Herbally enhanced drinkmeisters will jockey for position this summer as the all-natural segment brings new punch to the beverage sector.
Ah, summer. A time for hot dogs on the barbecue, weekend getaways with the kids, romantic walks on the beach without the kids – and for beverage marketers, some of the biggest promotions of the year.
Beverage behemoths are getting ready to uncork mega-campaigns this summer in hopes of moving billions of cans and bottles. PepsiCo. is mounting another Pepsi Challenge and working with Yahoo on a PepsiStuff.com initiative. Coca-Cola Co. will break a national instant-win game for its flagship brand and is developing a Sprite game tied to a fashion company. Dr Pepper/Seven Up has a string of on-pack and in-pack offers utilizing all of its brands.
But summertime isn’t the sole possession of carbonated, caffeinated concoctions. A group of non-fizzy drink brands are quietly competing for customers, shelf space, and brand awareness.
Healthy drinks, those enhanced with herbal additives or nutrients, represent the fastest-growing segment of the $12 billion all-natural beverage market, which represents around 17 percent of the total $65 billion soft drink industry and includes ready-to-drink teas, juices, and sports drinks. The beverages are becoming the latest craze among consumers who have migrated from the simple soda. “This is the most exciting segment in beverages over the last two years,” says Gary Hemphill, a vp with Beverage Marketing Corp. in New York City.
Young consumers 12 to 26 are fueling the growth, primarily through single-serve purchases at c-stores and supermarkets. “Consumers see one iced tea with ginseng next to one that is just regular tea,” says Marc Johnson, president of Mad Rivers Traders, an herbally enhanced beverage company based in Stowe, VT. “They’re going for the one with a little something extra in it.”
The marketers behind these drinks are using promotion to make a little headway with the “in” crowd. But young customers are as fickle as ever, so marketers are staying away from mainstream initiatives and opting for grassroots approaches.
“If you don’t get too heavy into brand marketing with this audience, they’re receptive,” says Neal Larkin, director of promotion for White Plains, NY-based Triarc Beverage Group’s Snapple and Mistic brands – which run ads in college newspapers instead of making national media buys. “But turn up the brand dial and you’ve lost them.”
“I think this customer group has been looking for a new brand. They’re not a Coke. They’re not a Pepsi. And they aren’t a Dew,” concurs Howard Wishner, a senior vp with South Beach Beverage Co. “So we can’t be too commercial or mainstream.”
GET OUT THERE
In the fragmented herbally enhanced market, large brands are scarce and mom-and-pop outfits plentiful, so local promotions are a good fit for small marketing budgets. Mad Rivers Traders does limited sampling at stores and events. So does Tualtin, OR-based Nuturina Laboratories, which sells its Regain herbal drinks in 2,500 corporate-owned 7-Eleven stores nationwide.
Tribal Tonics, the herbal beverage line from Roslyn, NY-based Adam and Eve, sticks to trade promotion in the natural-foods stores such as General Nutrition Center, Whole Foods, and Wild Oats which carry its 13 drinks, says Ken Goodkin, the company’s director of natural foods.
Adam & Eve injects a cause-component into its marketing by donating a piece of profits to charity. (Lake Success, N.Y.-based AriZona, which launched a successful line of ginseng teas and other extensions in the early 1990s, has remained relatively quiet while its market share has been stripped away by competitors.)
A lot of attention in the category has been given to Norwalk, CT-based South Beach Beverage Co. “SoBe,” as the company and its line of 28 herb-infused drinks are called, launched in 1997 and has quickly grown into a $200 million operation. (Sales are projected to reach $500 million by 2002). The company’s elixirs carry kooky names such as Eros, Zen Blend, and Wisdom, and are packed in glass bottles emblazoned with SoBe’s logo, a pair of green lizards.
SoBe’s entire $15 million marketing budget is funneled into sponsorships and alternative-event efforts. The company rides five Love Buses (logoed school buses and other vehicles) into venues such as mountain biking events, fairs, and ski resorts, and unleashes a team of samplers proffering tastes as well as “Team Lizard”-branded merchandise. The efforts will continue all summer long. “The key for us is building high-quality brand awareness by interacting with consumers on a face-to-face basis,” says vp-marketing Bill Bishop, Jr.
Co-founded by ceo John Bello, a former president of National Football League marketing arm NFL Properties, SoBe distributes its products nationally but has its heaviest sales on the two coasts. Some regions are hotter than others, and as a result Bishop is segmenting his promotional blueprint by region, labeling markets either “developed,” “developing,” or “under-developed.”
The company has built a long list of alternative endorsers who fill the Team Lizard roster, including volleyball star Gabrielle Reece, extreme sporter Biker Sherlock, skier Bode Miller, track and field wunderkind Anna Norgren, and golfer John Daly. (The latter an odd choice to promote a wellness product, if you ask us.)
SoBe sponsors a mountain bike racing team with bike maker Cannondale and also backs an Arco race car. The company recently inked a three-year event-sponsorship deal with Burton Snowboards. Sierra Communications and Performance Media, both of Wilton, CT, handle SoBe’s marketing efforts.
