Vegetable Beverages Hitting Mainstream

Gatorade Lime CucumberWould you drink a cucumber lime-flavored Gatorade?  How about blueberry mint-flavored water?  An article on Beverage Industry on emerging beverage trends claim that vegetable-flavored beverages are increasingly popular because of their “healthy halo” (article link here).  With everyone focusing on healthier options, it makes sense that vegetable flavors reach mainstream status and consumers seek to take in more vegetables.  After all, berry and other fruit-flavored beverages can only deliver so much momentum.  That said, the article describes that consuming a vegetable-only flavor is still in uncommon and many beverage options are a combination of both vegetables and fruits.  How will this particular flavor trend impact beverage makers?  Will these drinks ever reach a level of popularity to take down mainstream colas, juices, or waters?

Beverage manufacturers constantly monitor flavor trends and Pepsi has locked into this trend since 2011, when they launched a Cucumber Lime flavor under the Gatorade franchise.  Pepsi Japan’s limited-time releases of Pepsi Shiso and Pepsi Ice Cucumber also proves this point.  Since most (if not all) beverage organizations monitor consumption trends, it would not be surprising to see manufacturers build momentum and launch more vegetable-infused variants over the next few years.  It just needs to make its way into the North American market.  And this is beginning to catch on more in the U.S.; research firm Mintel tracked over 100 U.S. beverage innovations with vegetable or vegetable-fruit flavors launching in the past year, representing a 20% increase from 2013.  It still stands to be seen whether these vegetable-flavors will launch under the most popular and mainstream beverage lines like Gatorade, Coke, and Pepsi or launch under emerging beverage brands.  No matter the case, any approved product launch puts sales pressure on other items to perform or risk losing the shelf space.  This flavor trend may not have been successful replacing other products’ sales to justify shelf space though it looks that will soon change.

On the topic of reaching critical mass to take down mainstream product categories, it doesn’t look promising.  This isn’t to say that vegetable-flavored beverages will not reach mainstream status themselves, just that it will not overtake other mainstream categories.  For one, this is a flavor trend that integrates the product under a specific beverage segment; it is not a standalone beverage category in itself.  Consider these vegetable-flavored products to pattern after  Campbell’s V8 juices or Bolthouse Farm smoothies, where they represent a growing portion of a drink category (juices and smoothies, respectively) but are not large enough to overtake juices as a whole or smoothies as a whole.  Regardless, these healthier options will compete aggressively for retail shelf space alongside other beverage options.

Image courtesy of foodbusinessnews.net
Image courtesy of foodbusinessnews.net

The Beverage Industry article also describes other beverage flavor trends, include a growing preference toward sweet and spicy combinations.  Consumers increasingly look for flavors that will satisfy multi-sensory experiences.  Some examples include chocolate gojuchang tea (gochujang is a Korean spicy sauce),  spicy ginger mango juice, and mango jalapeno water.  So be on the lookout, soon enough you’ll see more cross-flavored beverages on store shelves.  Be in sweet and spicy or vegetable-fruit flavored, it will sound exotic but your taste buds and your body will thank you for choosing that over another drink.

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.

Lost in Translation: vitaminwater Canadian Promotion Goes Awry

vitaminwater's promotion blunder. Image courtesy of Metro through adweek.com
vitaminwater’s promotion blunder. Image courtesy of Metro through adweek.com

Over the last few weeks, glaceau vitaminwater have come under scrutiny for its under-the-cap promotion that spelled out the words “YOU RETARD” (story link here).  As a bilingual Canada nation that calls English and French as its national languages, certain words may not translate so well.  vitaminwater’s promotional intent was to put one English and one French word under the cap, with the consumer collecting the caps to make funny sentences.  Apparently the problem was that the English list of words and the French list of words were separately approved and no one thought of what the consequences should both words were combined.  These consequences were amplified given that the family finding these words were a special needs family.  Doug Loates (the dad) sent Coca-Cola a letter immediately letting them know of his displeasure toward their campaign and how hurtful it was to his family.  As you see from the letter (below), he has signed it as “an ex-Coke drinker” which likely means that they have lost a customer for life.

