Adding fuel to Fruit20

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When Kraft purchased Veryfine Products in 2004, its crown jewel was the fast-growing Fruit20, the innovator of the flavored-water category, whose sales grew to $65 million last year. During the past two years, though, Fruit20 has been hit hard by the encroachment of top beverage players into the now $100 million-plus flavored-water segment, including Nestle Waters' Nestle Pure Life, PepsiCo's Aquafina and Coca-Cola Co.'s Dasani. The rise of functional water beverages, including PepsiCo's Propel and Energy Brands' Glaceau VitaminWater, has also taken the wind out of Fruit2O's sails.

"It's not easy competing in the beverage business against Coke, Pepsi and Nestle," said Beverage Digest Editor In Chief John Sicher.

So Fruit20 is introducing new flavors-energy, immunity, relaxation and hydration-and a separate brand dubbed Fuel20, with zero calories, said Vinay Sharma, senior brand manager for Fruit20. Varieties of VitaminWater, whose sales are up 145% to $141 million over the past year, pack 125 calories per bottle, and Propel has 20 calories per bottle. "Touting zero calories with a line of functional waters ... that's a white space we feel we can really go after," he said.

Although Mr. Sharma declined to give details, he said: "With such formidable competitors, we know we can't launch this with a piddly [marketing] program. We'll be out there in full force." Kraft spent $23 million in measured media on Fruit20 in 2005, according to TNS Media Intelligence. Ogilvy & Mather, New York, handles the brand.

Kraft must quickly seed its zero-calorie functional message, though, as rumor has it competitors such as Nestle Pure Life are soon to come out with functional flavors of their own. A spokeswoman said such a product is not slated for the first quarter, but "never say never." Where the growth is, the big guys will go.
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