beverages - ranking the brands iq beverages 2014, l2... · spread of the disease beyond the united...

DIGITAL IQ INDEX®

BEVERAGES

September 29, 2014

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DIGITAL IQ INDEX® BEVERAGES

September 29, 2014

© L2 Inc., 2014 Circulation of the report violates copyright, trademark and intellectual property laws.


2

Beverages: Annual Per Capita Consumption by CategoryU.S., 1987–2013

FizzleThe “sugar water” business is going from bad to worse. In 1998, the average American drank more than 50 gallons of soda per year.1 Fifteen years later, consumption is down nearly 20 percent—with “diet” drinks declining faster than any other beverage category due to increased scrutiny of aspartame and other artificial sweeteners.2 Although cola conglomerates have attempted triage by launching anti-obesity campaigns, testing stevia-based reformulations (e.g., Coca-Cola Life, Pepsi NEXT), and doubling down on marketing expenditures—nothing can stem the tide.3,4 Last April, Coca-Cola announced its first global dip in soda volume since 1999, signaling the spread of the disease beyond the United States.5

Too Little, Too Late?As reality sets in, beverage titans are slowly rethinking business fundamentals. In 2007, Coca-Cola embarked on a diversification binge (e.g., Glacéau, Honest Tea, Zico)—culminating in a $2 billion investment in Monster Energy last August.6,7 In 2013, the company reversed course by selling costly distribution operations it acquired as recently as 2010.8 In September, Coca-Cola experimented with its first exclusive distribution deal with Amazon (see page 48). Although such investments signal a positive shift away from denial, analysts

1. “Soda Losing Its Grip on America,” Jim Avilia & Serena Marshall, ABC News, April 2, 2014.2. “Diet Sodas’ Glass Is Half Empty,” Mike Esterl, The Wall Street Journal, December 8, 2013.3. “Pepsi and Coke’s new cola war challenger? Zevia.” Phil Wahba, Fortune, June 27, 2014.4. “Coca-Cola Maintains Marketing Spend Amid Sluggish Demand,” Natalie Zmuda, Ad Age, July 22, 2014.5. “Coke Under Pressure as Sales Abroad Weaken,” Mike Esterl, The Wall Street Journal, July 30, 2014.6. “Coke Confronts Its Big Fat Problem,” Claire Suddath & Duane Stanford, Bloomberg Businessweek, July 31, 2014.7. “Coke to Buy Stake in Monster Beverage for $2.15 Billion,” David Gelles, The New York Times, August 14, 2014.8. “Coca-Cola to return some distribution to U.S. franchisers,” Martinne Geller, Reuters, April 16, 2013.

Beverages: Change in Per Capital Consumption by CategoryU.S., 2003–2013

Source: Beverages Digest, July 2014.

GALL

ONS

PER

CAPI

TA

0

10

20

30

40

50

1990 2000 2010

Soft Drinks

Juices

Beer

Bottled Water

42.2

22.1

6.9

20.1

4.3Sports Drinks

-20%

0%

+20%

+40%

SoftDrinks

Juices

Beer

BottledWater

Wine DistilledSpirits

Tea

Coffee

PowderedDrinks

SportsDrinks

Milk

Source: Beverage Information Group, July 2014.



http://abcnews.go.com/Business/soda-losing-grip-america/story?id=23151625

http://online.wsj.com/news/articles/SB10001424052702304579404579236630401881844

http://fortune.com/2014/06/27/zevia-pepsi-coke/

http://adage.com/article/cmo-strategy/coca-cola-maintains-marketing-spend-amid-sluggish-demand/294251/

http://online.wsj.com/articles/as-sales-flag-abroad-coke-refocuses-on-home-turf-1406765563

http://www.businessweek.com/articles/2014-07-31/coca-cola-sales-decline-health-concerns-spur-relaunch

http://dealbook.nytimes.com/2014/08/14/coke-to-buy-stake-in-monster-beverage-for-2-15-billion/?_php=true&_type=blogs&_r=0

http://www.reuters.com/article/2013/04/16/us-cocacola-bottlers-idUSBRE93F0GH20130416

http://online.wsj.com/articles/as-sales-flag-abroad-coke-refocuses-on-home-turf-1406765563

http://www.businessweek.com/articles/2014-07-31/coca-cola-sales-decline-health-concerns-spur-relaunch#p3