As the glaceau business unit goes into public relations defense, what can be learnt in this situation?  The obvious lesson is to develop stronger approval systems when running a bilingual campaign in Canada (as in any other nation with more than one national language). Ensuring that the correct message is not lost in translation is critical and avoids the company any negative PR and embarrassment.  If there was a business team that handles the French marketing and another team that handles English marketing, then these two teams must collaborate more closely to ensure each party is dialed in to what the other team is doing.  Ultimately the national campaign is approved by someone that manages both teams, so that executive should also be aware of the consequences.

Aside from focusing on the directly results of this campaign, one has to wonder why vitaminwater ran this type of a campaign in the first place.  If the intent was to stimulate sales by having beverage enthusiasts collect the caps to create words, is there a prize for the funniest word?  Or was it simply a game for instant gratification by combining words together?  I have not noticed any type of media promotion to build awareness or excitement for this campaign in either case.  vitaminwater may have fared better had they simply piggybacked off of Coca-Cola’s iCoke.ca loyalty program.  After all, with an existing infrastructure where consumers are already knowledgeable of the reward system, this would make it easier to achieve the campaign’s objectives.

The next time vitaminwater runs a marketing campaign that spans the nation, we’ll see whether they have truly learned their lesson.  Will it be regional promotions with stricter guidelines for English- and French-speaking provinces?  Or will it be the same problem?

Coke Letter by Doug Loates
Doug Loates’ letter to Coca-Cola on finding the vitaminwater bottle cap

Nestea Enters Crowded Liquid Enhancers Space

Nestea's Liquid Water Enhancer - image courtesy of bevnet.com
Nestea’s Liquid Water Enhancer – image courtesy of bevnet.com

It seems that Nestea is primed to enter the liquid enhancers space soon (link here).  In a segment that grows increasingly crowded with strong brand names like Kraft MiO, Crystal Light Liquid, Dasani Drops, Powerade Zero Drops, is this the right decision by Nestea to enter with their own liquid enhancer?  Aside from the well-known branded players, a host of grocery retailers already have their own store brand (per this BevReview article, Walmart, Supervalu and Winn-Dixie all have their own versions).  Can this beverage segment sustain another branded player?  With various offerings available and finite space in the grocery aisle, will this launch actually be beneficial?  It depends on who you talk to.

First, let’s take a look at what Nestea is introducing to the marketplace.  Nestea Liquid Water Enhancer will arrive exclusively to Target in three flavors:  Iced Tea with Lemon, Iced Tea with Peach and Half & Half Iced Tea.  Another flavor will hit the rest of the market afterwards: Green Tea Citrus.  The Nestea Liquid Water Enhancers will be available in 26-serving bottles.  Because there is no other tea-based liquid enhancer in the marketplace, the Nestea product is unique and certainly adds value to the grocery aisle.  The consumer will now be able to find their Nestea drink mixes in both powder and liquid formats.  So Nestea benefits from this product launch, giving themselves a broader consumer reach.  Now that Nestea has a unique product, they just need to go and “sell” it to the grocery retailer that their product is beneficial for them too.

Retailers, however, may interpret this as more of a headache than anything.  With liquid enhancers expanding so rapidly, it looks like manufacturers just want to launch a product and get in on the gold rush.  With another product added to the overall consideration set, the retailers must decide which ones to carry and help them grow their business.  Do they maintain the same space in the grocery aisle for these products?  Or should they rationalize some other products?  The retailer may simply pass the problem on to manufacturers, and have them create the most compelling sell story to gain retailer distribution.  What may ensue should certainly benefit consumers and retailers: manufacturers will undoubtedly be offering some form of pricing and promotional support to get them to take their product in-store.

Coca-Cola's Powerade Zero Drops - image courtesy of coca-colacompany.com
Coca-Cola’s Powerade Zero Drops – image courtesy of coca-colacompany.com

For liquid enhancers and the consumer, Nestea’s entry is a positive addition.  Nestea’s entry carves out a niche for tea-based liquid enhancers, similar to how Powerade Zero Drops and MiO Fit created the sports niche.  Despite further fragmenting liquid enhancers into more beverage segments, this launch will be beneficial to the category.  As more marketing dollars get behind liquid enhancers, this may spell opportunity for even more product launches.  If consumers are willing to mix water with enhancers for caffeine, electrolytes, and tea, what else may they be interested in?  How about juices?  Or carbonated soda?  In due time, consumers may be able to find liquid enhancers for any beverage that is currently available in can or bottle format.

