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Five Brands Bucking the Downtrend in Beverages

Upstarts Have Snagged Distribution Deals With Likes of Pepsi, Nestle

By Published on . 1

NEW YORK (AdAge.com) -- Like every other category, the beverage market has been pounded by the recession, with 2008 marking its first volume decline on record as consumers buy fewer bottled beverages. Still, thousands of products continue to launch each year, making it one of the most competitive categories around. Backed by smart marketing strategies, some drink brands are breaking away from the crowd and amassing loyal consumer bases.

The five brands below aren't giants, with sales in the millions, not billions. But they've certainly won the attention and confidence of major players, such as Pepsi Bottling Group and Nestle Waters, which invested in distribution deals even in the throes of an economic crisis, in the hope of cashing in on these upstarts' appeal.

BAWLS GUARANA

Bawls
BACKGROUND: The beverage brand began as a college class project when a young Hoby Buppert, now Bawls' CEO, was looking for an alternative to coffee. His idea was a high-caffeine soda using the Amazonian guarana berry, which contains a natural form of caffeine almost three times stronger than what's found in traditional sodas. Bawls Guarana launched in Miami in late 1996. In 2008, BevNet named the company's "G33K B33R" flavor -- which tastes like root beer -- Energy Drink of the Year.

MARKETING STRATEGY: Bawls Guarana has spread its name via sponsorships in three unique communities many marketers would overlook: gamers, paintball enthusiasts and the BMX racing world. It's had a slew of tie-ins with films and TV shows, from the Paul Rudd comedy "Role Models" to HBO's "Entourage" and Bravo's "The Real Housewives of New Jersey." The company also just launched a program to allow consumers to send Bawls Guarana Military Packs to troops overseas.

SECRET TO STANDING OUT: "Own the consumer experience through targeted marketing initiatives -- not just with the product but with their overall lifestyle," said Bawls Chief Operating Officer Christina Staalstrom. "Support your consumers, and become a part of their culture."

OWATER

Bawls
BACKGROUND: Tom First is no beverage novice: He co-founded and sold Nantucket Nectars. But when he decided to jump back into beverages in 2004, it was with a different type of product. Owater is billed as a "healthy sports drink," with all the components of a traditional sports drink but fewer calories and no artificial flavors or colors. The brand had nearly $4 million in sales last year and expects growth of about 65% this year. It's available at Whole Foods, Stop & Shop, Duane Reade and Au Bon Pain.

MARKETING STRATEGY: Mr. First is relying primarily on radio ads, which feature him chatting with a colorful cast of Owater friends. Those friends, including star center fielder Jacoby Ellsbury of the Boston Red Sox, yoginis Ashley Phoenix and Ann Zilvitis, the Boston triathlon team and Devon Haskell, a "cyclo-cross" racer, are also tapped to appear on product labels. Virtually all of those partnerships are gratis; Mr. Ellsbury is one of the only Owater friends to receive a small amount of money from the brand.

SECRET TO STANDING OUT: Sampling. "Market to people's taste buds first," Mr. First said. A bit of chutzpah also doesn't hurt. Mr. First forged the partnership with Mr. Ellsbury after cold-calling him. "That's how I do things. ... I'll call the guy until he figures maybe if he says yes, I'll stop."

MUSCLE MILK

Bawls
BACKGROUND: Muscle Milk started as a family-run operation in 1997 with just five staffers; today, it has more than 200. Fitness enthusiasts helped to grow the brand, which considers itself a "functional beverage." It's won a range of awards from BevNet, including Beverage of the Year and Beverage Company of the Year Under $1 Billion.

MARKETING STRATEGY: For years it relied largely on word-of-mouth, but the company recently hired its first agency of record, San Francisco indie shop Pereira & O'Dell, after a pitch against six other shops. With its help, the company plans to start reaching beyond hard-core fitness types to tout itself as more of a lifestyle drink for on-the-go individuals. It will step up its targeting of female consumers and promote a new line of products for children dubbed "Mighty Milk." The beverages retail at grocery stores, Target and delis.

SECRET TO STANDING OUT: "It's important to align with a very robust, go-to-market, unified distribution system, like we did with Pepsi Bottling Group and Pepsi Americas and other independents in their system," said Nikki Brown, VP-marketing at the maker of Muscle Milk, CytoSport. Something else that's important? Making sure your drink tastes good. "The industry recognized how challenging and critical it was to make protein taste good -- something we realized early on and made a focal point of our product development. We knew that our loyal fans would consume our products, but in order to really secure a broader audience, we had to ensure the product is both nutritionally beneficial and tasty at the same time."

SWEET LEAF TEA

Bawls
BACKGROUND: The brand, founded in 1998 by Clayton Christopher and David Smith, was an early player in natural and organic beverages. Now, thanks to a $15.6 million investment from Nestle Waters and plenty of persistence, the brand is going mainstream. It sold just under 2 million cases last year and is expecting 50% growth this year. Look for Mr. Christopher in July's issue of Inc. magazine. Look for Sweet Leaf in major retailers including Kroger and Safeway.

MARKETING STRATEGY: Sweet Leaf relies heavily on sampling and sponsorships of popular music festivals such as Austin City Limits and Lollapalooza. This summer, major sampling efforts are slated for San Francisco, Los Angeles, Phoenix, Chicago and Boston. Mr. Christopher says the brand is now branching out to individual sponsorships of bands and athletes. It's also been more aggressive in its PR outreach and social-media efforts. Mr. Christopher is on Twitter, and various employees participate in the company's blog, The Sip.

SECRET TO STANDING OUT: Mr. Christopher advises new brands to be disciplined and go after the consumer where they're not price sensitive. "Taking mainstream accounts right off the bat is so tempting, but you can kill yourself because [consumers there] are shopping on price," he said. "We say no a lot more than we say yes. You have to create that love affair with consumers in nontraditional channels, such as music festivals, food-service accounts and delis."

ZICO

Bawls
BACKGROUND: Mark Rampolla introduced Zico in 2004 after discovering coconut water as a Peace Corps volunteer in Central America. It's produced in Brazil using green coconuts and positioned as a natural sports drink. Mr. Rampolla declined to share sales figures but said the brand has grown 250% each of the past four years. It can be found at Whole Foods, as well as gyms and natural-food retailers in markets including New York, Los Angeles, Boston and Chicago.

MARKETING STRATEGY: When Zico enters a new market, it goes straight to hot-yoga studios, where it has had success in creating a crop of brand evangelists, Mr. Rampolla said. From there it uses sampling and events, as well as fitness-focused blogs to promote itself. The brand has also gained traction with endurance athletes, surfers and beach-volleyball players. "Our goal is to surround our target consumer in unconventional ways," he said.

SECRET TO STANDING OUT: Mr. Rampolla says discipline and patience are key, noting the brand is not yet profitable, as it's been willing to invest in growth. He expects the brand will be profitable within 12 to 18 months. PR has also been a key focus, with Sandy Hillman Communications, Baltimore, the only agency Zico has on retainer. The brand does frequently tap Commerce House, Dallas, for creative work, and Acquity Group, Chicago, for digital needs. "[Our PR agency] has been a real competitive advantage for us," Mr. Rampolla said. "It's something I'm glad we invested in."

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