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Marketing Kids’ Healthy Beverages:Ten key case studies

Marketing Kids’ Healthy Beverages

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Contents

1. Executive summary .....................................................................................1

2. Six strategies in kids’ healthy beverages ......................................................3

Case studies ..................................................................................................21

Immunity and omega-3 ................................................................................................ 22

Case study 1: Nestlé Juicy Juice .................................................................23

Case study 2: Smartfish ............................................................................................. 27

Water and fruit juice ......................................................................................31

Case study 3: Fruit Shoot ............................................................................32

Case study 4: Y Water .................................................................................35

Case study 5: First Juice .............................................................................38

Case study 6: Magic Fruit Potions ............................................................................. 41

Case study 7: Froose .................................................................................................. 45

Tea ................................................................................................................................. 49

Case study 8: Republic of Tea ................................................................................... 50

Teens and Tweens ......................................................................................................... 53

Case study 9: Crayons ................................................................................................ 54

Case study 10: The Switch ........................................................................................ 59

Charts

Chart 1: Top 5 parental health concerns, China ...................................................... 5

Chart 2: Parental concerns when shopping for your kids, US ................................ 6

Chart 3: How does your kids’ product measure up against the checklist? ...........20

Chart 4: US sales growth of Juicy Juice .............................................................26



Companies, Brands & Countries Listings

COMPANIES AND BRANDS

ActimelAmaze BrainfoodBritvicCalpis Fibe MiniCarpe DiemClear Beverage CorporationCoca-ColaCrayonsDan ActiveDaninoDanoneDog On It!First JuiceFrooseFruit ShootGefilus KidiusHighland SpringInnocentIzzeJuicy JuiceKagome LabreKelloggsKnorr VieLittle Bird BrandsLittle Citizens Herb TeaMagic CheeseMagic Fruit Potions

Marine Harvest IngredientsMilk TimeMüller Vitality MyOmegaNatural Fruit & Beverage CompanyNestlé NP Biotech LtdNumicoOcean NutritionPepsiCoPharmalogicaProVivaRepublic of TeaRobinsonsSmartfishSmartweekSupajusThe SwitchTropicana Go!TSG PartnersUnileverValio DairyVolvic SplashWhite Hat BrandsY WaterYakultZespri

CONTINENTS/COUNTRIES/REGIONS

AfricaSouth AfricaAsiaChinaHong KongIndiaJapanSingapore TurkeyEuropeAustriaBelgiumFinlandGermanyNorwayScotlandSwedenSwitzerlandThe NetherlandsTurkeyUKNorth AmericaCanadaUS


www.new-nutrition.com1

1. Executive Summary

• The American market for kid’s food and drink is set to increase in value by 50% over the next few years, from $16.4 billion (€11.6 billion) in 2007 to $26.8 billion (€18.9 billion) by 2011. The largest segment of that market is beverages.

• Along with dairy, fruit juice (and fruit-flavoured water) is still the biggest and most dynamic area of activity in child-specific products, as more companies recognise that parents are casting around for alternatives to sugary colas and sodas in greater and greater numbers. There are a number of factors that give fruit drinks for kids a competitive advantage over other categories. For one thing the “naturally healthy” image of fruit drinks makes them a suitable vehicle for health benefits – as does children’s love of fruit-flavoured, sweet drinks. They are also convenient to carry and pack in lunchboxes.

• Naturalness as an underpinning for a brand is proving to be just as strong and profitable a trend in kids’ food as in adult nutrition. Across all food and beverage categories, the message that a food or food component is naturally and intrinsically healthy is one of the most appealing to consumers in all cultures. “Natural” has universal, pan-European and trans-Atlantic appeal (and a rapidly increasing appeal among middle class consumers in Asia). As brand strategist Peter Wennström has said, “Consumer research makes it very clear that ‘natural’ is becoming the biggest driver in every country.”

• As almost all of the case studies illustrate, health-conscious parents are increasingly interested in products that they perceive to be “as natural as possible” – free-from ingredients that they see as undesirable or unnatural or potentially harmful, such as added sugar and “artificial” sweeteners, preservatives, colours or flavours. Being able to offer one or more of the benefits of being “free-from” dairy or wheat (to take just two examples) is essential for any brand targeting children and health-conscious parents. Kids’ beverages should contain no added sugar – use apple or pear juice concentrate as your sweetener, or perhaps fructose.

• No matter what the scientific credentials behind your product, no matter what your R&D or advertising spend, your product’s packaging must perform just as strongly. Packaging innovation that projects a product into the market has been a key part of the strategy of successful beverage brands such as Y Water.

• Kids’ beverages should offer a health benefit that mothers can clearly see as relevant to their children and one that is easy to understand. Ideally your product should be as natural as possible, but if you want to deliver a health benefit from an added ingredient, the ingredient should be one that mothers accept and understand and that means, in most countries, either a probiotic or omega-3.

• Parents’ key concerns for their children’s health are immunity and digestive health; in coming years expect to see an increasing focus on developing brands to meet these needs. Concerns around digestive health suggest an untapped opportunity for fibre (one that Froose beverage in the US has picked up on) and probiotics.

• Parents are now used to the idea of omega-3 in infant formula, but sales of omega-3 products have often disappointed. However, omega-3 products that are making progress on a niche basis are those



that define themselves as experts in supporting children’s healthy brain development (such as Nestlé with Juicy Juicy, and Smartfish).

• Another very important reason for the success of beverages relates to “the 3 Ps” – Packaging, Portability and Portionsize. By their nature, and by the nature of the range of packaging that’s available for beverages, drinks can be sold in single-serve, on-the-go, hand-held, lunchbox-friendly formats and in multipacks more readily than most foods.

• Even if their strategy is a good one, kid-specific products seem to sell on a niche basis, just as most adult nutritional brands still do. One reason for this is that the buyers of nutritional brands, be they for kids or adults, are a group of higher-income, health-conscious people who make up only around 20%-25% of the population.



2. Six strategies in kids’ healthy beverages

In the business of food and health it is in beverages – including daily-dose dairy drinks, energy drinks, superfruit juices, smoothies and enhanced waters – where the most success stories are found. The reasons include:

• beverages offer superior convenience• there is more scope for packaging innovation

with beverages (vital to capture consumers’ attention on crowded supermarket shelves)

• a wealth of packaging options means the format and the pack-size can be customized to the consumption occasion (lunch-box format sold in multi-packs, family breakfast)

• beverage formulators are particularly skilled at making most things taste good

• consumers are more willing to experiment with beverages

• it’s easier for consumers to accept them as a snack (no change needed to their eating habits).

Beverages are more convenient than formats such as bread and cookies, they are perceived by consumers as a “healthy carrier” of health benefits in a way that formats such as confectionery are not, and they allow health to become an anytime option and a snack in a way that a “functional meal” cannot.

Beverages and kids – a natural fit

Worldwide, interest in healthier kid-specific products is increasing both among parents and in industry. The American market for kids’ food and drink, for example, is set to soar in value by more than 50% over the next few years, from $16.4 billion (€11.6 billion) in 2007 to $26.8 billion (€18.9 billion) in 2011, according to a new report by TSG Partners.

And the largest individual segment of that market is beverages, says the report. Some 134 kids’ beverages were launched in the US in 2006, with drinks holding a 29% share of the children’s food and beverage sales in that year.

The statistics are contained in TSG’s Future Directions in Children’s Food and Beverage report. The

Atlanta-based healthcare and wellness consultancy used Mintel and Packaged Facts figures to calculate the massive increase, which equates to an increase of 11.5% every year over the period. The report pinpoints innovation focused on health as a key driver of this growth.

“The children’s food and beverage category is garnering interest as an area of high growth and innovation due to wellness issues and pressures,” says Panna Sharma, managing partner and CEO at TSG. “Healthy and functional foods are becoming mainstream. TSG believes that the market is sustainable and will continue to grow at double digit rates beyond 2012.”

The greater appeal to consumers of beverages, says Sharma, is down to their versatility on several accounts, including the incorporation of vitamins and functional ingredients and flexible time of consumption. “Beverages encompass several popular categories such as dairy, juice, and water where incremental ingredient innovation warrants margin premiums,” she adds.

Parental concern over their children’s diets is driving demand for, and development of, healthier food products for kids, says the report. Key

Dog On It! is helping fi ll the gap for healthy food for kids from a source parents trust.



focuses are weight, hyperactivity, brain function, digestion and immunity. “Due to increasing obesity rates and other health problems among children, parents will want to confer healthy habits on their kids,” says Sharma.

But public pressures from regulators and campaigners are also shaping the market, with companies re-evaluating their approach to marketing, exemplified by responsible advertising initiatives such as that established in 2006 by the US Better Business Bureau. Schools, too, are having an impact with bans on the sale of high-sugar products.

Food and beverage suppliers are “infusing health into their portfolios by altering existing products and exploring new options in functional and other areas of innovation,” says Sharma.

New companies are also emerging to fill the gap in the market for “healthy and trustworthy products for kids from reliable sources”. Examples include drinks companies WaddaJuice, White Hat Brands (owner of Dog On It!), Clear Beverage Corporation (supplier of Kid Fuel) and Froose Brands.

Nonetheless, appealing to kids’ tastes is challenging, with a recent survey showing children prefer traditional snacks: crisps (48%), chocolate/sweets (39%), biscuits/cakes (32%) and fizzy drinks (27%). This, says the TSG report, underlines “the need to fuse health with children’s firmly established favourite tastes”.

What, then, are the elements that beverage companies can incorporate into their strategies

to enable them to find a profitable niche in this emerging market? Based on our analysis of the kids’ nutritional beverage market since 2004 (which has involved interviews with executives at over 300 companies in the kids’ nutrition market) there are six key issues that consistently emerge. These are set out below.

2.1 Free-from what’s “bad” is crucial

When even Coca-Cola runs an advertising campaign to tell you that its famous drink has “no added preservatives or artificial flavors”, then you can be certain that the trend for products to be “all-natural” and “free-from” has truly crossed over from being a trend that you can choose to follow – or not – into a category standard, a basic message that any food and beverage is expected to be able to communicate to even the least health-motivated consumers. Had anyone suggested a few years ago that Coca-Cola would one day feel it necessary to maintain consumers’ trust by reassuring them that its fizzy brown drink is free from “artificial” ingredients people perceive as undesirable, they would not have been believed.

In 2008 TV and print advertising debuted in Austria, Switzerland, the UK and the US which affirms that Coca-Cola never has had, and never will have, added preservatives or artificial flavours. Coca-Cola will also print the line “no added preservatives or artificial flavors” on cans and bottles of Coke.

Coke – and every other beverage company – is responding to a global trend which has moved to the level of a basic business requirement. It illustrates that of all the ways that marketers can talk to consumers about health benefits, by far the most-compelling message is that a food is “all natural” or “free from” some ingredient that the consumer perceives as undesirable.

In the kids market, as in the adult market, this “natural” and “free-from” message has become a standard message that all products need to communicate – whether they are brands aimed at the mass-market or at the most health-motivated niches.

Parents everywhere are becoming much more aware of what products should or shouldn’t contain and it’s therefore essential to avoid any ingredients

The Crayons brand aims to capture pre-teens’ desire for beverages that are as hip as energy drinks. Marketed with a strong “all natural” message, Crayons drinks strongly communicate that they are “allergen and gluten-free” and “have no high fructose corn syrup”.



seen as “bad” additives.As with most aspects of health, it’s a global trend.

Chinese parents are (perhaps unsurprisingly) more highly concerned with preservatives and additives in new products than parents in the UK and US, according to data from consumer researchers Health Focus International. This finding was in 2006 (see Chart 1), even before the recent melamine-in-milk scandal.

As a result, all of the following types of brand communications have established themselves – and at least some of these messages are used by major brands – as meaning “healthy” to one or another group of parents:

• no added sugar• no added sweeteners • no added preservatives • no artificial additives, colours, flavours • dairy-free • wheat-free • gluten-free • no trans-fats• no hydrogenated oils• no high-fructose corn syrup

Hitting at least a handful of these buttons has become a necessity for any brand that wants to pass the scrutiny of the health-conscious parent. It has become a basic part of the strategy even of mass-market brands.

“No artificial colours or flavours…covers what mum wants and what she wants to give her child,” comments Noel Clarke, senior brand manager for Fruit Shoot, a very successful mass-market fruit-flavoured water brand in the UK with $179 million (€125 million) in annual sales (see Case Study 3). “As a minimum you have to deliver that.”

As Case Study 1 illustrates, even a mainstream brand such as Nestlé now puts “no added” centre-

stage. “Whether their kids are under two, or two to five years old, or six-plus,” said Victoria Nuevo-Celeste, Juicy Juice Marketing Manager at Nestlé USA, “if we asked [parents] what benefits most interested them in foods or beverages, low sugar and extra calcium were the things they were most interested in across the board. So we decided to make the products lower in sugar. It’s harder to differentiate by adding calcium.”

As a result Juicy Juice’s over-arching brand message is:

Naturally Lower in Sugar: With filtered water to lower the natural sugar content, and enhanced with nutrients. As always, no added sugars, artificial flavours or preservatives.

SOME RULES FOR SUCCESS IN NATURAL AND “FREE-FROM”

1. There are many possible approaches that you can take to make a “free-from” message. It does not need to be as rigid as “gluten-free” or “dairy-free” – nor do you need to try to cover every possible free-from option. Use a “free-from” benefit that is a logical fit to your product.

2. As far as cost and efficacy permits, choose ingredients that are “as natural as possible” and ingredients that the consumer can understand.

3. If your ingredient does not score highly in consumers’ perceptions as “natural” – even though technically it may be – you need to invest in consumer education to enable the consumer to accept your ingredient.

Sleep problems, 35%

Lack of appetite, 37%

A balanced diet, 40%

Growth and physical

development (height, bones,

muscles), 41%

Resistance to disease (colds,

coughs), 48%

CHART 1: TOP 5 PARENTAL HEALTH CONCERNS, CHINA.

Source: Health Focus International



2.2 Immunity a key concern

Immunity is mothers’ number one health concern, worldwide (see Charts 1 and 2) – and a concern Nestlé USA has tapped into with its Juicy Juice beverages. Consumer research, in every country in the world, be it in Asia, North America, or Europe, reveals surprising commonality in the key health concerns of mothers. The list below is a summary of key health benefits which mothers say they are motivated by. We’ve synthesized the list from research conducted by different leading suppliers of infant formula – who got almost exactly the same results in their consumer research. Note that immunity is consistently named as mothers’ top health concern:

• Immunity• Intestinal function• Dental health• “Normal development” • School performance• Various allergen or “free from” concerns

Numico, Europe’s biggest infant formula company and one of the biggest in the world (it is No.1 in most Asian countries, ahead of Nestlé), decided to act on this ranking and back in 2006 it re-positioned its entire infant formula range on an immunity benefit.

The result was double-digit sales increases in 2007 – even in markets such as Europe, where the formula market is flat – leading Numico’s CEO to comment that this confirmed that the repositioning was “the right choice”. Numico’s formula sales growth was a further 7.6% in 2008.

Numico’s parent company is Paris-headquartered Danone, which has also made a success of immunity.

Danone Actimel (branded DanActive in the US) is the world’s biggest immunity brand. First launched in Europe in 1994, it is marketed in 23 European countries as well as in Argentina, Mexico

CHART 2: PARENTAL CONCERNS WHEN SHOPPING FOR YOUR KIDS, US

• A balanced diet (83%)• Mental development (81%)• Resistance to disease (colds) (80%)• Growth and physical development (height,

bones, muscles) (78%)• Dental cavities (76%)• Protection against diseases later in life• Healthy appearance (skin, teeth, hair)• Gastrointestinal problems• Environmental allergies• Food allergies• Sleep problems• Obesity

Danone Actimel, the world’s biggest immunity brand, has more recently increased its direct appeal to kids with initiatives such as a kid-oriented website (www.actikid.fr) with games and information.



and the Middle East. It has estimated annual retail sales in excess of €2 billion ($2.5 billion) and still growing.

The immunity concept is communicated in consumer language using Actimel’s core messages, which are:

Helps maintain your body’s natural defences Helps protect your body from the inside

Senior Danone executives have been quoted in the trade press as attributing between 30% and 50% of the sales of Actimel (depending on the country) to mothers buying it for their children.

Actimel advertising has always featured children prominently and makes the brand’s relevance to children clear, but there was until recently no overt positioning of the product as kid-specific; instead Actimel used a broader message about “family health”. More recently the positioning has become more overt.

In trying to find new health directions for its Juicy Juice brand (see Case Study 1) Nestlé found that immunity was identified by mothers as the most important benefit for their two- to five-year-olds.

Interestingly, these mothers were also very concerned about digestion (see section 2.6 for a discussion of the as-yet untapped digestive health opportunity), and as part of its development of new extensions for Juicy Juice Nestlé formulated two separate products, one for immunity, one for digestive health, and test-marketed them.

But, Nestlé said, they in fact cannibalised one

another since they were perceived by consumers as meeting the same need. So Nestlé decided to focus the positioning of the resulting product on immunity rather than digestive health since, the company said, “For the parent, if it’s choosing between the need for having a healthy child who doesn’t get sick often, the benefits are tremendous versus having a kid that’s constipated. If the child is sick, you can’t take him to school or go to work yourself, and you may not be getting paid and you need babysitting. So we wanted to lead with the immunity benefit because it was compelling to moms.”

Actimel: the world’s biggest immunity brand

Valio Dairy, in Finland, launched its Gefilus Kidius range in 2004. Kidius includes spoonable yoghurts, yoghurt drinks and a snack cheese, called Magic Cheese. Three slices – or 30g – of Magic Cheese, a lactose-free, low-fat Edam-style cheese, contains enough LGG to boost kids’ natural defences, accord-ing to Valio.



Zespri, the world’s largest kiwifruit company, has moved its marketing message beyond generalised wellness benefi ts to the specifi c benefi t of “natural protection”, meaning “immunity”, but in consumer language.

These illustrations are stills from a TV ad which the company used in Taiwan, the fi rst market where it tested the “natural protection” message.

They bring to life in a vivid and amusing way the benefi t that eating kiwifruit can help boost children’s natural immunity against germs andsicknesses.

The natural protection message is being rolled out across Asia as a new health benefi t for kiwifruit.