While the Nestea launch further crowds the liquid enhancer market, it still benefits everyone.  Consumers get another liquid enhancer choice.  Nestea improve their consumer reach.  And retailers linking these two groups together will be rewarded with more profits.

Liquid Enhancer Segment Legitimized With Powerade Launch

Sourced from www.coca-colacompany.com
Sourced from http://www.coca-colacompany.com

Funny how just a few years ago, no one has ever heard of liquid flavor enhancers but now many people have heard about and possibly tried MiO.  This is due in no small part to Kraft, which created the product segment and put a lot of marketing support behind their MiO to introduce and educate consumers on how to use this product.  And as Dasani introduced their own liquid enhancer to capitalize on the market trend, Kraft innovated to stay ahead of its competition.  These innovations include employing a dual brand strategy by launching Crystal Light Liquid, as well as extending MiO’s platform by branching out to energy and sports drinks.  With recent news about Powerade coming out with a liquid enhancer, this segment appears to provide legitimate profitable returns for manufacturers.  However, is the segment itself big enough for so many different branded offerings?  Will this spur Pepsi to participate in some shape or form?  Possibly with a Gatorade drop to maintain their market share in sports drinks?

Courtesy of www.makeitmio.com
Courtesy of http://www.makeitmio.com

Liquid enhancers have enormous growth potential and despite its infancy, have extended across sports drinks and energy drinks.  This has certainly broadened its consumer appeal and increased the segment’s awareness and adoption rates.  However, the segment still appears to be crowded with four branded players: MiO, Crystal Light, Dasani, and now Powerade.  And it only looks that way because the segment itself is still small.  For all the excitement around MiO, it is still only a $200-$300 million brand.  Combined with Crystal Light, Dasani, Powerade, and even private-label offerings, the segment itself is not predicted to be over $500 million.  But with more advertising support behind each of these beverage properties as well as higher levels of consumer adoption, the segment will grow to be large enough to house these four liquid enhancer brands.  MiO will certainly be rewarded for being the first mover.  Consider this the initial stage of energy shots, when 5-Hr Energy was the only one in the segment and it took some time to gain sales.  As more companies introduced their own energy shots, the segment gained popularity and market size.  Through all this, 5-Hr Energy became the de facto leader in energy shots and rebuffed Red Bull, Rockstar, and Monster.  5-Hr Energy capitalized on the news that other energy drink manufacturers brought to the segment and benefitted from being the most recognized name among the consideration set.  So while it currently appears that liquid enhancers is congested, the potential size of the segment mirrors energy shots, and may even outpace it given less consumer backlash.

With great potential, comes great competition.  We’ve seen Coca-Cola wait for Kraft to prove that this is a viable segment, and then furiously pursue them with their own offerings.  Why has Pepsi not done anything yet?  A Gatorade Drop would certainly gain lots of attention among athletes, not to mention give them another extension to complement their Gatorade Chew.  Pepsi could also come out with a tea offering to start off in a segment where there are no current liquid enhancers (though there are rumors that AriZona is coming out with one soon.)  Given that liquid enhancers can be sold warm and are so compact, they can be stocked on shelves and also at the cash register as consumers complete their purchases.  Pepsi would be missing out on a large opportunity if their only presence were in coolers or displays – far away from the point of purchase.  My guess is that they are likely in the works to launch their own enhancer soon, but only time will tell.

Liquid enhancers are here to stay and has proven to be rich opportunity for the participants.  As the segment gets bigger, it will spell of a missed opportunity for Pepsi if they remain on the sidelines.

