Healthy Hero takes UK bow
The success of Hero Foods' natural fruit drink Fruit2day not only confirms the strength of the wellness trend but the willingness of consumers to pay a premium for beverages with real health credentials. The company is following up successful launches in Germany and the Netherlands with a UK debut and is also looking further afield. Ute Ballay reports.
Next month sees the UK launch of Hero Foods' wellness brand Fruit2day. With more and more firms targeting Europe's booming wellness segment, it takes something a bit special to stand out in the crowd. Early signs are that Hero may have pulled of that difficult trick with Fruit2day. The packaging helps - giant images of exotic fruits on a figure-of-eight bottle. But it is the content - described as "drinkable fruit" by the Swiss food group - that has opened up a niche market for Fruit2day somewhere between fruit juices and probiotic drinks.
The brand name refers to Hero's claim that a bottle of Fruit2day provides the two daily portions of fruit recommended by most public health campaigns. It promotes the drink as the first genuine substitute for fresh fruit. Fruit2day comes in three flavours - pineapple and banana, orange and strawberry, and mango and peach. It is sugar- and additive-free, with fruit chunks in a fruit purée solution. The 200ml plastic bottles are available individually and in multipacks.
Sales growth in the Netherlands has been spectacular since the brand's March 2005 launch. Industry sceptics said sensible Dutch consumers would not pay Hero's hefty price (a twin pack of Fruit2day retails at between EUR1.49 and EUR1.69) for little more than chopped fruit in fancy packaging. Why buy a more expensive substitute for fresh fruit if the real thing is readily available? It seems a fair question, but not one that troubles Dutch shoppers. With over 20m units sold this year, in a market of just 16m people, Fruit2day is already an established brand in the Netherlands.
"The introduction of Fruit2day in the Netherlands went tremendously well," said Heinz von Kempen, chairman of Hero's German unit Schwartauer Werke. "We aim to repeat that success in Germany." Fruit2day launched in Europe's biggest soft drinks market in the summer, and is already one of the fastest growing soft drink brands. The German launch campaign laid great stress on scientific backing for Hero's nutritional claims - precious endorsements in such a health-aware market.
Valuable too is the bottle's '5 a day' logo, a token that its healthy living credentials are accepted by the German Health Ministry. Hero's use of all natural ingredients also goes down well in Germany, where the bio-sector is one of the economy's few growth stories. Demand for chilled ready-to-drink products is also strong, up some 15% last year to almost EUR700m.
By the autumn, Hero was scaling back TV advertising over concerns that the Bad Schwertau plant could not meet demand. Early estimates of low double-digit turnover in the launch year have been left well behind. "We are stunned by the level of demand, which is running far ahead of our best projections," said Hero's CEO Stefan Heidenreich. A third production line has just begun operating at the north German plant. Heidenreich expects that demand for Fruit2day alone will boost the parent company's modest 2% annual growth rates of recent years.
Heidenreich has totally restructured Hero over the last decade - a process that included the sale of leading juice brands Lindavia and Klindworth. Today it concentrates almost entirely on premium health-food brands and ingredients. Fruit2day is one of several new Hero lines feeding the public appetite for wellness and convenience. The group has suffered in the past from cheaper copycat lines springing up to undercut their premium brands. Germany's powerful discount chains are very aggressive in speeding-up the cycle of innovation and imitation. "The fact that the trade imitates top brands makes genuine innovation all the more important for leading producers," said von Kempen.
Hero expects its fruit division's latest creation to stay free of me-too lines for some time. One reason is the exclusive long-term contract signed with the plant supplier for Fruit2day's purée production lines. The plant uses new technology unique to Bad Schwertau, and Hero aims to keep it that way for as long as possible. Each unit costs the firm over EUR10m. The Schleswig-Holstein plant supplies all three national markets.
Add a big promotional spend to the initial EUR20m investment in R&D and new plant, and launching a premium soft drink from scratch is not cheap. Hero has allocated GBP11m over the next two years for UK marketing alone, including an initial GBP4m campaign in the local, national and consumer press. Building a wellness drink also requires brand backing from a well-established and trusted name.
Fruit2day profits from the financial clout and solid image of parent company Oetker, although the German food group is more associated with pizzas than innovative wellness drinks. But Oetker's backing - added to Hero's own good name and substantial SFr1.3bn turnover - puts Fruit2day in the same premier league as wellness brands from rival food multinationals Nestlé (Nestlé Fitness) and Danone (Actimel).
Hero is also well placed to push Fruit2day as an international brand. "Today Europe alone is not a sufficient market for our products," Heidenreich said. He aims to detach Hero from the slow-growth markets of Western Europe and become a global player, lifting turnover by 50% to SFr2bn by 2009. This might seem a pipedream for a firm which employs just 15 staff at its provincial Swiss head office. Yet Hero has already built close ties with fast-growing Asian markets. It has a joint venture project with dominant Turkish food group Ulker. In the medium term, Heidenreich wants to increase non-European turnover from the current 10% to 50%, building sales in Central Asia, the Middle East and Africa. Product innovation is another key area; Hero is developing new R&D centres in Spain and Germany.
The company seems genuinely surprised by Fruit2day's booming sales figures in the Netherlands and Germany. The UK market may prove tougher, with the product up against some well-established smoothie brands such as innocent and PJs. Yet the wellness wave is still building and was one of the big themes at this year's Anuga trade fair in Cologne.
Source: Soft Drinks International
For further information on Soft Drinks International, go to www.softdrinksjournal.com
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