evian Replaces Coca-Cola With Red Bull

Courtesy of designtaxi.com
Courtesy of designtaxi.com

It appears that Coca-Cola and evian have both outgrown their distribution partnership.  Come July 2014, Coca-Cola will stop distributing evian waters (read the full story here).  Consequently around that same time, some U.S. cities may see evian being distributed off Red Bull delivery trucks (that story found here).  While Coca-Cola & evian describe the agreement’s termination as an opportunity to refocus on their core businesses, it may simply be Coca-Cola wanting to re-focus on their own water brand as smartwater continues to build sales.  With this adjusted partnership, who wins and who loses?  Coca-Cola, evian, or Red Bull?

It would seem that Coca-Cola is constantly looking at ways to ensure delivery truck space is stocked with as much Coca-Cola-owned refreshments as possible.  Coca-Cola appears to be re-evaluating all their distribution agreements in order to locate new growth opportunities.  It was only two years ago in 2012 that Coca-Cola ended a distribution agreement with Nestea to focus their attention on Fuze – which so far has left consumers upset since Nestea is not as broadly available.  Fuze also appears to have failed to expectations given consumers still prefer Nestea.  Has Coca-Cola been supporting Fuze with the appropriate level of marketing?  This indicates that while in-house products (Fuze, smartwater) may offer better profit margins, licensed products (Nestea, evian) may perform better given a stronger sales record (that was built with Coca-Cola’s distribution network).  Will Coca-Cola look to remove Monster Energy from their distribution infrastructure as well?  While smartwater may have stronger sales than Fuze, the question remains whether smartwater will be able to outperform evian.  If smartwater outsells evian, then Coca-Cola would have benefited from the distribution change-up.  The same logic would apply for all other products that Coca-Cola distributes.

For evian, this change comes at a time when the company is in the midst of introducing new product packaging.  The fact that the premium water brand needs to revitalize their packaging to stay competitive is disheartening.  This is a sign that evian must re-align some aspects of their product (this time it’s the packaging) in order to re-communicate the product benefits to the consumers.  With distribution changes occurring simultaneously, the impact is amplified and more detrimental. Consumers looking to repurchase evian waters may find fewer selection in addition to not recognizing the 14-year-old evian plastic bottle.  Retailers may be less confident in evian, observing so much change in such a short time.  However, Red Bull is a strong partner and is building up their own distribution network.  With the partnership agreement ending in July 2014, this still gives evian a little time to build more infrastructure to replace Coca-Cola’s footprint.  evian appears to be disadvantaged in this new arrangement, given the fragmented nature of their distribution system.  Even if evian could establish the same footprint as before, they still must compete against smartwater for shelf space given the opposite sales trends of these two premium water brands.  Still, evian is part of The Danone Group and would be able to leverage the strength of their yogurt distribution network.  Possibly weaker distribution, but evian should be none the worse off.

Courtesy of asiantrader.biz
Courtesy of asiantrader.biz

For Red Bull, this is an opportunity for them to improve their business through new opportunities.  While their innovation track record outside of energy drinks has been poor, the sales of their energy drinks has been steady and growing.  The fact that the energy drink manufacturer has returned to their roots among product innovation, they have also been creative to find new revenue-growing opportunities.  This is where distribution becomes that great growth opportunity.  As they deliver energy drinks to their retail customers, they can now satisfy more of the retailer’s beverage needs by bringing them evian as well.  While evian is the first manufacturer to explore product delivery through Red Bull, there are other product manufacturers that may leverage Red Bull’s distribution infrastructure in the future.  If Red Bull can expertly manage the evian distribution relationship and help the premium water brand regain sales momentum, then Red Bull stands to have many other growth opportunities in the future.

It would appear that Red Bull and Coca-Cola have more upside than evian in this new arrangement, but upside nonetheless.  It would also be important for other beverage manufacturers to take notice of what is happening here.  Would evian be better off approaching Pepsi to see if they can leverage a partnership with them?  And if you’re Monster Energy, this offers short term gains with more truck space.  Question is, will Coca-Cola one day end their distribution agreement to focus on Nos and other Coca-Cola owned energy drinks?

glaceau smartwater: Jennifer Aniston Has a Sex Tape

Jennifer Aniston doesn’t really have a sex tape, but the original name for her video ad that she made for smartwater was named a sex tape, that’s all.  glaceau smartwater has been using Jennifer Aniston as their spokeswoman for some time and the water company has been known to come up with entertaining advertisements for some time now.  This new video shows their creativity in getting people’s attention again.  The video features a kid lip-syncing a popular song, puppies, babies dancing, double rainbow plug, groin kicks, and cheesy porn music – each element being successful in getting viewer’s attention online lately, all rolled into one satirical video.  And then it finishes reminding you about smarrtwater being pure.

This ad’s been getting a lot of negative attention from the internet viewers, saying that the ad isn’t creative and tacky.  The claim is that the video doesn’t really have any creativity – all it does is have a celebrity spokeswoman and an attention-grabbing video title.  However, how do you define the success of any advertisement, wouldn’t getting attention be deemed successful?  Looking at alternate video sensations, aren’t Old Spice, Paul Vasquez (double rainbow guy), and Volkswagen’s Mini Darth Vader successful because of their ability to get your attention?