Zevia’s Organic Growth Differentiates Them From vitaminwater

Courtesy of Zevia.com
Courtesy of Zevia.com

Zevia recently announced that they were adding three more all-natural soda flavors to their Canadian offerings.  Cherry Cola, Dr. Zevia and Caffeine Free Cola joined the existing Canadian selection that included Cola, Cream Soda, and Ginger Ale among many other flavors.  In total, that brings their total portfolio to 11 sodas for the Canadian market.  Our American counterparts only have four incremental flavors than us, which may prove that our taste preferences are not really all that different.  See all the Zevia flavors here.  However, with the proliferation of soda flavors, will Zevia run into a problem that we have seen with another beverage offering: glaceau vitaminwater?  Will this end up being detrimental to Zevia in the long term, as we have seen vitaminwater peak and start to decline with reduced advertising support?

In more ways than one, Zevia and vitaminwater have common ground that would lead us to come to this conclusion of Zevia’s possible rise and fall.  For one, both beverage brands capitalized on consumption trends.  Zevia gained market acceptance as consumers became increasingly interested in all things “all-natural”.  vitaminwater gained sales as consumers started to look for something less boring than bottled water.  And because both were the leaders of their respective categories, their growth became synonymous with their segment’s growth.  Both companies started out as independent outfits separate from global beverage manufacturers.  vitaminwater as most of know may know, is now a part of Coca-Cola, despite all the separation the hydration brand is trying to create between them.  In terms of product offerings, both have great tasting products that stretch into the double digits.  It is a very plausible assumption to think that Zevia will follow vitaminwater’s path.

However, what sets Zevia a part from this comparison is that they are still a stand-alone entity and not a division within a larger beverage organization.  That makes a world of difference.  While they may not have the luxury of stronger financial backing, they are also growing themselves organically.  When vitaminwater was brought into Coca-Cola, the hydration brand was given much stronger product distribution and piggy-backed off of Coca-Cola’s distribution network.  This helped vitaminwater gain strong market visibility, and at a much quicker rate than when they stood separately.  Unfortunately, the downside of being in a conglomerate beverage company also proved detrimental to vitaminwater.  As Coca-Cola shifted their focus inward to grow their core offerings of Coke, Diet Coke and Coke Zero, vitaminwater as well as other beverages in their portfolio suffered.  They received less advertising and promotional support.  Zevia will continue to grow because they are their own company, and their sole dedication is toward this beverage brand.

Zevia is also not as celebrity-endorsed as vitaminwater.  With celebrity endorsements, they could endorse one beverage now and change their endorsement later when another refreshment company provides them with a more lucrative deal.  And while Zevia has less star power than vitaminwater, they are also certainly less volatile given the celebrity’s reputation.  For example, if a celebrity was perceived negatively by the media, the products and services they endorse would receive a “halo effect” and also be viewed as negative.  Take Tiger Woods and Nike a few years back.  Or does anyone want to have Lindsay Lohan as your spokeswoman right now?

In any case, Zevia should continue to rise while vitaminwater continues to experience growing pains.  While Zevia may still yet encounter the same problems that vitaminwater is currently going through, they still have a ways to go.  The all-natural trend is here to stay, and all-natural sweeteners are getting more widely accepted by consumers.  Let’s just hope that Zevia keeps these things in mind should a similar scenario arise for them.

vitaminwater zero Quietly Arrives in Canada

vw+vw0 canada line-up courtesy of @vitaminwater_bc

Has anyone noticed the subtle changes to the low-calorie vitaminwater lineup in Canada?  There used to be three vitaminwater10 variants available: go-go, resilient-c, and recoup.  Now they have quietly replaced the go-go and resilient-c 10 calorie offerings with zero calorie offerings.  The recoup (peach mandarin) doesn’t appear to be on the market anymore, in favor of a zero calorie version of XXX, renamed as XOXOXO (acai-blueberry-pomegranate).  It appears that the United States’ transition in December 2010 has finally made its way north of the border this past April.  As it stands right now, there are 9 regular calorie flavors of vitaminwater, along with the three new low-calorie offerings.

One has to wonder why glaceau did not simply launch the zero-calorie offerings from day one, rather than wait a year to eliminate the 10 calories inside the bottle.  How did the 10 calories get eliminated after a few months’ launch into Canada?  Was it fear that Canadians would not adapt to the zero calories right away and needed to be transitioned away from calorie-filled beverages?  Was there a delay in getting approvals on the ingredients, particularly the sweetener?  In any case, the complete Canadian vitaminwater line-up still stands at 12 flavors.

