Branching Off Beverages, Part I

For bottled water, brand has risen up the consumer decision tree

[Editor's Note: This is the first of a series of articles on packaged beverages. Part I deals with bottled water, Part II will deal with beer and Part III will deal with carbonated soft drinks and juices.]

Bottled Water

OAKBROOK TERRACE, Ill. -- Bob walks into a convenience store looking for an energy drink. He knows exactly what he wants, from the brand down to the package size. Joe is not as sure of what he wants, but he has a hankering for a soda and loves to try new flavors. And Susan is looking for a healthy beverage option for her five-year-old in a flavor he likes.

Do you know these folks? Would they be able to navigate your cold vault easily and quickly, or will they be forced to settle on a second choice--or, worse, write your store off as a poor destination for beverages?

A decision tree can serve as a helpful map of the likely behavior of these consumers. It also can highlight opportunities for guiding the purchase to completion and making the shopping experience as convenient and smooth as possible.

A consumer decision tree (CDT) reveals how consumers shop a category, ranking the order and importance of elements ranging from occasion and need state to flavor and brand preferences. Each tree--typically presented as a flowchart--is as different as the subcategory and its core consumer.

"Understanding the way the consumer thinks about the [beverage] category will make it easier for them to shop the store," said Ivan Alvarado, director of category management for Dr Pepper Snapple Group (DPSG), Plano, Texas. It takes the average consumer 12 to 30 seconds to make a beverage choice once in the store, according to DPSG research.

"It's a good way to manage the shelf flow and the way the aisle is set up," said Tom Prestridge, director of trade marketing insights for Anheuser-Busch InBev, St. Louis. "Depending on how much space you've got, it is difficult for a shopper to look at 20 feet and decide they want A, B or C. … Sometimes I like A or B. Do I want to get one of each? It just makes it more shoppable."

To help in this endeavor, what follows are examples of CDTs and consumer insights for some of the biggest cold-vault segments to help provide a blueprint for maximizing the beverage category.

Bottled Water

As packaged beverages go, bottled water is among the most widely consumed, according to research by Chicago-based Technomic Inc.; 71% of consumers had bottled water in the past month, although this skews even higher among 35-to-54-year-old, upper-income women. Flavored water skews younger; while 25% of consumers overall say they have consumed the beverage in the past month, among 18-to-34-year-old males and females, the figures are 34% and 36%, respectively.

According to Chelsea Allen, senior manager of category and shopper solutions for Nestle Waters North America, Stamford, Conn., brand has risen up the decision tree to take greater priority. The bottled-water supplier--whose brands include Nestle Pure Life, Arrowhead, Deer Park and Ice Mountain, as well as sparkling water brands Perrier and San Pellegrino--shared the latest CDT for the segment, based on research from The Nielsen Co.

"A few years ago, brand wasn't up there," said Allen, citing that the type of water (still or sparkling) typically came first, as well as the water source (spring, purified, etc.). But bottled-water brands have so differentiated themselves that they now communicate more than the label.

A CDT can help retailers better organize the bottled-water section to make it more shoppable. "Right now [many retailers] place the still water together; there's no premium cut-out section. It's more on who is distributing, what the region is," she says. Instead, Nestle Waters suggests carving out sections that reflect each area of the CDT: premium brands, flavored and unflavored, sparkling water, glass and plastic bottles, flavored and unflavored, etc.

"Sparkling is such an untapped opportunity," said Allen, pointing out that its share of c-store bottled-water sales is still small. "This is an untapped opportunity that will help try to drive this channel further."

To read more on packaged beverages, see the November issue of CSP magazine.

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