While tiny SoBe has done surprisingly well in the short time it’s been around, the company still lacks the shelf space and distribution system it so desperately needs to become a multi-billion-dollar player. “To be successful in this business, you have to have an established distribution network,” says Larkin. “Otherwise, you don’t have a chance.”
Triarc, which saw sales of Snapple, Mistic, and Stewart’s beverages rise 6.5 percent to $651.1 million in 1999, has both the cash and distribution to get a lot done. After unsuccessfully trying to buy into the herbal category through a 1998 attempt to purchase SoBe, Snapple launched its own Elements line in April ’99. The beverages are packaged in funky-shaped bottles and pitched to active consumers. Sales skew evenly between males and females, says Larkin, who hints the line has done well enough to have Triarc thinking about spinning off Elements as a stand-alone division. The company recently expanded the line to eight flavors; names include Earth, Sun, Fire, and Rain.
Snapple ushered elements into 2000 with a pair of consumer campaigns. A Defy Gravity tour hit the Pacific Northwest with sampling events at 15 ski resorts between California and Colorado. Consumers scored samples, T-shirts, stickers, and hats at Elements-branded tents set up at mountain bases. Staffers carved ice sculptures, played trivia games, and shot cold doses of the beverage via ice luges (a gimmick used in the past by some stiffer-drink purveyors). The effort tied into local events at each venue and wrapped last month.
The company then kicked off a Refresh Your Natural Resources effort that brought college bands to 20 schools on the West Coast. Elements-branded music CDs and samples were again served up from tents. “This wasn’t just a sampling event,” says Larkin. “We created a party.”
Elements sold so well in its first year that Triarc’s marketers got together to figure out a way to get Snapple sister brand Mistic in on the action without cannibalizing the new brand’s core consumers. The result: Mistic Hip-Hop beverages, a line of herbally enhanced drinks launched in February via a partnership with Def Jam Recordings.
The four drinks in the line are packed in collectable 20-ounce glass bottles featuring images and biographies of popular Def Jam recording rappers such as Redman and Method Man. The line is easily being accepted in urban stores, but is expected to eventually find its way into mainstream distribution outlets, Larkin says. P-O-P materials are already rolling out.
Triarc will take an Elements time-out this summer and bring Hip-Hop on a 19-market tour with events, instant-win games, sampling, and lots of bass-pounding rap. The tour will take thecompany into nightclubs and other new venues.
Deutsch Promotions, New York City, handles Elements and Hip-Hop promos. White Plains, NY-based The Guild Group pitches in on in-store components.
OUT OF THE WOODWORK
The successes of Sobe and Elements are expected to spur other herbal launches. Procter & Gamble, Cincinnati, recently jumped into the category by expanding its Sunny Delight Eclipse brand with a new Inner G SKU. The 18.5-ounce plastic bottles, which come in a variety of flavors and include boosts of green tea, ginseng, and guarana, don’t carry the Sunny Delight name – a signal that P&G didn’t think the Sunny D moniker would inspire the herbal set.
P&G began a multi-million-dollar grassroots effort last month with sampling at colleges and outdoor locales, according to a spokesperson. Innova Marketing, Minneapolis, handles.
Atlanta-based Coke may be next. The company won’t say how closely it’s looking at the segment, but a spokesperson confirms that, “We’re currently looking into this.” Coke has an extensive line of herbal drinks selling overseas, most heavily in Asia. Pepsi, on the other hand, is apparently not interested in dipping it’s toe into echinacea-enhanced waters. “We don’t dabble in that category,” a spokesperson says.
Indeed, the herbally infused beverage sector is hot enough to warrant the attention it’s getting. “This will be a category of its own one day,” predicts SoBe’s Bishop.
Companies like Triarc, SoBe, and P&G are betting the segment will prove a winner. But as any beverage marketer knows, the non-carbonated industry is a hot-or-cold market, where this year’s must-have becomes next year’s has-been.
“It’s like fashion. You have to anticipate what consumers want and get to market quickly,” says Larkin. “This is a fickle industry. You never know how quickly consumers will get tired of something.”
Did somebody say tired? A little bee pollen, yohimbe, and gingko biloba should take care of that.
In the alternative beverage segment, packaging is as important as what’s inside.
For companies fighting for retail shelf space and consumer hearts, the package is often integral. In the non-carbonated beverage world, the bottle can be everything.
Make it big, make it tall, make it wide, and the weirder the better. Consumers flocked to beverages from AriZona when the company debuted its unique, oversized bottle in the early `90s, causing other beverage makers to head back into their labs and cook up unique shapes of their own.
Herbal-infused drinks seem to be housed in the strangest bottles. Each has its own variation on a tall, oversized, oddly-shaped theme. And for many herbally enhanced beverage makers, the packaging is their only form of marketing.
“The bottle allows smart marketers to get more bang for their buck,” says Joe Kornick, principal with packaging developer Kornick Lindsay, Chicago. “The packaging creates excitement at the point of sale and is a badge that the consumer carries around with him.”
Unique packaging can also stave off legal encumberment, since imitation isn’t always accepted as flattery in the marketing world: AriZona is suing SoBe for allegedly copying its trademarked bottle. The case is pending.
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