Having 12 flavors makes it challenging to manage the product portfolio.  The benefit of this vitaminwater zero transition is that it will not impact the overall shelf spacing – only the existing area that vitaminwater product occupies.  However, 12 flavors for any product is quite significant, and getting a retailer to list all 12 at the same time will certainly be difficult.  Take for example Red Bull, which has found success with only three variations (Red Bull, Sugar Free Red Bull, and Red Bull Total Zero).  Or Coca-Cola, which also has three offerings (Coke, Diet Coke, Coke Zero).  Both these brands have fewer flavors and have been very successful.  Monster Energy and Rockstar Energy are also successful as a result of their broad portfolio of products – but not all products get listed in the retailer.  The most successful brands have fewer variations and can command more shelf space.  They also tend to be leaders in their respective categories.  vitaminwater seems to be buck that trend.

Is vitaminwater a leader in the enhanced or flavored waters category?  Sales data would almost guarantee it as such.  Why would they need so many flavors, when traditionally four or five flavors will be enough?  The answer is portfolio shelf space relative to sales.  If the vitaminwater portfolio commands 40% of the category sales, they should be allocated 40% shelf space.  After all, the argument is that the cooler space should reflect market conditions for the consumer.  This is why in the summer there are less shelf space allocated to juices, but more to water and sports drinks.  Having a broader portfolios always gives you more opportunities to create shelf space and in turn sales.  Just look at how Gatorade has been able to gain more shelf space following its prime/perform/recover extensions.  So while the majority of sales may come from the most popular flavors, the less popular flavors also have a significant role to play in creating and extending shelf space for the vitaminwater total portfolio.  Imagine that the sale for one vitaminwater flavor was marginal relative to the total portfolio, but had two shelf facings.  That flavor still remains on shelf to “hold space” for other better performing flavors, and allow the retailer to reduce that flavor to one facing while increasing facings for another better performing flavor.

Optimizing the shelf space ultimately falls onto the beverage category manager’s responsibility.  As long as vitaminwater’s broad portfolio keeps making sales, it makes difficult for other enhanced waters like Aquafina Plus to gain shelf space.  Once you secure the shelf space, it’s up to you to structure and space out your products to protect your shelf space.

 

 

 

Kraft MiO Enjoying Exclusivity in Canada…For Now

Kraft’s liquid beverage enhancer MiO is now available in Canada, after being available in the U.S. for over a year.  My earlier post detailed the MiO’s impact on the American market, how it has led to line extensions as well as inspired copycats (link here).  While MiO is still in a state of infancy in Canada and offers very few challengers, it’s worthwhile to look at the example south of the border to see what type of impact it may have in Canada.  Here’s the first MiO commercial for Canada, followed by the American commercial link below.

American MiO commercial link here.  The differences are quite obvious in its message and communication, since each ultimately caters to different audiences.  Kraft Canada has decided to target 18-34 year old males with the MiO (article from Strategy Magazine details MiO’s Canadian strategy here).   With regard to the business impact, will the MiO inspire copycat products from Coca-Cola or Pepsi?  Will it also lead to caffeine-infused line extensions like MiO Energy?

While there exists a template in the United States, it’s important to note that the two markets are decidedly different.  As we’ve already seen, Canadians do not react to the same type of messaging and need customized advertisements.  Further to the differences, Canadian regulations also stipulate stronger focuses on health-consciousness (ie calorie listings on packaging) and product compositions (ie  mandatory nutritional tables).  This all boils down to the point that what may works in the United States may not work here in Canada.

Kraft Canada will work to grow the category of liquid flavor enhancers, and this will lead to copycats.  With Kraft bearing the education costs and the initial market research, other beverage organizations will be able to see what type of opportunities exist in this category.  Judging by how the American market is performing, the category does have growth potential and can sustain more than one branded manufacturer.  Understanding their own production & distribution capabilities, the entry of Coca-Cola, Pepsi, and even Dr Pepper Snapple Group in Canada seems just like a matter of timing.  Currently on grocery store shelves, the MiO sits by itself with powdered drinks like Crystal Light, Kool-Aid, Nestea without any store brands.  It would appear  that at this time, even private labels are hesitant of coming into the market and are watching to see how the MiO will perform first before jumping into the category.

