GenDigital

A New Entrant In The Cola Wars With A Familar Name

Red Bull, the number one energy drink brand among teens and college students, is launching a new 100% natural cola brand this June in hopes of reinvigorating a declining carbonated beverage market. As we've noted previously, teens and college students have been shifting their beverage purchases in recent years towards bottled water, sports and athletic drinks and of course the still fast growing energy segment. So why would the number one energy drink brand take a risk and make a run of it in a declining category? It seems a little bit contrarian, but sometimes those contrarian approaches can pay off, big time. For one thing, Red Bull commands the highest brand loyalty rate among teens and college students within the energy drink category. It's not that much of stretch to say they can leverage that loyalty in another category. It's not like they're entering the game with a no name brand, after all it will be called Red Bull Cola and the packaging looks similar to that of their ubiquitous energy drink coming in 8.4 ounce cans that will be available at the bars and restaurants and 12 ounce cans that can be purchased at c-stores and supermarkets. The other thing they have going for them, and this is something that can certainly not be underestimate is the whole natural cola thing. It is no secret that young consumers are actively looking for and purchasing more and more all natural products. Have you been in a Whole Foods or Trader Joes store in a college town lately? If they stress the all natural make up of the beverage, they'll receive a much stronger response. The last thing they have going for them is ease of availability. Unlike the plethora of new beverage launches that aim for broad consumption among young people but lack the wherewith all to get their product on or near campuses, Red Bull energy drinks are already widely established at most tier one campuses. Making a little bit of room for Red Bull Cola shouldn't be too much of a stretch. We'll have to wait until June to see what the audience thinks, but based on all the Red Bull brand has going for it, there is no reason not to think Red Bull Cola won't be able to grab share away from category leaders in relatively short order.

2008 Market Trends: Drinking Beauty

One could easily deduce that at least a portion of those young people who have become increasingly active by exercising and working out are doing so purely out of selfish reasons, meaning at the end of the day, they just want to look good and attract the opposite sex. Really, it's that simple for most. With this audience, it's not that they're always looking for the easy way out (I think that more on Gen X's back), but perhaps looking for a less intensive alternative. So we go back to physical appearance...you're all on board that appearance and self image is just about the most important thing the audience thinks about...Ok, so the notion that along with a some kind of healthy diet and a regular exercises schedule one could consume a beverage or pop a pill that would ultimately make them look better is wildly appealing for this audience. There is a whole new category that's being referred to as drinkable beauty or cosmeceuticals that is almost sure to stir up the pot. One initial challenge we see for the early entrants is their target audiences. A product we're watching that is due to hit the market this quarter comes from a partnership between beverage king Coca-Cola and beauty queen L'Oreal. Their tea based nutraceutical, which is called Luma, helps improve women's skin, but the new brand will be targeting women 25+ which we think is an early misstep. Luma is just one of many cosmeceutical and nutraceutical products launches that will hit the market over the next two years. We can already envision specialty retailers like Sephora and Bath & Body Works becoming key purchase points, at least among the young women's market.   

Product Watch: Y Water: One Part Beverage, One Part Toy

You could hardly call the beverage industry boring lately. Ever since last year when the major beverage companies including PepsiCo, Coca-Cola and Cadbury Schweppes voluntarily began pulling their sugary soft drinks out of schools, the industry heavyweights have been on an non-stop product innovation tear. At the same time, we have seen some critical market consumption trends take shape. For a zillion years regular soft drinks like Coke, Dr. Pepper and Pepsi were the most consumed soft drink type among the youth market. Even before the voluntarily pullout, bottled water outpaced regular soft drinks to become the most purchased and consumed beverage type among the audience. Clearly, there is pressure on the leading companies to focus on healthier products or face a backlash from consumer interest groups. Not wanting to go down the same road of multi billion dollar lawsuits, activity in the space has been nothing short of extremely robust via new product intros, lots of acquisitions of specialty companies to round out product portfolios and a new focus. We are keeping an eye on a new beverage that will hit the shelves early next year that will be aimed at the kids and tween market that is one-part beverage and one-part toy. The beverage, called Y-Water, will be carried exclusively at Whole Foods, also known in some suburbanite circles as Whole Paycheck. Y-Water seems to click with all of the relevant lifestyle trends of the moment. The beverage falls under the organic category. The plastic containing the beverage is completely recyclable. The ingredients and flavors are non-traditional and unique using things like rosemary and black carrot juice for starters. (I never even heard of a black carrot until reading about it). Really, at first glance this product seems to hit all of the major touch points of the moment. The initial challenge will be distribution, but if they can gain enough traction from Whole Foods customers, we think it won't be too long before it is carried at other competitive chains like Trader Joes and even some larger more generic supermarket chains.

Mountain Dew Creates Extension Exclusively For Halo 3

When we reference "innovative" youth-focused marketing programs these days, we often highlight interactive and new media type programs. It's refreshing every once in a while to see a traditional consumer packaged goods company see an acute and identifiable youth market lifestyle trend and seize upon the opportunity. This is exactly what Pepsi's Mountain Dew brand is about to do. In recent years Mountain Dew has a done a good job of building brand equity and loyalty among the action sports crowd as well as the more populous gamer crowd. If you're a Youth Trends subscriber, you might remember a portion of our 2007 Trends and Predictions report that talked about this year's most anticipated game title releases. By far and away, the highest levels of brand awareness and purchase intent went to the upcoming third installment of the Halo franchise. Next to the Grand Theft Auto franchise, nothing has been bigger or sustained such a high level of popularity over multi-year period of time than the Halo franchise. That said, it looks like a major strategic marketing coup for Mountain Dew as they introduce an exclusive brand extension using the name "Halo 3" that will hit the market as the the title premieres later this summer. I really can't think of a better example of utilizing a non-traditional marketing approach to reach a core consumer target, in this case, teen and young adult men. Although it is still early in the year, the Mountain Dew/Halo 3 deal could definitely end up being the most original and creative youth-focused marketing tie-in of the year.

