Innovation driving sales

Source: ACNielsen C*Track Top 20 juices at major convenience stores for March 2004.

Like the rest of the convenience store industry, the scene has changed considerably for juice manufacturers over the last few years. There have been mergers and acquisitions among some of the major manufacturers and one or two new entrants to bolster the numbers.

Not that numbers need bolstering. According to data provided by ACNielsen, there are 731 SKUs covering the Australian fruit juice market. These include 250 ml self consumption packs up to 2 litre take-home in either fresh juice or juice drinks in fresh or long life variants. Juice products command just over seven per cent on total drinks sales at major convenience stores and are usually allocated half of one fridge door for display, and often somewhat less at smaller outlets.

Dividing 731 juices into half a fridge door means that convenience retailers have to be brutal when selecting which products to include in their range. Finding a compromise between loyalty to the major manufactures and making room for innovative new products can be bewildering.

The ACNielsen 2004 Convenience Report reveals that the market at the major convenience stores is dominated by just six manufacturers, several of which have come or gone in the previous twelve months:

	2004	2003
Berri	59.5%	52.5%
Cadbury Schweppes	21.0%	23.7%
Coca Cola	6.2%	5.7%
Golden Circle	5.5%	1.6%
Parmalat	2.2%	N/A
P&N	1.3%	N/A
Original Juice	N/A	7.5%

Golden Circle took over the Original Juice Company in 2002 and the subsequent revamping of the Original Juice range is only now being felt in the market. Parmalatís successful launch of the Santal range in 2003 has earned a couple of share points in this very crowded market.

The market is split almost fifty-fifty between chilled fresh juice and long life product. Pure juice makes up 87 per cent of juice sales in convenience with the balance going to juice drinks.

According to the Australasian Association of Convenience Stores State of the Industry Survey for 2003, sales of refrigerated fresh juices are growing more than four times faster (14.4% pa) than for long life products (3.3% pa).

For convenience outlets to match the sales performances revealed in the AACS survey, juice sales should be responsible for at least one per cent of total shop sales at convenience outlets and fruit juice stock should be turning over once every two weeks at retail margins of better than forty per cent.

In recent years, self consumption packs have been crowding take-home packs out of the top twenty juice lines (in dollar value) at convenience stores. In 2002, there were five packs of one litre or larger among the national top twenty juice sellers; in 2004 there are just two. Apple and orange based products dominate the flavours, with a smattering of mango and blackcurrant among the top sellers. Pineapple and passionfruit have dropped out of the top twenty for the past two years.

In addition to the manufacturers listed above, there are more than forty others fighting over the remaining four per cent of the juice market. It is entirely conceivable that a retailer could spend a full working week talking to non-one but juice reps. Yet sticking to the same total juice range from year to year is a sure-fire way to lose sales.

About half of the juice products listed in the ACNielsen Top Twenty for Convenience for 2003 have not made it onto the 2004 list. This means that, with rapid changes and heavy competition between brands, no retailer can afford to waste precious refrigerated display space on lines that are not selling strongly.

Itís also important to anticipate and to be able to make space for innovative new juice products in order to make the most of the juice category. This means keeping half an eye on the future. Australian Convenience Store News spoke to juice manufacturers to get their slant on where the juice market is heading.

Berri, which from last month is now 50 per cent owned by brewing giant San Miguel, sells more juice than any other company in Australia. Berri commands half the total juice market and 60% of the convenience market. Brands include Berri, Daily Juice, Fruitful, Australian Fresh, Just Juice, Mildura Sunrise and Mr Juicy.

Berri controls around 65% of the fast growing ëfreshí segment with its Daily Juice and Fruitful Australian Fresh brands.

ìThe growing market in fresh juice presents us with tremendous opportunities,î said Bill Kelsall, Berriís Director for Marketing & Innovation.  ìThe trend has a lot to do with the focus on health and wellness, and the sustained growth shows us that people are willing to pay a premium for freshness and quality. Berri has significantly lifted its focus on innovation to continue to drive this area of the market.î 

In August, Berri released several new ëfreshí products in the chilled section of supermarkets including a range of vegetable juices, seasonal juices as well as ësuper juicesí which allows consumers to purchase packaged products similar to those they buy from juice bars. Berri has also expanded its recently launched Harmonics range, with additional innovative flavours.

