Dr Pepper 10 alone, sales nationally have been strong enough to offset the declines across Sun Drop and 7UP.  And as the one year anniversary  for Dr Pepper 10 approaches, they have already worked on releasing five additional 10 calories colas.  The 7UP 10, A&W 10, Canada Dry 10, SunKist 10, and RC 10 are currently in test markets and some of these flavors should make it national (my bet is on the 7UP, A&W, and Canada Dry).

Overall, it would appear that there are two main players in the mid-calorie segment right now between Pepsi Next and Dr Pepper 10.  Coca-Cola has been reported to be trying a mid-calorie version of Sprite and Fanta in key test markets as well.  This segment will only continue to grow as consumers become more and more health conscious.  However, in order to make it a success, the main issue of taste must be addressed, since consumers likely wouldn’t sacrifice taste for calories.

And beyond that, let’s hope it makes it way up north to Canada so we don’t have to drive across the border to find some mid calorie beverages.

Coke Follows Pepsi, Entering Mid-Calorie Soda Segment

With the recent success of Dr Pepper Ten and Pepsi Next, there’s been some renewed buzz in the carbonated soft drinks category recently.  Now Coca-Cola wants to get into the mid-calorie segment.  BevReview.com has a few links to other articles where sources have confirmed that Coca-Cola will be launching Sprite Select and Fanta Select in five U.S. test markets (link here).

As the linked article notes, both Coca-Cola and Pepsi have tried mid-calorie products before.  Both companies’ products failed to gain traction in the marketplace and were discreetly phased out from store shelves.  Given the technological advances and the successful-so-far products of Dr Pepper and Pepsi, is it time for Coca-Cola to come in with another mid-calorie product?  Will they succeed this time around?  And why try this with Sprite and Fanta, not with the trademark Coca-Cola product itself?

One issue would be to first determine what is “mid-calorie” and how this type of product is unique from the consumer’s perspective.  Arbitrarily, I’m defining this soda segment as with a limit of 70 calories per 12oz (355ml) serving, given Pepsi Next has 60 calories, and Sprite Select and Fanta Select will have 70 calories.  Dr Pepper Ten only has 10 calories per 12oz serving, so they fit the mold (Note: Dr Pepper Ten has 10 calories in both a 12oz serving, as well as 10 calories per 8oz serving, click through link to understand how).  Mid-calorie products are also categorized as those using natural sweeteners to bring the calorie count down below 70, featuring a combination of sugars, high fructose corn syrup, or some other form of sweetener in tandem with the natural sweeteners.  The purpose is to balance out the taste curve: from the moment the liquid hits the palette, all the way to the after taste.

Given that mid-calorie soft drinks like Coc-Cola C2 and Pepsi Edge of the early 2000s did not have the technology or cost-efficiencies before to insert natural sweeteners, they failed to catch on in the marketplace.  One decade later, the technology is in place , which makes it possible to give consumers a better-tasting (and better named) product.  The generally positive feedback toward Dr Pepper Ten and Pepsi Next would seem like an opportune time for Coca-Cola to enter the mid-calorie soft drink segment.  Similar to how Coca-Cola’s Dasani Drops may be entering the liquid flavor enhancers after Kraft’s MiO has tested the waters, Coca-Cola may have monitored the consumer reaction to mid-calorie products  (BevWire’s article on the Dasani Drops piece can be found here).  This lets Coca-Cola sit on the sideline to see what would happen without bearing the developmental costs until it’s been a proven success.

While it appears that these products have received positive reviews, it appears that Coca-Cola is still hesitant with this segment.  These reservations makes the pilot testing with Sprite and Fanta that much more important.  Coca-Cola would not want to put the trademark name on something that they don’t fully believe in, only to see it fail like last time.  A second failure with this segment would have implications such as losing brand equity or showing that the soft drink manufacturer does not understand its consumers.

A factor that would aid in their success, as well as supporting the successes of Dr Pepper Ten and Pepsi Next are consumer trends.  Consumer trends have shifted toward a stronger focus on health consciousness.  No longer are consumers willing to sacrifice calories for taste.  However, not all consumers are  prepared to sacrifice taste for zero calories either, which provides the opportunity for the Pepsi Next, Dr Pepper Ten, and the impending launches of Sprite Select and Fanta Select.

In this regard, there would appear to be a market for mid-calorie soft drinks, albeit a small market for now.  The consumer trends and the technological advances will help to make this a success this time around.   If history does end up repeating itself, it would certainly guarantee that Coca-Cola will not be testing any more mid-calorie soft drinks.

Fanta updates packaging, add news formula

Coca-Cola announced today that they will be unveiling new packaging for the Fanta series of sparkling beverages later this month (new packaging on left, old packaging below right).  The US’s best selling fruit-flavored sparkling beverages will have contemporary graphics and colorful illustrations in their new packaging.

Also, Fanta Orange will be the first fruit-flavored sparkling beverage produced using 100% natural flavoring.  “We know that during these difficult times, shoppers want to bring home products that the entire family will enjoy; we are pleased to invest in our products and offer the same great taste of Fanta now with 100 percent natural flavors,” said Santiago Blanco, vice president of Sprite and flavors, Coca-Cola North America. “The introduction of this new formulation and the new look of the Fanta line are part of our ongoing efforts to reinvigorate the sparkling beverage category in the U.S., and Fanta will play a critical part in this effort due to its strong connection with teens.”

Critics analyse that Fanta’s efforts are an attempt to solidify its position in the fruit-flavored beverage category.  Given it’s positive image with parents (it’s caffeine free) and it’s appealing taste and flavor assortment geared towards teens, Fanta has indeed established a leadership position.  With the new naturally sweetened offering, Coca-Cola brings Fanta in line with Coke and Sprite as naturally sweetened beverages, making it a more attractive choice to consumers.

The “same great taste” of naturally sweetened beverages are debatable.  For better or worse, the refreshed packaging has not been released and still awaits consumer feedback.  However, Fanta does not have as strong a brand relationship as Coke (and recently Tropicana) to ignite a riot given its change in formula or packaging.