Enhancing a Category

New nutrient and flavor additives bring energy to bottled water

Published in Convenience Store Products

By  Steve Holtz, Online News Director & Beverage Editor

Kraft MiO Fit

Liquid water enhancers such as Kraft Foods’ MiO and Coca-Cola Co.’s Dasani Drops are catching on across the country and breathing new life into the bottled-water category, with the hope of establishing themselves as categories of their own in convenience stores and other retail channels.

Kraft Foods saw this potential in 2011 when it introduced MiO, a “liquid water enhancer” that, in its initial form, allowed consumers to add flavor to water to match a consumer’s personal taste. The product sold well enough to warrant an “energy” line extension with caffeine, and a “fit” extension that echoes the benefits of sports drinks such as Gatorade and Powerade.

“As a portable, liquid water enhancer, this product encourages an incremental purchase: a bottle of water,” says Jessica Sheth, senior associate brand manager for Kraft Foods, Northfield, Ill.  “This is a great bundling profit opportunity for convenience retailers. Initial research indicates that over 50% of all MiO purchases in c-store are an incremental, unplanned beverage purchase.”

MiO followed on Kraft’s success with Crystal Lite to Go, a line of single-serve powders to flavor and enhance waters with nutrients and energy. In 2012, according to SymphonyIRI Group data, Crystal Lite to Go Energy unit sales in c-stores grew 31% to 2.3 million packets, while MiO Energy in its first year of sales sold nearly 7.0 million units—at a typical price point of about $3.50 per unit.

Such success has bred imitators, including Kraft Foods’ own Kool-Aid and numerous private-label brands. But perhaps most significant is Coca-Cola’s Dasani Drops, which leverage the bottled water’s brand name.

“We think this whole space for consumers in an active, healthy lifestyle, the hydration space, really resonate well with us,” says Mel Landis, chief customer officer for Coca-Cola Refreshments, Atlanta. “Dasani Drops: That’s an enhanced water, just in a different form. You add it yourself, but it’s the same concept. How do we add value to core water, whether it’s nutrients or flavor or whatever it is?”

Gary Hemphill, senior vice president of information servicesfor Beverage Marketing Group in New York, says the desire to personalize is part of a larger trend affecting several beverage categories.

“We see consumers increasingly opting for customized beverage options so they can have products exactly how they want them,” Hemphill says. “Water enhancers are one such example of this, along with the emergence of products like single-cup coffee brewers and soft-drink dispensing systems like SodaStream.”

Dasani Drops debuted last fall in four flavors. Landis said he sees the opportunity for the drops to branch out.

“Dasani Drops gives people the ability to control the taste,” he says. “If you can do drops in flavors, why can’t you do nutrients in concentrate? Why can’t I do energy, vitamins, etc.?”

Other variations on the concept include Zipfizz Healthy Energy Mix and Gatorade Powder Sticks.

If there’s a challenge facing these innovative products, it’s one that any new category goes through: Where should these products—particularly those in new, unfamiliar packaging—be merchandised in the store?

While most c-store retailers have placed MiO on the front counter to drive impulse, Kraft suggests multiple points of purchase.

“To really capitalize on this purchase behavior, convenience retailers should consider placing MiO on the front counter or near the water cooler [door] to maximize velocity performance,” says Sheth.

Keywords: 
packaged beverages
By Steve Holtz, Online News Director & Beverage Editor
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