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.

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.

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?

Pepsi Next Changes Its Packaging

Pepsi Next undergoes a facelift, changing the packaging from blue to green. Courtesy of facebook.com.

Pepsi Canada ushered in 2015 with a packaging change to Pepsi Next.  Previously packaged in light blue, the product packaging transitions to green and harmonizes with the Pepsi True product packaging in the U.S.  This change is logical since Pepsi True (in the U.S.) and Pepsi Next (everywhere except the U.S.) are formulated the same way: both versions are sweetened with stevia and contain fewer sugar and calories.  While this packaging change harmonizes Pepsi’s cola representation in many markets, two questions remain.  The first being what should Pepsi do to simplify their cola portfolio in the U.S., should they discontinue Pepsi Next so consumers are not confused with the many versions of Pepsi available?  The second question is whether more harmonization is on the horizon, where Pepsi keeps only one brand name (Next or True) across all marketing areas?

Related Post: U.S. Cola War Continues with Pepsi True Launch

Pepsi Next was launched to much fanfare in the U.S. and kickstarted with a Super Bowl commercial featuring Beyonce.  Despite the amount of marketing support and retail space Pepsi dedicated to this launch, sales of Pepsi Next has not set the world on fire.  Many consumers still find the aftertaste hard to stomach as a result of the artificial sweeteners.  It would make sense to discontinue Pepsi Next since its performance fell short of expectations.  While discontinuing Pepsi Next helps Pepsi True secure retail shelf space, this will be a tough decision for Pepsi.  The mid-calorie soda launched in 2012 – roughly on the market for two years – and rationalizing the drink so quickly after its launch could damage Pepsi’s reputation for flawless product launches and create trust issues within their customer relationship.  Since Pepsi True was introduced in 2014, discontinuing this product would undoubtedly create trust issues and severely damage Pepsi’s reputation in the marketplace.  Regardless of difficulty, it’s important that Pepsi simplifies the U.S. cola portfolio.  Rationalizing Pepsi Next would be easier than Pepsi True.

Related Post: Pepsi Next May Find More Success in Canada (Than The U.S.)

Pepsi Next’s new packaging, in green. Image courtesy of facebook.com

Pepsi would also have to address the product name of Next or True if it wants to achieve the greatest marketing scale and build the strongest brand equity.  If cost was the sole consideration, keeping the Pepsi Next brand name is least costly since Pepsi True is only available in the U.S., whereas Pepsi Next is sold and recognized across the Americas, Europe, and Australia.  However, the marketing perspective suggests that it would be make more strategic sense to keep the stronger brand name, and the name that translates best across multiple geographies. It’s possible that Pepsi keeps both names, as some products are branded with a different name in international markets.  For example, North American brands Bounty (paper towel) and Becel (margarine) are recognized internationally as Plenty and Flora, respectively.  It would just cost more to Pepsi as they market the product across closely tied geographies, like Canada and the U.S.

Changing the Pepsi Next packaging in Canada to match the U.S. Pepsi True packaging is a good first step toward reducing confusion, but the work isn’t done for Pepsi.  Consumers should be on the lookout for some more changes to Pepsi Next (or Pepsi True if you’re in the U.S.) in the coming months.

Mountain Dew Dewito: An Example of Perfectly Targeted Messaging

A college student samples Mountain Dew Dewito – a Doritos-flavored Mountain Dew soda. Image courtesy of reddit.com.

By now most people have heard of Mountain Dew testing a Doritos-flavored variant of their popular citrus soda.  Among a variety of flavors the soda brand was also testing out, this flavor garnered the most attention for its shocking combination of tortilla chips, cheese, and citrus soda.  Many people (including myself) believed that Mountain Dew would eventually launch this flavor nationwide.  It seems we were all tricked by the soda brand – thankfully.  Per Bloomberg BusinessWeek’s Venessa Wong, the “Dewito” flavor was merely part of a flavor test on college campuses but there were no definite plans for broader release (article link here).  Depending on its success, the Dewito flavor would have moved onto the next phase of product introduction though that now seems unlikely based on the chatter it created on social media.

