Juice fights back

Beverages battle shapes up to be a thriller in the chiller

When convenience and impulse store operators talk about cool beverages these days, it seems that energy drinks, sports drinks and water are always the segments that generate the most excitement.

While there is no disputing that these drinks have made a spectacularly positive contribution to many outlets' profitability ... there is a growing suspicion that we are in danger of neglecting some of the other longstanding and always reliable segments.

First the bad news

A case in point is juice. It is certainly true that it has been having a quiet time of late, particularly through the convenience channel, but it seems the manufacturers are now ready to draw a line in the sand. And their message is clear. We're tired of being pushed around in the convenience chiller and we are going to stand and fight.

First the bad news, however. There has certainly been a slowdown in juice sales across both P&C and Route as distribution and share of shelf is eroded in favour of other competing impulse beverages. Yet, juice is still found in nine out of 10 Australian households and, on average in Australia, we consume 50 litres of juice per year per household.

In the impulse channel, the fruit juice and drinks category is the number 4 beverage category, worth $177 million and, compared to total market, is declining at -4.8% (MAT 31/12/09).

National Foods, which produces leading brands such as Berri and Daily Juice, says distribution and range is being lost in convenience, and poor location in-store and declines in share of shelf are just exacerbating the problem.

It seems then that part of the responsibility for the slowdown in convenience juice sales lies with the C&I operators themselves. Data showing that more than 90% of total juice sales are derived through grocery and that sales in that channel are continuing to grow perhaps confirms that suspicion.

Then the opportunity

In grocery, the juice category is primarily driven through large format packs that are being purchased by consumers for the breakfast occasion. However, consumer research suggests that whilst 'morning' remains the biggest occasion for juice consumption, the lunchtime, mid afternoon and early evening are also key juice consumption times. As these other occasions tend to be when consumers are on the go, the route and convenience channels are in the best position to capitalise on the opportunity.

Understanding the consumer is as important as ever here. Across the grocery channel, families are the key target market for juice, while within impulse channels the key target market is 18-35 year old males and females.

"Juice is an impulsive category with a large number of purchases decided when consumers are in the store, therefore it is important that focus is placed on the path to purchase to assist in delivering category sales," said National Foods Corporate Affairs Manager, Elise Sullivan. "National Foods ensures its juice brands have a wide range of Point of Sale (POS) materials available for use both out of store and in-store to promote the juice category."

Using the promotional material available and locating wisely and visibly is then clearly critical for lifting juice sales … but new news to combat the excitement that surrounds categories such as energy drinks could be equally vital.

Importantly, Lion Nathan National Foods has declared itself committed to investment and innovation in its brands. According to Nielsen Scantrak & C Track Volume Sales, the company is the market leader in the P&C channel with a 52% volume share and the number 2 supplier in Route with a 17% volume share. Daily Juice and Berri are the leading brands through the channel and both boast massive brand awareness.

Variety & flavour drive sales

"Variety and flavour are the key drivers of purchase for the juice category, therefore it is important to offer shoppers a wider selection," said Ms Sullivan. "Brand is also an important consideration, with many consumers selecting varieties within a particular brand."

If innovation is another ingredient required to kickstart juice's fightback through convenience, then Heinz Australia and its Original Juice and Golden Circle brands reckon they have got just what the doctor ordered.

Raw and LOL are two new products that have been launched in the past 12 months and, after an amazingly successful start in other channels, they are just beginning to cause a stir in C&I circles.

"Both of the new brands are going really well," said Cameron MacFarlane, Heinz's General Manager, Marketing. "Raw's main presence has been in grocery but that is changing and distribution is widening, while LOL initially went through schools and then moved into grocery and now into convenience ... these are exciting times."

Raw is a fresh juice and vegetable combo. It offers two serves of fruit and two serves of veges, and comes in a 400ml bottles that really is said to stand out on shelf with striking design and bright colours.

"People are leading busy lives and yet they still want to make sure they are getting their fruit and veges and this product suits that lifestyle," said Mr MacFarlane. "Although it is still very early days, when you look at the way it has performed in grocery, we are highly optimistic that Raw is going to be successful in convenience and the response so far has been very encouraging."

For its part, LOL is really targeted at children. It is a fruit juice that is lightly carbonated and its 'text talk' style name reflects its fun image. Mr MacFarlane says it comes in a bright, slim 250ml can and currently has four flavours, with three more to come. Although originally distributed through schools, LOL is now making its presence felt in the C&I store chiller ... and distribution is improving.

Schweppes, which owns the Spring Valley brand, shares the optimism about juice's future ... and the desire to keep innovating.

Juice revival is in sight

"Our traditional flavours are the leading products within our range; however our more exotic flavours such as Mango & Banana Nectar and the Spring Valley Crush range are very popular with people wanting to try something a little more exotic and unique," said Schweppes' Group Marketing Manager, Enda O'Sullivan. "Today's consumers are looking for the right variety and choice in store."

While Mr O'Sullivan acknowledges that the space allocated to juice in impulse has been reduced in recent years due to the explosion of the new age beverages categories, she says overseas market and consumer insights suggest that juice will have a revival in the Australian market.

"We know from our research in the past that the level of sugar in juice has been a barrier to purchase, but more recently we are seeing a change in consumer behaviour, as consumers are understanding that the sugar in many juice products is derived from a natural source," he said. "Consequently, juice is being seen as a more healthy beverage choice."

Over at P&N Beverages, which produces Extra Juicy juice, there is also a belief that an emphasis on juice's positive health benefits will bring sales rewards.

"With Extra Juicy, you know you're getting a quality juice that not only tastes great, but is good for you too," said P&N's Marketing Manager, Harris Spyrou.. "With no added preservatives, no artificial colours or flavours and no added sugar, consumers can rest assured they are buying an all-natural product for their families."

