Wednesday, July 18, 2012

The Consumer Calls And The Beverage Industry Answers, Once Again

In the crowded beverage world, there is always room for new products. I would always tell my customers who would say they don't have the space for a new item, "bottled water was once a 'new item' and now look, you have an entire door of water." 

Some retailers have to wait to see how a brand does before they jump on the bandwagon. But, there are others who will always find a way to make room. Regardless of the space issue, the brand has to have an identifiable trait, something that will make the consumer want to grab it versus their usual preference. Nowadays, the "healthy alternative" is getting more attention and it's impact on the market is changing things.

Look at the bottled water market I mentioned. It was once thought to be a crazy idea that anyone would buy something they could get for free from their taps at home. Well, Pepsi and Coke decided it wasn't crazy, and ventured into the bottled water business with their entries Aquafina and Dasani, respectively. Two of the top selling "purified" waters available. They weren't the first to put it in a bottle, but they were the first to make it mainstream. What happened after that was an economic tidal wave of gross profit that swept across the beverage industry because it was so easy to produce. Year after year saw double digit increases in volume, but, eventually, as most good things do, it slowed, primarily due to immense competition from others who saw how cheap it was to get in on the action. 

But, competition wasn't the only reason for slowing sales; consumers had their fill of bottled water's "healthy offerings". Yes, it is still healthier than any CSD on the market, but people were wanting to take the next step. So, as a result, the industry evolved toward other choices. Natural pure spring water became more popular and brands such as Fiji and Evian increased their stature as a premium, healthy choice. And, the category continued to evolve seeing brands like SmartWater emerge as a viable option. Now, you have choices such as flavored or regular, imported or domestic, still or sparkling and even caffeinated, as in the brand Avitae.

What all this means is the consumer will want more from a category and industry has always answered the challenge. Now, more than ever, consumers are well versed in what it means to live healthy, not only in what they consume, but how the products they consume are made. Could you imagine just twenty years ago asking yourself these questions while at the supermarket; Is it Certified Organic? Are the raw materials sourced in a sustainable manner? What is the environmental impact of the packaging? What is the company's carbon footprint? 

These are exactly what consumers are asking themselves and the industry, once again, is listening. Honest Tea, co-founded in 1998 by Seth Goldman and Barry Nalebuff, has led the charge. Instead of using powders and concentrates found in almost all mass produced teas, Honest Tea makes it's tea the "old fashioned" way (as in 2730 B.C. China), brewing the entire tea leaf. In 2011, the company switched to 100% Fair Trade Certified tea leaves, helping to ensure the workers who pick the tea leaves are properly compensated. Honest Tea has also been named one of the 10 Best Companies On The Planet by The Better World Shopping Guide because of their environmental and social records. In addition, they were named one's Top 7 Green Corporations and recognized by Huffington Post as a Revolutionary Socially Responsible Company. In 2004, all of Honest Tea's products became fully USDA Organic Certified, making them the only tea company to have an entire line of certified bottled and bagged tea. 

In 2011, The Coca-Cola Company acquired Honest Tea, although the brand still functions as an independent operating unit. If a global company such as Coca-Cola recognizes the impact a small company has on an entire category, there must be something to it. And isn't that a good thing? 

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