The aisles of grocery are awash with water like spring, mineral, sill, sparkling, caffeinated, flavored, vitamin-enhanced and others that are called the “ultra” water. The Evian, Aquafina, Fruit2O, Dasani, Propel, Poland Spring, Vitamin Water, FIJI and Perrier brands all are wrestling for the their shelf space, can other enter in this market and survive?
1. It is difficult to find available room for new one
Tom First who is the founder of the O Beverages thinks so. He is the one Tom in “Two Toms” standing behind the prevailing juice company – Nantucket Nectars that was launched in the year 1989. And now this man aims to get to splash that is selling the sugar-free flavored water for health improvement target to the health nuts who has hawked intake their sugar however still want more in pizazz than it is found in the old H20. In other drinks, the calories always extract because of the sugar amount in fruit.
But it is too bad: he does not have the advantage of first mover. The biggest sellers in the bottled water market of the US that are PepsiCo, Nestle, Coca-cola introduced the sugarless flavored drink in 2005. They have a variety of distribution networks and marketing muscle as well. All the firepower now is chasing the fairly small market. For example in 2004 the wholesale market of flavored drink – the US was puny $170 million, while up to $47 billion for the soda beverage, $14.4 billion for juice drink and $9.2 billion for bottled water. And for growth, the sales of the flavored water did go up to $800 million in 2009.
2. Flavor is important
The gimmick of First is while the large guys use Splenda that is the artificial sugar made by Johnson & Johnson, the O uses natural ingredients in the ultra-purification technique while yielding flavored drink that, the First says, is “very healthy”. Let me back up, the “O” term in O beverages stands for zero as zero contaminants. The Nestle make the Pure Life brands as the flavorful beverage which is calorie-free, said Jane Lazgin – spokeswoman from Nestle Company, while spokesman from Coca-Cola Company said that flavored water of Dasani is very healthful to the level that beverages are healthful.
Using money earned from the Nectars success, Cadbury Schweppes did buy a company for the undisclosed amount 10 years ago. First corralled some million in the startup capital taking advantages of the likes of the celebrity chef – Ming Tsai – the host of the East Meets West program and Ming’s Quest TV show on the Food network. And Minnesota Timberwolves follows Kevin Garnett. This man also kicks in money with the significant amount – six figures!
In order to help people mount attack, First has brought Edward Slade – the previous president of the FIJI Water as well as marketer at Evian. It is a great balance with the risk taker and operator of Slade. Last fall, the two companies launched the new flavor with strawberry for going along with the mandarin orange, wild berry, lemon and lime. First says that he wanted to get formula arrive on time to carry out the project. However, the Slade needs more time to refine the labeling and the flavor.
First also leans on valuable lessons from the day he stayed at Nectars. That is the time he threw $2.5 million only in 18 months in order to try to set up the distribution network for only Nectar. In one point, the key investor issued the ultimatum that turning the business around and face with liquidation. First recalled that he had a variety of windows and his money was gone out every one of those things, and trucks crashed into buildings, the miscount of inventory occurred and the products were damaged. And he said that this experience as a $2 million MBA.
The O beverages today uses a lot of same independent distributors. At this time, it should have a better luck that means high volume in the market. While the customers like to purchase fruit drink in the larger bottle, they tend to make purchase many water in the single-servings either individual bottles or cases. The flavored water is better than juice, said First, even though he will not release the exact figures.
3. Packaging – another matter
The packaging is also matter. First uses heavy glass bottle from Nectars for the tapered plastic bottle sporting the clean-feeling, brightly colored label. The matter is that the containers are nearly impossible for labeling with high speeds since their shapes are sloped. The company sometimes has to order the custom equipment from Italy used in its factory in Pennsylvania in order to handle bottles. First said that the labeling stage delayed distribution nearly four months and pasted the date of first launch in the spring.
With the growing pain, First said that he got over hundred emails with encouragement each week from the consumers who visited the website of the company. He also received the requirements from the high schools as well as primary schools of Massachusetts, New Hampshire. Almost requests ask for sugarless beverages for the students. Each year, the revenue is about $1 million that is not a bad figure on the marketing strategy limitation that includes Slade and First driving to the in-store promotions.
The company also lands deals on national supermarket, some still are in working process. However, First does plan for expanding to Illinois, California, Florida not only being trapped in the Northeastern. If this plan goes well, First will obviously boost his budget for marketing to over 10% of the revenue each year, he said.
First says that he can be disappointed if the O will not profitable on operation in several years. And, he says, “I love being an underdog”, “the O will be the iconic brand of the drink industry”
And you see, nothing is impossible in this designer commodity world! Just think out of the box and make your brand known worldwide.