Profit from choice
With Coca-Cola declaring that it sees future growth to be in non-carbonated drinks and PepsiCo openly saying it is going to chase the healthy vote, consumer lifestyles and life choice issues are driving new product development and marketing strategies. Annette Sessions reports.
Speaking to investors at a Morgan Stanley conference held in New York in November The Coca-Cola Company predicted that non-carbonated drinks would overtake carbonated beverages in Europe within three years. The company believes that teas, energy drinks and other non-carbonated brands will become the most profitable part of its business in Europe, Eurasia and the Middle East.
At the same event PepsiCo's Steve Reinemund, said that growing consumer interest in health provided his company with its "biggest single opportunity" for long-term growth. Plans were in place to develop new products in response to growing consumer demand for healthy products. It's a case of what the consumer wants, the consumer will get. And what is driving consumers' needs are their lifestyles.
Being cool, 24/7
Market researcher Datamonitor has discovered that there is a growing trend of 'cool consumerism' whereby consumers across Europe are increasingly purchasing products that reflect their aspiration to lead a 'cool' lifestyle. In its report, 'Coolness in Consumer Packaged Goods', Datamonitor reports that these aspirations are equally reflected among older consumers who are as reluctant to appear middle aged, as young consumers are keen to be seen as cool.
Consequently, the 'coolness' factor can be the make or break quality in contemporary branding as consumers use their perception of cool to differentiate and choose between products. Although coolness is most commonly associated with fashion items, Datamonitor says consumers are now beginning to seek 'cool' in consumer packaged goods such as beverages: a 'cool' packaged product assists the consumer in living their desired lifestyle.
Marketers know that celebrity endorsement contributes to the perception of what is 'cool'. In the US this has now been taken a stage further where hip-hop performers like Nelly are launching their own drinks. Nelly has taken advantage of his celebrity status to support his new energy drink, Pimp Juice, named after its namesake hit song. He is reported to have now partnered with Sam Goody's, Tower Records and Hasting Entertainment to sell and promote Pimp Juice and the new remix album simultaneously across the US. In the UK, Highland Spring's promotional arm Watermedia has acknowledged this trend with the first of what could become a number of celebrity own label drinks.
"Celebrity endorsement will move from simply using people's image or comments in advertising to the celebrities themselves realising their name is the important brand and, instead of saying drink someone else's soft drink, will say drink mine instead" is the prediction of drink commentator Nigel Lucas.
Findings from the Yellow Pages 118 24 7 survey by Critical Research in July 2003, indicate that 'European' UK embraces a 24/7 lifestyle. The traditional British 9-5 lifestyle is almost dead but Britain will never become a truly 24/7 society until its licensing laws are changed. Companies, such as Fire Fly, who have identified drinking occasions throughout the day (Wake Up, No Siesta, Sharpen Up and Chill Out), illustrate the current inventiveness to support those with a 24hour, seven- day-a-week, non-stop lifestyle.
Further research undertaken by Leatherhead Food International indicates that convenience and health are the drivers behind new product development. In The UK Food and Drinks Report 2003, Leatherhead cites bottled water as an example of a sector benefiting from such consumer demands. And, at this time of year, bottled water companies will be taking advantage of consumers' concerns over their lifestyle.
Vittel, for example, was promoting its water as part of New Year resolutions to become more active, using the tagline Revittelise in 2004. The water's healthy message is that it is a natural way of maintaining and restoring your vitality and helps replenish essential minerals such as calcium and magnesium which are lost during the course of a busy day.
Ethnic and ethical
However, it's not all health and nutrition which affect lifestyle choices. The UK-based Qibla Cola is one newcomer which aggressively pursues the 'consumer with a conscience' and demonstrated this by exhibiting at a recent UK lifestyle exhibition, Mela 2003. Speaking at the event, founder Zahida Parveen said: "The Qibla Cola Company is here to provide consumers from within the ethnic community and all people of conscience with an alternate brand of popular soft drinks - a real alternative." Besides UK distributorship, the company now has a presence in Canada, the Netherlands and Norway and predicts more countries will follow. It donates 10% of all profits made to world causes.
Likewise Mecca Cola, the Islamic alternative cola, donates 20% of its proceeds to a range of international humanitarian concerns. This cola has just launched in the UK to coincide with the Muslim Eid-ul-Fitr festival. It is already being sold widely in Europe, the Middle East and Asia, with sales currently exceeding a million litres a day. CA Distribution, the UK distributor for the drink, hopes the beverage will appeal to drinkers beyond the Muslim community.
Rashad Yaqoob, CEO of CA Distribution said: "We believe the UK will respond extremely positively to a credible ethical alternative to existing products, which is committed to promoting leading humanitarian causes. We will be seeking to assist both local and overseas charities, something the general public will be keen to support."
Ethical activitists are described by Fairtrade as ABCs, broadsheet readers and those aged between 35 and 54. Fairtrade, which represents over 4.5m producers and their families involving 350 groups in 36 countries, has been selling goods for more than 20 years. Its products are sold in 17 countries across Europe, North America and Japan. The UK has the largest Fairtrade market after Switzerland and claims are made that consumer demand for its foods has helped make Fairtrade a major concern of British politicians. Fruit Passion from Gerber Food Soft Drinks is one brand in the UK which has Fairtrade status: handpicked oranges for processing come straight from farming cooperatives. Fruit Passion is a pure fruit juice with no artificial additives or preservatives and as Gerber points out "with a rrp of £1.09 shopping with a conscience costs less than you think".
In its 'Natural and Fresh Food and Drinks' report, Datamonitor reveals that the organic food and drinks market in the UK is set to grow by almost 75% between 2002 and 2007. The UK is the second biggest organic market in Europe, but it is still a long way behind Germany. However, evidence that higher prices remain the most prominent barrier to consumer acceptance of natural and organic food and drinks is all apparent. "This suggests that, while opportunities are open to manufacturers and retailers, educating consumers on the benefits of organic and natural food and drinks is vital. Otherwise, marketers are going to find it increasingly difficult to justify the current price premiums in existence," said the report's author Daniel Bone.
The report also concludes that loss of trust and confidence in the food industry has been a great organic growth impetus with consumers increasingly conscious about safety of foodstuffs, methods of production and the ingredients used. Key life events such as childbirth, menopause, children leaving home, the 'empty nest' syndrome and senior lifestyles are also 'trigger' points for natural food adoption. "Research indicates that over 50% of consumers trust organic and natural products, more so than conventional food and drinks," said Bone.
Price premiums, though, are a deterrent; Datamonitor's advice to manufacturers is to limit price premiums to between10% and 20% above conventional counterparts which would be deemed acceptable to occasional and non-users of organic products. A clearer understanding of nutritional and health benefits would also increase consumption of natural drinks.
As to the future, the challenge for drink companies is to identify lifestyle issues and develop drinks to meet consumer expectations. Soft Drinks International predicts that 2004 will see the launch of drinks to aid beauty and weight problems (cosmeceuticals) and that drink fortification will reach a state of fine-tuning with refreshing palatable offerings. And by the end of the decade could it be possible that genetic science will have advanced sufficiently to indicate what our genes/DNA /blood groups dictate we should be
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