ZESPRI: MAKING IMMUNITY FUN



However, you don’t have to be a multinational to tap into the immunity opportunity. In Finland, a country of 5 million people, Valio Dairy, the country’s biggest dairy group, has made a success of immunity with its Gefilus Kidius probiotic range.

Valio introduced the Gefilus adult-oriented brand back in 1990. Its active ingredient is LGG (Lactobacillus Goldin & Gorbach), the world’s most-researched probiotic bacteria. Valio holds the global licensing rights to LGG, which can be found in dairy products in 27 countries, and has invested in clinical studies which have scientifically validated LGG’s benefits in relation to immunity. LGG is particularly effective in supporting the health of infants and children, including reducing the risk of allergies.

It was therefore a logical step to extend Gefilus to a kid-specific variant, called Gefilus Kidius, in 2004. Kidius includes spoonable yoghurts, yoghurt drinks and a snack cheese, called Magic Cheese. Three slices – or 30g – of Magic Cheese, a lactose-free, low-fat Edam-style cheese, contain enough LGG to boost kids’ natural defences, according to Valio. The range is also marketed with the tagline “as natural as it gets” .

In yoghurt, Kidius sales volumes grew an impressive 45% over the years 2004-2007 to 2.7 million kilogrammes. That’s a healthy figure in a country with a population of just 5 million people. It’s also a rate of growth far ahead of the low single-digit growth that characterises the adult yoghurt market in Finland.

y y g

nsumer need is the same. Actimel (which is marketed as DanActive in th

rocketed to over $75 million in retail sales in its first three years on the

Immunity is a cross-cultural issue. Below is the image of the Actimel French family – and the American family. The messages are the same because the consumer need is the same. Actimel (which is marketed as DanActive in the US) rocketed to over $75 million in retail sales in its fi rst three years on the market.

Source: www.actimel.com



In 2008 Unilever attempted to bring together the trends: Milk Time is a snack ice-cream, targeted at the after-school snacking occasion. It aims to help parents feel good about offering a snack that their children will eat and which is also healthy.

Milk Time is made with the probiotic bacteria Bifidobacterium lactis BB12, which is described in product literature as helping “support the body’s natural immunity”. The product is also prominently flagged: “without artificial colours and flavours” .

While immunity is the main area of focus, immunity and gut health are linked. The link between the health of a person’s gut and other aspects of their health is only just starting to be understood by science. What is beginning to be revealed is that the gut influences our health, wellbeing and resistance to disease to an extraordinary extent.

So powerful is the emerging evidence that it prompted Dr. Michael Gershon, a professor of anatomy and cell biology at Columbia Presbyterian Medical Center in New York, to choose the title The Second Brain: A Groundbreaking New Understanding of Nervous Disorders of the Stomach and Intestine for his latest book, in which he sets out the role that “the brain in the gut” plays in human happiness and misery. The term “The Second Brain” today has respectability enough to be in widespread usage in the scientific community.

The large intestine plays a central role in maintaining the body’s defences against harmful bacteria and viruses and in the control of energy intake and the metabolism of fat and glucose.

In the years to come we are likely to see an increasing focus on children’s immune and digestive health (see section 2.6) from an increasing number of brands.

2.3 Consumers want omega-3 “naturally” or from an “expert brand”

Omega-3 and its benefits for child health has been a significant focus for childrens’ food and beverage development.

Nestlé found that mothers are now used to the idea of feeding their infants formula that is fortified with DHA and concluded that the idea of providing the same benefit to their toddlers would be appealing, leading to an extension of its

Juicy Juice brand that carries the claim: “DHA – A building block for brain development” (see Case Study 1).

As yet, though, sales of omega-3 products have not fulfilled the expectations that have been held up for them in recent years. There may have been a wealth of new product launches in recent years, but few have made much progress in any category or in any country.

That said, two types of omega-3 product are making headway. The first is omega-3 brands

THE TECHNICAL CHALLENGE

Aside from the challenge that you can’t “feel the benefit” of omega-3, the ingredient has three distinct problems:Dosage: only a handful of countries have an RDI for omega-3 DHA/EPA but most have a guideline for a healthy daily intake that’s somewhere around 400mg-500mg a day. The difficulty is that most omega-3 products deliver only around 100mg per serve. More than that and many products start to have an “off-taste” from the oil. No product can give you a quick fix of an effective daily dose.Taste: the bigger the dose of omega-3 oil you add to a product the worse it tastes and the more technically difficult it is to add the omega-3 and keep it stable in the product. In fact, most omega-3 products, and particularly dairy and juice products, have an unappealing oily taste even at low dosages.Shelf-life: Omega-3 oil breaks down quickly, resulting in bad tastes and smells, and as a result it is usually only used in products with a short shelf-life.



UNILEVER’S AMAZE BRAINFOOD: THE OMEGA-3 EXPERT BRAND

In Asia, awareness of omega-3 is higher than in the West and parents’ desire to invest in their children’s mental development – and thus their school performance – is also higher than in the West. As a result, the inclusion of omega-3 has become a category standard for infant formula and milks for young children. Beyond these products omega-3 hasn’t made much headway in the market – and indeed the benefits of omega-3 are regarded as “old news” in many parts of Asia.

Given the receptiveness of Asian markets to omega-3, it isn’t surprising that Unilever chose India and Turkey – not Europe or the US – for the launch of its children’s Amaze Brainfood range.

In 2008 Unilever launched Amaze in India, following what was reportedly a successful first year of sales in Turkey. Intended for children aged six to 12, the range includes Brainy Bars, Brainy Bites (an “any time snack”) and Smart Mix, a powder to be added to milk. The Turkish market also has an RTD flavoured milk variant of Amaze.

Unilever’s approach makes omega-3’s benefits for children’s learning and development the key benefit of the Amaze brand. Its ambition is clearly to set up Amaze as the “expert brand” – the one that parents associate most closely with the benefits of omega-3 and trust most to deliver the benefit.

Amaze promises that it gives children “33% of their daily required dosage of brain nutrients for mental development”, including protein, vitamins A and C and omega-3 and omega-6. Levels of sugars, sodium and saturated and trans-fat have been kept to a minimum following WHO dietary guidelines. A large part of the Indian population is vegetarian and Amaze is a 100% vegetarian product. In contrast to the Turkish products, they do not contain DHA from fish oil.

Amaze has been supported in India with a massive marketing campaign, which includes TV commercials, sampling and PR, primarily targeting mothers. Experience in Turkey, says Unilever, is that mothers need education on the nutritional needs of kids and the importance of nutrients for brain development before they can judge how Amaze can assist them in getting a daily dose of these into their children.

Unilever’s strategy of creating a focused “expert brand” is one that has already proven successful in other categories (think of Yakult and digestive health or Red Bull and energy drinks). As the world faces a recession, the brands that succeed will be those that hold similar strong positions in the minds of consumers.

For many omega-3 foods and beverages, one challenge will be that they do not offer any health benefits that consumers can quickly see or feel (unlike products for digestive health and energy drinks). In a recession such products are at a disadvantage and many such brands could suffer.

Every pack carries the “Amaze promise”: We are parents too, and we realize that brain development is essential for our children to have a bright future. As scientists we know that special brain nutrients can help in a child’s mental development. That’s why we specifically designed Amaze Brainfood. Each serving contains the right type of brain nutrients, in the right combination, giving children 33% of their daily required dosage of brain nutrients for mental development, as depicted in the nutritional information table.



that define themselves clearly as “expert brands” supporting children’s healthy brain development. The second is products that offer the benefits in an “all-natural” way (such as fish).

Advances in technology that allow higher “doses” of omega-3 may create new opportunities. There are some exceptions: in Canada Danone’s Danino omega-3 yoghurt range has made a good impact in the kids’ sector. Canada is one of the strictest countries in the world in terms of health claims but it allows products fortified with DHA to make a health claim.

What omega-3 needs if it is to be as successful as probiotics is the development of a technology that overcomes the taste and shelf-life problems to allow a dosage of 400mg to be delivered in a single-serve product. If a branded foods company can create a

Yakult-like product that delivers all of your daily needs of omega-3 in one convenient, single-serve product then that will be something at last tailored to the needs of consumers.

It’s just this approach which is being taken by the fledgling Smartfish brand (Case Study 2), marketed in Singapore, Hong Kong, China and Norway. Smartfish offers the benefits of an effective dose of marine omega-3s – 470mg per 200ml serve of its juice drink – which is aimed at the niche of health-knowledgeable consumers who are motivated by the benefits of omega-3 for their children.

The company says its patented encapsulation process prevents fish oil from oxidizing, enabling it to make a virtue of taste, freshness and high dosage.

SOME RULES FOR SUCCESS IN OMEGA-3

1. Use technology that gives an “effective dose” of omega-3.

2. Be an expert brand – make the kid-specific benefits of omega-3 the total focus of your brand proposition.

3. Support your brand and help your consumer develop their knowledge with a significant investment in education and marketing.

4. Focus on single-serve, ultra-convenient products.

SUPAJUS OMEGA-3 JUICE DRINK

After it launched Supajus, the UK’s first-ever juice drink fortified with marine omega-3s, the company behind the brand patiently spent 18 months learning how to market a novel omega-3 product. One key lesson was that the most enthusiastic consumers were health-conscious mothers keen to get omega-3 in a good-tasting way into kids who wouldn’t eat fish or swallow supplements.

Many companies are learning the hard way that growing sales of new products fortified with marine omega-3 is not the cake-walk that is usually portrayed by some industry analysts. “These things take a lot longer than anyone realizes,” explained Gerry Dunn, managing director of the Natural Fruit & Beverage Company, a privately-held company based in central Scotland, which – in partnership with Scottish company NP Biotech Ltd – created Supajus, a marine omega-3 fortified orange juice which was the first product of its kind on the UK market.

Dunn said frankly in 2006 that sales of Supajus were modest by the standards of big companies. But his company was focusing on learning how to manage an omega-3 fortified brand and on refining the product and the marketing messages, based on market feedback, initially selling only through independent channels – notably a national listing with Holland & Barrett, the UK’s biggest health food store chain – before moving on to a listing with one of the big grocery multiples and a mass-market debut.



For one thing, increasing media and industry interest in omega-3 was helping to fill Supajus’s sails, said Dunn: “The more products there are the more that builds awareness and helps the whole category”.

“We’ve made the mention of omega-3 more prominent on the packaging every time we re-printed it,” he added. “Brands like Muller Vitality with omega-3 [a 100ml daily-dose omega-3 dairy drink] – we take our hats off to them. They’re not putting in as much DHA as we are proportionately but it tastes great and their advertising of omega-3 helps raise people’s awareness and when they taste the product and it’s great that takes away the ‘fishy’ objections some people have. That helps us. The launch of St. Ivel omega-3 milk has also got a lot of attention.”

Marketed with the tagline of “The Think Drink”, Supajus is a 50% orange juice drink packed in a 250ml foil pouch, with a re-sealable cap, and intended primarily for kids. Each pack delivers 100mg of DHA and 50mg of EPA, giving totally 150mg of omega-3s, which are supplied by Numega Ingredients, a Brisbane, Australia headquartered company that is a leading supplier of marine DHA.

The product was developed jointly over a two-year period with NP Biotech, a Scottish-based biotechnology company which specialises in DHA fortification. Dunn emphasized that a significant part of the product development effort went into getting a good-tasting product that compared with regular orange juice drinks.

Supajus promotions have focused on DHA, rather than the broader term omega-3, when describing the product, and communication leaflets talk about its vital role in the health of our “Brains, Eyes, Concentration, Circulation”.

Supajus garnered some good PR following its launch – among other things, coming joint-first in a survey of beverages conducted by a leading nutritionist and published in British daily newspaper the Daily Mirror.

Dunn noted in 2006 that although his brand was aiming to move into the mainstream, the first consumers to adopt Supajus had been “people that already understand the benefit of omega-3. We have a small dedicated band of customers – people who have a problem with hyperactivity or autism in their family or people who are strongly aware of omega-3’s benefits but their kids won’t eat fish or take capsules.

“A lot of our customers are parents with children who don’t like taking capsules,” he added, and agrees that for these customers, Supajus is as much a dietary supplement as a drink.

A number of changes have been made to Supajus and an additional flavour, apple and blackcurrant, has been added.

“And we altered the formulation of the orange juice product since we started,” said Dunn. “We started using sugar as an ingredient, for technical reasons, but we got negative feedback and replaced it with fructose – chemically it’s not different but perceptually it’s different. We got a good response to the change”.

There have also been changes to the packaging: “The 250ml pouch package we use has been good for us. Currently we have a 250ml single-serve but we’re next going to do a multi-pack of three 200ml stand-up pouches – lunchbox packs. But most juice is sold in 1-litre cartons and the feedback we had from Tesco [the largest UK grocery chain] was that they wanted a 1-litre pack so we will need to do that next to get into the mainstream”.

“The key thing,” concluded Dunn, “is that people are buying Supajus, paying 79p ($1.38/€1.15) a pack and they are coming back and buying it again and again. We just need to get into a multiple now and the volume will grow”.



2.4 Fruit and water

As already stated, the message that a food or food component is naturally and intrinsically healthy is one of the most persuasive in food marketing. Moreover, to a small but significant band of consumers in most countries, the word “natural” automatically means “healthy”.

More than any other food type, fruit has a halo of natural health. It’s seen by health-conscious consumers as one of very few things they can indulge in without guilt. Fruit’s health halo is constantly being polished by a steady stream of news about fruit’s benefits, such as fibre and antioxidants, and by public health campaigns such as “5-a-day” that remind us in the supermarket and in the media that we need to consume fruit to maintain health. Fruit scientists and celebrity nutritionists alike support fruit’s “all natural” health benefits.

There’s no denying that fruit is a credible carrier of health messages, and juice makers have been particularly successful in combining convenience, health, and taste in consumers’ minds. The marketing power of fruit’s “naturally healthy” image is good news for the juice industry, since profit margins are often too thin to allow the addition of expensive ingredients without either raising the selling price to very high levels – as Nestlé has had to do for its Juicy Juice Brain Development and Immunity products (see Case Study 1) which retail at a 50% premium to its regular juices – or

cutting already fine profit margins even finer. Fruit’s intrinsically healthy halo is enough on its own to appeal to consumers.

Convenience: Fruit drinks are perceived by consumers as providing all the benefits and taste of fruit with none of the mess and inconvenience of peeling. And, of course, the fruit comes in a convenient portable form.

This combination of extreme convenience and health is a persuasive selling message for fruit drinks, many of which are increasingly positioned as delivering the benefit of one or more of your recommended five servings a day of fruit and vegetables (see the examples of Knorr Vie on page 15, and also Fruit Shoot juice in Case Study 3).

As Elizabeth Pivonka, president of the US Produce for Better Health Foundation which runs the 5-a-day consumer education campaign, put it: “One of the main reasons consumers don’t eat more fruit is that they say they’re not convenient.”

To this, adds fruit marketing guru Professor David Hughes, Emeritus Professor of Food Marketing at Imperial College London and director of KG Fruits, Europe’s largest berry fruit company: “Fresh products are not in the formats that meet people’s lifestyle needs. As a result the value that the fresh fruit industry should be capturing is being stolen by consumer goods companies. In what form do you think people under 35 will eat fruit and vegetables? More than half – maybe much more – will be in processed formats.”



UNILEVER PUTS KID ANGLE ON DAILY DOSE FRUIT DRINK

Unilever’s Knorr Vie daily dose drink, which promises to give you 50% of your daily requirement of fruits and vegetables in a single 100ml bottle, was last year extended to include a kid-specific product. Called Knorr Vie Kidz, it was launched in the Netherlands and Belgium with further European launches to follow.

Unilever says that Knorr Vie Kidz has been formulated specifically to meet the taste preferences of children and it is intended as a healthy snack which also helps parents get into their children their daily requirement of 200g of vegetables and fruit.

Communications emphasise that Kidz is not intended to replace fruits and vegetables, but should be used as a supplement on top of the normal consumption of vegetables and fruit or to help parents on those days when a child doesn’t get enough to eat. Unilever is also clearly targeting “picky eaters” – a distinct group identified in many companies’ consumer research – who refuse to eat vegetables or fruit.

The product is described as containing 100% natural ingredients with no added sugars and preservatives and naturally rich in vitamin C (each 100ml bottle provides 50% of the recommended daily value). The packages carry the “I choose wisely” logo (in Dutch: Ik kies bewust), which is carried by brands in the Netherlands that meet independently-established healthy eating criteria.

Knorr Vie Kidz is available in two flavours: banana-peach-pumpkin and banana-carrot-passionfruit. It retails in a pack of three 100ml bottles at a price of €1.99 ($2.94) per pack, compared to €1.89 ($2.79) for regular Knorr Vie.

Launched in 2005, the Knorr Vie brand can be found in ten European countries. In some it has been successful, such as Belgium, which has a population of just 10 million and where in its first year the brand earned €5.5 million ($8.1 million) in retail sales.

In the larger market of the Netherlands the brand appears to have reached over €10 million ($14.8 million) in retail sales – at best – in 2006. But in 2007 sales declined.

As Knorr Vie is a super-premium product, priced at €6.30 ($9.30) per litre – compared to around €2.70 ($3.90) a litre for Tropicana juice – the volume sold is very small, perhaps less than 2 million litres a year (compared to a total Dutch juice market of over 400 million litres), making Knorr Vie a true niche brand.

The kids market is a core target for Unilever which uses a consumer segmentation model called the Unilever Vitality Life Goals Model as the basis for all its strategy, product development and consumer targeting. The model includes a segment called Give Children a Good Start, which recognizes parents’ increasing desire to, “give their children a good start so that they will be healthy, happy and successful in later life.”

Knorr Vie Kidz.

Goedgekeurd door moeders.

Geliefd bij

Daarom zijn kinderen zo gek op Knorr Vie Kidz. Elk flesje is een extra portie groenten en fruit. Gemaakt van 50% van de groenten en fruit die iedereen - volgens aanbevelingen van internationale voedings-deskundigen - elke dag nodig heeft. Zonder kunstmatige ingrediënten, zonder toegevoegde suikers en ... zonder stukjes.En zo lekker dat zelfs het meest kieskeurige kind er gek op is.

...nu ie naar perzik smaakt.Ik ben gek op pompoen

Advertising for Knorr Vie Kidz in the Netherlands carries the tagline: Approved by mothers. Liked by kids.



