Overview of Category Dynamics in the Beverage and Cranberry Sauce Categories An Actionable Orientation for Category Managers, Sourcing/Buyers, Merchandising/Store Operations, and Anyone New to these Categories
Table of Contents Category / industry jargon and definitions Category size, common segmentation, & trends Crop timing - Best time to review Packaging Merchandising Labeling Promotional tools 2
Beverage Category / Industry Jargon Bill Board Effect Not to be confused with the advertising bill boards you see along the side of highways, this refers to the effect the primary/front panel of the package has on communicating the product s features and benefits. How well does the label front panel convey the product identity? Does it provide visual impact for the section of product/display? Does it work as a strong piece of communication? Is it sufficiently interruptive? Cut-in The addition of a new item to the planogram. Retailers have different policies. Some have strict reset schedules 2-3 times/year and others have rolling resets. Cutting - Tasting a sample of a new product. Typically cuttings are done by both QA and category merchants when new products are being evaluated. This term can be used as a verb or a noun: At our appointment yesterday, we cut a new variety of juice. Please join us for a cutting tomorrow when we will sample a new variety of juice. Dieline Common term in the printing and labeling industry. The dieline shows all dimensions of the label or package and clearly defines the areas available for printing logos, brand names, nutrition information and other product information. EDLP - Everyday low price; This is an alternative pricing strategy to high/low pricing. Retailers using this pricing technique feature products at a consistent low price rather than having products alternate between higher everyday prices and periodic lower sale prices. Facings This is how many of the same items (same item number) sit on shelf next to each other. 3
Beverage Category / Industry Jargon High/Low This is an alternative pricing strategy to EDLP pricing where a retailer uses more aggressive promotions as a primary tool to attract shoppers. In/Outs - Items carried as in/outs are not permanent parts of the shelf set. Refers to products that are carried on a limited time only basis. This is common for seasonal items that are in during the seasonal period, and then out during the non-seasonal period. Juice Cocktail Commonly used term for beverages with mid-range juice content of about 20-60%. However, legally any juice-based product that is less than 100% juice must be labeled as either a cocktail, drink, or beverage. Juice Drinks Generally used term for a beverage with low juice content about 15% or less. Mixed Display Pallet These may be used in a variety of ways. 1) Special-focus promotions where outof-stocks are a concern 2) new products when sufficient shelf space is not available when needed 3) seasonal in & outs 4) traditional merchandising for some store formats to use everyday. The key to the pallet design is shoppability for the consumer. Multi-Serve The opposite of single-serve sizes, multi-serve packages are larger and contain multiple servings. Common multi-serve sizes for the juice category are 46 oz., 64 oz., and 1 gallon sizes. Pack size how many consumer selling units are packaged in the case. Typical format is 8/64 oz. which means eight units of 64 oz. each are contained in one case. Pallet the wooden or plastic structures that are used for shipping cases of product on trucks from the manufacturer to the retailer. These are commonly seen in the warehouse section of a retailer. Sometimes product is merchandised in store on pallets too. 4
Beverage Category / Industry Jargon PDP Principle (or Primary) Display Panel the front part of the product that faces the aisle as the consumer shops Resets The implementation at retail of revisions to the schematic and planogram. Every retailer is different in terms of how they handle resets. Some are done once per year, some twice per year, and others as needed. RTD Ready-to-Drink; these beverages do not require the addition of water or some other step prior to drinking. Schematic/Planogram This is the plan or shelf map of how the product is organized on the shelf. The goal is to organize the product in a way that makes the most sense for the consumer. This typically aligns with the way consumers shop and is linked to the mental steps the consumer goes through when deciding to buy a product. For example, if the consumer decides the juice type first, the products in the category should be grouped by juice type. Single Serve The opposite of multi-serve. This packaging size is typically used by the consumer as an individual serving. Common single serve sizes generally range from 10 oz. to 20 oz. 5
