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The beverage aisle is undergoing a radical transformation in regards to what products consumers are buying, a pattern that suggests grocers need to rethink how they’re presenting beverages to their shoppers.
It’s no longer simply Coke versus Pepsi – it’s traditional carbonated soft drinks versus up-scale sodas, enhanced waters, juices, teas, milk and energy drinks. Some are shelf-stable, some are refrigerated, so they’re merchandised in different parts of the stores, according to tried-and-true beverage aisle models that some would argue have been rendered obsolete.
Refrigerated juices tend to sell better in c-stores competitively with alternatives because they’re marketed right alongside other grab-and-go beverages that might otherwise be shelf stable but are stored chilled for convenience, says Mark Orsi, senior director of sales for Bakersfield, Calif.-based Pom Wonderful.
“We have merchandisers in stores every day helping retailers move product,” Orsi told PG at the 2014 Natural Products Expo West in Anaheim, Calif., explaining that Pom’s category management teams work directly with sales managers to call on retailers and work with them to grow the category. That growth recently gave birth to a new 48-ounce family size for the brand’s Pom blends in Coconut, Mango and Hula varieties, flavors that launched a year ago as single-serves.
Pom Wonderful is positioned as a premium refrigerated juice, and the company relies on marketing and reputation to lure shoppers over from the CSD and shelf-stable beverage aisles, Orsi says. “Our product has a low household penetration … we have a solid core of consumers, but we’re looking for people to cross over to buy our product.”
Carl Sweat, chief marketing and commercial officer for Atlanta-based children’s beverage marketer Good2Grow, says his company’s philosophy of helping families raise healthy kids “permeates how we work with our retail partners. Rather than focus on discounting and other tactics that erode margins for our retailer partners, Good2Grow seeks to add value to the category through innovative packaging and shopper marketing.”
As a result, Sweat says, retailers have benefitted not only through incremental sales growth, but also highly accretive margins. “This track record has convinced the largest grocery chains, Kroger and Safeway, to add all seven of our new SKUs. Strong strategic partnerships of this kind enable faster innovation to drive the category.”
Good2Grow’s research shows that roughly 25 percent of shoppers with kids age 2-10 do not currently buy juice boxes or pouches, which Sweat says provides an opportunity for high-quality juices and unique products like his company’s Disney, Marvel and other character-based SippaTop caps. “By introducing “refill packs” of bottles without SippaTop caps that enable mom to reuse their child’s favorite character caps, Good2Grow can help our grocery partners grow the category at a higher ring.”
Sweat sees “boredom and value erosion” as the main challenges to beverage category growth. “With very little innovation or imagination springing to life today, large corporations do what they know best: cut prices to maintain their share of a declining market,” he says. “The focus shifts from meeting the needs of the shopper and retailer to a more zero-sum competitive battle for share. In the long run, there are few winners in this game. Typically, smaller entrepreneurial companies will come forward with original ideas that excite the consumers and build value.”
Sweat continues: “Some of the more forward thinking retailers have already taken steps to re-orient decision-making with an eye toward incremental profitability versus ‘sales tonnage.’ … Much like the media planning concept of ‘unduplicated reach,’ the most savvy retailers are translating the powerful shopper card household data into decisions that enable them to source growth from underserved households or occasions. These same shopper card programs enable the manufacturer to partner with the retailer to better target underserved shoppers that may be meeting their needs elsewhere. Over time, we will hopefully see fewer decisions regarding merchandising support being made based on ‘sales tonnage’ (minimum weekly sales volume) and more on true incrementality of returns.”
Last summer, the Milk Processor Education Program (MilkPEP) partnered with Paradigm Sample and ExactCast to better understand the strengths and areas for improvement in its efforts to promote lowfat chocolate milk as a recovery drink.
Paradigm Sample focused on where people are consuming chocolate milk and where MilkPEP could have the most impact by collecting real-time consumer feedback at six premier race events, including the Rock n’ Roll Marathon and Ironman. ExactCast concentrated the effectiveness of the message.
“One of the things they learned is that while many recovery beverages are consumed at point of sweat, athletes tend to drink chocolate milk in single-serve packages at home,” says Emily Jane Meyer, MilkPEP spokesperson. “This creates a unique opportunity in the traditional grocery environment and supports the need for in-store activations to keep chocolate milk top of mind (something the research also found was a top barrier to chocolate milk consumption).”
To help retailers support the Built With Chocolate Milk campaign in store, MilkPEP has developed a wealth of artwork, logos and packaging information that is accessible on GotMilkSales.org. “These materials help tell chocolate milk’s recovery story and help keep chocolate milk top-of-mind — something the research emphasized was critical to driving sales,” Meyer says.
Real-Time Shopper Data Takes the Guesswork out of Retail Planning
In the past, shopper research was limited to surveying and monitoring in-store behavior. Companies would try to make educated guesses about shopper behavior based on shopping trends, attitudinal surveys and tracking how people behaved while inside a supermarket.
However, thanks to advancements in virtual technology, manufacturers now have access to real, verifiable data that shows exactly how people shop and what leads them to make purchases.
“The days of trial and error are over,” says Mark Hardy, CEO of Chicago-based InContext Solutions. “Stores are looking to do more than just offer the goods and services customers want; they are often looking for a streamlined experience. With the advent of simulations, stores can really put the needs and wants of their customers first and foremost.”
InContext Solutions offers virtual simulations and 3D displays that allow manufacturers and retailers to try out store displays and packaging ideas before they invest time and money in them.
“For the first time, we are able to see into the mind of consumers and actually predict their next moves,” Hardy says. “This means that we can create in-store marketing plans accordingly and ensure that our clients don’t waste thousands of dollars on ineffective displays. From packaging to shelf arrangement, we provide data to ensure that every decision is made with real, first-hand knowledge and unquestionable statistics.”