More Than Child’s Play

IT’S ONE OF THE PARADOXES OF contemporary beverages. Moms swear they want something better than soda for their kids to drink – nutritious would certainly be nice, but if not that, then at least something that’s more interesting to drink than plain water but doesn’t contain the sugar, the empty calories, the artificial colors and sweeteners, all the bad stuff. And don’t even talk about orange juice, the one-time default choice that used to be a badge of parental care and responsibility. In recent years parents have been read the riot act on that one. This all makes it sound as though healthier kids’ beverages should be a whopping opportunity for someone, right?

And yet, when you review the field of beverages that were launched precisely to provide these healthier alternatives, it’s hard to find anyone doing more than just surviving. Some aren’t even doing that. Waddajuice has pretty much thrown in the towel on its efforts to raise the capital that would have enabled it to resume production of its juice-and-purified-water blend, even though it’s spillproof bottles had proved a hit with moms in emporiums like Stew Leonard’s in the affluent suburbs north of New York. White Hat Brands, marketer of Dog On It fortified juice drinks, is out beating the bushes for capital to resume production, even as it rethinks its basic premise. (These include the ready-to-drink sector itself; it’s devising powdered beverages that might allow it to dodge some of the punishing production and distribution economics of ready-to-drink.) Even a well-financed, carefully researched brand like Crayons has lurched from one restage to another, burning through millions as it gropes for the branding and formula answers that might click with moms and their brood.

So what’s the problem been? Talk to the developers of these drinks and the first thing that comes through is that, nutritious or not, they’ve found that they’re still battling against the rock-bottom price and massive shelf presence of Capri Sun and its ilk. And they also blame their target consumer. “Moms lie,” they say – meaning the same moms who feel compelled in focus groups to insist that they would happily pay a premium for better beverage choices for their kids act quite differently in the store. (This seemed to be the case even before the recession crimped spending on a wide range of products.) One can’t argue that these marketers were naïve in believing the mothers in the first place because, in the milk segment, it was moms paying a steep premium for organic milk that ignited the broader organic sector in the first place. And while the price points of some of entries definitely would be a challenge to all but the most affluent families, the disappointment has been shared even by a brand like Wild Waters, which went out of its way to rig its economics so that it could get its nutritionally enhanced waters onto store shelves at less than a buck a bottle.

So is all this opportunity a mirage? Not necessarily. As the prevalence of obesity rises, parents are concerned about what their kids drink, and some influential retailers – from 7-Eleven to Toys ‘R’ Us – have been setting up healthier-beverage sets to cater to them. It’s too early to say whether those experiments will pan out but you can’t argue that these retailers aren’t attuned to their customers. (And for undercapitalized beverage marketers, a presence in those sets provides a national billboard that could help a lot in building brand awareness.)

So if you can’t blame the consumers, then the problem may also be simply that none of the healthier beverages in the market today has completely nailed it. It’s a complicated trick to offer a distinctly superior nutritional premise that gets past the gatekeeper moms while also offering something kids – a finicky focus group, even when tranquilized – actually want to drink. That means some concessions to taste as well as more exciting branding. It’s not clear to me that the latter amounts to no more than label imagery of wakeboarders or cartoonish dogs. On top of that, if you’re going to be considerably higher-priced than Capri Sun, it may help to come across as offering some distinct added value for the money. This may be where brands that are essentially selling diluted juice miss the mark: consumers may bridle at the notion of paying more for something they can do in one step in their own kitchen (even if few of them actually do). Distribution is another conundrum: economics dictates that most brands eschew DSD and instead take the warehouse route to market in order to keep their price low – but in doing so, they find themselves waging battle on precisely the Capri Sun-dominated grocery shelves that are hostile to new brands, rather than in more impulse-oriented channels where they might get a look from parents and their kids. Since most of them are undercapitalized, they’re going into that battle with few marketing weapons at their disposal.

The bright side of this is that these are a lot of levers with which to play around until somebody gets it right. Roberta Greenspan, the mom who devised the Wateroos brand of flavored water packed in juice boxes, reminded me the other day that even familiar adult-skewing brands may take a decade or more to hit their stride. Patience is key, she counseled. With lots of kids apparently drinking brands like Gatorade and Vitaminwater, there’s also a chance that fundamentally adult-targeted brands could play the aspirational card to bring kids aboard too – as Honest Tea is doing with its well-received Honest Kids pouched juice line and Hint is trying to do by re-entering the kids space with a boxed version of its unsweetened enhanced waters. Somebody, eventually, should be able to figure it out. The question is whether the segment’s more inventive players are able to hang in there through these tough economic times. And whether those moms will finally get scared enough of shopping in the “husky” section to make that perseverance worthwhile.

Longtime beverage-watcher Gerry Khermouch is executive editor of ?Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.