Australian convenience Store News | Drinks - The Summer of the beverage tidal wave

hill out and wait for the invasion! If it hasn't happened already, your drinks fridge is about to be inundated with a rash of new products that will broaden the segment and the selection like never before.

While Hollywood may never make a movie about it, the summer of 2002 will go down in history. Its claim to fame? The summer of the beverage tidal wave.

Quite simply, there has never been another season like it in terms of new product. The old favourites will still be there but they will be joined by a swag of new arrivals and actually choosing a drink is likely to take a lot longer than before.

Old Favourites
Perennial favourites are the carbonated soft drinks, a category that is estimated to be worth $4.5 billion a year. Of that, total cola represents 56 per cent of the soft drink sector ($2.5billion). Cadbury Schweppes produces and sells one of the easily identifiable colas - Pepsi - which includes Pepsi, Diet Pepsi, Pepsi Max and the new Pepsi Twist, which is a full sugar Pepsi with a twist of lemon. But Pepsi isn't the start and finish of Cadbury Schweppes' contribution to the Australian beverage market.

"Our Schweppes Lemonade has a 23 per cent share of the total lemonade volume in Australia and it's about to be re-launched this summer," says the company's Communications Manager, Karina O'Meara. "We're also relaunching our highly popular Solo lemon for the summer as well as introducing an all-new product which we call Agrum. This is targeted at young adults and is a unique blend of citrus flavours."

Like many of its rivals, Cadbury Schweppes has broadened its range of products to become a one-stop beverage shop. In further new product news, the company has extended its Spring Valley Twist range of lightly flavoured spring water as well as launching Viking drink, a liquid version of the very popular chocolate energy bar.

Ms O'Meara says Cadbury Schweppes will be aggressively promoting all its ranges through the summer with particular emphasis being placed on Pepsi - the current Austin Powers/Britney Spears campaign being followed by a link with the next chapter of the 'Lord Of The Rings' series.

'Big' is the way Alec Wagstaff describes the summer to come. This seems to be an understatement given the activities by the two largest cola producers in this country. As Group Corporate Affairs Manager for Coca-Cola Amatil, he knows just how big. The company, which produces what is arguably the world's favourite beverage, is making some BIG moves, and not just with that particular drink, although it is setting the pace of the revolution.

New Arrivals
"Nothing has really happened in cola since 1983 - until now. We launched Diet Coke with Lemon earlier this year and now there's Vanilla Coke." Australia and New Zealand are the first countries after the US to get this new version of an old favourite. Described by some as a bit like a caramel milkshake, the new variant, with its dash of vanilla, has been extremely successful in America and is expected to pack a similar punch here.

"Our consumer research here showed that three out of four people who tasted it said they would buy it. So it will be a big thing this summer and it will re-energise the whole cola sector, " Mr Wagstaff says.

However, don't think the new arrivals begin and end with Vanilla Coke. While it is an important product for CCA, it's not the only new product they - or many of their competitors - have lined up for us.

Also fresh from CCA is Disney Winnie The Pooh juice drink, a 250ml PET pop-top aimed at children aged three to eight, a group CCA has not catered for before. Mr Wagstaff describes it as the perfect drink solution for little ones, particularly when travelling (little or no spill). Parents will appreciate that it has 25 per cent juice and 10 per cent less sugar than its competitors.

CCA also offers Frutonic, a 'wellness' drink pitched at women. Flavoured with orange, lemon and pink grapefruit and topped up with folate and Vitamins C and E, it's a low-calorie 'crossover' product somewhere between juice, water and a fully carbonated soft drink.

There's also Powerade Sports Water, a mix of sports drink and water with electrolyte additives, a new iced tea variant (NESTEA Cool) and a relaunch of Deep Spring's range of flavoured mineral waters, pitched more at adults.

According to Mr Wagstaff, while the energy segment is still strong, it is coming off the boil and there's a new emphasis on 'wellness' drinks. Mr Wagstaff's views are shared by others within the industry, including Phillip Carter, National Sales Manager for Solis Beverages which sells a range of what he terms 'functional' beverages.

"Traditional soft drinks will always be there though the mix will change. Energy drinks certainly made an impact when they arrived three or four years ago and the segment grew very strongly, but there are signs it is waning.