If we were to look at it in the traditional way of AIDA (attention, interest, desire, action from the university advertising textbooks), this video may be considered a success.  It has gained instant attention and interest given its title and has many people searching out the video online to view it to find out what this “Jennifer Aniston sex tape” is all about.  On the desire spectrum, this video may fall short because in the entire video only about 30 seconds are spent to tell you what the product is all about (purest tasting water there is).  For action, the sales results will measure will show how successful this ad is with sales before and after the video ad.

Another way to look at it, despite negative attention is the overarching goal of advertising.  Companies advertise to get your attention and peak your interest in their product, and increase it’s share of mind.  The video has shot up internet video ranking charts and has more people aware about the product; not sure about knowledge of the product’s benefits itself, but it has certainly made more people know it’s out there.  So if that’s the main goal of advertising, I would say that it’s pretty successful.  If smartwater were executing a multiple-phased ad campaign, then this would definitely be phase one where people are made aware of the product itself (and then later phases educating the consumer on the product’s benefits on how pure the water is and how it’s been manufactured).

Only smartwater’s marketing guys can truly tell you if this video has been a success or not, but the video has already gotten 6.5 million youtube views in a little over a week’s time.  Not too shabby.

update: Advertising Age says that the Jennifer Aniston video ranks as this week’s top viral video (most unique views).   See article and ranking chart here.

Glaceau smartwater has arrived in Canada…

In an earlier post BevWire broke news that Glaceau’s smartwater would enter the Canadian market in Toronto and Vancouver.  Glaceau probably decided that those two markets responded well to this product (and why wouldn’t they?) so with that successful entry, smartwater is now being listed nationwide and will soon be found at your local supermarket, grocery store and convenience store (and probably at a bunch of other places as well).

The 591ml size was extremely successful so now it will appear in the 1L bottle also. The company is trying to duplicate the success it has received in the US, where smartwater owns over 45% of the premium water category.  With that in mind, what will the other premium water companies do? Will Fiji, Evian and the likes feel the need to offer promotions or advertise more heavily to combat smartwater’s arrival?  Keep in mind that premium water is not a category where offering price promotions will help the brand.  As a premium product, the more  you lower prices or advertise, the more mainstream your product becomes and thus loses the luxury status.  So what can a premium water brand do to maintain it’s appeal and status, especially when there is a new competitor?  For now, it is too early to see how the market will respond to smartwater.  Even then, lowering prices are not an option.

The solution may be advertising, or marketing strategy in general.  For example, both Evian and Fiji use different marketing strategies to promote their products.  Even though both water brands advertise in the mainstream media through TV and magazines, Evian tends to use sponsorship and designer glass bottles more while Fiji relies on celebrity endorsements more.  The key is to have a unique selling point where no one else can duplicate, and then market it to the target audience.  So Evian will likely have to publicize their sponsorships more or find more sporting events to sponsor.  Fiji will likely need to get their products in the hands of more celebrities when they are out and about.

Time will tell what actually happens, but for now, head down to your 7-Eleven or Whole Foods and pick up a bottle of smartwater to refresh yourself!

Glaceau’s smartwater coming to Canada

smartwaterSmartwater is vapor-distilled water with added electrolytes.  BevWire has found out that Glaceau will be introducing smartwater for Canada.  Within the next few weeks, smartwater will slowly be appearing on shelves in two Canadian markets: Toronto and Vancouver.  This brand of water for now will only be available in one size: 591ml.  In addition, only a select number of stores in both Toronto and Vancouver will be presented with the offer to carry this product.  There will be less than 200 stores Canada-wide that carry this product, and only places like Whole Foods, Choices, and Urban Fare will carry it.

Not that the brand is unsuccessful, but why introduce this product in such a small community?  And why only Toronto and Vancouver, not Edmonton, Montreal, or Ottawa?

Answer to the first question: Glaceau is using the “pull” marketing strategy.  Instead of selling or “pushing” the product into stores, Glaceau is letting the product slowly receive attention, gain traction and have customers request (or “pull”) for the product from other stores.  Also, this gives the company more power in deciding where to release this product.  By seeing the sample of stores that will carry the product at first opportunity (Whole Foods, Choices, Urban Fare, etc), it is understandable that the brand’s perception is for healthy living.  Both these stores and smartwater share the “healthy living” values.

Answer to the second question: Toronto and Vancouver both have a high proportion of inhabitants that embody the company’s “healthy living” value.  While Edmonton and Ottawa may also have people that live healthy, the majority of the people are not.  However, Montreal is a curious omission.  Montreal seems to fit into both criteria, but is not included in the cities targeted for the initial launch.  A possible reason is that The Coca-Cola Company, owner of Glaceau, has a weak prescence in Quebec.  The province has warm feelings toward Pepsi product, but traditionally is neutral or cold toward Coca-Cola products.  Therefore, for fear of a cold reception to a high potential product, Montreal has been left of the list of initial launch cities.

For those living in Toronto or Vancouver, feel free to go out and pick up a bottle of smartwater when it becomes available!

**UPDATE ** Glaceau’s smartwater is now available everywhere, find out more here.