Comment - Soft Drinks & Water - Are the Brits Really Coming This Time?
How successful will Lucozade and Innocent be in the US?
The Brits, it seems, have been coming to the US ever since Paul Revere warned the people of Massachusetts that an army was about to stop the American Revolution; they didn't. Neither have the Brits conquered Hollywood in the manner so often declared at Oscar time. So, can they secure a foothold in the US when it comes to soft drinks? Annette Farr thinks yes. And no.
Earlier this month, GSK said that it is in talks with a distributor for its Lucozade energy drink brand in the US. We've also heard talk of a possible roll-out of the Innocent smoothie brand in the US at some point soon.
First, to GSK. The London-headquartered company may well face an uphill struggle in the already overcrowded sports and energy sectors in the US. Although there has been no further official news since the first reports in June, a company spokesman has confirmed to me that the US is still a market of interest and definitely one that the company is looking at.
Unlike the niche smoothie sector, sports and energy drinks are well-established in the US with two powerful market leaders. In the sports category PepsiCo's Gatorade ranks No 1 followed by Coca-Cola's Powerade. Despite being market leader in the UK, GSK is going to have to work enormously hard to make an impact in a sector under such domination.
Furthermore, the sports drinks category has been experiencing a downturn. According to Beverage Marketing Corp, sports drinks volumes declined by 12.3% in 2009 with Gatorade, which has undergone a major rebranding and is now labelled simply 'G', seeing volumes drop by 15.5% compared to a 1% drop at Powerade.
Although energy drinks are performing better in the US - Nielsen stats show sales rose by 7.6% in the four weeks leading up to 10 July this year - the market is extremely competitive. Consumers have an overwhelming choice, fronted by Red Bull. Monster drinks, owned by Californian-based Hansen Natural Corp, are in hot pursuit and are reported to be taking market share from Coca-Cola's Full Throttle and PepsiCo's Amp, Mountain Dew and SoBe. Then there's a plethora of smaller brands each after a slice of the action. Not much room left, then, for Lucozade.
Sadly, Lucozade signally lacks a USP for an American audience. Yes, it's a much-loved, established UK brand with a great heritage, but what is its point of difference for US consumers?
Smoothies, however, tick an awful lot of boxes for the growing number of Americans embracing functional, healthier drinking habits. Historically, the US is used to drinking smoothies in juice bars where the drinks are made to order - there's no reason why Americans shouldn't readily switch to drinking their smoothies in a ready-to-drink, on-the-go format.
Innocent, along with The Coca-Cola Co (now the proud owner of 20% of the company), must surely be delighted at last month's news that McDonald's USA cancelled a national in-restaurant sampling event of its new McCafé Real Fruit Smoothies, due to overwhelming popularity. A thumbs up from McDonalds represents pretty good market research.
"The McCafé Real Fruit Smoothies are an absolute hit with our customers and we're experiencing unprecedented demand for this new choice on our menu," says Neil Golden, chief marketing officer of McDonald's USA. Working with franchisees and suppliers, McDonald's will be reviewing the potential of rescheduling the national in-restaurant smoothie sampling event for a later date.
The Innocent trademark has been registered in the US and the company is gaining media attention. Its trio of charismatic founders - Adam Bolon, Richard Reed and Jon Wright - with their start-up story and subsequent growth to become market leader in the UK and some European countries, is a colourful back story and makes good column inches.
Their smoothies have product integrity. They are natural, nutritionally sound, healthy and, in my opinion, taste very good. Their marketing is oddball and, from an American standpoint, has overtones of English eccentricity and sense of humour. The brand has also been a pioneer of sustainability and ethical issues. What's not to like?
Crucially, Coca-Cola's part ownership of the company gives Innocent distributorship and marketing opportunities the like of which other brands can only dream. Further, Coca-Cola has shown its willingness to introduce overseas brands into US markets with the recent launch of Kvass, the staple Russian fermented beverage, in the New York City area.
It has been reported in the US online publication Inc. that Innocent has a 30-year vision and that all three founders have made a rolling three-year commitment. Richard Reed says: “ We're really keen to get the brand recognised internationally as the one that helps people live well and die old. One could say we're doing okay in the UK and just starting to get somewhere in Europe. But, we've registered the trademark in the US, China and India and we want to get there, too.”
With Coca-Cola's support, they probably will.
The US soft drinks market is notoriously difficult to infiltrate as Sir Richard Branson discovered when Virgin Cola attempted to capitalise on his name and brand to grab a share of what is the world's most popular carbonate flavour. Branson learnt, as the brand failed to dent Coke and Pepsi's duopoly, that it's a tough nut to crack.
GSK has flagged up its global aspirations, but whether Lucozade can prosper in the US is questionable.
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