Showing its commitment to Extra Juicy, P&N Beverages recently embarked on a national media campaign showcasing the new 2.4L Bonus Pack. The campaign uses the new Channel Seven 'Focus' infomercial format and features Sally Williams (ex Brand Power ambassador). As well as highlighting the Bonus Pack message, the infomercial emphasises that Extra Juicy is the only major juice brand that is 100% Australian owned. Mr Spyrou says this is a unique selling position that P&N Beverages is proud of.

Extra Juicy comes in a unique and ergonomically designed carafe-style bottle, complete with an oversized, easy to open cap and, as well as traditional favourites like apple and orange, it is also available in more exotic forms like Dark Grape, Carrot Combo, Apple Blackcurrant, Orange Mango and Apple Cranberry.

Coca-Cola which, largely thanks to its Goulburn Valley brand, currently has a 13.7% share of the juice market through the immediate consumption channels, says increased focus and visibility of the juice category and offering a greater variety of juices can help turn things around.

While Coca-Cola acknowledges there is still strong demand from consumers for the core juice flavours like Orange, Apple, Apple & Blackcurrant and Tropical, it certainly sees the need for continued creativity.

"While those flavours still make up the majority of the sales, consumers continue to look for variety," said a Coca-Cola spokesperson. "To ensure the growth of the category, we are working to provide more innovative and exciting juice products."

Cameron MacFarlane from Heinz is an equally strong believer in the benefits of spicing up the flavour range.

"With the fridge space being given to juice declining it seems that, at the moment, all the ranging seems to be orange juice," he said. "When consumers see that is all there is in the fridge they can be disappointed ... they are looking for are something original and exciting."

Mr MacFarlane says that fundamentally juice is a healthy, convenient beverage that should thrive in the convenience environment.

"It really just needs innovation and excitement," he said. "The combination of veges and fruit juice, and things like that, can bring back that spark to the segment .... and we are not finished yet ... there are more innovations and new products to come."

While Golden Circle juices are generally sold as ambient juices in supermarkets, its Classic range, which comes in 350ml bottles, has been a hit in convenience. Similarly, the Black Label brand, which is a premium juice, has been going fantastically well and sales are up some 30% in all accounts over the past year. Mr MacFarlane says the 600ml container has the highest Units Per Store Pere Week (UPSPW) of the top 50 juice product in convenience.

As you would expect from such a corporate giant, Heinz has thrown an enormous amount of marketing energy and dollars out there and it wants C&I operators to make the most of the interest and excitement being generated.

Reap the rewards of marketing

"The message to C-Stores is that we are not producing these new products and letting them sit there on the shelf to look after themselves, we are throwing our marketing weight behind them and driving sales and excitement," said Mr MacFarlane. "We want new news in this category and retailers should cash in on the opportunity to reap the rewards."

It's a similar message from Schweppes which is developing some exciting plans for its 2010 communications campaign around the Spring Valley brand and will also be launching its biggest ever promotion.

"The heartland for the Spring Valley brand is the impulse channel through our on-the-go juice formats," said Schweppes' Mr O'Sullivan. "In grocery, we are targeting the impulse consumer through Spring Valley being available at front of store in the cold fridges ... however we also have a 1.25L PET large format for all those consumers that love Spring Valley and are looking for a format to share with their friends."

He says that in impulse, it is important not only that operators ensure the juice category offers the consumer the right choice of brand and flavour, but that the category is also easy to find in store.

"Displays and presence in store is important across all beverage categories," he said. "With so many choices in beverages, retailers need to make sure shoppers can easily find what they are looking for."

Obviously, with 70% of beverage purchase decisions being made at the point of purchase, it is important to ensure that the decision is as easy as possible for the consumer. Retailers need to ensure that their fridges are in the best location in store and are merchandised correctly in segments. Core brands need to be available to consumers and products need to be merchandised by brand. Retailers should also attract customers' attention through devices such as price points, combo offers, and promotional point of sale.

Coca-Cola certainly thinks so, and it says that grocery's relative dominance in juice is largely due to the fact that it gives the category a much bigger shelf presence than convenience does.

"To grow the juice category in 2010 retailers can display more juice packs and a wider range of juices as well as work to increase its presence on menu boards and in meal bundling offers," a spokesperson said. "Point of Sale is critical to creating in-store impact and ensuring our juices stay top of mind, especially during morning and lunch occasions."

To that end, Goulburn Valley will double its spending on POS and merchandising this year to help drive growth in the juice category.

Coca-Cola invested heavily in the Goulburn Valley brand at the end of last year by updating its packaging/visual identity.

"The new packaging has driven growth across the whole range and delivered a greater impact on shelf while increasing premium taste cues," said a spokesperson. "The look and the feel of the product provides the visual cues for the consumer and contributes to selling the product."

Cause for optimism

So, the juice story in convenience is certainly not one of all doom and gloom. The consumption of juice per capita in Australia continues to increase each year. And, while the Australian consumption per capita is growing at a much slower rate than in overseas markets, that simply indicates there is potential for still further positive news. In 2000, Australia had a higher consumption per capita than the UK (34 litres vs. 30 litres), however that has shifted dramatically over the last decade with the UK consumption in 2009 at 49 litres vs. Australia at 42 litres.

Based on the global juice market and consumer insights, it is reasonable to expect strong growth potential for juice and a resurgence of the category in the near future.

After all, juice is still a great carrier of health properties and can fit in superbly well with people's on-the-go, busy lifestyles.

While it is hard to argue with the success of energy drinks and sports drinks and the profits they have brought C&I outlet operators in recent times, juice is still here and ready to fight its way into the front of the fridge again. C&I operators should be ready, too.