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Competition heats up in 'juice wars.'(Industry Overview)

NEW YORK - As consumer tastes in the new age beverage segment seem to be undergoing a subtle shift from ready-to-drink (R-T-D) tea to juice, competition is intensifying in what industry insiders now refer to as the juice wars.

While R-T-D tea sales slowed to a crawl across all three trade classes and dropped dramatically in drug stores in 1995, sales of juice and watered-down juice mixes continued to soar. Dollar sales of R-T-D tea fell 13.9% in drug stores in 1995 - versus a 4.9% rise in the sales of bottled juice, with bottled water sales up 1.5%.

While many define new age beverages as any noncarbonated, nonalcoholic drinks, some leading juice manufacturers resent being lumped with R-T-D tea and sports beverages.

"New age beverages aren't as healthy as they appear to be," says a Tropicana Dole Beverage North America spokesman. "Many contain as many calories and as much added sugar as soft drinks - often providing little in the way of vitamins and minerals. The benefit of 100% juice is that it not only tastes great, but is good for you."

Last year Coca-Cola Co. spent $100 million to redo its Minute Maid juice packaging, at about the same time that Tropicana parent Seagram Beverage Co. bought Dole Food Co.'s juice business for $285 million to support Tropicana's worldwide battle for supremacy with Minute Maid and other leading juice brands. The Dole acquisition gave Seagram its first production network outside the U.S.

Meanwhile, Coke invested another $180 million to publicize and expand its Fruitopia fruit drink line. For its part, Pepsi-Cola Co. is substantially increasing advertising support for its Ocean Spray line of fruit drinks.

The juice wars are not only precipitating a wave of massive spending and acquisitions, but also creating the greatest array of new and varied juice products in memory. This decade's barrage of juice, R-T-D tea, sparkling water and sports drink launches vying for shelf space has forced retailers into perplexing category management decisions.

"You name it, it's out there," remarks K&B Services Inc. buyer Peter Clarke. "It's almost too much to choose from. You've got to do a good job of managing that category or it can get out of hand quickly."

And the competition will only intensify this year. This month Tropicana is adding two flavors to its Season's Best line: ruby red grapefruit and strawberry-orange. "The combination of these new flavor offerings and the success of our other 100% juice favorites shows how we're meeting consumers' desire for healthy, convenient products," says a Tropicana spokeswoman. The firm is also adding apple-berry-pear and strawberry-orange-peach to its Twister line.

To gain further acceptance in the 18- to 22-year-old segment, Ocean Spray is set to roll out four Wild Cider beverages: kiwi-watermelon, peach, cranberry-crabapple and cherry. These cider-based drinks will be available in 16-ounce bottles with foil-stamped labels featuring an eye-catching wave graphic capitalizing on Ocean Spray's "crave the wave" tag line.

"I'm confident that we've created a product here that's new and creative enough to separate ourselves from the competition," notes business unit manager Corey Smith.

In addition to introducing cranberry-apple-raspberry to its line this year, Minute Maid is preparing an advertising and promotion blitz for its products through sponsoring the 1996 Olympic Games. The company plans to leverage this prestigious sponsorship with a national Olympic merchandise promotion.

Tropicana is set to team up with MCA/Universal for a tie-in promotion linking Season's Best with the video release of the movie Babe. Consumers will be offered $3.50 rebates when they purchase Babe home videos with three proofs of purchase from any flavor of Season's Best.

This promotion follows on the heels of a similar promotion linked to the release of the movie Apollo 13 around $5 rebates with the purchase of six multiserve cartons of Tropicana pure premium orange juice.

The Apollo 13 tie-in was the first to be announced after Seagram acquired an 80% interest in MCA in June 1995. "While this was our first promotion with MCA, we foresee many additional opportunities," says Tropicana vice president of marketing Mary Gold.
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Publication:Chain Drug Review
Article Type:Industry Overview
Date:Feb 12, 1996
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