Growth in Healthier Products
"People are looking for a healthier alternative - you only have to look at the way bottled water sells now. And people are not afraid of price. Consumers will pay for good taste and a product they believe has benefits for them," Mr Carter says.

The Solis range is non-carbonated, with a range of different flavours and healthy additives. Mr Carter is emphatic it is not an energy drink although two in the range - 'Adrenalin' and 'Power' - have guarana as well as vitamins in them.

The Solis range also includes 'Bliss' (pink grapefruit and cranberry) 'Cherish' (peach and pear juice and added folate), 'Defence' (lemon, ginger and echinacea, plus vitamins B and C) and 'Edge' (a citrus base with a variety of exercise-replenishment additives). Mr Carter says the whole idea behind the Solis range is 'drink healthy'.

"Route is very important to us - it's where the majority of our sales are. We take the approach that if it's not cold, it's not sold. Route works better because people will grab something new to try and drink it straight away. Supermarkets will work once they've tried it."

While Solis' range was initially launched in a 500ml bottle, the company has now moved to the 350ml size after research showed that both consumers and retailers like the smaller size.

"We believe this category will see enormous growth. We're somewhere between water, fruit drinks and sports drinks and people want something that tastes good and that they perceive is good for them."

Solis will be involved in a major promotional push this summer with lots of radio advertising and sampling opportunities around the suburbs, giving consumers plenty of opportunity to try the range.

Plenty of Demand for Energy
Meanwhile, despite the emergence of these newer 'healthier' products, there is still plenty of 'energy' left in the energy sector. Leaders among these include Red Bull - which is still going strong. Recent industry figures show Red Bull attaining a growth of 38 per cent in August this year compared with the same period last year, so the product is far from spent.

"We now have three SKUs compared to a couple of years ago, because the demand for that variety is there," says Red Bull's national sales manager, Mike Stacey. "There's the traditional 250ml can, a four pack into grocery and a new 330ml bottle. While supermarkets are doing well, route is very important for us. It's the logical place for someone who's busy and in a hurry and feeling a bit tired to decide on the impulse buy of a pick-me-up."

And while route is important to Red Bull, Red Bull can be very important to route. Put simply, it is a product with a small footprint - and a large return on the investment.

"If your fridge space is limited, you've got to make it work for you and so you want a product that is going to make you money without costing you in terms of space and time. There's a margin of around 40 per cent on both the can and the new 330ml bottle which makes it a very sensible investment."

Red Bull is continuing to build sales with a variety of events, sampling opportunities and sponsorship arrangements, all linked with the 'Red Bull gives you wings' slogan and advertising campaign.

Mr Stacey suggests smart operators will link in with this movement to ensure they gain maximum return: "We maintain that if you give us a chance to be seen, we will be bought."

Also out there in the energy sector is Red Eye. The range kicked off with Red Eye Classic and has been expanded to include Red Eye Gold, Extreme, Platinum and Passion. On the way is Red Eye Diet while the 250ml Red Eye Power can is to be superseded by Red Eye Power2 which, according to Theo Kotiadis, MD for Red-Eye International, is a more sophisticated taste than its predecessor.

"When Red Eye was first introduced into C-Stores, sales were very strong and they have remained consistent ever since. Convenience stores are a good outlet for us because the type of people shopping there are travellers and busy people who need what the product offers. Store operators have the advantage of offering a range of flavours to their customers and the added benefit of our generous margins, so it's a win-win situation!"

Mr Kotiadis says his company is wholly Australian owned and all the products except Power and Power2 cans are made here. While he says the market is still strong for such products, he does believe it is changing.

"At one time there were any number of energy drinks on the market but I believe the market is now rationalising itself, both in route and in grocery, down to about four brands including Red Eye. I expect C-store operators will shortly find that the market has stabilised and that there is continuing steady growth to be had."

Traditional Favourites
Outside these relatively new arrivals, the more traditional favourites of the drinks fridge include soft drinks, flavoured milk and fruit juices and there's plenty happening in those categories as well.

Robert Lever is Marketing and Export Manager for Gold Medal Drinks which produces soft drinks (including a home delivery range), spring waters and the Energiser range of sports drinks. While supermarkets have traditionally been the company's stronger market, it is now targetting P&C more than ever before because of its growing importance.