For quite a few years now, Coca Cola Amatil has been driving its sales through product innovation, with new Coke variants, waters and, in the juice market, its long life and Fruitopia, Frutonic, Fruitbox, Appletise and Winnie the Pooh ranges. It is the third largest juice supplier to the convenience market with 6.2% share.

More ambitious plans for expansion into the juice market were thwarted last November when the Australian Competition and Consumers Affairs Commission stopped Coke from taking over Berri Limited. The ACCC said that such an acquisition Ö. ìwould substantially lessen competition in the market for the manufacture and wholesale supply of chilled and ambient fruit juice and fruit drink in Australiaî.

A similar thing happened several years earlier when Coke attempted to take over the drinks brands controlled by Cadbury Schweppes, which is now the No 2 player in the juice market. Coke acquired Neverfail Spring water in July this year and is still looking around for opportunities in the juice market.

"CCA continues to investigate various opportunities in the juice market in Australia. We believe that our strategy to broaden our beverage portfolio will benefit both our business and our customers businesses," says Alec Wagstaff, spokesperson for Coca-Cola Amatil.

Trish Morris is Sales & Marketing Manager for Wild about fruit, a new entrant in the convenience juice market. Wild about fruit recently launched a 375ml single size juice range, which the company says is steadily making its way into C-Store fridges.

ìWild about fruit is apple-based and is the only juice range on the market that has a licensed LOW GI rating from the Sydney University Glycemic Index Research Serviceî, Ms Morris said. ìAt a LOW GI of just 37, this makes it a tested healthy choice for everyone, not just diabetics.

ìAs one in four Australians are now diagnosed with diabetes and with an increase in obesity levels, Wild about fruit now caters for the needs of this growing health conscious market within the convenience channel.Wild about fruitís 100% fruit juice with no added sugar, preservatives, flavours or colours, offers a nutritious and great tasting change for customers seeking a healthy thirst quencher.î

Quenchy Crusta is located in the Riverland district. Crusta currently distributes nine flavours in 500 ml chilled fresh product as well as Lipton Ice and the Torquay/Cascade range in all States except NSW and ACT, where it plans to open soon.

The company says that the Quenchy Crusta range has done well in supermarkets and there are now good prospects for growth with fresh high-quality product in the route market.

ìThere is a huge difference in flavour between good quality fresh product and reconstituted or long-life product,î said Crustaís Route Manager, Martin Goldsworthy. ìFresh product has an edge to the taste which customers know and recognise. They are prepared to pay a premium for quality and freshness.î

Nudie is a very new brand that started less than 18 months ago with just three people. In spite of a disastrous factory fire in May this year, the company says that its 250 ml and 750 ml fresh juice and crushed fruit drinks are being stocked by some 4,500 retail outlets, mostly in the route market.

ìWe have set out to create a brand that is engaging and owned and driven by the consumer,î said James Ajaka, Marketing Director for Nudie. The nudie brand has enjoyed huge success in doing this with all segments of the market. Our entire strategy has been built on approaching all we do (product, packaging and marketing) in a different and unique manner whilst focusing on the fun and all natural/nothing but fruit proposition.î

Nudie has made its way in the market on the back on an extensive sampling campaign and a strong internet presence and says itís now expanding into convenience.

P&N Beverages has done well in supermarkets with its long life products, particularly in larger pack sizes. It has also picked up a 1.3% share of the major convenience channel.

ìP & N Beverages is extremely pleased to have gained a share in the convenience store juice market,î said P&Nís National Sales Manager for Impulse, Kelvin Goodhew. ìWhilst 1.3% may appear small, it is important to note that this has been achieved with limited ranging at the major chains that appear in C*Track data.

ìP & N Beverages is confident that, with its entry into the convenience store market, combined with consumersí shift towards healthier lifestyle drinks, the company is in a good position to grow this market. This will be achieved through continued product innovation and persistence.î

The production of fresh chilled product has been severely affected this year by a fruit shortage brought on by Australiaís devastating drought and stock-outs in-store are not uncommon. In the short term at least, itís reasonable to expect that long life product will take up the slack.

But the key to growing juice sales is to stay in touch with product innovation and be very disciplined about what to stock and what to drop.

(All of the major juice suppliers were invited to contribute to this article. Ed.)