Water: We bracket together fruit with water not only because water is a significant component of most fruit drinks but because plain bottled water has little hope of making significant inroads in the kids market. It is hard to achieve any point of difference with a plain water – and in many countries tap water now also has the advantage of a better environmental image.

Children – just like adults – like flavour and get bored with drinking plain water. They like sweetness and they like fruit flavours, and hence even waters must offer some of these advantages of fruit if they are to have any hope of capturing market share.

It’s therefore no accident that in every single one of our case studies the beverage is either a fruit drink or one that uses fruit flavours. The successful “spring water” in Case Study 3 – Fruit Shoot – is actually a fruit-flavoured water. A large part of its success is because it gives the target market of eight-year-olds “a taste delivery that appeals to their palate”, in the words of the company behind the brand. The embryonic Y Water brand (see Case Study 4) is also a flavoured water brand.

The presence of fruit flavours enables beverage formulators to mask the tastes of added ingredients – such as vitamins and minerals – and they are especially valuable in making palatable drinks with difficult-tasting ingredients such as marine omega-3s (see Case Study 2: Smartfish).

In short, fruit drinks and fruit flavours have all the advantages in terms of image, flavour, consumer appeal and making the beverage formulator’s life an easier one.

2.5 Packaging innovation

It’s one of the most important laws of food marketing that you use packaging design to capture the consumer’s attention. After all, the average supermarket stocks some 20,000 items and a shopper can pass by 300 items per minute. For the few items they actually pick up and look at they will devote on average five seconds deciding to buy or not. In this intensely competitive environment the package is the brand owner’s last chance to influence buyers. It becomes a “five second commercial”, as marketing guru Philip Kotler puts it.

Research shows that a sizeable percentage of buyers can be deflected at the last minute from buying their usual brand if their eye is caught by a well-designed competing brand. Hence

manufacturers must use packaging to project themselves into the market.

These simple rules mean that no matter how much science your functional or healthy juice drink has behind it, no matter how much you have spent on R&D or on advertising, your product’s packaging must also perform as an equally potent part of the product mix.

There’s no finer example of this innovation strategy in action than Case Study 4, Y Water, which illustrates how a start-up brand has made differentiation through packaging innovation a key part of its strategy. It remains to be seen how successful the Y Water brand will be – or whether it can succeed – but it has certainly thus far established excellent distribution for itself as a result of its point of difference at a time when many other start-ups that have failed to use packaging differentiation struggle to survive.

Packaging innovations and strongly differentiated packaging design helps brands achieve better market positioning and thus achieve premium prices. Putting your new product in a standard 1-litre gable-top carton makes your product look like every other brand on the shelf, making it harder for it to stand out and making it much more difficult – if not impossible – to achieve a price premium, since “standard packaging” enables consumers to easily compare prices between your product and regular products.

Some of the most successful brands of the adult functional foods market have been the most innovative in terms of their packaging while being relatively low in innovation in terms of their science. Red Bull, Yakult, Danone Actimel – all of these brands have given birth to new categories on the strength of strikingly innovative packaging. It was innovative packaging which, in all these cases, announced to consumers that these companies were creating a new category (respectively, energy drinks and probiotic dairy drinks) quite unlike anything else on the shelf. And while Yakult and Actimel are both brands with scientific credentials, essentially what they offer – the health benefits of probiotics – was not so very innovative, since probiotic products have been around in one form or another for a long time (in Europe and Asia at least). What was innovative was the highly convenient daily-dose format (65ml or 100ml bottles) in which these two brands delivered the benefit.

Yet if you measure the time spent within



companies, or at industry conferences, in discussion about the two subjects of, on the one hand, the science of functional ingredients and, on the other, packaging, you would almost certainly find that the discussion weighted overwhelmingly in favour of science. That isn’t surprising, but the balance needs to be corrected, for what use is a heavy investment in science if the package it is delivered in arouses only a yawn from consumers?

So one of the most vital questions to ask – ranking equally with “What can I claim for this ingredient?” and “How much scientific evidence is there for its benefits?” – is “How does our packaging help the consumer use our product when and where they need it?”

The evolution of the type of packaging formats in which you offer your product can also have the effect of helping the market to evolve. A wider range of packaging options makes consumption easier for different groups of people – each of which will have different consumption needs. It widens the appeal, increases consumer familiarity with your brand and its benefits and so results in increased consumption.

In the words of the song (as sung in the 1980s by all-girl group Bananarama): “It ain’t what you do it’s the way that you do it … that’s what gets results.”

2.6 Digestive health for kids – the untapped opportunity for fibre and probiotics?

Like all good ideas, the notion of juice drinks for digestive health is a very simple one and has in fact been around for a long time – since at least 1994 in Europe and since 1988 in Japan. It was digestive health that actually started the market trends that we have today. In the mid-1980s a Japanese government report called for more fibre in the Japanese diet. This in turn led to the launch of the first functional food, Calpis’ Fibe-Mini brand – a fruit juice with added fibre – in 1988.

Looking at supermarket sales figures it’s clear that digestive health is one of consumers’ main concerns worldwide. Products with digestive health benefits massively outsell those for heart health and it’s worth bearing in mind that in the home of functional foods, Japan, where the whole “functional food” concept was created and where

the market is now 20 years old, it’s products for digestive health that still dominate, accounting for 64% of all sales of functional foods. In Europe it’s a similar story, with probiotic dairy products for digestive health dominating. In the US, too, thanks to the rapid success of Danone’s Activia brand, digestive health is on track to rival energy as the biggest segment of the market.

Children have as much need for good digestive health as adults. As Paula Krebs, a spokesperson for Nestlé USA, says in Case Study 1: “Regularity is a big issue with kids. Enterologists actually have said that chronic constipation is one of the largest childhood maladies that parents face. So a digestion benefit would address a key issue for parents.”

As an ingredient, fruit – and fibre from fruit, such as pectin – has a lot of advantages in relation to digestive health. Fruit juice appeals to all types of consumers, has little or no negatives associated with it and has the advantage that in the consumer’s mind fruit is already associated in a natural and credible way with the fibre/digestive-health message: fruits such as fig, pear, prune, plum, kiwi, rhubarb – and many others – have a traditional association with digestive health in many countries.

Fruit-based digestive health drinks for children might be a niche, but there are many opportunities in terms of ingredient choice and for the brand that can create and dominate it, that niche could be a very profitable one.

Probiotic fruit drinks for digestive health: Today, the dairy sector effectively owns the digestive-health message (via probiotic yoghurts and dairy drinks), but there’s no reason why such a monopoly should persist indefinitely. For the segment of consumers who want digestive health benefits but want them in a non-dairy form, there are in most countries almost no alternatives – and certainly none that could be said to be convenient.

Dairy products have in many ways captured the high ground of health, but there are significant groups of consumers, particularly in Asia and Africa, who perceive dairy products as having disadvantages in terms of their content of fat or lactose or who just want to have a plant-based diet or who simply aren’t used to the taste of dairy.

In Sweden and Japan fruit drinks for digestive health – the ProViva brand in Sweden and the Kagome Labre brand in Japan – have proven successful. These brands are targeted at adults, but there is clearly a gap in the market to bring the



same benefit in beverages targeted at kids. Fibre for kids: As well as an untapped

opportunity for probiotic juices there is scope for doing more with fibre, which is increasingly used as a selling point in other categories with a health halo. The digestive health message is, for example, being used increasingly by breakfast cereals. Kellogg is enhancing the fibre content of all of its cereals to the point that 80% of its cereals will be “at least good to excellent sources of fibre” by the end of 2009. Kids, through their parents, are an important part of Kellogg’s fibre initiative. In fact its most popular children’s cereals – such as Froot Loops and Apple Jacks – are the first to get a high-fibre makeover.

While it may be tempting to talk about “prebiotic fibre” as the active ingredient in a kids’ beverage the term “prebiotic” is probably too new for most markets. As Case Study 1 shows, Nestlé USA recognizes the problem with the term prebiotic

– and its confusing similarity to probiotic – in connection with its Juicy Juice brand: “They know that the two have similar functions, but do consumers fully understand what they are?” In Europe several brands have already tried unsuccessfully to target the adult market with products marketed as “prebiotic”; most have failed to make much headway. Some companies have abandoned their prebiotic marketing efforts.

It makes more sense in terms of ease of consumer communication to use the more familiar and easily-understood term “fibre”. Fibre is something every mother knows that both they and their child need more of, and there’s widespread awareness that modern diets are deficient in fibre. Boosting the fibre content of beverages so they deliver an “effective dose” while still tasting good is a technical challenge but one that some companies are working on (see Case Study 7).



A check-list for kids’ beverage success

While it’s a necessary first step, identifying the health concerns that you intend to target is only a very small part of creating success in the kids’ nutritional marketplace.

Your success in creating a kids’ beverage brand will depend on your competence in executing a successful product; a successful package design; a health benefit that is relevant to, and understood by, mothers; and an ingredient which mothers will accept. All of these factors, of course, will need to be heralded by a successful marketing strategy.

An analysis of the companies’ brands profiled in this report makes it possible to create a check-list which could help create the perfect children’s nutritional product.

Such a product would ideally be:

1. Fruit based or able to talk about its fruit content or flavours.

2. As natural as possible, with no artificial preservatives, colours or sweeteners.

3. Free from added sugar. Apple or pear juice concentrate would appear as a sweetener, or perhaps fructose.

4. One which has clear health benefits that can be easily understood by mothers and is relevant to their children. While it’s recommended that your product be as natural as possible, if you want to deliver a health benefit from an added ingredient, the ingredient should be one that mothers accept and understand.

5. Packaged with an eye-catching design that communicates your brand is healthy, fun, natural.

6. Supported by an integrated marketing effort. The days when companies could

simply put a product on the shelf and expect it to sell are over. Brands that don’t work hard to communicate, particularly in the still-embryonic and intensely competitive kids’ market, die. One of the most-powerful and cost-effective tools is sampling, especially in places where kids will be with their parents (so that they can tell their parents straight away how much they like the taste of your product). Sampling is by far the most-effective marketing technique. As a senior Danone executive put it: “Advertising creates awareness, but sampling creates purchase.”

7. Marketed with a budget big enough to have an impact. Half-measures get half-results (or worse).

8. Targeted at mothers, rather than children. Mothers are the gatekeepers of their children’s health. For kids, marketing is in the great-tasting product and the eye-catching packaging. Messages about your product’s health benefits, naturalness and convenience should be targeted at mothers.

9. Tested to breaking point by at least 100 children in the target age-group. Only when 80% of them say they want the product and love its taste should you go ahead. Developed after extensive qualitative, in-depth research of your target market and their mothers. Become an expert in what they believe, when, where and how they use your product – or why they don’t.

If you can accomplish many or most of these you might well build a successful kids’ healthy beverage. If you are not doing most of the things on the list above, then you should be asking yourself why, since these seem, again and again, to be the questions successful kids’ brand owners ask themselves.



CHART 3: HOW DOES YOUR KIDS’ PRODUCT MEASURE UP AGAINST THE CHECKLIST?

1. Fruit content/ fruit flavour

2. As “Natural” as possible

3. Free from added sugar

4. Clear health benefit that mothers understand

5. Eye-catching packaging

6. Marketed with sufficient budget

7. Targeted at mothers, not just children

8. Taste-tested on kids

If you score less than 7 you may need to rethink your product development plan

Final score out of 8



Case Studies



Immunity and omega-3

case studies



Case Study 1: Nestlé Juicy Juice

Nestlé USA has introduced two kids’ juices targeting specific health benefits – brain development and immunity – under its Juicy Juice brand. Commanding a 50% premium over regular varieties, the juices are to be followed by other single-function varieties.

Juicy Juice, Nestlé’s US children’s juice brand, has become the first major player in the segment to target specialized nutritional functionalities, with the pricey new products in a distinctive new multi-serve Tetra Pak size and shape.

And while Nestlé has deliberately stopped short of creating a sub-brand to cover the new products – Juicy Juice Brain Development and Juicy Juice Immunity – a senior brand executive said that a string of other varieties focused on single functions is in the works, beginning with a third product to be introduced next year.

“This is a line built to be about benefits for kids especially under six years of age,” said Victoria Nuevo-Celeste, Juicy Juice marketing manager for Glendale, California-based Nestlé USA. While she declined to identify which specific nutritional need the brand would target next, she did cite some that Nestlé is studying. The company also plans to introduce single-serve versions next year.

“Bones and teeth are areas of importance for moms,” Nuevo-Celeste said. “Recharging and energy-related products as well. Allergies also are coming to the top, and more and more moms

are interested in an allergy-relief – or, hopefully, allergy-prevention – type of product.”

In the meantime, Nestlé means to glean some profits, or at least recover its additional costs, from the first two entries in the Juicy Juice diversification effort, Brain Development and Immunity. The brand is charging a stiff price premium of around 50% for them compared with its multi-serve bottles of regular Juicy Juice varieties.

Both Juicy Juice Brain Development, which features DHA omega-3s, and Immunity, which touts prebiotic fibre and essential nutrients, are retailing for a suggested price of $2.99 (€2.19) for a 33-ounce bottle, or about nine cents an ounce, while regular varieties retail for around $3.60 (€2.64) for a 64-ounce bottle, less than six cents an ounce.

That premium is all the more remarkable because, unlike regular Juicy Juice varieties, the two new products are diluted, containing only 70% juice and 30% water, because Nestlé wanted to lower the sugar content and calories of the new drinks.

“It costs more for the ingredients,” noted Pamela Krebs, a Nestlé USA spokeswoman. One example: the brain-development product includes microencapsulated fish-oil omega-3s provided by Ocean Nutrition.

Nestlé bought Juicy Juice 12 years ago and has grown the brand rather conventionally since then, retailing it in both multi-serve bottles and single-

Nestlé Juicy Juice aims to be the “expert brand” for parents of children aged 1-6



serve juice boxes. Like other juice brands, Juicy Juice has battled parents’ increasing concerns about sugar content and calories.

Managers decided to attack the sugar and calories issues as well as add specific functionalities that would differentiate the brand. Deciding to dilute the new products was the easy part.

“Whether their kids are under two, or two to five years old, or six-plus,” Nuevo-Celeste said, “if we asked them what benefits most interested in them in foods or beverages, low sugar and extra calcium were the things they were most interested in across the board. So we decided to make the products lower in sugar. It’s harder to differentiate by adding calcium because other products in the marketplace are doing that.”

Juice Juice products’s over-arching brand message is:

Naturally Lower in Sugar: With filtered water to lower the natural sugar content, and enhanced with

nutrients. As always, no added sugars, artificial flavors or preservatives.

Brain development key for toddlers

Then Juicy Juice managers had to decide what benefits to feature. They quickly determined that they would aim different benefits at mothers of kids aged two and under, and at mothers of kids two to five.

For the toddlers, brain development quickly emerged as an obvious choice. “It is a well-differentiated benefit,” Nuevo-Celeste explained, “and moms have a great focus on that. From toys to videos to food, it’s such a crucial point in a child’s life to make sure that the brain develops correctly. That was the benefit [moms] were most interested in.”

Moreover, most moms are used to the idea of feeding their infants formula that is enhanced with

JUICY JUICE IMMUNITY INGREDIENTS & NUTRITION FACTS

JUICE JUICE BRAIN DEVELOPMENT INGREDIENTS & NUTRITION FACTS



DHA, so the notion of carrying over that benefit to toddlers would be appealing, the company concluded.

“Though eventually DHA gets produced by our own bodies,” Nuevo-Celeste explained, “at the point where Mom weans her baby off of infant formula, there’s a bit of a [DHA] deficiency. And it’s such an important element of the human brain that we thought it would be perfect, in the first juice for a child under two, to add DHA.”

Juicy Juice Brain Development is available in Apple and Grape flavours and contains 16mg of DHA per serving and the front of the pack states prominently:

DHA – A building block for brain development

“We’re not trying to be the sole source of DHA that a child needs,” Krebs explained. For one thing, some children under two years old might still be breast feeding, and some may be eating cereal.

“But we’re the first in our segment to figure out how to [get DHA into the product] and still have a great taste,” Nuevo-Celeste said.

Rolling digestive and immunity benefits together

Things got pricklier as executives specified what benefits Juicy Juice would deliver to older kids. They settled on digestive health and buttressing the child’s immune system.

Immunity was the most important benefit that

moms identified for their two- to five-year-olds. But they also were concerned about digestion. “Regularity is a big issue with kids,” Krebs said. “Enterologists actually have said that chronic constipation is one of the largest childhood maladies that parents face. So a digestion benefit would address a key issue for parents.”

Juicy Juice formulated two separate products, one for each benefit, and test-marketed them. “But they cannibalized each other because they almost met the same need,” Nuevo-Celeste explained. “And since they almost met the same need, we decided to put them together.”

They decided to lead the positioning of the resulting product with immunity rather than digestive health for a couple of reasons. “It came up as a more interesting and appealing benefit” to the moms who were surveyed, Nuevo-Celeste said.

“For the parent, if it’s choosing between the need for having a healthy child who doesn’t get sick often, [the benefits] are tremendous versus having a kid who isn’t constipated. If the child is sick, you can’t take him to school or go to work yourself, and you may not be getting paid and you need babysitting. So we wanted to lead with the immunity benefit because it was more compelling to moms.”

Second, the company learned, from the test market, more about the challenges of marketing digestive benefits to Americans. “It’s not as appetizing as immunity,” Krebs said.

What’s more, Juicy Juice faced the challenge of having to explain what prebiotic fibre is all about

Latest 52 Weeks Ending Mar 22, 2009 Dollar Sales Sales % change compared to previous

year

% market share of segment

NESTLE JUICY JUICE ASEPTIC JUICES $87,294,220 7.34 38.48

NESTLE JUICY JUICE CANNED FRUIT JUICE $5,823,589 (6.27) 2.85

NESTLE JUICY JUICE SS BOTTLED APPLE JUICE $43,014,680 16.60 7.78

NESTLE JUICY JUICE SS BOTTLED FRUIT JUICE BLEND $55,993,420 8.86 13.35

NESTLE JUICY JUICE SS BOTTLED GRAPE JUICE $20,619,130 7.74 8.03

Total $212,745,039

Calendar Year 2004

JUICY JUICE J MAX ASEPTIC JUICES $2,552,562 (58.28) 1.38

NESTLE JUICY JUICE CANNED FRUIT JUICE $9,722,995 (15.58) 4.41

NESTLE JUICY JUICE SS BOTTLED APPLE JUICE $30,565,680 14.77 5.66

NESTLE JUICY JUICE SS BOTTLED FRUIT JUICE BLEND $53,886,610 18.78 22.38

NESTLE JUICY JUICE SS BOTTLED GRAPE JUICE $18,720,720 6.85 7.48

JUICY JUICE J MAX SS BOTTLED OTHER FRUIT JUICE $1,363,872 (37.71) 5.71

Total $114,259,877



to a public that has little understanding of the general concept – much less the difference between prebiotics and the probiotics that they hear more about.