"Our new products for this season are the Gold Label range of soft drinks. There are six different flavours, which we're backing up with a TV and radio advertising campaign and they'll go into supermarket and route. We're a medium-priced range that makes a good alternative to some of the more expensive brands - and with reasonable margins as far as the store operator is concerned."

Mr Lever says the company has several advantages over the bigger, multi-nationals, which are real assets and should appeal to true-blue Aussies, both consumers and retailers alike. "We are all-Australian. We're a totally Australian company and that's a very different story to the majors. We also have organic registration for our Snowy Mountains spring water. Our springs are fully registered as organic, which means there's no herbicides or pesticides in the vicinity. We see that as a huge plus."

National Foods has geared up for a huge spring and summer with its different flavoured milk brands. According to Alison Johnston, marketing manager for the company which includes Big M, Masters, Classic and Farmers Union among its brands, there will be plenty of action to push sales.

"Big M's latest flavour is Choc Honeycomb which should be a big winner with the core market group of 14-24-year-olds. That's being sold in Victoria, NSW and Queensland and it's replacing Vanilla, whereas Vanilla has been added to the range rotation of Masters milk in WA.

"We have a lot of promotional activity related to the introduction of new flavours with radio and TV support and lots of good POS to highlight both the new additions and the on-pack competitions, so it's a good chance to work with that to maximise sales.

"Spring, summer and autumn are the peak sales periods for flavoured milk so it makes sense to stock the widest range of flavours during this time and stock the latest rotational flavour to encourage your customers to try something new and different," Ms Johnston says.

"The margins on our products are around 30 per cent so the consumers aren't the only ones who will benefit from our latest round of activity."

A slightly different product again is the popular nutritional beverage Sustagen. While not traditionally a route product, the new owners (Novartis Consumer Health acquired the licence for Sustagen in October last year) - now have C-Stores as a priority, according to Violetta Jaskula, senior brand manager for the product. She says the company is investing heavily in both media support and market research to ensure the product continues to sell well.

"Sustagen has four great flavours coupled with a high brand awareness and generous margins, all of which make it a great product for the route customer and the store operator. All varieties are now available in route and all in a new-look packaging as of December. Retailers have the flexibility of determining their own margins but around 40 per cent is fairly standard.

"I think it's fairly well accepted now that consumers are increasingly time-poor and are looking for convenience, particularly with food substitutes. This is reflected in the fast growth of pre-packaged meals and fast foods.

"We believe consumers are also looking for healthy food and beverage alternatives and Sustagen Ready To Drink is a nutritional food supplement that provides energy as well as satisfying the need for a sweet or chocolate fix," Ms Jaskula says.

While The Original Juice Company (TOJC) has long been recognised as a stand-alone specialist in freshly squeezed orange juice, it's now part of the Golden Circle group. The takeover and subsequent re-shuffle has left Original Juice responsible for distribution of all the parent company's associated beverages.

TOJC has its own new products ready for the summer season including a 350ml Apple Cranberry 'Classic' juice, a 2-litre version of the same and a 2-litre Cranberry Drink, both of which are pitched more at food service. Golden Circle has several major initiatives happening, says Rob Sturma, business development manager for The Original Juice Company.

"There's definitely been a shift in beverage consumption to a healthier product. Soft drinks are losing ground although they will always be popular, but fresh juices and bottled waters are growing strongly.

"Our 'Classic' range has been growing at around 25 per cent per year since it was released three years ago and 'Original Black Label' continues to do well. Our advantage against many of our rivals is that we are a fresh fruit product and we are Australian - and we are party to this push towards a healthier product."

What to Stock?
Mr Sturma says the hardest job now for any retailer is deciding what to include in his fridge.

"You have to be well-stocked. There's no argument about that but space is limited and there are a lot of products now vying for that space. Like any major supplier, we have deals that will encourage operators to stock our product and suggestions for promotional deals that will help those products move.

"With the amalgamation with Golden Circle and with agency lines that include Torquay, Oak and Sustagen, we're now operating as a one-stop beverage shop with good margins. That has to work well for a retailer in terms of all-round convenience."

Perhaps the last word on this now overcrowded market sector - and overwhelming challenge for the operator who has to make sense of it all - belongs to Coca-Cola Amatil's Alec Wagstaff:

"Consumers want choice and they will try new things. The best advice we can offer is to stock what sells and ditch what doesn't."