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Taking Back Breakfast: How Soft Drinks Can Return to the Morning Routine

7/16/2013
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In late June 2013, Coca-Cola Enterprises, the bottling company responsible for distribution of Coca-Cola products in many Western European markets, issued a report that identified various ways it can increase sales across the region. One section of the report discussed the opportunities that existed in making Coca-Cola products part of consumer breakfasts. Given the decline of juices in developed markets of North America and Western Europe, soft drinks face a more difficult battle in challenging coffee, tea and other hot drinks for this daypart. However, beverage manufacturers can leverage a changing breakfast landscape by creating drinks that meet consumer demand for health, convenience, and energy functionality to at least bring soft drinks back to the morning conversation.

The breakfast challenge

In the Coca-Cola Enterprises report, the bottled company explored ways to increase sales and asked “how do we motivate people to make soft drinks … part of their morning ritual in the same way as tea of coffee?” But breaking into breakfast cultures is much easier said than done.  Juice and milk manufacturers have long pushed their products as vital parts of a complete breakfast, yet juice figures continue to decline in key markets. While this can be attributed to high costs as well as high calorie content of quality juices, the growth of RTD volumes for hot drinks like coffee and tea also indicate that consumers are relying less on these beverages as part of their breakfasts. In order to return to this daypart, soft drink manufacturers must address two hurdles: breaking custom and providing functional value.

Morning beverage consumption varies market to market and is greatly influenced by culture and custom. Americans consumed almost 348.1 cups of coffee per capita in 2012, which reflects the position of coffee as the United States’ go-to morning beverage. Conversely, consumers in the United Kingdom prefer tea in the morning and as part of an afternoon snack, reflected by the country’s 618.9 cups of tea per capita in 2012. These high per capita figures demonstrate how, in regard to breakfast, hot drink consumption is engrained in routine. Making soft drinks part of that routine would naturally drive sales. However, breaking into that routine is extremely difficult given the almost ritualistic morning habits of many consumers.

Complicating matters is the traditional functional aspect of hot drinks over soft drinks. While breakfast is considered “the most important meal of the day,” consumer choices for breakfast beverages are rooted in energy boosts. Caffeinated beverages such as coffee and tea have been helping consumers wake up in the morning for centuries. Although many carbonates and all energy drinks offer this functionality, consumers are unlikely to incorporate these products into their routines outside of major changes in formulation and positioning.

Mountain Dew is a (kick)start but misses the larger opportunity

Given the success of energy drinks in North America and Western Europe (11.4% and 10.6% off-trade volume CAGR from 2007-12 respectively) as well as the functional requirement of breakfast beverages, it is no surprise that beverage manufacturers are exploring adding energy to carbonates, RTD teas, and other soft drinks. Kraft’s MiO liquid water enhancer has an energy sub-brand and Arizona is launching Arnold Palmer Drive, an energy iced tea/lemonade. But, perhaps most interestingly, PepsiCo’s is attempting to market an energy soft drink with breakfast positioning. Under the umbrella of its popular Mountain Dew brand, the company has launched Kickstart, a beverage that acts as an energy drink, as well as a morning substitute for consumers seeking an alternative to coffee and tea.

Kickstart could be viewed as an amalgamation of several beverage trends. It contains 92 mg of caffeine (over double the caffeine of most cola carbonates) thus giving it higher energy functionality. Yet this figure is less than many energy drinks and coffee, assuaging fears of consumers of the health effects of too much caffeine. It is sweetened with both high fructose corn syrup and a blend of artificial sweeteners, keeping it at a svelt 80 calories per 16 fl. oz can, considerably lower than many full flavoured carbonates. And lastly, it contains 5% fruit juice, which aids in PepsiCo positioning it as a breakfast alternative to “kickstart your morning”.

Early sales of Kickstart (which launched at the start of 2013) seem to indicate that it is finding a home with its core consumers.  An executive from PepsiCo noted that the launch is “encouraging” and that fans of Mountain Dew “love the concept”. But the use of the Mountain Dew brand, while key in promoting the product to loyal customers, also limits its potential. Mountain Dew is a popular, but youth positioned brand. And, despite the inclusion of juice in the beverage, it is unlikely that Kickstart will entice older consumers to join the “Dew Nation”.

A focus on health and function

For soft drinks to successfully become “part of [the consumer’s] morning ritual”, soft drink manufacturers need to create beverages that address the changes in the breakfast landscape. Despite all this talk of routine and tradition, consumer breakfast habits in North America and Western Europe are indeed changing. Faced with busier lifestyles in many markets, consumers are eschewing traditional hot meals for quick breakfast bars or yoghurts – on-the-go products that provide nutrition needed to start the day. Beverage decisions are also mimicking this behaviour with consumers purchasing coffee at foodservice or choosing the convenience of quickly brewed single serve coffee pods.

Beverage manufacturers, with their long experience in on-the-go drinks, can help meet the needs of convenience while also addressing the traditional requirements of helping consumers start their morning. While juices alone no longer appear to be the answer, an intriguing possibility comes from Campbell’s V8 brand. Its V8 V-Fusion + Energy combines vegetable and fruit juice and green tea extract to create an 8 oz beverage with 50 calories, 50% fruit/vegetable juice, and 80 mg of caffeine. Furthermore, unlike Mountain Dew, V8 has a strong following amongst consumers seeking healthy beverages. Coca-Cola’s Minute Maid and PepsiCo’s Tropicana could do well to follow V8’s lead as V-Fusion + Energy provides consumers the convenience of an on-the-go beverage, the health benefits a full serving of fruit and vegetables as well as vitamins A, E and C, and the energy functionality of coffee and tea.

The growth of spoonable yoghurt in North America (which posted a 9.2% retail value CAGR from 2007-12) also provides possibilities. On top of the many health properties associated with consuming yoghurt, it is also an excellent source of protein, making it an ideal meal replacement for traditional breakfasts. Despite this strong positioning of spoonable yoghurt, drinkable yoghurt is still relatively niche in North America and has declined Western Europe. However, if beverage or packaged food manufacturers could add natural energy functionality to drinkable yoghurt and sensibly position the product as an easy alternative to traditional breakfasts, the product could meet the changing demands for morning consumers.

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