Enhancing water's value

by Erica Shaffer
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As the beverage market recovers, so does the value-added water segment. Last year proved to be a rebound period for the beverage category, which advanced by 1.3% in 2010, according to the Beverage Marketing Corp. (B.M.C.), New York. Value-added water saw a 0.2% increase in volume from 2009 to 2010.

The economy has affected all beverage categories, with an adverse impact in 2008-09, said Gary Hemphill, senior vice-president of information services for the B.M.C. And although growth was not dramatic, 2010 was a rebound year in that performance was up for value-added waters, he said.

Enhanced waters continued to be the top performers and the largest category of value-added waters.

“It’s driven by consumer preference,” Mr. Hemphill said. “Brands that fall under the enhanced (segment) tend to be bigger brands, better performing brands.”

Leading brands in the category are Glacéau’s Vitaminwater, a Coca-Cola Co. brand, and Propel and SoBe Lifewater, both from PepsiCo, Inc., Purchase, N.Y.

“In general, from a consumer standpoint, these products, whether they are the flavored or enhanced, serve as a change of pace for a bottled water consumer who’s looking for greater variety,” he said.

In keeping with behaviors inspired by the recession, consumers continue to look for the best value in addition to convenience when shopping for beverages. The new wrinkle in beverage product offerings is enabling consumers to customize plain water with powder or liquid flavorings and several products are at retail to fill this niche.

MiO, developed by Kraft Foods Inc., Northfield, Ill., is a caffeine-free liquid flavoring that is sweetened with sucralose. The modern-looking container for MiO holds 24 servings, but consumers may use as much of the product as they want. The ability to personalize plain water seems to be resonating with the product’s core audience — millenials.

“Millennials are accustomed to personalizing everything in their lives — from playlists on their iPods to the shows in the DVR list and even their sneakers,” said Tiphanie Maronta, brand manager, Kraft Foods. “Millennials are our consumer target and we offer them a distinct benefit of personalization for their beverage — add a little or a lot, it’s the ultimate way to personalize your beverage.”

Kraft created a Facebook page for MiO and gave away 100,000 samples in four weeks through the social network site. Ms. Maronta said MiO has performed beyond the company’s expectations.

“The U.S. consumes over 170 billion servings of water each year, consisting of both bottled (a $10 billion market) and tap (on a consumption basis, three times the size of bottles),” she said. “We believe MiO represents the future of how people will drink their water and we are backing this initiative with a significant investment.”

Powdered drink mixes are another option available to consumers that have been slower to catch on, according to a report from Mintel International, Chicago.

“Drink mixes largely remain flat as consumers preferred the convenience of R.-T.-D. beverages,” Mintel said. “The segment needs more innovation, especially from brands that have proven their mettle in R.-T.-D. segments.”

Fruit drink mixes were the strongest contributors to the drink mixes segment on a dollar growth rate basis, according to Mintel. Energy drinks had the highest growth rate among all types of drink mixes during 2008-10.

Although powders overall have been underperforming in the market, they do have an edge over the R.-T.-D. products.

“The advantage the powders have is obviously, on a price basis — they are much cheaper than ready-to-drink products,” Mr. Hemphill said. “With a particular consumer, a price-sensitive consumer, that would be a category that would resonate with them.”

As for innovation, Kraft has turned to its Crystal Light brand as a launching point for Crystal Light Pure, powdered mixes that come in individual serving sizes. Since adding the line, Crystal Light Pure has made consistent gains in distribution, share and revenue, said Orion Brown, associate brand manager for Kraft.

Ms. Brown said the product is aimed at women ages 25-54 who aren’t currently buying Crystal Light.

“They regularly drink water (bottled or filtered) and are open to powdered drinks for iced tea mixes,” she said. “When this consumer thinks about flavored beverages, she typically doesn’t consider Crystal Light because she believes it’s artificial.”

In 2011, the company added lemonade, mixed berry and tropical punch flavors to the line.

“The positioning and value it brings to the consumer has helped to offset hurdles currently facing the category,” Ms. Brown said.

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