Bolthouse Farms Very Likely To Expand

Bolthouse Lineup

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

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

Naked Juice 10oz bottle

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

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

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

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Just for Kids: Odwalla Smoothies

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

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

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

Naked Juice 10oz bottle

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

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

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

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

Starbucks Buys Evolution Fresh, Naked Juice to Disappear in Starbucks?

Evolution Fresh - courtesy of drinks-business-review.comNumerous headlines were made this week when Starbucks bought Evolution Fresh, a super-premium healthy juice company.  For Starbucks, this signals their entry into the health and wellness juice category, and may also spell the end of Naked Juice in Starbucks locations.  First of all, who is Evolution Fresh and what makes them so special?  Second of all, how will this affect the partnership between Starbucks and PepsiCo, with Pepsi bottling and distributing Starbucks Frappuccinos and Doubleshots?  Will Pepsi’s Naked Juice follow the path of Happy Planet juices, the first juice and smoothie manufacturer in Starbucks coffee shops that was later replaced by Naked Juice when Pepsi and Starbucks entered into the distribution agreement?

In answer to the first question, Evolution Fresh differentiation is its unique pasteurization technique called High Pressure Pasteurization (HPP).  This technique allows the liquid to be pasteurized in the bottle using little to no heat, maintaining the juice’s nutritional value as well as prolonging the shelf life.  Other juices like Naked and Odwalla uses a  technique called Flash Pasteurization”, which uses high temperature heat for 15 – 30 seconds to kill off bacteria and microorganisms.  The main difference would be the use of heat to pasteurize the beverage, as flash pasteurization’s use of heat may slightly shorten the juice’s shelf life and also cause the loss of some vitamins.

Relating to the business and marketing aspects of this acquisition, Starbucks may have to look for a new distribution partner for their Frappuccinos and Doubleshots.  With Naked juices being replaced with Evolution Fresh in Starbucks coffee shops, Pepsi may likely decrease their priority on re-stocking Starbucks products when inventory runs low.  Other distribution options for Starbucks include regional beverage distributors or food distributors that sells products int he same grocery supermarket channels.

It will be  interesting to see how the two companies treat each other when the partnership officially terminates – amicably or otherwise.  With Starbucks initiating this juice purchase, they will be direct competitors in the juice category.  Will Pepsi purchase or create their own coffee brand?  After all, Coca-Cola does have their own boutique Chaqwa coffee brand, so maybe Pepsi will be developing their own coffee beverage to add to their overall refreshments portfolio.

Happy Planet introduces juice shots

A comment posted by Christine Leonard on BevWire’s Happy Planet entry highlights that Happy Planet has recently launched some all-natural juice beverage shots.  Although, it may seem like a case where they are looking for free publicity – all other web sources show Christine Leonard’s contact information so it is likely she works for Happly Planet and is providing some buzz marketing while the product is being introduced to the market.  In any case, this is an intriguing innovation and a post has been written about these Happy Planet juice shots, providing a quick analysis of the launch.  Please continue reading…

There are 4 types of juice shots:

  • Energy – main ingredients includes Ginko Biloba and Cha de Bugre to help the user main an energy high.
  • Immunity – main ingredients includes Fucodian, Echinacea, Zinc, and Vitamin C to protect the user from common sicknesses such as colds and flus.
  • Detox – main ingredients includes Burdock, Milk Thistle, Ginger, Sodium, and Potassium which helps cleanse and protect the body from harmful toxins.
  • Glow – main ingredients includes Coenzyme Q10, Sea Buckthorn Berry, Selenium, and Vitamin E which helps the user regenerate cell and skin tissue for smooth skin.

A news release also mentions that these juice shots will be available in gas stations (Shell, Mohawk/Husky, Chevron), convenience stores (Mac’s, Quickie, etc) and supermarkets (Safeway, Capers, Whole Foods).

It appears that everyone is getting on board with the shots.  First energy drinks and now juice beverages too.  BevWire previously mentioned that margins are notably higher and costs are lower therefore it makes sense to be in this category.  Whereas juices and energy drinks are mainly found in the cooler vault at the back of the store, consumers may find these shots in the beverage aisle or at the cashier till (providing an additional point of interaction before their complete their purchases).

While it may seem too early to make a decision, it seems like Happy Planet has made a good move here.  While the all-natural juices category is growing, this proliferation leads to over-stimulating the consumer and the products ultimately receive less exposure given this proliferation.  Therefore, providing juice shots is a key differentiator that will have consumers take notice – it also helps to have your product positioned at the counter when consumers are ready to pay (increasing impulse consumption).  Second, the shots market is mainly dominated by energy shots.  By offering juices in a smaller serving, Happy Planet will potentially increase their share of pocket by switching consumers looking for a quick, small beverage without the caffeine (with the exception of Energy+ which does contain caffeine).

Happy Planet has also supported this launch with its event marketing.  Happy Planet will be in Vancouver, Calgary, Toronto and Montreal to promote their new innovation.

At the moment, BevWire has not noticed any other juice shots available in Canada.  This gives Happy Planet a monopoly on the market without any competitors.  However, given the history of a product’s success, we may be primed to see more juice shots introduced to the market soon enough.

What happened to Happy Planet?

happyplanet-extgr2Some might remember that Happy Planet was an organic juice/smoothie that was sold in coffee shops, supermarkets, and convenience stores.  One of the main locations where this drink can be found was inside Starbucks.  Happy Planet was an alternative to the range of caffeinated beverage inside a Starbucks coffee shop.  However, Starbucks now carries something called Naked instead of the Happy Planet smoothie.  Is Happy Planet no longer produced?  The answer may be “Pepsi.”

Pepsi Bottling Group (PBG) produces and distributes Naked, a Pepsico owned beverage.  They also happen to produce and distribute a variety of beverages for other companies, one of which is the Starbucks Frappuccino.  So what have happened is that PBG and Starbucks have signed an agreement to carry and distribute each other’s products.  PBG will bring the Starbucks Frappuccino into their customer accounts, while Sarbucks will replace Happy Planet with Naked as the coffee giant’s smoothie.

The benefits for both parties are significant.  For the Pepsi Bottling Group, getting into Starbucks with their smoothie gives the beverage giant an additional distribution channel.  Not everyone going into Starbucks looks for coffee, so their healthy alternative beverage is now a Pepsi product.  For Starbucks, having PBG distribute their beverages is a clear winner.  Starbucks can continue focusing on what they do best and leave the rest to Pepsi.  And having a larger distribution network and dedicated sales force to bring your product in front of the customer doesn’t hurt either.  Not to mention that the Starbucks Frappuccino is not limited to coffee shops, but now available in supermarkets, convenience stores, and other grocery stores.

An excellent arrangement to Pepsi Bottling Group and Starbucks, but not to Happy Planet.  Happy Planet can still be found at most places like coffee shops and supermarkets, just not at Starbucks.  And there goes another little company being shut out by the big corporations.