Category Sizes and Segmentation Shelf Stable Juice $3.8 billion 1.6 billion units Canned & Bottled Ready-to-Drink Tea $1.3 billion 0.6 billion units Bottled Water $4.8 billion 2.5 billion units Segmentation listed in order of size: Apple Juice Fruit Drinks (contain < 100% juice) Cranberry Juices Cranberry Juice Cocktail 100% Cranberry Juice Vegetable Juice 100% Fruit Juices 100% Grape Juice Lemonades / Limeades Lemon / Lime Juice Orange Juice 100% Prune Juice Cider Grapefruit Juices: cocktail & 100% Tomato Juice Nectars Pineapple Juice Segmentation by: Tea type - Black, green, red, oolong, etc. Flavor Diet Sweetener type Segmentation by: Still / Sparkling / Mineral Flavor Calories i.e. zero calorie Sweetener type Enriched Nutrients such as vitamins and calcium Electrolytes, etc. Note: This information captures POS sales at Food, Drug, and Mass grocery retailers. This information excludes information from some retailers including ALDI, Save-A-Lot, Walmart, Dollar Stores, Club stores, C-stores, and Foodservice, vending, and Organic Specialty channels. Source: Symphony IRI Group, Sept. 2010 6
Category, Segment Size, & Trend Information Beverage Segment Dollar Sales (millions) Dollar Sales % Chg. Vs. Yr. Ago Private Brand Dollar Share of Segment Unit Sales (millions) Unit Sales % Chg. Vs. Yr Ago Avg. Price per Unit Shelf Stable Bottled Juice $3,834.4 (2.34) n/a 1,653.2 0.0 $2.32 Private Brand Bottle Juice $677.2 (3.66) 17.7 308.9 (1.1) $2.19 Shelf Stable Apple Juice 544.9 (2.95) n/a 244.7 6.1 $2.23 Private Brand Shelf Stable Apple Juice $207.1 (3.35) 38.0 106.6 4.7 $1.94 Shelf Stable Cranberry Cocktail $689.5 (5.47) n/a 254.6 (3.9) $2.71 Private Brand Shelf Stable Cranberry Cocktail $133.2 (9.65) 19.3 52.8 (6.6) $2.52 Shelf Stable 100% Cranberry Juice and Cranberry Juice Blends $220.8 9.14 n/a 65.9 12.7 $3.35 Private Brand Shelf Stable 100% Cranberry Juice and Cranberry Juice Blends $28.7 (7.85) 13.0 9.5 (6.9) $3.03 Shelf Stable Grape Juice $253.0 (10.84) n/a 77.4 (12.3) $3.27 Private Brand Shelf Stable Grape Juice $59.0 (0.54) 23.3 20.2 (6.1) $2.93 Canned & Bottled Tea $1,283.0 8.12 n/a 601.6 10.1 $2.13 Private Brand Canned & Bottled Tea $38.6 30.25 3.0 19.4 29.2 $1.99 Note: This information captures POS sales at Food, Drug, and Mass grocery retailers. This information excludes information from some retailers including ALDI, Save-A-Lot, Walmart, Dollar Stores, Club stores, C-stores, and Foodservice, vending, and Organic Specialty channels. Source: Symphony IRI Group, Sept. 2010 7
Market Trends Health & wellness / better-for-you products are driving growth Reduced sugar Lower calorie Reduced sodium New natural sweetener stevia Consumers continue to seek value due to the soft economy, high unemployment, high gas prices, rising food prices Sustainability / environmental consciousness result in initiatives to reduce environmental footprints Carbon footprint labels - some labels in the U.S. are beginning to communicate the environmental impact in a simple way for the consumer to understand Social responsibility Fair Trade Retailers marketing their Own Brands like National Brands Social media becomes part of the retailer s marketing tool box Sources: Packaging Digest packagingdigest.com, Sustainable packaging market matures, gets down to business, (Feb. 2011) 8
Best Times to Review Segments Based on Normal Conditions & Excluding Industry Carry Inventories Fruit & Vegetable Segments Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Apple B B Cranberry B B Concord Grape B B White Grape B B Grapefruit B B Lemon B B Tomato Prune B B Pineapple B B B B Orange (all futures based) B B B B B B B B B B B B B B = Best Time 9