“They know the two have similar functions, but do [consumers] fully understand what they are?” Nuevo-Celeste said. “We’re not sure. One of our goals is to make sure that across our touch points, we are able to communicate what prebiotic is.”

Juicy Juice Immunity, which communicates on the front of the pack that it Helps Support Immunity, is available in Apple and Berry flavours. It features gum acacia as the prebiotic fibre. Nestlé said that children three to five years old consume only 11.4g of fibre a day on average, while the recommended amount is 25g. With 3g of fibre per serving, the new Juicy Juice contains an amount about equivalent to that found in a medium-sized apple.

The drink also includes extra zinc and vitamin C, which the company said were essential nutrients for kids because neither can be produced by the body

and must be replenished.While Nestlé refrained from creating a sub-brand

for the new products, it has introduced unique packaging. One reason, Nuevo-Celeste said, is that they had to use packaging that would protect the DHA in Brain Development from light.

So Tetra came up with a large, 33.8-ounce (1-litre) “juice box” without a straw. As contrasted with most multi-serve juice products, this package is tall and skinny with a Prisma, not rectangular, shape.

Nestlé’s distribution of the new products is national, and marketing includes all traditional media outlets as well as sampling and an online presence which includes a Juicy Juice “channel” on YouTube.com.

Advertising will be product-specific but under the Juicy Juice tagline of “The very best juice for the very best kids”. Ads for Immunity, for example, feature “kids sharing things, in playful ways – and the many chances that they have to get bacteria in their bodies,” Nuevo-Celeste said.

CHART 4: US SALES GROWTH OF JUICY JUICE

Nestlé has grown the Juicy Juice brand steadily in recent years and it is arguably the biggest kid-specifi c juice brand in the US, competing with brands such as Capri Sun and Sunny Delight. The charts below show sales for the variants of Juicy Juice.

TOTAL U.S. - F/D/Mx (Supermarkets, Drugstores, and Mass Merchandise Outlets (excluding Wal-Mart))

Source: Infoscan Reviews, Information Resources, Inc. (IRI)

SalesUS $

(million)

0

$2.55(€1.88)

J max

asep

tic

juices

Calendar Year 2004

10

20

30

40

50

60

70

80

90

$9.72(€7.17)

Canne

d frui

t juice

$30.56(€22.54)

SS* b

ottled

apple

juice

$53.88(€39.75)

SS* b

ottled

fruit

juice

blend

$18.72(€13.81)

SS* b

ottled

grap

e juic

e

$1.36(€1.00)

J max

SS* b

ottled

other

fruit j

uice

Latest 52 weeks March 22 2009

SalesUS $

(million)

0

$87.29(€64.39)

Asep

tic ju

ices

10

20

30

40

50

60

70

80

90

$5.82(€4.29)

Canne

d frui

t juice

$43.01(€31.73)

SS* b

ottled

apple

juice

$55.99(€41.30)

SS* b

ottled

fruit

juice

blend

$20.61(€15.20)

SS* b

ottled

grap

e juic

e

*SS = shelf stable



Case Study 2: Smartfish

Making a focus of the benefits of the high dose of omega-3s used in its fruit juice brand, and finding a way to keep the omega 3 fresh, have been key to the success of Pharmalogica in its initial markets of Singapore, Hong Kong and China. Now the drinks are enjoying increasing distribution in their homeland of Norway, just 18 months after their launch in January 2008.

Norway’s Pharmalogica is not the first food manufacturer to add omega 3 to a fruit juice – and it certainly won’t be the last. But the company is finding success by marking itself out from the competition with a focus on the freshness of the omega 3 ingredient it uses in its drinks range, and the high doses it includes.

Pharmalogica buys in salmon oil from fellow Norwegian company Marine Harvest Ingredients and encapsulates it in an emulsion in the juice. There’s nothing unusual in that, perhaps. But the process by which it does this, says the company, is unique and patent-protected and prevents fish oil – which is notoriously unstable – from oxidising.

Pharmalogica says this is important because studies have suggested that oxidised omega 3 is less effective at providing health benefits than omega 3 that is fresh.

Whether or not this is the case – and the company is funding a major new trial in a bid to prove it – Pharmalogica is enjoying brisk business in its home market.

Since launching its range of Smartfish juices – both adults’ and kids’ products – distribution has increased dramatically, from 200 stores then to 1,100 now, a number which includes the whole Norwegian Co-op network and outlets owned by supermarket operator Norges Gruppen.

Pharmalogica has also added a lightly carbonated beverage to the range – Smartfish MyOmega – and is planning new products with ingredients other than omega 3. In addition, talks were at advanced stages with potential distributors in the US and Germany.

Despite being based in Oslo, Pharmalogica came late to Norway’s grocery market, and its story begins in Asia. The company was founded six years ago by Janne Sande Mathisen and her husband

Henrik Mathisen, who had identified omega 3 as a nutrient offering a good commercial opportunity. So sure were they that it was a good bet, in fact, that they didn’t even bother carrying out any consumer research.

“We just went with a gut feeling,” says Janne Sande Mathisen. “We were very interested in health ourselves and we had read about omega 3. We felt it had a strong scientific base.”

As parents to young children, the couple decided to develop a range of good-tasting omega 3 supplements for kids, marketed on the basis that the fish oil they contained would remain fresh until the point of consumption, thereby enhancing its benefits.

Mathisen was no stranger to the food industry, having worked for Norwegian dairy co-operative Tine before starting Pharmalogica. She was employed by Tine in a commercial role, but worked closely with the company’s new product development department. This gave her a taste of the importance of the technical aspects of creating food and nutrition innovations.

With this in mind, the Mathisens established a scientific advisory board and set about developing the technology to keep the omega 3 fresh –



something they achieved via the aforementioned patented process.

The first product they developed was a sachet supplement – but it was not launched on its home market. “The Norwegian market for supplements is crowded,” explains Mathisen.

Instead, it was introduced in Singapore. As it turned out, the brother of one of the members of Pharmalogica’s scientific advisory board had a contact in the country who was keen on the Smartfish concept.

It was as simple as that, and Mathisen admits that, at the time, she and her associates were playing things somewhat by ear. “We didn’t always have a clear idea of where we would be in three years’ time,” she confesses.

But in spite of the apparent lack of strategic planning, it soon became evident that the care put into developing the Smartfish brand and the technical quality of the product were paying dividends. After a successful launch in Singapore in 2003, the supplements were rolled out to Hong Kong and, just recently, China. They are also being sold in South Africa.

With things ticking over nicely in Asia (although Mathisen declines to reveal sales figures), Pharmalogica set about developing an omega 3 concept for Western markets.

The result was a range of Smartfish drinks for adults called Smartweek, and Smartfish drinks for children carrying Disney licenses Winnie the Pooh and High School Musical. The drinks mix exotic fruit flavours such as jackfruit, aronia, lychee and pomegranate with tastes more familiar to northern European consumers such as apple, pear and mandarin.

“The drinks represented something very new so we were prepared to launch them in Norway,” says Mathisen. “There is nothing else like this on the market here.”

High Omega 3 dose unique

One of the things that makes Smartfish drinks stand out, Pharmalogica believes, is the high dosages of omega 3 in the drinks. The adult product Smartweek, and the new MyOmega, contain 940mg – about double the generally accepted

Smartfi sh does not try to hide the fact it contains fi sh oil – a turn-off for some consumers – as this advert for MyOmega shows.



recommended intake for an adult (although there are no official recommended doses), of which 300mg is EPA (eicosapentaenoic acid), 200mg DHA (docosahexaenoic acid) and 100mg DPA (docosapentaenoic acid). The kids’ drinks offer 470mg of omega 3 (150mg EPA, 100mg DHA and 50mg DPA), which the company says gives the generally recommended daily intake in a 200ml serve.

Mathisen says Pharmalogica went for high doses because consumers in Norway care about the levels of omega 3 in a product. “If it’s too little, they don’t bother,” she says.

Keeping it fresh

But perhaps the most interesting selling point Pharmalogica promotes is the claim its omega 3 stays fresh because of the way it is processed. That gives the drinks, which are packed in 200ml aseptic Tetra Pak cartons, a shelf life of three months for Smartweek and the kids’ SmartFish products and six months for the carbonated product MyOmega. Mathisen says this is achieved by combining the marine oil with antioxidants in the form of rosemary extract and tocopherols. “There are of course also other steps in the process which are essential to keep the freshness,” she adds, “but I don’t wish to reveal more than this.”

Pharmalogica is to fund its own trial to establish whether fresh omega 3 is better for health, as Mathisen explains. “We are planning a comprehensive clinical trial in which the main issue is whether the health benefits of marine omega 3 supplements to humans are limited by oxidation. Few human trials have addressed this issue, the sample sizes have been small, and most have been in subjects with medical conditions.”

The study, which began in January 2009 and concludes in December 2011, will compare Smartfish with both fish oil supplements and fish itself. The trial will be conduced by Norway’s NIFES (the National Institute of Nutrition and Seafood Research) and the University of Oslo.

Health claims are kept to a minimum thanks to Norway’s strict rules in this area. MyOmega reads: “MyOmega contains a high dosage of Omega 3. Enjoy the well-documented health effects. Think n drink.”

Pharmalogica is very open that its drinks contain fish oil, even though evidence is mounting that some

consumers find the addition of marine-derived omega 3 to some functional foods unappetising.

Also on MyOmega, for example, the carton reads: “Smartfish MyOmega is made of lots of fruits rich in antioxidants – and a dash of natural oil from Norwegian salmon.” The source of the omega 3 – and its freshness – is also discussed openly on the Smartweek and kids’ products.

“Sometimes you have to tell people what it is,” says Mathisen. “If you try to hide that it’s omega 3 from fish then you’re not standing up for what’s in there. We want to make it so clear that this is really the relevant dosage, that it is a very healthy recipe with no sugar or preservatives, and that it’s fish – but it’s natural and really good for you.

“I think we scare off a lot of people, but our products also have an edge to them which some people like.”

Cool appeal

It does seem that the range is considered by consumers to have a certain “edge”. Part of Smartfish’s success is that it has built up a cult following among Norway’s snowboarding community. This

MyOmega’s pack promotes freshness with the message: “The marine oil in Smartfish MyOmega is super fresh and kept fresh with natural antioxidants – trust your taste buds”.



group, says Mathisen, are particularly interested in wellbeing because of the physical nature of their hobby, and they like Smartfish as a healthier alternative to mass-market beverages such as Coke.

Smartfish drinks are endorsed by Terje Hakonsen, Norway’s most famous snowboarder who, incidentally, also holds a stake in Pharmalogica. Hakonsen’s endorsement is central to an advertising strategy focused around cinemas, the internet and press. Pharmalogica also attends snowboarding events to keep its profile high in this community.

New MyOmega should help enhance Smartfish’s status further. Its carton design is more modern than Smartweek. “I guess it has a bit of a cooler look,” says Mathisen.

Smartfish drinks are far from cheap, even in a country noted for high prices such as Norway. Smartweek retails at around €1.80-1.90 ($2.45-2.59) for 200ml, while the kids’ drinks sell for

about €1.60 ($2.18). MyOmega is more expensive – around €2.20 ($3.00).

“Smartfish is not a cheap product,” says Mathisen. “But then again it is not that expensive and it’s in line with upmarket juice drinks.”

Pharmalogica has plans to add to its product range, with a version of MyOmega containing lycopene in development. But Mathisen says omega 3 will remain central to the company’s offerings.

Growth will come not just from NPD, however, and expansion into the US, other parts of Europe and also Asia is on the cards.

With momentum building following a successful launch on home ground, Pharmalogica will be hoping consumers further afield will also buy into its central messages about high dosages and freshness of omega 3, to take this emerging business on to the next level.

Fruit juice with marine oil in water emulsion, providing children with the daily recommended dosage of Omega 3 (EPA, DHA and DPA) in one 200ml Tetra brick.

Fruit juice (from concentrate of apple, pear, pomegranate and aronia), fish oil, emulsifier, natural raspberry and orange flavouring, rosemary extract, natural tocopherols.

NUTRITION FACTS PANEL FOR SMARTFISH



Water and fruit juice

case studies



Case Study 3: Fruit Shoot

Within the space of eight years the Fruit Shoot brand has redefined the UK’s kids juice market, taking a 25% share. Not only that, it has been successfully extended into flavoured water and redefined that market too – even at a premium price.

On its website, UK-based beverages supplier Britvic boasts that the launch of Robinsons Fruit Shoot eight years ago “revolutionised the kids’ juice drinks market”.

Such bold claims about brands often have to be taken with a pinch of salt. But, in this instance, Britvic, a company better known as the Pepsi bottler for the UK, has a pretty strong case to argue.

Kids’ juice drinks existed in the UK before 2000, of course. But it wasn’t until that year, and the launch of the first Robinsons Fruit Shoot variety, that the category began a journey which would see it become a high sector that is currently worth £427 million ($794 million/€536 million) a year, according to Nielsen data.

The Fruit Shoot brand holds 27% of this market, having seen its value nudge through the £100 million ($179 million/€125 million) barrier in the year to 17 June 2008.

This represented an impressive 38% increase over 2006, when the brand was worth £73 million ($131 million/€92 million).

Helping to drive value upwards has been a shrewd approach to stretching the brand. Since the launch of the first Fruit Shoot variant, a ready-to-drink juice and water blend product, Britvic has added carefully-positioned new varieties in the form of a sugar-free flavoured water in 2006, called Fruit Shoot H20, and a pure juice in 2007, called Fruit Shoot 100% Juice.

Nielsen data shows that, in the year to 9 August 2008, the Robinsons Fruit Shoot brand was purchased by 50% of all households with at least one child aged five to nine years, which is the key target age group for the brand.

The roots of this stellar performer can be traced back to the beginning of this decade when Britvic identified a hole in the on-the-go kids’ drinks market. “There wasn’t a strong brand out there at the time,” says Noel Clarke, senior brand manager for Fruit Shoot. “It tended to be fairly low-awareness brands or carbonates.”

Britvic already had a strong kids-related drinks

brand at this time, Robinsons, which is the UK’s number one kids dilutable brand by some distance. For Britvic, it was a logical step to move this into a new arena.

“The heritage of the Robinsons brand meant it had a more trustworthy reputation with mums [than carbonates],” says Clarke. “It was loved, but nonetheless it was a product limited to in-home, near-tap consumption. So there was an opportunity in the market to take Robinsons out of home.”

Trading off the back of Robinsons’ “trustworthy reputation” with parents is undoubtedly a very important string to Fruit Shoot’s bow.

When Fruit Shoot was launched in 2000, we were yet to see the revolt against junk food that we are seeing now. But in launching a fruit drink that was free of artificial colours and flavours, and wearing this claim proudly on-pack, Britvic was well positioned to take advantage of this emerging, and soon-to-be vital, trend.

Robinsons Fruit Shoot was well ahead of many of its longer-established rivals in the ready-to-drink



category, rivals who would eventually reformulate their products in the face of parents turning their back on additives of all kinds.

This is important because although Fruit Shoot is a kids’ product, it remains firmly a “gatekeeper purchase” – 90% of the time the brand is purchased by a mum or dad.

“It’s got no artificial colours or flavours so it covers what mum wants and what she wants to give her child,” says Clarke. “As a minimum you have to deliver that.”

As you would expect from a major player in the industry, Fruit Shoot is backed by a good-sized marketing budget (although the company won’t say how much it’s spending). The brand is supported by sampling activities as well as TV, cinema and radio advertising, focused on attracting mum through messages about the nutritional quality of the products.

Life would be straightforward if appealing to parents was the whole story; but of course it’s not. “You have to give mum what she expects, but after that you’ve really got to tap into what kids want,” says Clarke. “Kids spend a lot of time being told what to do: go to school, do your homework, go to bed. They like to have freedom and things designed for them.”

And that’s where the Fruit Shoot range “comes into its own”, says Clarke, because it is “engineered for kids”.

“It’s very much designed with an eight year old in mind. It gives them a taste delivery that appeals to their palate. The bottle also fits well into their hand, and the sports closure is something that allows them to use the drink when they want to use it – when they’re playing, or at school or just when they’re out and about.

“Back in 2000 it was the only pack of this kind for children and indeed Britvic set the standard for safety in the design of sport closures for kids at the time. It was a real point of difference.”

This kind of cap is now, of course, ubiquitous, having been copied by many others. Indeed, the success of Fruit Shoot generally has prompted many companies to come into this market with kids-specific propositions, both in the form of the inevitable supermarket own label offering and new products from major branded players.

But Fruit Shoot’s deliberate and specific kids appeal is crucial to the brand’s ability to maintain its lead over its rivals, says Clarke. “If you look at other brands in the category, they tend to be very worthy, parent-oriented adult brands that have moved into kids. Or they are kid-oriented brands that don’t get parents’ endorsement.”

Clarke doesn’t name names. But a glimpse at the market provides an illustration of his point. Smoothie giant Innocent – originally an adult brand – launched Innocent Kids Smoothies. Tropicana, the PepsiCo fruit juice brand, now comes as Tropicana Go!, a direct rival to Fruit Shoots original. In water, major brands such as Highland Spring and Nestlé Water UK’s Buxton have developed kids’ versions of their standard products. Clarke believes the fact Fruit Shoot is a kids’ brand, full stop, is vital to its appeal.

Innovation has also been at the heart of the continued growth of Fruit Shoot since its launch, says Clarke. “As time has gone by, and it’s become market leader, more and more own label brands and competitors have tried to replicate it, and it’s incumbent on us to keep innovating to stay one step ahead,” he says.