Can Cadbury Schweppes Challenge Gatorade?

Hmm, this is really interesting. May be Cadbury Schweppes sees something in the sports drink category that we and most others do not. This is something akin to what Microsoft did when they launched the Zune to go head to head with the category killer iPod. How are they doing with that? News is out from Cadbury that they are planning the biggest beverage launch in their history with Accelerade, a potential challenger to Gatorade and Powerade. When it comes to the youth market and sport drinks, here's the deal. More than half of all teens and college students purchase sport drinks on a regular basis, at least once a week. Gatorade has the dominate market share, capturing about 85% of all purchases, and just as important, their purchasers are loyal. With 15% of the sport drink category remaining, Powerade has done a nice clean up job and their share of the market has actually increased slightly over the past two years. So what is Cadbury thinking? According to the article, Accelerade's pitch is all about superior endurance and performance and their core consumer target will be the 35 million or so Americans that work out on a regular basis. The drink will have no celeb endorsers unlike their competitor who has a ubiquitous presence around some of this country's most popular and well known sports figures. The company plans to spend $50 million to promote Accelerade beginning in May using the theme "Sweat Smarter." It's definitely a gigantic challenge, but we'll see what happens, perhaps they can carve out a smaller niche among a segment of "the hardest of the hardcore" work out enthusiasts.

Site/Promotion Watch: Design Our Can

Using a portion of our proprietary panelists we've been tracking the efficacy of youth-targeted user-generated advertising and promotional campaigns since June of last year. So far, the programs that have received the highest ratings include the Super Bowl program that Doritos ran (skewing male) and the Dove College program (skewing female). Based on early feedback (assuming it holds) all of the aforementioned campaigns will be trumped and spit out by Pepsi's latest push. The "Design Our Can" promotion allows visitors to create their own custom design for a Pepsi can. The site and corresponding tools are super easy to work with (which is always more than half the battle...i.e. concept might be cool, but execution ends up sucking). Designs will be first evaluated by Pepsi and the their top choices will end up back on the site where users can that cast the final vote for the winner whose design will end up 500 million cans that will be distributed nationally. This is more than just self expression and customization...the market is looking at the final result in an American Idol-esque kinda way...they win, they end up on 500 million cans and who knows what else after wards...comparison, you make it to Hollywood on AI, you sing every week in front of 30 million "potential" fans who purchase your music down the road...

Krispy Kreme Hops on Health Kick

Long a late night snack favorite among teens and college students, especially among those in the southern portion of the country, the popularity of the highly caloric Krispy Kreme donuts have waned in recent years as the youth active and healthy lifestyle trend has kicked into high gear and shows no signs of slowing down anytime soon. Not to be left out of the trend, even Krispy Kreme is offering alternatives to health conscious customers. The donut and coffee chain has introduced a new 100% whole wheat donut that checks in with 180 calories compared to 380 calories for their popular Caramel Kreme Krunch variety. How a donut chain can go totally healthy seems a little far fetched, but like those lame BP commercials say, "it's a start."

Brand Watch: Bear Naked

Starting the new year off with a company that you should definitely keep an eye on. Given some of the current macro Gen Y lifestyle trends, it looks like cereal and granola maker Bear Naked is smack dab in the middle of a perfect storm...a perfect storm of explosive growth and success that is. We've been talking about the active, healthy lifestyle trend among teens and college students now for the better part of a year and a half. The macro trend show no signs of cooling off. To refresh your memory, we define the trend based on the increase in the number of teens and college students exercising and working out on a regular basis, the increase in awareness and intent for healthier food and beverage items and the increase in what we define as active wellness, that whole notion of wanting to feel good, look good, etc. Bear Naked already has one of the best selling granola brands in the country and their distribution is ramping up so they can hit more mainstream retailers instead of the all natural chains like Whole Foods. If Bear Naked wants to be one step ahead of the game and competition, they might think about a grass roots, word of mouth program based on using campus reps, or something to that effect.

7-Eleven To Stop Selling Cocaine...Huh?

Ubiquitous convenience store chain 7-Eleven has sent the word out to franchise operators to pull the caffeine friendly drink "Cocaine" from its shelves based on the negative connotation of the brand name. This might be a dumb question, but doesn't the c-store has some sort of corporate merchandising group that takes a look at things like this? They (7-Eleven brass) couldn't have been that naive to think that someone wasn't going to catch on to this super quickly. With the high powered energy drink now being pulled from the shelves, it could potentially give a short term boost (pun intended) to other energy drinks carried in the stores like Red Bull and Coke's energy drink called Full Throttle.

What All Hot Dog Connoisseurs Aspire To

Some post fourth of July fun postings...Twenty-seven year old Takeru Kobayashi from Japan broke his own record to win his sixth straight Nathan's Independence Day Hot Dog Eating Contest. The relatively small Japanese man weighs only 160 pounds, yet choked down nearly 54 hot dogs in just 12 minutes time breaking his old record set last year by half a dog. To be honest, I was pulling for Sonya "The Black Widow" Thomas who weighs in at only 100 lbs and holds such accolades including downing 65 hard boiled eggs in 6.5 minutes. How could you not love that?