The fact that the flavor stood out among other similarly surprising flavors (ie habanero mango, rainbow sherbet, and lemon ginger) is a sign that individuals talk and share what is most surprising to them.  And more importantly, it’s a sign that Mountain Dew recognizes how to reach their target consumers and leverage them to help create media attention.  As much as the BusinessWeek article states that this is not a PR stunt, it certainly seems like it was a PR stunt.  And ultimately a PR stunt that was successful at helping it garner significant press for a shocking soda flavor.

Understanding that Mountain Dew’s core demographic are millenials, the soda brand found a way to connect with this demographic break.  Mountain Dew could have announced flavor testing through a traditional press release, but instead had their Dew fans break the news via the news channels they are most likely to pay attention to.   It’s no surprise that millenials are heavy users of Reddit, Twitter, and Instagram, where news of the Dewito flavor first broke.   Mountain Dew could have chosen to sample less shocking flavors, and at more generally high traffic areas.  Instead, sampling took place on college campuses where strong concentrations of young adults exist.  All in all, this seems Mountain Dew providing its fans a chance to help generate some buzz.

As an edgy brand that puts its customers in a position to choose future soda flavors and create branded content for them, Mountain Dew has to take the good with the bad.  This Dewito example helped Mountain Dew generate a lot of positive publicity as a soda brand that listens to millenial consumers and anticipates their preferences.  Back in 2013, a partnership with Tyler the Creator to help the brand create commercials didn’t go over so well.  The commercials generated similar levels of media attention for racial stereotypes and downplaying violence against women (article link here).  Mountain Dew has been successful through leveraging fans to create content and carry out its brand communication, so there will be hiccups along the way.  For the most part, these are all examples of the soda company pinpointing content and communication channels that resonates with its audience.

The most surprising thing is that all this buzz was generated for a test product, not even one that was planned for limited release.  Mountain Dew never needed Dewito to be a successful soda – it just needed it to help it tap into their target demographic.

Amazon Wins Big with Coke & Pepsi Exclusive Launches

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, 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 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.

Pepsi Creates Caleb’s Kola By Recycling Pepsi Natural

Caleb’s Kola – Pepsi’s craft soda made with kola nut, cane sugar, brown spices, and citric acid.

The declining trend for soft drink consumption has not deterred Pepsi from launching a craft soda to attract an elusive demographic: millenials.  Maybe five years is long enough for everyone in the beverage industry to forget, so it may be worth reminding readers of Pepsi’s history.  It wasn’t that long ago that Pepsi launched Pepsi Natural (Pepsi Raw if you’re in United Kingdom) patterned the same way, with its natural ingredients and glass bottles.  Are Pepsi Natural and Caleb’s Kola essentially the same thing?  If yes, does Pepsi stand a better chance of making Caleb’s Kola a success five years after the Pepsi Natural failed?

From the ingredient list and glass bottle packaging, Pepsi Natural and Caleb’s Kola look very much alike.  Both sodas are made with kola nut and cane sugar, and come in glass bottles to highlight its authenticity.  Both drinks are also available through limited distribution, with Caleb’s Kola only available through Costcos in Maryland, New York, Virginia and Washington, DC.  Both products came off Pepsi-branded delivery trucks.  And both are produced in Pepsi bottling facilities rather than Caleb’s Kola being made by small, localized independent bottlers.  It seems that many aspects of the product and business practices are identical between the two.  A key point of differentiation does exist between them – which could help Caleb’s Kola succeed – is the marketing.  Branding the product as Pepsi may have been a factor of the Pepsi Natural’s failure.  The overt association with Pepsi may have made the “natural” aspect of their product less believable.