Underpinning the extension of Fruit Shoot has been identification of different usage patterns. “We realised there were different on-the-go drinking occasions in a kid’s life,” says Clarke. The original Fruit Shoot, he says, tends to be consumed after school or at the weekend. Fruit Shoot 100% Juice is considered a good option for school, where hydration and energy are key need states. H20, the second biggest seller of the three behind the original launch, does well at school, too, but also during sports and other organised play.

The growth of the kids’ water category is one of the most interesting features of the UK’s grocery market. There are several brands on the market, but the performance of Fruit Shoot H20 has been



nothing less than staggering. Launched in 2006, by mid-2007 the brand had

jumped to over £16.5 million ($30 million/€21 million) in retail sales, giving it a 53% share of the kids’ water category – and effectively giving new life to a category that had been going nowhere.

This growth was achieved despite a price position that put Fruit Shoot H20 at a 65% premium over private label kids’ waters and a 50% premium over its biggest branded rival, Danone’s Volvic Splash. Danone’s kids’ water efforts appear to have buckled before the Fruit Shoot assault and Volvic Splash was withdrawn.

A 2008 ranking in UK trade magazine The Grocer, based on Nielsen figures, shows H20 was the UK’s sixth best selling bottled water brand – and the only standalone kids’ brand in the top ten sellers in the category – having registered growth of 120% in 2007. In the kids’ water category, meanwhile, H20 dominates with 66% of sales.

What’s more, rivals such as Danone have been unable to compete.

Clarke says the emergence of water as a kids’ drink is a result of children becoming more aware of health and well being. “They are a lot more educated than we were, in terms of what we should and shouldn’t consume,” he says.

Growth in sales of 100% Juice and H20 has been “altruistic”, says Clarke, in that it has not come at the expense of sales of the original Fruit Shoot.

There are no immediate plans for further new variants but Britvic will keep an eye on the brand to make sure it stays looking fresh and up-to-date. “The window to our target market changes

continually,” says Clarke.“Our target is five to nine year olds, but that’s

only four years, and in four years’ time it will be a totally different set of five- to nine-year-olds, with slightly different tastes and expectations. So beyond new products, we need to continually refresh the brand.”

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A well-funded marketing campaign paid off for Fruit Shoot.



Case Study 4: Y Water

Put natural, low calorie water in a colourful “Y” shaped bottle, market it to kids and then let them use the empty containers in lego-like fashion to build a toy. Why not?

There was no master plan in place when Thomas Arndt, founder of Y Water, set out to develop a healthy children’s beverage. He just saw a niche and a need. Now the innovative Y Water product could potentially redefine the kids’ beverage market and create a new paradigm for product design and packaging.

Though it seems remarkably simple, the product development process decidedly wasn’t. Arndt, former brand manager for Carpe Diem, a wellness drink company owned by energy-drink maker Red Bull, admits he didn’t start out with a mission to develop a groundbreaking kids’ beverage and a reusable container, he was just a father looking for something healthy for his two young sons to drink. He saw a clearly underserved niche and thought he could do better.

“I investigated further and learned there was really nothing I would call healthy out there for kids,” said the German-born entrepreneur. “I

wanted to do something better. And it was always my dream to do something on my own.”

Thus began his three-year odyssey to develop Y Water, a certified organic, vitamin-infused water for kids. Once they drink it, kids can then link the uniquely shaped empties together with “Y knot” connectors to create their own imaginative toys. Arndt initially worked with Dr. Olga Padilla-Zakor, of the Cornell Institute of Food Science, who helped him develop the beverage with no preservatives, artificial colouring or artificial sweeteners. A top product innovation centre, Cornell provided Arndt with insights not just for the product, but helped develop processes to keep the vitamins and minerals active for as long as possible.

From the Cornell’s recommendations, it was clear to Arndt that the beverage had to have proven benefits. “We realized that lots of kids don’t get the full amount of vitamins and minerals in their normal diet,” he said. “We wanted Y Water to add to what they are getting in their diet with a balanced mix in the beverage.”

From there, Arndt began what he calls “friends and family research” to fine tune the particular

Y Water takes its name from the unique shape of its reusable bottles.



aspects of each Y Water variety. They created four flavours, Muscle Water, Bone Water, Immune Water and Brain Water. The names are designed to communicate to kids that the ingredients in each are “the building blocks of healthier bodies”.

This idea is reinforced by the containers that are “building blocks for creative play”. The brilliantly simple strategy works, but the concept was developed through an evolutionary process, Arndt said. “I realized that I was on my own with this. And I don’t have deep pockets, like the big companies,” he said. “It was clear that I needed the packaging to be different and important. Other than that I had no clear idea what to do. I needed an expert and a vision.”

What he needed was a gimmick, and Yves Béhar, founder of the San Francisco design studio fuseproject, was just the man to give it to him. Focusing on humanistic design, Béhar is known for creating projects in-tune with the needs of a sustainable future. “Yves is an amazing guy,” said Arndt. “He thinks in concepts. He’s not just creating something that looks nice. We needed a story and a concept, and this is what he came up with—it is more than a drink, it is a toy.” The reusable bottle resonated with Arndt, who says reusability is a very important concept in his home country. To be clear, he added, “We don’t want to compete with toys. But this concept does teach children that packaging has a value—you don’t have to throw it away.”

“We wanted to create a new paradigm for children’s products that encourages unique new behaviours and a productive afterlife for the product,” added Béhar.

The Y-shaped bottle also became the inspiration for the product’s name. Once they got the package there was an epiphany, said Arndt. “A friend of mine said, ‘it looks like a Y—why don’t you call it Y’.” The idea immediately made sense to Arndt. “Y is relevant for kids because they are always asking ‘why’. It was a perfect fit.”

The “Y/why” concept was also relevant for the product’s marketing and to incorporate in Y Water’s company philosophy. Arndt said they challenge themselves and the industry by asking the question “why” for everything that they do. For example, Arndt felt strongly that Y Water should be certified organic, if it was to be a superior product. That meant using all certified organic ingredients and having the organic certification process to provide an independent audit. “It was not easy to get organic certification,” Arndt said. “We worked with QAI for the certification, but it took us about a year to find organic suppliers with the right vitamins and minerals.”

The team carried the concept into marketing strategy as well. Arndt, with Los Angeles-based Kastner and Partners, who also created the brand strategy for Red Bull, designed the communication mix for Y Water. On the animated website, each

Y Water containers become building blocks for creative play. The bottles are 100% recyclable, made from a tough plastic used in the medical industry and certified safe for food by the US FDA. The bottles are environmentally safe and do not leach chemicals, and customers can receive a free mailer from Y Water to recycle the bottles by logging onto www.ywater.us.



of the four waters features a kid-oriented cartoon answering “Why drink Y Water?” For example, click on immune water and a cartoon kid pops up and says “because missing school is only fun if you’re not really sick”. A second click explains how Y Immune Water boosts the immune system with antioxidants and vitamins A, C, E and B6 and provides supporting research.

Kastner created the tag lines for each bottle, which work together to present the nutrition information and to inspire elementary school kids both mentally and physically. The Y Brain Water contains a special blend of zinc, molybdenum and vitamins B6, B12 and C. Zinc and molybdenum are known to improve concentration and receptiveness and the B and C vitamins are important for brain development and function. Why drink it? “Because it improves your memory and doesn’t taste like actual brains”, according to the pack. Y Muscle Water contains magnesium, potassium, selenium and vitamin C, and kids will drink it “because you never know who’s going to challenge you to a wrestling match”. Y Bone Water is enriched with calcium, fluoride and vitamins A, C and D. Kids drink it “because you don’t want your skeleton walking out on you.”

Launched in April 2008, Y Water was initially available at Southern California Whole Foods Markets, but roll outs were planned for Whole Foods in New York and Florida, as well as other natural channel stores and Target, according to Arndt. The suggested retail price is $1.69 (€1.32) for a 9 ounce bottle or by the case online for $39.50 (€30.93), slightly higher than direct competitor Bot Water, which retails at $1.39 (€1.09) for a 12 ounce serving. Certain Toys R Us outlets also feature Y Water. Toy R Us approached the company because of its initiative to offer more organic product to their customers. “Y Water is a credible story and good fit for them,” Arndt said.

And so far, the unusual packaging is creating

interest and having an impact in stores. For that reason, Arndt has no plans as yet to advertise. “We are relying on word of mouth and recommendations from one mother to another and kid to kid. That is how we are growing the business.” In addition, the company is doing sampling programs in Whole Foods and educating mothers and kids at regional kids’ events. The company also plans to further develop the website with more interactive features for children.

Overall, Arndt is pleased with the success of the product so far. “Often these concept products are either a huge success or a big failure,” he said. Arndt is pleased that Y Water has exceeded expectations in Whole Foods. “We are their clear market leader in enhanced waters for kids. To be the number one selling product in Whole Foods, in such a short period of time, shows we are a real player in this arena.”



Case Study 5: First Juice

In the world of junior juice, First Juice has differentiated itself in two ways. It offers greatly-reduced sugar content – less than half the sugar found in many 100% juice brands – and clever packaging that addresses real-life parental frustrations, offering leak-free bottles and smaller pack sizes for younger children. The company has also injected excitement into the brand with a flavour innovation – juice from purple carrots.

By now, the story has become so familiar that it is almost trite: Parents with some business or medical background, or both, are frustrated by the paucity of healthy snack choices for their kids, so they start a company to produce what the market is lacking.

Where these common stories diverge is whether they succeed or fail in the marketplace – the ultimate judgment of an entrepreneur’s products and business acumen. And David Glasser is determined that he and his startup, First Juice, are going to be one of those stories with a happy ending.

Two simple improvements

The basic proposition of Glasser’s First Juice is this: It is an organic, low-sugar, fruit-and-vegetable juice

line for toddlers that improves nutritionally on the 100-percent juice products that have become so popular with American parents over the last several years. And, probably more important, it introduces a packaging innovation – a disposable “sippy cup” – that separates First Juice from everything else in the juice aisle, so far.

“The idea of the high sugar content, and of the blowback against juice, was really appealing because I thought we could do better,” said Glasser, a successful serial entrepreneur who is based in Randolph, N.J. “So we saw two huge opportunities: improving a product related to its sugar content, and improving packaging for the segment.

“I founded the company thinking that if we could improve the product and the packaging, that would be enough.”

First Juice has only been available for 18 months, at first in some specialty chains and now in mainstream supermarkets, especially in the Northeast. It is 40% to 49% juice and contains about 50% less sugar than many 100% juice brands. It contains Vitamins A, C and D, plus calcium.

Each of the brand’s four organic flavours – apple and carrot, banana and carrot, peach and



purple carrot, and blueberry and purple carrot – is available both in an eight-fluid ounce, single-serve “sippy” bottle that retails for around $1.99 to $2.78 (€1.58 - €2.21) apiece, and a 32-ounce multi-serve, conventional bottle that is retail-priced at about $3.49 to $4.49 (€2.77 - €3.57).

Sales surged into the millions of dollars during First Juice’s initial year but haven’t reached $10 million annually, Glasser said. As the economic downturn socked American consumers, he conceded, sales of First Juice took a hit along with just about everything else – down about 15% in the fourth quarter of 2008 compared with the third quarter – “but those numbers are already coming back in the first of this year [2009],” Glasser said.

One reason First Juice may have more staying power than other startups is that Glasser is no newcomer to entrepreneurship or even to the beverage industry. In the Nineties, he was part of management at Pete’s Wicked Ale, a startup specialty brewer. And later, he co-founded Infinite Spirits, the producers of the five-star Shakers Original American Vodka.

Along the way, Glasser also was part of the internet startup LinkExchange, which later was purchased by Microsoft. Glasser spent several years developing sales at MSN.com.

Glasser also is married and has two young daughters, and in his shopping forays with his

family a few years ago, he noticed big holes in the kids’ healthy-beverage segment, both in terms of content and packaging.

“Children develop much of their taste preferences – and stay with them for their lives – by two years old, so that’s a really bad time to get them hooked on sugar” in juices, he said. “So we saw a chance for a healthy formula that is focused on long-term health.”

Like many parents, the Glassers preferred to cut the juice they gave their daughters with water – sometimes, awkwardly, trying to introduce water to a juice box. “Eventually you give up because you’re a parent and you’re time-stressed, and you give them 100% juice and stop fighting with them,” he said.

Glasser also noticed a lack of single-serve cold juice drinks, of any sort, for kids. “You see stores dedicate somewhere between 72 and 250 linear feet of shelf space to single-serve cold drinks,” he explained. “And if you were standing in front of one of those displays with your child of seven [years old] or below, you couldn’t find one bottle of anything to give them to drink. You can’t give a six-year-old a 16-ounce bottle of apple juice.”

Plus, Glasser said, “I got tired of my kids squirting me with juice boxes, usually in the back of the car.”

Purple carrots are making a splash into First Juice®. Yes, there are purple carrots! Carrots were originally red, white, yellow and PURPLE! Purple carrots are just as healthy and tasty as orange carrots. The red-purple pigments in purple carrots are the same powerful antioxidants found in red grapes and blueberries. Help steer children towards less sugar and more health with colorful fruits and veggies. It’s simple. Yummy. And smart.

Blueberry + Purple Carrot

First Juice® contains 12 grams of sugar per 8 oz serving, 50 percent less sugar than the leading 100% apple juice.

First Juice® provides 60% of the daily value (DV) for vitamin C, 25% DV for vitamin A and 10% DV for calcium and vitamin D in an 8 oz serving.

First Juice® has no added sugar, no artificial sweeteners, no preservatives and no high fructose corn syrup.

First Juice® is USDA Certified Organic.

Blueberry + Purple Carrot (45% Juice)

Peach + Purple Carrot (44% Juice)

FIRST JUICE’S PRODUCT FACT SHEET FOR PURPLE CARROT FLAVOURS



Packaging and flavour innovations win attention

The eight-ounce bottles of First Juice are squeezable and reusable and topped with a reclosable sippy top, not the straws that accompany juice boxes. And it’s not just any sippy top. It has a sloped spout designed to prevent chewing and clamping tendencies that cause dental and orthodontic issues with kids. It has a safety seal beneath the outer cap that lifts and peels. A durable, bi-injected crosscut silicone valve governs the flow of liquid – just like those found in regular sippy cups. And an outer cap with a built-in stopper snaps on for added leak protection.

The single-serve bottles aren’t perfect. A product trial revealed that the outer cap alone doesn’t provide a completely tight seal, which allows for the possibility of leaks if parents don’t know that. The bottle also seems to require a more vigorous squeeze than toddlers might be able to muster. But in any event, the package’s uniqueness wins First Juice a look from a lot of parents.

So does its low-sugar formula, the fact that the products are all organic, and, especially, First Juice’s flavour lineup. Clearly the most exciting flavours, to parents and kids alike, are the ones that include purple carrots.

“We started out with two juices that we wanted to use: banana and apple,” Glasser said. “We also were going to use carrot juice, which of course is orange also from orange carrots. But we were thinking about what we could do staying true to our values – but in a different colour. Then we saw a purple carrot, and it was intriguing. We did our market research and made a decision.”

The result was the two purple-carrot-based flavours. “We saw the opportunity and figured it would be cool to make juices for kids in different colours,” Glasser said. “When dietitians teach you about feeding your children when they’re young, it’s all about having foods of different colours.”

There were challenges to dredging up heritage purple carrots from America’s agricultural past and expecting to make them the basis of a popular new juice line. Glasser said that some suppliers

challenged First Juice’s insistence that the purple carrots be organic. “But we wouldn’t budge on that,” he said.

Purple carrots also bear a bit of a taste issue compared with the orange carrots Americans are used to. “Side by side, they don’t taste the same,” Glasser said, explaining that purple carrots have an additional flavour note, “which reminded me a bit of a cranberry-like flavour, and I found that really exciting,” he said. “And I liked the idea that it actually tasted a bit different; otherwise, it’s like you’re doing a gimmick, with just the colour being purple versus orange.”

First Juice also had to sell the purple-carrot concept to moms. Americans typically don’t know that the first raised carrots were white and yellow and purple as well as orange.

“We had eight moms in our focus group, and right away zero for eight said they would be interested in buying something made out of purple carrots,” Glasser said. But once it was explained to the moms what purple carrots are, he recalled, “They turned around quickly, and they said they definitely would want to give it to their kids.” In fact, the purple-carrot-based flavours are the line’s most popular with adults.

Babies R Us and Whole Foods Markets were the first chains to retail First Juice, and their stores nationwide now carry the brand. A couple of Ahold-owned chains in the Northeastern U.S. also carry First Juice, which is merchandised in the company’s “family-friendly cooler” section, Glasser said. Convenience stores are a possible outlet for First Juice as well.

In the meantime, like every other company, First Juice is having to figure out how to sell into a distressed marketplace – where, especially, many organic products are taking a hit in sales.

But Glasser is confident that parents will reduce purchases of expensive better-for-you products for themselves rather than cut out First Juice for their kids, once they’ve discovered it.

“Nothing is absolutely insulated from the downturn,” Glasser said. “But we’re the last item that’s going to get cut.”



Case Study 6: Magic Fruit

A dislike of artificial sweeteners compelled mother Catherine Walker to create a range of drinks sweetened with sugar. Magic Fruit Potions’ whimsical image and kid – and parent – appeal have won the product national listings in the UK. But how will it hold up against the sweetener-free, juice-and-water offerings that have appeared on the market in recent times?

It’s common these days to find that start-up businesses in the kids’ food and drink sector spotted their opportunity not after years of experience in the food industry but, instead, after years of experience of parenthood.

Their inspiration has typically come as a result of dissatisfaction with the products already on offer and a feeling that the desired product did not exist. Plum Baby, Ella’s Kitchen and Babylicious are examples of three relatively new baby and kids’ foods brands which began life that way. So it is of little surprise, then, that this was also the case with Magic Fruit Potions, a new range of children’s beverages launched by Scotland-based Little Bird Brands.

The drinks, currently available in four varieties, are ambient blends of fruit juice, water and sugar,

packaged in Tetra Wedge cartons, and free from all artificial additives. It sounds like a simple combination – and one that would be available widely, you would think. But according to the company’s founder, mother Catherine Walker, this is not so, and that is what drove her to launch Magic Fruit Potions.