Packaging Common Bottle Materials PET (or PETE) This is a common resin material with which beverage bottles are made The scientific name polyethylene terephthalate 100% new PET is known as virgin PET PET bottles carry the number 1 inside the universal recycling symbol and is commonly recycled PCR (post-consumer resin) This bottle resin material uses from less than 10% to 100% recycled PET Primary benefit - Lower carbon footprint, more environmentally friendly & greener packaging. Using recycled PET helps reduce the amount of plastic sent to landfills and uses less petroleum and energy to produce The color of PCR bottles is darker and somewhat more yellow than virgin PET bottles and the consistency of color can vary because of the various sources for recycled PET. Some companies overcome this by adding a colorant such as a light blue, green, or amber tint but this PCR cannot be recycled again into a clear bottle Many companies are using green packaging as a marketing tool to attract the growing number of environmentally conscious consumers Federal Trade Commission research found that when consumers see a product labeled green, they make a number of positive assumptions including that the item is recyclable, non-toxic, and made from renewable materials Steel Cans commonly used for Tomato and Pineapple Juice and cranberry sauce Aluminum Cans commonly used for single serve beverages such as carbonated soft drinks or grape, pineapple, tomato juices 10 Sources: Plastics Technology ptonline.com, Processing PCR: How it is Done at a Leading PET Bottle Maker (Feb 2010), Rockford Registar Star rrstar.com, Go Green: Avoid Getting Greenwashed (Feb 2011), Wikipedia
Packaging Other Packaging Materials Full Shrink Sleeve film label that hugs to the entire shape of the bottle from top to bottom. Allows for expanded space for product communication. Dog-bone this gets it name from the shape of the plastic that is used to join two of the same size products together as a way of selling a multi-pack to the consumer. The plastic piece is in the shape of a dog-bone. Hi-cone plastic film that commonly joins cans together as a way of selling multiple cans to the consumer at a time. This is popular in the carbonated soft drink category. Printed Shrink printed plastic film that wraps around a group of product to sell to consumers as a multi-pack. Full Shrink Example Printed Shrink Examples Dog-Bone Example Hi-Cone Example 11
Common Sizes Single Serve 5.5 oz. 10 oz. 12 oz. 16 oz. 20 oz. Multi-Serve 32 oz. 46 oz. 64 oz. most popular 96 oz. 128 oz. / 1 gallon Cranberry Sauce Cans 8 oz. 14 oz. 12
Merchandising Private Brand Best Practices call for Integrated Sets with the Private Brand merchandised either to the left or the right of the National Brand. This approach: Facilitates price comparison Prevents consumer confusion Example Juice Integrated Product Placement National Brand Cranberry Juice Cocktail Private Brand Cranberry Juice Cocktail National Brand Cranberry Grape Juice Cocktail Private Brand Cranberry Grape Juice Cocktail Retail Shelf 13
Labeling Consumers Shop with their Eyes! Effective Label Communication: Helps consumers find and know what they are buying Helps Your Private Brands better compete with National Brands and other retailers Label Content Employ a communication hierarchy that places emphasis on the key points you want to convey to the consumer about this product This applies to everything from the size of the Your Brand name and product name to the use of photos and product callouts Label Design Labels should help make the product bold and easy to see so it stands out to the consumers when viewing the product choices. Good examples of healthy claim call-outs Product features and benefits should be called out and communicated clearly Actual photography is recommended instead of photo illustrations Use easy to read font types Use color strategically to facilitate communication and create impact and a lasting impression in the consumer s mind 14 Healthy Balance is a registered trademark of Old Orchard Brands, LLC.
Marketing Tool Box Promotional Tools Promotions can help engage consumers and build store loyalty. Temporary price discounts at shelf Feature ads in store circulars - both printed and electronic Displays including cross promotion displays with complementary products Using store loyalty card data to gain and retain consumers Promoting via social media Facebook, blogs, twitter, etc. Leverage retailer websites to highlight new Private Brand products, announce deals, and suggest product uses via recipes 15
Best Practices in Promoting Compare and save programs Price shielding - matching National Brand price discounts Customize promotion timing to seasonally relevant periods by product type Communicate value to the consumer via in-store signage, website, circulars, etc. Keep your line-up fresh with in & outs limited editions Create promotional themes (i.e. around meal occasions, health and wellness) Promote at a frequency level that matches the National Brand 16