How about the MiO Energy, will it enter Canada?  It is an intriguing product because the user can personalize their beverage and control the amount of caffeine they would like in their drink.  However, with the increased attention on energy drinks, their high caffeine content, and their adverse effects, will this product be successful if launched in Canada?  My perception is that it will extend into Canada, but their success hinges on their market positioning. Positioning it as a customizable caffeine drink against coffee, rather than energy drinks may be more successful.  Coffee is generally more acceptable as a caffeinated beverage over energy drinks due to their lower caffeine concentration.

In the meantime, Canadians still have the regular Kraft MiO to enjoy in four flavors pending more introductions.  Enjoy the exclusivity while it last MiO, because it appears that you’ll have to defend your shelf space soon enough.

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.

Jones Soda Expands Their Product Portfolio

Jones Soda Sparkling Water - courtesy of bevreview.comJones Soda recently put out a press release detailing their upcoming entry into the sparkling waters segment, launching three flavors of sparkling water under a product line titled “Au Naturel”.  The press release in its entirety is available here, and BevReview.com covered some additional information talking about other products that Jones has previously launched and/or re-introduced:  Jones Naturals, Jones GABA, and Whoopass Energy Drink among others.  The link to BevReview’s piece can be found here.   Jones Soda’s press release also indicated that the product line will be stocked in natural grocery stores, which mean that stores like Whole Foods, Choices Food Market, and Urban Fare may have these products in stock soon.

This is an interesting launch for Jones, since the most of their previous beverage introductions have been in the premium soda and energy drink categories.  That is not to say that 24C, Jones Juice and Jones Naturals are not successful, but they have not been able to capture the same level of publicity and success that the other launches recorded.  The launch of Au Naturel marks an entry into another completely new category, one with a different set of competitors and challenges.  The launch still provides a level of similarity for Jones Soda since their most successful product launches share the following characteristics: premium and niche.  For example, Jones Soda itself using sugar cane for a variety of their 12oz glass bottle sodas and Jones GABA doesn’t include caffeine.  This gives Jones experience with bringing premium beverages to market – the category may be different but the experience and skillset should be transferrable from premium sodas to sparkling water.  Also of significance is that sparkling water gives them a shelf presence in a different area of the grocery store, or in another set of grocery stores altogether.  Au Naturel will be distributed in natural grocery stores at first, but may expand to regular grocery stores if there is enough traction.

On the challenges that Jones will face, they may be similar to the challenges that Jones Soda faced with launching their Juice, Naturals and Organics products.  These other categories all have a different of competitors, and much more store-brand (private label) competition.  Unlike sodas, the markets are less regulated and monopolized, making competition more likely.  The category itself is more commoditized, and telling consumers to trade-up to premium sparkling water is a significant problem.  Despite bottled water sales growing this past year, the category is currently challenged with educating consumers on the added benefits between tap water and bottled water.  With all these challenges, does Jones Soda’s expertise with featuring premium soda transfer over into featuring sparkling water?  Will Au Naturel be a short-lived offering, an experiment to see how another category may provide diversification for the company?

Even with all the challenges that the water category brings, I feel that this product launch has a stronger chance of success that some of Jones Soda’s other launches.  The key difference is that water itself is seen as wholesome and healthy, and the market trends shows consumers increasingly prefer healthier alternatives.  In order to compete with the more established sparkling water players, Jones may need to look to alternative channels to gain distribution and popularity.  One suggestion may be to look for opportunities in the on-premise channel such as salad & health food joints, and smoothie & yogurt shops.  By stocking their sparkling water in these establishments, Au Naturel aligns themselves with healthier alternatives that shoppers want.  Gaining traction in the alternative channels leverages on these shoppers to look for their products in the traditional grocery store and gain more shelf space.

Since consumers expect their food and beverage options to become increasingly health conscious, Au Naturel’s entry into sparkling waters is preemptive and a good chance to diversify their product offerings.  Should Au Naturel see strong sales in their current grocery stores, it is likely that their expansion into more locations would come quickly.  Cross-border expansion may also be a possibility at that time, and hopefully that means I’ll be able to find Au Naturel locally rather than having to make a trip down to the U.S. to find it!