“I was shocked to see how limited the choice was for safe nutritious foods and drinks for children,” she says, “particularly with regard to children’s juices, where the use of potentially-damaging additives is common practice. So I decided to create my own range.”

That was in 2006, and it’s proved a winning idea. In October last year Magic Fruit Potions began a national listing in Morrisons, the UK’s fourth largest grocery retail chain – and one of the market’s strongest performers in recent times. The range is now also sold in Sainsbury’s, the UK’s third largest chain, in stores in Scotland, with talks underway about a national listing. In addition, the brand has found favour with independent chains and in foodservice outlets in locations such as ‘soft play’ centres.



Contains sugar – and proud of it

One of the most striking aspects of Magic Fruit Potions is that they quite unashamedly contain sugar. It may be considered by many as a ‘bad’ ingredient, responsible in part for children’s well-documented expanding waistlines. But Walker looks at it another way. “I realise we’re bucking the trend with Magic Fruit Potions, but research shows that the safety of sweeteners is questionable,” she says.

“Sugar is naturally occurring in most foods and, so long as it is used in moderation, is harmless. I would be very suspect of any food or drink that

proclaims to be ‘sugar free’, especially when it is a product aimed at children, as in soft drinks and sweets, as the very nature of these products is that they are sweet-tasting. If they do not contain sugar or fructose then they almost certainly contain sweeteners.”

Walker hates sweeteners. She labels the drinks that contain them as “carcinogenic”, citing research suggesting one, aspartame, can cause tumours to grow faster in lab animals. She is unmoved by the fact that the European Food Safety Authority has repeatedly assessed the evidence and declared it safe for humans.

TOUGH TIMES SPARK MAGIC IDEA

Catherine Walker’s passionate dislike of sweeteners, and other artificial additives, was formed after a harrowing experience, which also marked the start of the journey that led her to found Little Bird Brands. Pregnant with her first child in 2001, she became unwell and her son Ryan was born by emergency caesarean at 25 weeks. Ryan survived but was gravely ill and spent months in hospital.

Walker herself was still sick, but doctors were unable to diagnose anything specific. Desperate, she visited a naturopath (naturopathy is a form of alternative medicine which emphasises the body’s intrinsic abilities to heal and maintain itself) who advised her to consume only water and unprocessed foods. Within months she felt better. “And then I thought that if that could work for me, then maybe it could help Ryan too,” says Walker.

Walker began researching nutrition and began applying what she had learned to Ryan’s diet, feeding him only fresh, natural and unprocessed foods. She also took up a job as a part-time nutritionist advising people with food allergies and intolerances.

All was well until Ryan attended a friends’ party at the age of five and consumed, says Walker, drinks containing artificial sweeteners and the preservative sodium benzoate. “Ryan hadn’t had anything artificial or processed,” she says. “But one day he was at a party and had these drinks. He had a complete personality change. He went mad and ended up lying on the floor squealing. When I managed to get him up he bit me on the arm.”

Walker’s experiences convinced her that the blame for the health problems faced by many children today – such as obesity, allergies and hyperactivity – could be laid at the door of artificial additives.

But, she says, she faced a problem. “In terms of drinks there wasn’t anything apart from just fruit juice or water that didn’t contain sweeteners or sodium benzoate. Fruit juice and water are fantastic, but just like anyone, kids like something different now and again. So I thought: why isn’t there anything?”

It was then, in 2006, that Walker decided to develop her own product. The Magic Fruit Potions website offers lots of fun for kids



“There may be no proof that it will make tumours grow faster in humans, but if it has that effect on animals then I just would not want to take a chance,” she says. “Would you give it to your children?”

Using savings and a government loan Walker set the company up and began the process of creating the drinks, the packaging and the brand identity, mentored every step of the way by the late Freddie Williams, owner of water brand Caledonia Clear.

The result was a range of four Magic Fruit Potions: Crimson (cherry); Orange (orange and peach); Purple (blackcurrant and apple); and Pink (strawberry and rosehip). Each contains mostly water, between 15% and 18% fruit juice from concentrate (depending on the variety), sugar, natural flavouring, vitamin C and Echinacea extract. The sugar content of Magic Fruit Potions – ranging from 21g to 23g a pack – is said by Walker to be on a par with fresh fruit juice.

Echinacea, says Walker, has been included because it’s “proven to ward off colds and flu”

– although this benefit is not referenced on pack. There is, however, a health claim for rosehip on the box for the Pink Potions. It says: “Long before you were born, babies and small children were given rosehip syrup to help them stay healthy and ward off colds, as it is a very good source of vitamin C.” The product contains 0.06% rosehip extract.

The recipes were tested out on Ryan’s school friends. “We just kept trying them until the children preferred them to the leading brands,” says Walker. “We did the same for the packaging. It’s a really good pack for children because it’s narrow rather than big and round and they can hold it very easily.”

Walker rejected the idea of using sports caps, which have proved successful for many suppliers of kids’ beverages. “I don’t like them because they’re hard and they’re put right onto the teeth,” says Walker. “Fruit juice softens dental enamel, so if you have a hard sports cap pressing on the teeth what do you think it’s going to do?”

On pack, Magic Fruit Potions uses the chatty,

On the side of the pack, text reads: “As mums working in the area of good nutrition, we have a real desire to give our children something that not only tastes great, but is refreshing and good for them too! We found it difficult to find drinks for our children which did not contain additives they might possibly react to. So we made our own! The children told us exactly what they wanted – something that was exciting and fun, tastes great and a change from just juice or water. This is the inspiration behind Magic Fruit Potions. In our research we have found that kids love these drinks – and we know that you will too!”



informal style made popular by Innocent smoothies, declaring the product contains “No Nasties!” It also states clearly the drink is free from artificial colours, sweeteners and preservatives.

The pack also invites parents to submit their own ideas for kids’ products, suggesting: “Perhaps together we may see your idea come to life as the inspiration behind our next product!” For kids, meanwhile, the pack carries instructions for a game called Jugarimo, which involves casting different spells.

Strong investment in marketing

Unlike many small start-ups, Little Bird Brands is investing a significant sum in marketing, most notably £500,000 in TV advertising across both terrestrial and satellite channels. The campaign, which is planned for the second quarter of this year, has been made possible by a cash injection from a new private investor, who is from outside of the food industry.

A website – www.magicfruitpotions.com – is also an important part of the marketing mix, offering fun and games for kids and nutritional information for parents. Walker says she hopes the site will develop into a hub for parents concerned about what their children eat and drink.

In terms of price, Magic Fruit Potions, which are primarily targeted at kids aged four to 11, are retailing for £1.85 ($2.71/€1.99) for a pack of four 180ml cartons in Sainsbury’s – or £0.26 ($0.38/€0.28) per 100ml.

That compares with £1.46 ($2.14/€1.57) for a pack of four 200ml bottles of Britvic’s Robinson’s

Fruit Shoot, the top-selling kids’ soft beverage on the market, which is equivalent to £0.18 ($0.26/€0.19) per 100ml.

This premium is not doing Magic Fruit Potions any harm, though, if Walker is to be believed. Although she declines to reveal actual sales figures, she says the brand is doing “fantastically well” and is on target to meet projections. Future plans include expanding the Magic Fruit Potions range and developing a range of confectionery containing all-natural ingredients.

It is early days, but the signs are that this is a company with the right ingredients for success in the kids’ market: a strong, simple marketing message; a focus on pleasing both parents and their children; the ability to invest in substantial marketing; and decent retail distribution.

If there is one caveat, it has to be that the market has moved on since 2006, when Walker had her eureka moment. Back then, perhaps there were indeed very few juice/water drinks free of artificial additives. Now, however, it is slightly easier to buy such products. Examples currently on the market include Ribena, Tropicana Go! (70% juice and 30% water) and even own label products (Sainsbury’s, for example, has a product called Kids Juicy Water, containing 75% juice and 25% water).

In terms of brand identity, though, Walker has created something which is unique on the market right now in the ambient juice drinks category. And, it has to be said, the kids’ drinks sector remains dominated by products containing artificial sweeteners and other additives. Magic Fruit Potions shows promise and will be one to watch.



Case Study 7: Froose

A long gestation is no bad thing if it enables you to get a product right, as the story of Froose beverage’s path to market in the US shows. With its science-based whole grain formulation, Froose has hit the market at a time when consumers are more aware than they ever were of the health benefits of whole grains.

More than a decade ago, Denise Devine had a great idea for a new product: a juice-based beverage cleverly infused with nutritious whole grains – something that would give her young son and other toddlers a healthful boost.

In fact, through her science-based startup company, the food-company executive proved so effective at developing and marketing the unique ingredient required for such a drink that she never got around to creating the beverage itself. And now, Devine’s son is 21 years old.

But deciding that it’s never too late for true innovation to shake up the marketplace, a couple of years ago Devine finally launched another company, called Froose, to make and market a whole-grain-infused juice line based on her science.

Froose contains whole brown rice and comes in three flavours – Playful Peach, Perfect Pear, and

Cheerful Cherry – in 125ml juice boxes. Retailing for $2.79 to $2.99 (€2.00-€2.14) for a four-pack, Froose is sold by a Super Valu chain and by Whole Foods Markets in the mid-Atlantic US, in Florida’s Winn-Dixie supermarket chain, and by a growing variety of conventional and natural-foods outlets around the country.

Devine declared she was “surprised” by inquiries at this early point about the possibility of distributing Froose also in other countries, where she might take on distribution partners. And she already is considering a brand extension for Froose, into another kids’ category that could use her whole-grains technology.

“The market wasn’t ready for [Froose] a decade ago,” said Devine, CEO of her Media, Pa.-based company. “The concept of drinking whole grains just wouldn’t fly. No one was really understanding the benefits of whole grains, and [appreciating] fibre was still an on-again, off-again thing.

“But in the interim, one thing that happened is that large cereal companies really educated consumers about the benefits of whole grains. That’s what started consumers noticing.”

The three Froose fl avours are Playful Peach, Perfect Pear and Cheerful Cherry.



Focus on the science

Also in the meantime, Devine perfected the science that ended up serving as the basis for Froose. She was a financial executive for Campbell Soup when, as a mother, Devine got frustrated about the lack of a nutritionally fortified juice that she could feed to her young son. That was still before nutritionists had formed a consensus of concern around the “empty calories” in juice because of sugar and calorie content.

To create the technological platform for the beverage she had in mind, she worked with Cornell University food chemists on a way to suspend whole grains and whole vegetables in a number of non-solid formats. “It’s not just fibre, but the whole food,” Devine explained. “In order to get insoluble fibre into anything that’s not solid – to get the whole food – you have to have these insoluble pieces. That’s what our patents are around.”

Specifically, Devine said, the technique combines whole food “in a certain form” with a natural suspension agent “so that you can create a very smooth and palatable mouthfeel with no particulates, no grit, no settling out. And you can do that in beverages, frozen confections, sauces, puddings, as a mouthfeel fat replacer in baked goods – a number of things.”

Actually, Devine briefly fielded a forerunner of Froose – called Fruice – eight years ago, placing it in a few Philadelphia-area supermarkets. “It did well in test, and people who got it really got it,” she said. “But it was too early for most consumers to understand the concept.” And then a business change at her distributor threw the product’s growing momentum off-stride, so Devine shelved it for the time being.

Instead, following the path of least entrepreneurial resistance, Devine veered toward applying her patented technology for outsiders, establishing a startup called Nutripharm. It has harnessed the technology in a number of pharmaceutical products for other companies. And Devine also has applied it to a non-dairy frozen confection that she has test-marketed.

But several years ago, with a young daughter in the house, Devine decided to return to her initial passion and get her own juice-based nutritional beverage to market. She renewed her commitment in part “because taste preferences and eating habits are developed early in life, and they can have a big

impact on lifelong health”.Also, Devine noticed that “the market was finally

ready, and big companies still weren’t addressing the problem,” she concluded. “They were still dancing around the edges.” For example, many juice makers are trying to take the edge off nutritionists’ criticism simply by diluting their products with water. “That’s fine for hydration purposes,” Devine said, “but it’s not really delivering nutrition.”

Honing the product

With her product formulation and positioning in her hip pocket, and her capital position improved in part because of Nutripharm’s success, Devine still had some things to tackle before she was ready to go to market again.

First, she settled on whole brown rice for Froose instead of the combination of oats and barley that she had used in Fruice. The main reason is that it allowed her to make the beverage gluten-free. “It’s not a big part of our positioning,” she said, “but it’s nice to be able to say, ‘Oh, by the way, it works [for the gluten-free criterion] too.’”

Second, Devine perfected the texture of the drink. Because Froose contains solid food particles, of course, it requires a certain minimum level of viscosity, and it isn’t a clear beverage. “It’s slightly thicker than a clear juice but not as thick as a smoothie,” she described it. “We tried to make it as delicious and smooth as possible. We wanted to keep it on the thinner side, but we couldn’t make it

Milton the Froose Moose mascot.



like clear juice. But it didn’t come out thick by any means. Kids just go, ‘Yummy’.”

Third, she changed the name of the product to Froose. “We found that ‘Fruice’ had confused consumers that maybe it was ‘just juice’, and we wanted them to understand that it wasn’t just fruit juice,” Devine said.

So she changed the spelling of her product and came up with a moose-character mascot. “He generates a lot of fun and he will be the Froose Moose forever,” Devine said.

Fourth, Devine selected flavours for Froose based on those she thought would best carry over from babies’ standards. “Kids coming off baby food are used to peach and pear, and kids tend to like cherry too,” she said.

Fifth, she deliberated about the package size. One of the problems with kids’ nutrition, she said, is that they tend to drink too much juice in a serving. “The smaller, 125ml boxes are just the right size for those kids,” Devine said. And she chose shelf-stable boxes over PET or glass for safety and environmental friendliness.

“I’m a working parent and I know how hard it is to find truly healthy products that are shelf-stable and convenient for on-the-go,” Devine said.

Sixth, she honed Froose’s price point. The four-packs range up to $3 (€2.15), a suggested retail price that “is pretty much the price that it lands

on the shelf at, given the cost of ingredients – and it’s more than for sugar water – and tacking on margins,” she said. “But it’s priced comparably to organic juice in that size.”

A work in progress

Enjoying the second incarnation of her beverage, Devine insisted that the timing is right now. Far more moms, and more retailer purchasing executives, “get it” now compared with several years ago. But Froose’s trajectory has only begun.

Here’s what Devine is still working on: Refining nutritional positioning: Devine

believes that, as American consumers develop a greater awareness of Froose and understand its essential benefits, she can build on the nutritional story. One possibility is to promote a glycemic profile that is much better than for regular juice.

“Because of the fibre and the other whole-food ingredients that we use, [Froose] has complex carbohydrates, which is something that you don’t find in juice,” she explained. “That gives it a much better glycemic profile. I have had a call from the mother of a brittle diabetic who told me that Froose is the only juice-type beverage that her daughter can drink when her blood sugar isn’t low.

“That’s thrilling to me. Froose accomplishes exactly what we thought it would. We assumed its



glycemic index was much better than typical juices with their simple sugars, but we haven’t done a clinical study on that.”

So far, Froose also has stayed away from one type of positioning that other juice marketers have used: touting their products as equivalent to a serving, or part of a serving, of fruit as defined by the US government.

“We probably could do that because of our nutrition profile,” Devine said. “But I have problems with that. Eating fruit versus juice isn’t the same at all nutritionally, because you’ve got none of the fibre or other insolubles.

“It all comes back to whole foods. As soon as you start stripping out elements from a whole-foods source, it’s not the same thing. Scientists don’t even understand how phytonutrients all work together.

“It’s possible we could make claims about being a half-serving of fruit, but I haven’t focused on that.”

Marketing and distribution. Having been burned with Fruice by the business problems of a distributor that were unrelated to her brand, Devine

decided to launch Froose by making it available via purchase online.

“I launched online first because I know that sometimes it takes a while to get retail distribution because of buying cycles and so on,” she said. “And if we were fortunate enough to get some PR for the product, I wanted people anywhere to be able to buy it.”

What’s more, Devine has come to value the instant feedback that online relationships provide and the buzz that can build behind her product.

Future products. For now, Froose will be a solo product. But Devine said she is hoping to get a second Froose product out this year, essentially based on her whole-grains technology.

She doesn’t believe the brand is restricted to juice-based beverages. “Our focus is going to be on products that are right-sized, conveniently packaged and shelf-stable that allow parents to get much healthier alternatives to existing formats, so they can pack them in lunch boxes for kids or throw them in the car when they go on vacation.”



Tea case study



Case Study 8: Republic of Tea

The unlikely triumvirate of a Nepalese village library, a Danielle Steele novel and a burned-out Microsoft executive provided the genesis for a non-profit organization and the first-ever line of natural, caffeine-free, organic Rooibos tea for children.

Republic of Teas’ newly launched tea line for kids has lofty goals. The Little Citizens Herb Teas are designed to provide a natural, caffeine-free, organic beverage that kids will like, create future American tea drinkers, and at the same time provide funding and resources to help educate children in developing countries.

For every tin of Little Citizens tea sold, The Republic of Tea will donate $1 to Room to Read, the non-profit organization founded by former Microsoft marketing director John Wood, working to eradicate poverty in the developing world by funding educational projects such as schools and libraries. The partnership with Republic of Tea will specifically provide funding for bilingual libraries for underprivileged children in South Africa, the country of origin for the Rooibos-based tea line.

Republic of Tea is no stranger to values-based products and marketing. Founded in 1992, the company sparked the specialty tea revolution, emphasizing a “Sip by Sip Rather Than Gulp By Gulp” lifestyle. “We see tea as a very deep and layered subject,” said Marideth Post, the company’s “Minister of Enlightenment”. “Tea is everything that other beverages aren’t. It’s slow, so it’s about slowing down your life to let the water boil, smell the tea and enjoy.”

The company’s founding tenets include enriching peoples’ lives through education about tea culture, with innovative tea products and by being mindful of its impact and responsibility to the community at large. Republic of Tea’s Minister of Tea (read CEO) Ron Rubin believes that his key staff members, called Ministers, should have a deep understanding of their products from “soil to cup”, Post said. Annually Rubin sends his team to one of the source countries to harvest tea side-by-side with workers in the field. The Ministers, in turn, take this perspective to help educate other staff members



(ambassadors), retailers (embassies) and customers (citizens).