Prior to its launch, Pepsi Natural’s UK team gave out product samples for 6 weeks.  Results were favorable.  More than 1.2 million bottles were sampled and over 80% of samplers claimed they liked the taste.  An additional 75% of respondents stated they would be purchase the soda.  As we now know, the sales results did not mirror the sampling efforts.  Pepsi Natural was discontinued quickly after its launch.  Pepsi UK discontinued the natural soda in 2010.  Norway had it for nine months before ceasing sales support in 2011.  In the US, its end date is unknown by certainly by 2011 Pepsi had moved to focus on other sodas.  It certainly looks like the odds are stacked against Caleb’s Kola, but times have changed and it may actually fare better than Pepsi Natural with its new name.

Maybe Caleb’s Kola will find more success in 2014 than its 2009 predecessor.  Millenials and consumers generally have valued healthy consumption more highly in the years since.  Branding the product under a different name also limits the association with Pepsi.  And tools to market Caleb’s Kola are better than the ones available to promote Pepsi Natural.  If Caleb’s Kola is to be a success, let’s hope Pepsi has learned from its failures with Pepsi Natural.

Vegetable Beverages Hitting Mainstream

Would 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

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.

U.S. Cola War Continues with Pepsi True Launch

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.

Nestea and Lipton Go After AriZona

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.

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.  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.

Backed By Popular Dewmand Reaches Canada

Mountain Dew Canada brings back Code Red, White Out, and Supernova for Backed by Popular Dewmand Canada. Courtesy of facebook.com.

It looks like Pepsi likes to recycle American promotions for the Canadian market.  Mountain Dew had used the “Backed by Popular DEWmand” promotion to resurrect popular discontinued flavors, and are now running this campaign in Canada.  Following in the success of Voltage winning the first Canadian DEWmocracy, Code Red, Supernova, and White Out are now returning to store shelves until early August.  Like the original DEWmocracy campaign, consumers vote and choose which flavor they’d like to remain available after August 2014.  No mention on whether the winning citrus soda will become a permanent beverage in Canada.  However, if the 2013 promotion was any indication, there is a strong chance another flavor will join their current beverage line-up come September.

Intelligent move by Pepsi Canada’s Mountain Dew to follow the American playbook to introduce a new product.  The DEWmocracy campaign from 2013 may have generated a surge in sales that would have made it difficult to match in 2014 without any promotional activity.  Repeating DEWmocracy in the following year risks tiring out the Mountain Dew consumer with identical consumer promotions.  Enter the 2014 “Backed by Popular DEWmand” promotion.  The DEWmocracy campaign equity is extended to the current year through the “Backed by Popular DEWmand” campaign without risking promotion fatigue.  Loyalists that previously chose Code Red, Supernova, or White Out can now re-engage with these flavors and vote for their preferred flavor.

The beverage brand also reaps another benefit by indirectly repeating this campaign.  Beyond the voting process, Mountain Dew can further understand the Canadian consumer’s taste preferences.  The four flavors from last year – Voltage, Code Red, Supernova, and White Out – were carefully selected to see which ones would appeal most to Canadians.  While Voltage (raspberry-citrus) was the most popular, Code Red (cherry) placed a close second.  Code Red has been produced by Mountain Dew USA since 2002 and was considered one of the brand’s most successful flavor extensions (via the Mountain Dew wikipedia page).  Based on this information, it is certainly worth giving Code Red another chance in the Canadian market.

Mountain Dew Canada brings back Code Red, White Out, and Supernova for Backed by Popular Dewmand Canada.  Courtesy of facebook.com

With all the focus and support behind the Mountain Dew brand in the U.S., it certainly makes sense for the Canadian team to receive some additional.  Even if Code Red does not win this year, the citrus soda company may return again next year with four new flavors – possibly the Taco Bell Baja Blast flavor.  Once again, great marketing campaign that engages with the brand’s fans that also provides valuable benefits to the beverage.