Anything but flat

Water is no longer plain old H20, and the non-carbonated market is taking the fizz out of the soda market.

Water is no longer plain old H20, and the non-carbonated market is taking the fizz out of the soda market.

The Beach Boys once embodied the free-living counterculture of the 1960s. But now, the icons are more  concerned about what brand of water they drink. These days, it's Talking Rain's Twist.

The Preston, WA-based water and flavored-beverages bottler was sponsoring a concert just north of Seattle that The Beach Boys were performing in. Michael Fox, VP of sales and marketing at Talking Rain, said as part of the group's contract they asked that another bottled-water brand be provided for them in their dressing room.

"[But] they started drinking our product, and left the brand they'd requested for the roadies," Fox says. "By the time they left, the Twist was gone and the other bottled water was just sitting there."

Talking Rain introduced Twist, aimed at the "upscale, healthy-living consumer age 25-45," in July into the heavily saturated multibillion-dollar non-carbonated drink category. Many beverage industry pros say the majority of growth that has taken place in the category has happened in the past 10 years. The spark for that boom has been the health and wellness craze.

"Health and wellness was labeled a fad, then a trend, but now we know it's a revolution," says Rohan Oza, SVP marketing of Energy Brands at Glaceau, producers of Vitamin Water and Smart Water.

Fox agrees, saying people aren't just concerned with what they put in their bodies; they also want it to taste good.

Grassroots efforts

The idea for Twist, Fox says, came from hearing about consumers squeezing lemon or blueberries into their water for a little flavor. Fox says it's handling the launch of Twist the way it does all its products, with cause-related and grassroots marketing efforts.

"We're not big into the media side of things," Fox says. "You won't find Jessica Simpson prancing around with a bottle of Twist - although that would be nice."

Talking Rain does hundreds of cause-related tie-in programs with its retailers for organizations like The Special Olympics and The Juvenile Diabetes Foundation.

"In the Northwest, we do over 500 events and cause-related programs throughout the year," Fox says. "We look to find what's important to our retailers and their communities and don't just give them a cookie-cutter program."

Talking Rain is also putting together some on-street sampling efforts for later this year in East Coast metro areas.

Twist is available throughout the Northwest, Midwest, and Southwest. Fox expects Twist to be available in other parts of the country within the next few months.

In its state-of-the-industry report, Beverage Industry says that while the carbonated soft-drink category is "merely treading water with flat sales," the energy-drink and bottled-water categories are booming, growing at a rate of 50% and 25%, respectively, for the year ending June 18. In 2005, the energy drink category generated $535.5 million in sales while the bottled-water category reached $2 billion. Beverage Industry cites Information Resources data in its report.

Taking on the big boys

As independent bottlers look to gain a foothold in the $50 billion-plus non-carbonated drink segment, they still have to battle heavyweights Coca-Cola and PepsiCo for shelf space. This year, PepsiCo has increased its presence in the segment with the introduction of SoBe Life Water and vitamin-enhanced water.

And Coca-Cola, who produces Dasani, one of the highest-selling bottled-water brands, this past July marked the debut of Gold Peak, an "upscale" premium tea from Coke and Nestlé's joint venture Beverage Products Worldwide.

Ray Crockett, communications director, Coca-Cola North America, says in order to position Gold Peak as an upscale and sophisticated drink, it was launched in the Hamptons as part of the Mercedes-Benz Polo Challenge at the Bridgehampton Polo Club.

The event was hosted by actresses Heather Graham, Christina Applegate, and Chloe Sevigny.

"Our everyday audience is what we call the 'everyday gourmet,' primarily male and female, 35 and older," Crockett says. "These are brand enthusiasts that enjoy buying premium brands."

The trend-setter

When it comes to PR in the non-carbonated segment, Glaceau, one of the pioneers in the enhanced water category, may have set the bar.

Oza claims the PR Vitamin Water generates might be bigger than a lot of the ad campaigns of its competitors. Vitamin Water has a large list of celebrity and athlete endorsers including 50 Cent, Kelly Clarkson, and Boston Red Sox star David Ortiz.

"PR is a big part of what we do," Oza says. "We definitely have an ad campaign, but I think while a lot of companies use PR as a fire-fight-ing mechanism, we embrace PR."

Jessica Wolff, communications manager at Glaceau, says with no real ad budget until this year, PR has been key in helping shape what the company has become.

"The amount and level of editorial coverage that we got in a very big way is responsible for getting the company to where it is today," she says. "There are other forces as well, but PR has helped a lot."

Along with editorial coverage, Glaceau relies heavily on grassroots marketing. "We realized it's important to get the brand into consumers' hands," Oza says. "Once they try it and know it works for them, they become loyal fans. So we focus on getting consumers to our Glaceau Tasting Vehicles (GTV)."

Glaceau started the GTV program three years ago and continually brings it back with new themes. The first one was "Spin the Bottle," where people would spin a bottle of Vitamin Water for the chance to win prizes.

"Consumers would line up 30- to 40-deep to play," Oza says. The next variation was called "Hydropoly," a play on the board game Monopoly.

"It's our irreverent way of introducing Vitamin Water to consumers with personality," Oza says. "It's important for us not to take ourselves too seriously. We have a product we know that works and want to bring a degree of humor to it. We do that through all the marketing we have."

Drinks in dollars

The non-carbonated drink segment is well over a $50 billion industry. The following is a breakdown of the wholesale dollar amount generated by the major categories within the segment.

Non-carbonated drinks          2005 wholesale numbers (in billions of dollars)

Milk                                           $26.1
Fruit beverages                          $14.4
Bottled water                             $10
Sports drinks                             $3.7
Ready-to-drink teas                    $1.8

Top 10 bottled-water brands (2005 sales)

Aquafina  $463.2m
Private label  $422.4m
Dasani   $379.8m
Poland Spring  $222.8m
Propel   $193.6m
Dannon  $160.9m
Arrowhead  $157.6m
Deer Park  $121.3m
Glaceau Vitamin Water $107.8m
Ozarka   $86.1m

Sources: Beverage World, Beverage Marketing Corporation, Information Resources

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