The marketer that pushed open the floodgates for New Age drinks must now find a way to reinvent itself or be drowned by a torrent of competitors ranging from copycat sweetened sparkling waters to ready-to-drink iced teas.
Already, Clearly Canadian's supermarket sales have fallen 25%, to $91.1 million, for the 52 weeks ended Dec. 5, according to Information Resources Inc.
At the same time a new entry, Seagram Beverage Co.'s 2 Calorie Quest, was able to capitalize on consumers' growing knowledge about how many calories the beverages contain. Clearly Canadian originally took off, in part, because drinkers incorrectly assumed the liquid's clarity and natural ingredients translated to fewer calories than traditional carbonated soft drinks.
Clearly Canadian has about 100 calories in an 11-ounce serving, while a 12-ounce sugared soft drink has about 160 calories.
Clearly Canadian will fight back by introducing two new products this year-Clearly 2, a 2-calorie diet version of its flagship drink, and Clearly Tea, a lightly carbonated iced tea.
Clearly 2 is seen as particularly crucial in light of Seagram's success with Quest. Clearly Canadian had been reluctant to introduce a diet product, fearing the use of artificial sweeteners would muddy the brand's "all natural" positioning.
Seagram's Quest came out of nowhere to capture $22.4 million in sales and a respectable 3.5% share of the $634.9 million carbonated water/club soda category last year. Clearly Canadian's category share is 14.4%, off 4 points from the previous year.
"It's obviously paying off for" Seagram, said Hellen Berry, marketing director at Beverage Marketing Corp., a New York industry research and consultancy.
At the same time, Clearly Canadian will bump up ad spending for its core Clearly Canadian soft drinks to $7.6 million, a 67% increase from last year. Advertising is handled in-house. Further demonstrating the seriousness of its challenge, the company has cut senior management salaries by 10% and frozen other employees' wages at 1993 levels.
Clearly Canadian may be the largest New Age beverage competitor guarding against an inevitable shakeout as the category's novelty wears off, but it's not the only one.
"Little regional contenders will be falling off rapidly in the next year," said Michael Flowers, president-ceo of Sports Beverage Inc., Plano, Texas. Even so, he feels his company will succeed by using a patriotic hook for its entry, Absolutely American sparkling water, a Clearly Canadian look-alike.
Pepsi-Cola Co. conceded it will recast marketing for Crystal Pepsi, shifting appeals from aging baby boomers to teens amid industry speculation the clear cola will be renamed or reformulated. Coca-Cola Co. has virtually eliminated ad and promotional support for its Nordic Mist beverage, as well as the New Age-inspired Tab Clear diet cola.
Pepsi-Cola introduced Crystal Pepsi nationally on the 1993 Super Bowl and planned to spend as much as $40 million to establish the brand last year. Coca-Cola, by contrast, slowly rolled out Tab Clear to just a fraction of the country, where it's languishing as a brand too small to register any significant national market share.
Crystal Pepsi is performing below already scaled back expectations with a 1.6% share of the $48 billion U.S. soft-drink market.