The findings should give the brands in question food for thought, as they attempt to grow the category in the UK following its runaway success in the US, where it is now worth $300m+.
Canadean’s September survey found that 28% of those surveyed in the UK were concerned that the enhancers contained artificial ingredients, 19% didn’t think they provided enough servings, 12% that they were not healthy and 11% that they ‘spill easily’.
Some lack of consumer education was clear, since 18% thought liquid water enhancers only provided up to 10 servings, whereas market leader Robinsons Sqaush’d, for example, contains 20.
Brands must fight for better consumer awareness
Canadean analyst Sam Allen said the main UK brands Robinsons, Vimto and Oasis all focused on convenience (the main sales driver prized by 47% of people surveyed) although there are different emphases in the approach each brand takes.
For instance, market leader Robinsons only offers classic flavors and relies on brand heritage and popularity to drive sales, but without really offering anything new, according to Allen.
“To fully capitalize on the growing flavored water enhancer market, they should innovate to offer consumers new and exciting flavors that also provide convenient storage,” he said.
Oasis, meanwhile, has opted for more exciting flavors such as raspberry lemonade as a more ‘value-oriented’ alternative to their regular bottles.
Finally, Vimto’s ‘no added sugar’ proposition strives to encourage consumption among kids and teens, but Allen warned that despite these innovations, this brand and Oasis suffered from poor brand awareness versus Robinsons.
According to Canadean, 10.5% of the UK population has tried Robinsons’ Squashed but only 3.6% have tried Oasis Mighty Drops or Vimto Squeezy.
Brands must offer consumers better value
“Positioning products around on-the-go consumption alone will not resonate with consumers who want more than just convenience,” Allen said.
“Brands and manufacturers must offer innovative, exciting flavors, as well as healthier options, to alleviate concerns over added sugar and additives,” he added.
“The most important concern will be to offer better value to consumers who are concerned about the higher price of flavored water enhancers and are unwilling to spend more on a product simply for the convenience of smaller, transportable packaging," he said.
Finally, the Canadean analyst tipped a nod to the success of Kraft’s MIO in the States and said the UK brands should focus on innovative and exciting flavors, and a portfolio that offers “sports and added energy boosts, goes beyond basic needs such as value and convenience”.
So how are water enhancers selling in the UK now? Does Canadean have any information on what the category is worth thus far, growth figures, consumer trial and repeat purchase rates?
"In terms of specific sales figures and values, the category is still in such a nascent stage in the UK that we don’t have data on this as of yet. The online discounting suggests that supermarkets and retailers want to encourage more consumers to initially try liquid water enhancers by raising awareness of the products, and build on sales from there," Allen told BeverageDaily.com.
Price, promotion and shopping routine drive cordial sales
We also asked the analyst if he worried whether the tradition of squash as a discount category in the UK (which the US hasn't had) could harm prospects for these enhancer brands, unless they really offer something new?
"Products in the cordial market are mostly unemotive, meaning purchase and consumption are driven by price, promotion and shopping routine, making it more difficult for new products such as LWE’s to become established," Allen warned.
"The traditional positioning of squash as a value product could harm the more premium brands offering LWE’s, as private label has witnessed increasing success across the cordials market. Consumers will be less willing to spend more on an expensive LWE when there are many private label cordials offering good value. This is due not only to lower price private labels can offer, but also to the emergence of double concentrate, meaning less is needed per serving, resulting in less frequent purchase and more savings for consumers," he added.
Allen said he though the problem for LWE’s, particularly the more expensive, branded options, is to convince consumers that they offer comparable value and can compete with the number of servings in a traditional bottle, with the added bonus of convenience.
"There is an opportunity for more premium LWE’s, in a similar vein to premium cordials such as Belvoir. However, these are likely to remain a niche category and won’t result in the high sales bigger brands would desire. Major UK supermarkets such as Tesco have introduced private label LWE’s in an attempt to capitalize on their growing popularity," the analyst added.
"However, the challenge remains to provide consumers with new experiences in terms of both flavour and transportability, to drive consumption and establish the category to compete with traditional cordials. Given the stagnant sales figures of cordials in the UK – forecast to grow at a CAGR of only 0.52%, by volume from 2013-2018 – there is profit to be made for brands that can get their proposition right in this new, high growth category," Allen said.