Given this philosophy, it was no surprise that Rubin began to think about a partnership when he heard John Wood’s story about the dire need for books he found when visiting the rural Nepalese village of Bahundanda, where the local school library only contained a Danielle Steele novel and a Lonely Planet guide.

That was really the origin of the Little Citizens’ line, Post said. Already searching for ways to give back to its source countries, the company found natural connections with Room to Read. “Republic of Tea wanted to be a good global citizen,” said Sonia Torres, senior public relations associate for the San Francisco-based non-profit. “We have a shared purpose. We both work to empower communities and charities with the gift of education.”

Creating ‘little sippers”

Common mission in mind, Republic worked to develop a product that would provide value for customers and help create little sippers. While tea is the most consumed beverage on the planet, other than water, it is not necessarily as big in the US. “But we saw a real need for a kids’ tea beverage after we spoke to moms who had gotten down to water as the only healthy beverage they could offer their kids,” Post said.

From there it was a natural step to create a kids’ line with the naturally caffeine free, organic Rooibos, or red tea, made from the South African red tea bush. Rooibos was an obvious choice because it was already the basis for Republic’s wellness line (see box). It is also touted for its high antioxidant properties and immune support.

While the tea is a strong sell with parents, getting kids to opt in may be easier said than done. Tea is traditionally an adult beverage, and that is one reason it has never been marketed to kids, said beverage development expert James S. Tonkin, of Tonkin Consulting/Building Healthy Brands. While he applauds the choice of Rooibos, he suggests the line may have some hurdles. “Rooibos is an acquired taste, and tea is not kid friendly, so adults have to get involved in the preparation.”

In market testing, Post noted that kids who tried the product had sophisticated palates and liked its bold, direct flavour. The line currently offers three varieties: Strawberry Vanilla, Tangerine and

Apple Cherry. The Rooibos is paired with high quality herbs and all natural ingredients. The teas are sold in the Republic of Tea’s signature tea tin, which contains 36 unbleached, round tea bags and has a suggested retail price of $10.50 (€8.25). The teas are available nationally at select natural and specialty food stores such as Whole Foods Markets, Wegmans and Cost Plus World Markets.

Bamboo the Panda: marketing magic?

The label concept on the tins is geared to elementary school children and meant to engage them not only in learning about tea but also the Room to Read mission. The Little Citizen’s mascot, Bamboo the Panda, is shown on the tin in tea-growing countries: India; Vietnam; and South Africa. “The story on the tin tells how Bamboo brings tea and books to his friends around the world,” Post said. Complementing the line is a kid-sized Little Citizens mug with artwork featuring Bamboo for $12.00 (€9.42). A Bamboo plush toy will also be available retailing at $10.00 (€7.86).

Building on these items will help make the product more relevant for kids, according to Tonkin, who said kids don’t typically look for their products in the tea department. “Republic of Tea will have to evoke a change in their in-store presence and have the tea placed somewhere that kids are excited to shop. That’s where they will create marketing magic,” he said.

ROOIBOS AND SUPERFRUIT

Rooibos tea from South Africa is already the basis for a line of nine adult wellness teas from Republic of Tea. BE WELL RED TEAS blend the Rooibos with an array of beneficial herbs to create a customized selection of healthful, yet flavourful teas. Each tea is a unique blend tailored to specific health needs.

The company also offers Superfruit Teas, made from a base of the finest China green tea “blended with Superfruits recognized for their superior antioxidant qualities, reported health benefits and vibrant flavours”. Republic of Tea says that “deeply pigmented Superfruits like pomegranates, black raspberries and açaí berries, not only have centuries of traditional use, but the support of modern science in their antioxidant qualities”.



The line is being supported by a promotional plan that is consistent with other Republic of Tea launches – a handful of trade shows, some minimal trade ads, and otherwise relying on direct sales on the Web, word-of-mouth and editorial. Introduced in January 2009 at the Fancy Foods show in San Francisco, the Little Citizens line has so far been well received, Post reported.

As of late February, the Republic of Tea’s website reported that they had donated $6,079 (€4,777) to Room to Read. Both organizations are bullish

about the long-term prospects for the line. Republic of Tea will establish two libraries in South Africa at a cost of roughly $15,000 (€11,785) each, Post said. “But our goal for ourselves is 100 libraries. How we develop the line to meet those goals is, as yet, hard to say.”

“We see this as a long-term partnership,” said Room to Read’s Torres. “We feel it will be a natural partnership. It is a unique line for them, and, for us, anything that will support education and empower kids is the tie that binds.”



Teens and Tweens

case studies



Case Study 9: Crayons

Having spent several years securing its brand name for use in food and beverages, and tying down major investment, US startup Crayons has quickly created a successful business in juice drinks and sports drinks with strong marketing messages based on its products’ “all-natural” and “allergen and glu-ten-free” status. Now, says the company, it is ready to grow to the next level.

Given the proliferation of brands and products in the better-for-kids marketplace over the last few years, it’s difficult for a startup to find what looks to be a clear shot at dominating and even defining a new segment.

But that’s exactly what Duncan Seay believes he’s taking with Crayons, the company he launched to capture pre-teenagers’ desire for beverages that are as hip as energy drinks – and their need for products that are a lot more nutritious.

Marketed with a very strong “all natural” message, Crayons drinks not only have a range of functional benefits, but strongly communicate that they are “allergen and gluten-free” and have “no high-fructose corn syrup”.

Crayons All-Natural Beverage Co, headquartered in Washington in the north-west of America, is counting heavily on the appeal of its lineup of juice drinks with funky names and highly specific functional associations, such as Blueberry-

Raspberry Razzical, the “Free Radical Grabber” formulated with “the 3 essential antioxidants to support a berry, berry long life”.

But even more essential, Seay said, is the coup that he pulled off in legally corralling the name “Crayons” and a font and other graphics that are strongly associated with Crayola and other brands of the popular kids’ writing instruments around the world.

“Crayons are very well known internationally, including in Latin America, and there is a heavy level of awareness in other countries, in Europe in particular,” Seay said. “Our goal is to build a beverage company, but we own this mark for a variety of food products as well as beverages.”

It’s hard to argue with Crayons’ success so far. In just two years on the market, sales already are approaching an annualized rate of $10 million (€7.36 million) for 2009, Seay said. While he wants to continue to build the beverage business, the Crayons co-founder also hopes to get support from big existing players to expand the brand into other categories, such as yogurt.

Each “FUNctional” flavour of Crayons is made with 30% fruit juices, sweetened only with organic cane juice, and contains 30% less sugar and carbs than “most other juice drinks,” the company said. Each eight-ounce can yields only nine calories.



Retailing for suggested prices of around $1 (€0.74) for each single-serve can, Crayons now are available in about 5,000 US stores in natural and specialty chains, mass merchandisers such as Meijer, traditional supermarkets, and 7-11 stores nationwide.

Serious investment

In fielding the Crayons brand and lineup, Seay brings the kind of entrepreneurial credentials and track record that remain unusual among better-for-kids startups. The former investment banker started one company in the early Nineties that

was a trailblazer in dehydrated vegetarian soup cups. Later he established a concern that beat Campbell’s to the medical-meals market with shelf-stable entrees.

Crayons is financed with eight figures in venture and institutional capital. Its board is peppered with former executives of Nestlé, Triarc, Coca-Cola and other big food and beverage brands.

Seay said that the company conducted “30-plus rounds of research among 15,000 moms and kids” for guidance in putting together the Crayons products and brand.

Now, on the strength of all that, he is attempting to establish a grip on a segment that he said Crayons

THE CRAYONS RANGE

Here’s the lineup of Crayons products, and their touted functional benefits, in addition to Blueberry-Raspberry Razzical:

Fruit Punch 3PM is “the Afternoon Pick-Me-Up,” a “mid-afternoon snack boost” with B vitamins for energy, and fibre equaling that in two cups of grapes.

Tickled Pink Lemonade Thirst-C is called “the Quencherator” by Crayons, which promotes it as “a contemporized version of the classic for instant refreshment” plus 100% of the daily requirement of Vitamin C.

Watermelon & Wild Berries Buff Bonz is called “the Calcium Booster”, providing three calcium-boosting vitamins plus calcium to support sound muscle and bone development.

Kiwi-Strawberry Super-V is labeled “the Multi-V Marvel”, a multi-vitamin beverage.

Outrageous Orange Mango D-Fense is called “the Immunity Guard”, offering vitamins, zinc, “as much fiber as an orange and other bug-fighting nutrients”.

CRAYONS FRUIT JUICE DRINK INGREDIENTS & NUTRITION FACTS



created. Seay cited data claiming that tweens – kids ages 7 to 13 years old, by his definition – control $220 billion (€162 billion) a year in household spending in the United States alone. But he says they don’t really have a nutritional drink brand to call their own.

“Arguably, we’re the only brand out there today that speaks to this tween audience,” he said. “There are lots of companies offering juices for young kids, but no one owns the tween consumer. That allows us to have a premium-priced brand where tweens have influence.”

At the same time, Seay said, “We have a dual-consumer messaging strategy, and the other half of it is driven around appeasing Mom.”

Other brands that covet tween consumers aren’t capable of scoring big with them, Seay contended. Juice brands owned by big beverage companies that are aimed at young kids, such as Nestlé’s Juicy Juice franchise, can’t extend successfully to older children, he said.

Still other brands, such as Kraft’s Capri Sun, he said, are too associated with pouch packaging systems to make a credible leap to beverages aimed at tweens, who begin to covet energy drinks that are packaged in cans and distributed in convenience stores as well as supermarkets.

At the same time, Seay explained, parents comprise a strong wall of resistance between their pre-teenagers and nutrient-poor energy drinks. One of the few other brands that effectively exploits this space, Seay said, is Bug Juice Brands, a Michigan-based company that has managed to build a multi-million-dollar business in convenience stores alone.

Licensing a recognised brand

Because Crayons’ success or failure ultimately will hinge on creating a brand that can occupy the tweens segment and keep the giants at bay, Seay spent the first few years after his company’s 2004 founding establishing the brand name and image.

“At first I didn’t want to go into the beverage space,” he said. “There are 2,000 new products a year there, and only five percent are successful. It takes $150 million to build up a brand name. So I had to go in under a very powerful brand name.”

And perhaps surprisingly, Crayons is that brand. As a generic product, Seay said, crayons create a magical association with pre-teenagers. Kids begin using the self-disposing writing instruments as toddlers, of course, “but what we found – which was counterintuitive – is that as a brand, Crayons actually has its most prolific home among tweens. That’s because they can’t even recognize the

Crayons name on a beverage product until they’re seven years old. Until then, they don’t get it.”

So Seay paid an inventor – whom he declined to identify – a seven-figure fee for the brand positioning that this man had created and owned around crayons. What this inventor discovered in the mid-Eighties is that there was a huge association among kids worldwide with a few basic visual cues concerning crayon brands: logos with bold names, in sans serif fonts, against some sort of black oval. Even the word “crayons” resonated as much with them as specific brand names.

And yet none of the major brands in the crayon business – most interestingly, Binney & Smith of the Crayola brand, and RoseArt – had bothered to legally protect the word “crayons”, or the typical elements of trade dress that they all happened to share, including the use of the black oval.

Through his deal with the inventor, Seay said, Crayons now owns the brand name and the trade-dress elements in 27 countries around the world for broad categories of foods and beverages. Now, he believes that his company can continue to build a strong beverage business on the Crayons brand. Seay projected a 300% sales increase this year.

Another key element in the Crayons proposition is packaging in a slim, cylindrical can that is topped off by a pull-tab. Of course, it fits geometrically with the basic shape of actual crayons. But more important, Seay said, “This can is so reminiscent psychologically of allowing young kids that soda or energy drink, so it allows that audience to aspire to be older. Even the sensory experience of opening the can does that. It’s different than a Tetra box or pouch. The kids become the driver of purchases.”

Strong messaging on the brand’s packaging is another plus both with tweens and their parents, he said. “There’s nutrition messaging which is appealing to the mom gatekeeper,” Seay explained. “But there are very fun names that allow us to speak in a way that attracts the kid audience.”

Now, Seay said, Crayons is ready for its first major marketing push. So, for the back-to-school season beginning in summer 2009, the company is “putting together specific programs in key geographic markets and supporting them as a big brand would,” he said. That will include radio, TV and print advertising as well as “guerrilla street-marketing teams” in a few local markets that comprise a small percentage of the total US market. How Crayons performs in those few saturated markets “would tell us a nationally replicable story,” he said.

For the short term, he said, despite Crayons’ trademark ownership in so many countries, the



CRAYONS SPORTS DRINK AIMED AT HYDRATING ACTIVE KIDS

In August 2008, Crayons announced its unique line of all-natural and high fructose corn syrup-free sports drinks created specifically to address the nutrition and hydration needs of youth athletes – and to fill a “void in the fast-growing functional beverage market for kids”.

Ron Lloyd, CEO of Crayons, said he was confident its All Natural Sports Drinks would soon replace other sports drinks, juice boxes, and bottled waters. Crayons provide optimal levels of vitamins, electrolytes and minerals, with low amounts of organic evaporated cane juice and a moderate amount of low-sodium sea salt, to specifically address the hydration and nutritional needs of kids. They also contain added vitamin C and calcium to “help growing kids stay strong”.

Natural Sports Drinks have just 50 calories and come in three flavours: Playoff Punch, Leaping Lemon-Lime and Breakaway Berry. Each flavour is free from high-fructose corn syrup, dyes, artificial sweeteners and preservatives, and has 50% less sodium than the leading sport drink.

According to Brooke de Lench, founder of MomsTeam.com, a leading web site focused on youth sports, health and safety, and who recommends Crayons All Natural Sports Drinks because they meet kids’ hydration needs more than either water or adult-formulated sports drinks: “Studies show that sports drinks are better than water at re-hydrating kids because sports drinks contain essential electrolytes and because kids are more likely to drink the required liquids if there is a moderate amount of sodium and some fruit flavour included,” said de Lench. “Other sports drinks are not designed for kids’ needs and have too much sodium and other undesirable ingredients for kids.”

De Lench says youth dehydration is a serious issue, with two out of three children dehydrated before sports practice even starts. Crayons, Inc. has teamed up with de Lench to create a downloadable “Healthy Hydration Guide for Parents”.

This is available at: http://www.drinkcrayons.com/downloads/CrayonsEBrochure-lores.pdf.

CRAYONS SPORTS DRINK INGREDIENTS & NUTRITION FACTS



company plans to stick mainly with expanding in the US market.

Beyond beverages

But Crayons won’t be standing pat only with beverages for very long, Seay noted. “We’ll be looking to partner with other people in other categories,” he said, in which Crayons would retain ownership of the brand and license product

categories to large, established companies.“There are companies like Nestlé and Unilever

that are in every category known to humankind and every country in the world,” Seay said, “where mom the gatekeeper is going up and down the aisle. We want her running into our brand in fruit rollups, drinkable yogurts and so on, in a way that our brand – standing for high quality – becomes a brand of trust. That’s the long-term play.”



Case Study 10: The Switch

It had a rocky start and nearly went bankrupt, but now The Switch is starting over as a brand, boosting the flavours of its 100% juice sodas, and broadening its appeal beyond its original health-food channel to mainstream consumers, mainly teenagers. As well as targeting them at school, the company, under a new CEO, is strengthening its online presence – teens who see The Switch ads on Facebook can order the juice from Amazon.

After a false start that saw the Darien, Conn.-based startup brush with bankruptcy a few years ago, the purveyor of carbonated juices in bottles and cans tripled sales last year and is looking to triple them again in 2009 to reach an annualized rate of about $13 million (€9.8 million) by the end of the year.

The Switch Beverage Co. finally is rolling out its products to mainstream retailers nationally in addition to a strong marketing push in school districts.

And under its new CEO, beverage-industry veteran Maura Mottolese, The Switch finally appears poised to make a serious run at the other major players that have emerged in this segment over the last few years: Izze, a former startup that now is owned by PepsiCo; Fizz Ed, by the juice brand Apple & Eve; and Fruit 66, marketed by the independent, 4U2U Brands LLC.

“The brand was originally conceived of as a healthy soda, which it still is – but it was primarily trying to attract consumers who shop in the health-food channel,” explained Mottolese, who earned her beverage-industry stripes as an executive of Cadbury-Schweppes and Labatt, the Canadian brewer, and who then was part of the brand-turnaround team at Snapple.

“But it still is a great opportunity for us because the product has the nutritional credentials that shoppers are looking for,” she said. “And as the landscape has evolved, there is a much bigger opportunity. The brand is a healthy alternative to soda for mainstream consumers – and today’s mainstream consumer is much more health-concerned than the mainstream consumer of several years ago. So the opportunity is much larger.”

And, anticipating the next question, Mottolese

insisted that this opportunity clearly extends to teenagers, who are “critically important” to The Switch because more than half its business at this point is through school-foodservice plans.

“You’d be shocked by some of the e-mails we get from teenagers who say absolutely yes” – that they’re looking for a product like The Switch. “They’ll say, ‘I’ve been looking for a product like this.’” She reads one recent e-mail received from a teen customer: “’It’s an ideal drink. Something with a kick. It’s juicy. And it’s actually good for you’.”

Mottolese had been tracking Switch from afar when she was with Snapple and wondered why the brand – with such a solid proposition – had trouble gaining traction. It turns out that original management misspent its resources in attempting to build the business, beginning with too little emphasis on teenagers and young adults and the outlets where they would buy a beverage such as The Switch.



At the same time, other pioneers in the carbonated-juice category were not sitting still, of course, neither in the retail channel nor in the school-foodservice market. By 2006, as an independent, Izze had built its cans and bottles up to a $12 million (€9 million) brand in the grocery, mass and drug outlets measured by Information Resources Inc., Chicago. Izzy sales measured by IRI topped $14 million (€10.6 million) in 2007, and Fizz Ed came on the scene in the meantime.

And last year, IRI-measured sales by Izze topped $18 million (€13.6 million), while Fizz Ed was still struggling to reach $1 million, at least in retail channels. Last year, in outlets tracked by IRI, The Switch didn’t even register $1 million in sales.

Neither was The Switch doing much business in schools, which even early company management had identified as an important target market. Now, The Switch is available in schools – but has only been so within the last year or so.

