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Coke Takes Juice Lead From Pepsi

Marketer Maintains Disastrous Tropicana Restage Wasn't at Fault

By Published on . 5

NEW YORK (AdAge.com) -- While there's still some debate about the fallout from Tropicana's much-maligned redesign, this much is for certain: Coca-Cola has usurped the top slot from PepsiCo in fruit-juice share.

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Coke juice brands cumulatively overtook those of Pepsi
PepsiCo blames a surge in private label for its share falloff rather than the repackaging and there were inevitably other factors at work in what was an action-packed year for the usually predictable orange juice category, which is the single largest juice type within the fruit-juice category.

Not only did Tropicana embark on its redesign, Minute Maid introduced its own redesign, and Florida's Natural took aim at both PepsiCo's Tropicana and Coca-Cola's Simply brand with a "Made in the USA"-themed campaign. Then there was the swine-flu outbreak that anecdotally goosed OJ sales and a recession that boosted private-label sales up and down the grocery aisle.

The net effect was Coca-Cola's brands cumulatively pulling ahead of PepsiCo brands by volume in the combined U.S. refrigerated-juice-and-juice-drink category based on brands tracked by Beverage Digest. According to its figures for the first 10 months of 2009, Coca-Cola's volume share increased 1.1 points to 23.3, while PepsiCo's share fell 2.7 points to 21.8. During the period, PepsiCo's Tropicana lost 2.3 volume share points, while Coca-Cola's Simply gained 1.6 points and Minute Maid lost half a point. According to Information Resources Inc., the overall refrigerated-orange-juice category saw unit sales rise 3%, while dollar sales dipped 4% to $2.6 billion for the 52 weeks ending Dec. 27.

The good news: "The category overall is probably starting to recover," said Beverage Digest Editor John Sicher. "People now understand that a calorie is a calorie and that refrigerated juices are healthy beverages. ... I think, both in the U.S. and globally, the juice business has growth potential over the next several years."

Cold snap
The bad news: As things are looking up for the category, a smaller orange crop and the recent freezing temperatures in Florida could complicate matters. Ray Crockett, a spokesman for Coca-Cola's juice business, said Minute Maid and Simply expect to pass along a 6% to 9% price increase to retailers in April. Executives at Tropicana and Florida's Natural said it was too early to determine whether there would be price increases. Walt Lincer, VP-sales and marketing for Florida's Natural, did note that there could be a lowering of promotional offers to compensate for a decrease in juice availability.

Bill Pecoriello, CEO of Consumer Edge Research, said it's likely other brands will have to take price increases, though he noted that Tropicana, facing declining share, could make a calculated decision to refrain from significant price increases. "You've got an environment where we'll have price increases against the backdrop of a weak consumer. Private label will also have to take price increases," he said. "That's likely to hit category growth again."

"Price increases are never positive," added Mr. Sicher. "But the category is going to get more attention, in terms of marketing, and consumers' interest in healthy beverages will help."

Indeed, all the major juice brands are planning major marketing and branding initiatives for the coming year. But the most closely watched will be Tropicana. As the largest single brand in the refrigerated juice category, Tropicana's failed redesign, introduced in January 2009, frustrated consumers. Tropicana responded by pulling the Arnell Group-designed packaging in late February. "The biggest mistake we made last year was underestimating the passion consumers have for our business," said Andy Horrow, chief marketing officer at Tropicana.

According to IRI, the brand had an 8% decline in unit sales, and dollar sales fell 11% to $862 million in 2009. Many will point to the redesign as the reason for the decline. Mr. Horrow blames the strong showing from private-label brands, which did see a 21% increase in unit sales and a 5% increase in dollar sales last year.

Speaking up
"I attribute [the sales decline] first and foremost to the large supply of oranges that created a really big market for private label. Put that together with an economic downtown, and it's the No. 1 factor," said Mr. Horrow. "But let's be honest. We had a tough year last year coupled with the fact that we weren't very loud in talking about Tropicana."

Mr. Horrow said the brand will be much louder this year, with a significant investment behind the newly launched Juicy Rewards program. Media from Contagious Content, a London-based agency, will launch Feb. 3, and Ogilvy Public Relations Worldwide will handle PR and social media. Mr. Horrow said Arnell doesn't have the kind of involvement it had prior, and he doesn't foresee the agency working on the business.

Still, even as Tropicana has seen declines, other brands have been growing -- most notably Simply and Florida's Natural, which saw unit sales grow 7% and 6%, respectively last year, according to IRI. Both Coca-Cola juice brands are handled by Doner, Detroit.

Mr. Lincer said Florida's Natural is breaking new campaign in February from 22Squared that will continue to emphasize the brand as being Made in the USA. Meanwhile, Minute Maid unveiled plans for redesigned packaging in November, which will roll out globally throughout this year. Both Messrs. Lincer and Crockett declined to comment specifically on the impact of Tropicana's redesign, though both said their respective brands enjoyed growth in 2009.

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