In 2006, as the board of the startup was trying to fend off bankruptcy, they invited Mottolese to take over as CEO. She accepted, she said recently, and then began addressing the crucial question that faced the brand: “What’s the best way to communicate the essence of the brand to consumers?” as Mottolese put it. “And what is the best route to market to create awareness and trial and demand?”

The answers centered around teenagers and schools, at least initially.

Bolder flavours boost appeal?

As a product per se, The Switch had a lot going for it. As Mottolese likes to note, The Switch’s flavour profile and ingredients are important points of differentiation versus its competitors.

It is 100% juice, whereas Izze is only 70% juice. The Switch boasts 100% of the Recommended Daily Allowance of Vitamin C, while Izze offers only 5% of the RDA for Vitamin C.

Bolder tastes go with the higher juice content, Mottolese said. One of the problems that original company management created, she said, was that they allowed The Switch to drift from the early promise of satisfying taste.

“Because we’re 100% juice, we have the opportunity to create some wonderfully delicious products,” Mottolese said. The Switch now comes

in seven flavours: Orange Tangerine, Watermelon Strawberry, Grape, Fruit Punch, Black Cherry, Kiwi Berry and Very Berry. The last flavour has a raspberry profile, comes only in bottles (while the other flavours are available in bottles and cans), and is only available at natural-foods stores.

“One key with the flavours has been going with mainstream flavours such as Black Cherry and Orange Tangerine and Watermelon Strawberry,” Mottolese said. “Also teenagers want bold flavours that really characterize what they think they’re getting. So our black cherry now has delicious black-cherry taste versus something watered down or that tastes more like apple juice than black cherry.”

In a recent blind taste testing in Southern California, Mottolese said, The Switch prevailed over its competitors by a three-to-one ratio.

But prevailing in school settings hasn’t been as easy for The Switch as winning taste tests. Price competition typically is taken out of the equation by school-foodservice administrators for products as similar as The Switch and its rivals. Typically, in a school setting, a can of The Switch – as its competitors – will sell for about 85 cents (€0.64), in an a la carte line or a vending machine.

So, much of the battle comes down to taste. And in at least one big sampling of the tastes of high-school consumers, The Switch hasn’t prevailed.

“We actually brought it in for a while, but the kids seem to have liked Izze better,” said Becky Domokos-Bays, director of food and beverage

New Switch management has introduced bolder flavours, including Black Cherry and Watermelon Strawberry, to satisfy teen taste buds.



services for Alexandria City Schools, in Alexandria, Va. She said that when given the opportunity to purchase The Switch or Izze, the thousands of teenagers represented by the buying cooperative of which her district is a part “didn’t go for The Switch as well. And that speaks volumes to me”. Izze also boasts its own differentiator in that its cans are slim, like energy-drink containers.

Negotiating the complex world of school policy

The Switch management under Mottolese also has had to learn a lot, and very quickly, about the sometimes-labyrinthine rules that govern food and beverage purchases by US school districts. A huge better-for-you push has been ongoing for a few years now, both from the top down and at the grassroots, but that doesn’t mean it’s all easy to navigate.

“Some nutrition standards at state and local levels make it difficult for these beverages to be sold, even though they’re juices,” said Erik Peterson, director of public awareness for the School Nutrition Association. “All of these companies now have a letter from the U.S. Agriculture Department that exempts them from the provision that requires minimum nutritional values, because they’re just juice and water.

“But some states, including Florida,” Peterson explained, “have said even with the exemption letter they won’t sell carbonated-juice products. Does state law stand its ground on this issue or does federal law override it? It’s still a gray area right now, and the companies are fighting it.”

Mottolese admitted that “the greatest challenge in marketing to schools is that there is no one consistent

set of policies that schools follow from state to state or county to county. You have to do your homework and know what the nutritional requirements are and what the hot buttons are in terms of regulations and the concerns of foodservice directors.” Mottolese herself, she said, can be talking by phone to dozens of school officials each week during peak marketing periods like summer.

For The Switch, however, such obstacles are now only part of the cost of doing business. The school market has become “critically important for us,” Mottolese said. “It’s a great way of giving a product to a target market in a venue where they can decide if they like it. It’s a phenomenal trial vehicle.”

Naturally, Mottolese is counting on increasing consumption of The Switch by school-goers to translate into stronger retail demand. “The next opportunity for us,” she said, “is rolling out strong retail distribution to meet rising demand.” The Switch is distributing its products into several mainstream supermarket chains in the U.S. Northeast, she said.

Meeting consumers’ needs online

The Switch is also available on Amazon.com. “That is a huge deal for us,” Mottolese said. “Amazon last year was one of the few large companies that had double-digit sales growth, and grocery has been a big push for them. They have phenomenal service and a huge array of products, and our target market – think about it. These folks live online. For them, the immediate gratification of The Switch arriving within a day or two is tremendous.”

As far as marketing is concerned, The Switch is heavily oriented toward the online milieu at

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0%0%100%0%1%153313511%340100%Kiwi Berry

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Watermelon

Strawberry

0%0%100%0%1%153313012%350100%Black Cherry

0%0%100%20%1%153414012%360100%Orange Tangerine

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NUTRITION FACTS PANEL FOR THE SWITCH



the moment. Facebook.com is one prominent site where The Switch is launching advertising that is meant to drive its young consumer base to retailers – especially, Amazon.com.

The Switch also has been sponsoring an online contest inviting readers to contribute their own ideas why the “The”, in its moniker, is upside-down, and giving away iPhones as prizes.

The winning entry sent by a Switch fan in

Richmond, Va., said: “This is actually the Cyrillic alphabet. ‘EHT’ upside down means ‘buy’ in Russian. It’s all part of a subliminal plan to sell Switch to the Russians.”

Owned by Luther King Capital Management in Fort Worth, Texas, a public and private equity firm, The Switch may be a brand that, as Mottolese put it, “is in the right place at the right time”.

The school market is ‘critically important’ for The Switch, as this page from The Switch website illustrates.



PUBLICATIONS

REPORTS

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Energy shots: birth of a new premium-priced, high-growth categoryStrategies, trends and case studies from the US and UKSuch is the value to consumers of the proposition of a daily dose of energy with no added sugar that in the US alone this new category has soared to over $350 million in retail sales in less than two years - despite recession and despite sell-ing at a massive 400% price premium over “mainstream” energy drinks such as Red Bull!

10 Key Trends in Food, Nutrition & Health 2009Our annual review, 10 Key Trends in Food, Nutrition & Health, is one of the most sought-after publications in the food industry. The report identifies the 10 mega-trends that will have the most impact on the food and beverage industries over the year ahead. It points companies towards some clear and practical strategies for their functional food and beverage developments, production and marketing.

Trends & Strategies in Weight Management: Ten Key Case StudiesOur concise analysis shows which brand strategies are most effective and why, which ingredient strategies are most effective and why and sets out the key market and consumer trends. Our analysis is illustrated with ten detailed case studies which cover satiety and fat burning and look at how to use weight management to revive old brands or create new ones.

Superfruit: strategy for superfruit successSuperfruits are the product of a strategy, not something you find growing on a tree.Superfruits are revolutionising the way consumers relate to fruit and fruit-based products and they’re growing their market fast – from 40%-100% every year. And yet just a handful of fruits have crossed over from commodity status to superfruit stardom. This guide provides a checklist for superfruit success.

Probiotics: Successful Strategies from the Global MarketplaceThis report is written for anyone trying to develop an effective strategy in the challenging and fast-changing area of probiotics. It sets out the seven steps to creating a successful probiotic brand and describes probiotic strategy both in dairy and emerging new segments such as fruit juice and solid foods.

Functional and Health-Enhancing Juices: 7 Key TrendsUsing 15 detailed case studies this report analyses the functional and health-enhancing juice business. It explains that digestive health, behind superfruits, is the single most-promising trend for the juice industry – and demonstrates how two companies have quietly built digestive brands worth over $50 million

in annual sales. It explores juices with added ingredients and it points out that the areas of beauty, energy and weight management all have the potential for profitable growth.

The Food & Health Marketing HandbookIn a competitive world how do you take your technology to market so that it’s your product that wins at the point of purchase? This handbook tells you how to get the best out of the science and the health benefits of your ingredients or products.

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CASE STUDIES

Anlene: What makes the world’s biggest bone-health brand so successful? Positioned as “Expert in Bone Nutrition”, Fonterra’s Anlene dairy brand dominates the high-calcium milk segment in Asia and is the biggest bone health brand in the world. Anlene has achieved that position as the result of both innovation in science and innovations in marketing, marketing communications, packaging and products. It’s a case study that provides a model of best practice for anyone looking to communicate clinically-proven benefits.

Danone Actimel: Innovation Builds a Probiotic Mega-BrandDanone’s Actimel probiotic drinking yoghurt is the world’s biggest immunity brand and one of the world’s biggest and most successful probiotic brands. In this report Actimel’s marketing communications, pricing, packaging, labeling, merchandising, advertising and consumer insights are analysed and explained in detail and illustrated with colour photographs, charts and images from advertisements to provide valuable lessons from which all food and beverage businesses can learn.

Innocent Drinks: What makes Europe’s fastest-growing smoothie brand so successful? For any company, large or small, looking to create a successful health proposition the story of the meteoric rise of smoothie makers Innocent Drinks shows what can be achieved in a tough, highly competitive category. Innocent’s strategies are not elusive, nor unachievable – they are instead steps that any company can easily take to propel its brands to new levels.

Gainomax: How to create an expert brand in sports nutritionGainomax has shown how a brand can successfully broaden the market for a sports recovery drink, reaching beyond serious “elite” athletes to draw in occasional gym goers and other mainstream consumers while maintaining its loyal following among the elite athletes.

Cranberries: How Ocean Spray made them the world’s most successful superfruitCranberries’ rise to success as “the original superfruit” is well-known. Less well-understood is that cranberry sales actually declined for several years. That decline was turned around by a focus on innovative new product development and effective brand communications. This 35 page case study shows how Ocean Spray - and other companies in the cranberry field - have already moved cranberry far beyond simple cranberry cocktail.

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Our case studies and reports give you unique insights into the vital and changing food, beverage and nutrition market.

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Using a wealth of strategy, branding, regulatory and technology case studies based on our own primary research, New Nutrition Business will help you:

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A subscription entitles you to:

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Since 1995 New Nutrition Business has proven itself to be the most reliable, practical & useful source of analysis & insight into the global nutrition business.

Today over 1,000 companies in 42 countries around the world use New Nutrition Business as a practical tool to help them do business.

As food, beverage and foodservice companies take up the challenge of children’s nutrition, KNRdelivers to you every two months:

• analysis & insight of their strategies & tactics

• explanations of trends and market developments

• profiles of key & emerging companies & individuals

• new product launch data

• brand and product profiles

• analysis of newly-published research into children’s nutrition and health

• analysis of marketing & retailing developments

Edited by Julian Mellentin, co-author of the best-selling book The Functional Foods Revolution, and one of the world’s top five experts on the global nutrition business, Kids Nutrition Report brings to its readers analysis that will help them make better business decisions.

To order visit: www.kidsnutritionreport.com or email: [email protected]

Kids Nutrition Report is the first and only publication worldwide to focus on the highly active area of children’s nutrition and child-oriented food products, strategies, policies and politics. Every two months we bring fresh and exclusive news, trends and analysis of what is rapidly becoming a key issue for the food industry.

In the fast evolving kids’ nutrition marketplace it pays to stay informed

75% of the readers of New Nutrition Business have the job title CEO/President/Vice-President/Director

Pages 4-5

N U T R I T I O NREPORTwww.kidsnutritionreport.com

MARCH / APRIL 2007 VOLUME 3 NUMBER 5 ISSN 1744-5450

kids

Continued on page 3Yoplait adds Martek’s Omega-3 to its kids’ yoghurt

NutriPals wants to make friends with US moms

Pages 7-9

Jacky makes omega-3 more palatable for Nordic kids

Page 6

Unilever has debuted Amaze, a brand it describes as the “first specifically designed brainfood for kids” in Turkey. Aimed at school kids aged 5 to 12, the Amaze range is made up of lunchbox snacks and flavoured milk drinks which have been developed by the nutrition and mental development programme Unilever established in 2000. They represent, the company says, the culmination of extensive research by the company into kids’ nutritional needs.But what makes Amaze amazing?

• The brand is the first of its kind. The products are specifically developed to support children’s mental development needs. It does not involve the fortification of existing kids’ products with functional ingredients and to our knowledge there is no similar product to be found anywhere in Europe or the US.• Amaze is truly science-based: Unilever says that it conducted a review of over 200 scientific studies on nutrition and mental development in kids before creating Amaze. As a result of this research Amaze products have been designed to deliver 33% of all the key micronutrients that science indicates kids need daily for optimum mental development – such as iron, iodine and B-vitamins – as well as important macronutrients such as protein and omega-3 DHA.

• Unilever emphasises that it has gone to great lengths to formulate Amaze to

ensure the bioavailability of nutrients is increased, an issue which is increasing in importance for all companies with ambitions in the nutrition industry.Amaze has also been formulated to be as low as possible in ingredients known to be harmful when consumed in excess (trans and saturated fats, sugar and sodium) and therefore conforms to the WHO’s dietary guidelines. Amaze lunchbox nibbles and milk drinks have been on sale nationwide in Turkey since February, through all the grocery channels Unilever has access to in the country. They are priced at €0.38 ($0.51) and €0.49 ($0.65) respectively. “The initial consumer response has been

very positive,” Geert van Poppel, Ph.D. and Director of Nutrition for Unilever’s new Vitality platforms, told Kids Nutrition Report.“In less than four weeks, the brand attained more than €3 million worth of news coverage in the Turkish media,” van Poppel says. “The sales channels are proactively asking to list the products which is a good early sign.”

Amazing Mums; not confusing them

The marketing campaign for Amaze, is fully integrated to cover press advertorials, in-store sampling, TV advertising and direct communication with medical professionals and a website. “The brand is fundamentally targeting mothers and TV is the main communication medium,” explains van Poppel.“There are also, however, advertorials, a website and TV infomercials to help mothers understand the essentials in kids’ nutrition and how the Amaze formula would help them in giving their children a better start. The product launch has generated a great deal of interest among mothers on the Internet.”

The communications for Amaze “are designed to reflect the great science behind the product and the specifically designed, unique formula,” says Poppel, and what he describes as a “rational voice” is used in TV ads to help mothers understand that their kids’ nutritional

Unilever unveils first kids’ brainfood rangeBy Paul Vincent

Yakult Honsha, the world’s biggest marketer of digestive health products, is bringing one of the most successful of its home-market brands to Europe in a bid to boost flagging sales.Launched in the Netherlands in February, and likely to be launched later in the year in Germany too, Bifiene is a milk drink with the active ingredient Bifidobacterium breve Yakult, delivering a dose of at least one billion bacteria per 100ml package.

Although plastic bottles have become the standard container for daily-dose dairy products in Europe, Bifiene is packaged in a 100ml Tetra Pak, as it is in Japan, where the product has been marketed – albeit under a different brand name – since 1978. The packs are sold in threes and retail at Albert Heijn, the Netherlands’ biggest supermarket chain, at €2.99 ($3.99) per 3-pack.The Netherlands is an important country in the history of functional foods in Europe – it was where the whole European daily-dose market had its naissance in 1994 when Yakult launched its flagship 65ml daily-dose product, called simply Yakult.

The Dutch daily dose dairy-drink market has grown strongly in recent years and in 2006 was worth, at retail prices, around €110 million ($147 million) – a staggering 800% growth over 2001 – mostly driven by the extremely aggressive and effective marketing of Danone Actimel, which entered the Dutch market in 2000.Despite being first-to-market in Europe, the Netherlands is the only country where Yakult has had any enduring success. Weathering

the assault of Danone Actimel, Yakult even managed to maintain market leadership in the Netherlands until 2005. Now, even though it has lost ground to Danone, Yakult still holds a 34% market share – far higher than in either Germany (7%) or the UK (13%).

Much of Danone Actimel’s success in Europe relates to its very effective use of “challenges” as a marketing tactic (see November 2005 NNB). These challenge the customer to take Actimel every day for 2 weeks and to claim their money back if they don’t feel any difference. On average, the number of money-back requests is in single figures while the challenge concept tends to boost sales by millions. The only Dutch dairy company competing in the sector was Campina, one of the two biggest Dutch dairy groups and one of the world’s biggest dairy companies. Campina was also spurred by the introduction of Yakult in 1994 to launch its own probiotic daily dose product, called Vifi t. Vifi t’s active ingredient

is LGG (Lactobacillus Goldin & Gorbach), which it licenses from Valio Dairy of Finland. LGG is the world’s most-researched probiotic and can be found in around 30 dairy brands worldwide.Unfortunately, Vifi t was Campina’s last attempt at doing anything innovative for some time and the company – which has a reputation for conservatism and a remarkable self-confi dence – stood back and did nothing while the daily-dose sector romped ahead. It wasn’t until 2005 – almost ten years after fi rst launching Vifi t – that Campina extended the brand into a 100g daily dose. Campina’s failure to see the clear signs of how the market was evolving have left Vifi t as a minor probiotics player in its home market.

The Netherlands is also home to one of Europe’s most innovative daily dose products – ActiFruit from Hero, one of Europe’s biggest juice companies. ActiFruit established a real point of difference in a crowded market by providing digestive health benefits from fruit – each 100ml bottle has a 3.3g dose of fruit fibre (pectin) – and this is clearly communicated on the label: “fibre from fruit”. Thus for the many people – particularly women – who want digestive health benefits in a convenient format but want to limit their intake of dairy products, ActiFruit provides a perfect alternative.Athough privately-held Swiss-based Hero has declined to comment on its brand’s performance, industry sources tell NNB ��sales of Actifruit, which was launched in November 2006, have been going well.

N E W N U T R I T I O NB U S I N E S Swww.new–nutrition.comAPRIL 2007 ISSN 1464-3308

VOLUME 12 NUMBER 6

T H E J O U R N A L F O R H E A L T H Y E A T I N G , F U N C T I O N A L F O O D S & N U T R A C E U T I C A L S

Minute Maid lifts its nutritional portfolio

Biggest fish in omega-3:

Robert Orr

The rise and rise of Açaí in the US

Page 15-16Page 25

Page 3

Continued on page 5

Yakult starts its European fight-back



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