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September 29, 2014



are asking if they are too little, too late.9 Representing only $1 in every $100 dollars spent in supermarkets, online grocery remains in its infancy.10 However, future winners and losers on Amazon Fresh, Walmart Grocery, and Google Shopping Express are being determined now. Four of the 10 top-selling soda brands (Mountain Dew, Dr Pepper, Diet Pepsi, and Diet Mountain Dew) are not present among the 20 best-selling soft drinks on Amazon—displaced by Zevia, Fever Tree, and Hansen’s.11 With food and beverages products demonstrating the lowest customer loyalty of any category measured (approximately 40 percent of buyers identify as “not loyal”), it is imperative that beverage brands reassess their online visibility and explore how digital properties reward frequent buyers.12

Digital IQ = Shareholder ValueThis study attempts to quantify the digital competence of 54 beverage brands in the U.S. market. Our aim is to provide a robust tool to diagnose digital strengths and weaknesses, helping managers achieve greater return on incremental investment. Like the medium we are assessing, our approach is dynamic. Please reach out with comments that improve our methodology and findings.

Regards,L2

9. “Coke, Pepsi...These guys aren’t cracking beverage innovation,” Ben Bouckley, Beverage Daily, May 16, 2014.10. “How E-Commerce Is Finally Disrupting The $600 Billion-A-Year Grocery Industry,” Cooper Smith, Business Insider, September 10, 2014.11. “Special Issue: U.S. Beverage Results for 2013,” Beverage-Digest, March 31, 2014.12. “84 Percent of Global Respondents More Likely to Visit Retailers That Offer a Loyalty Program,” Press Release, Nielsen, November 12, 2013.

Source: IBISWorld.

Beverages: Online vs. Offline Grocery Product SegmentationU.S., 2013

Beverages: Online Grocery SalesU.S., 2009–2018E ■ Annual Revenue ■ Annual Change

IN M

ILLI

ONS

$0

$4,000

$8,000

$12,000

$2,000

$6,000

$10,000

-6%

-2%

+2%

+6%

+10%

+14%

20102009 2011 2012 2013 2014E 2015E 2016E 2017E 2018E

2008–2013 CAGR 2013 Size 2013–2018E CAGR

+1.5% +0.7%Offline

Online +3%

$574 Billion

$6.5 Billion +9.2%

Source: IBISWorld.

Fruits andVegetables

Meat, Fish,and Poultry

OtherNonfood

Items

DairyProducts

Other FoodItems

Beverages(IncludingAlcohol)

DeliveryCharges

Offline$574 Billion

Online$6.5 Billion

FrozenFoods

$

9% 15% 14% 11% 11%5% 5%

32% 11%12%8%2%

19%

30%

15%0%



http://www.beveragedaily.com/Manufacturers/Coke-Pepsi-aren-t-cracking-beverage-innovation-Verlinvest

http://www.businessinsider.com/e-commerce-disrupting-600-billion-grocery-industry-2014-8

http://www.beverage-digest.com/pdf/top-10_2014.pdf

http://www.nielsen.com/us/en/press-room/2013/nielsen-survey-84-percent-of-global-respondents-more-likely-to.html


http://www.ibisworld.com/industry/online-grocery-sales.html

http://www.ibisworld.com/industry/online-grocery-sales.html

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September 29, 2014



GIFTED

RANK BRAND DIGITAL IQ

3 139

4 138

5 137

6 131

7 129

8 128

9 127

Heineken

The Coca-Cola Co.

PepsiCo

Monster Beverage Corp.

Anheuser-Busch InBev

PepsiCo

PepsiCo


1 151

2 143

Red Bull



10 115

11 113

11 113

13 112

13 112

15 111

16 109

The Coca-Cola Co.

The Coca-Cola Co.


The Boston Beer Co.

Unilever Group

Dr Pepper Snapple Group

The Coca-Cola Co.

AVERAGE GENIUSRed Bull

Bud Light

GIFTEDCoca-ColaBudweiserGatorade

PepsiMonster EnergyMountain Dew

HeinekenDiet Coke

Samuel AdamsSpriteLipton

Stella ArtoisDr Pepper

AVERAGECoca-Cola Zero

RockstarPowerade

Coors LightCorona Extra

Miller LiteSierra Nevada

Shock Top5-Hour Energy

SnappleGuinness

Michelob UltraVitamin Water

NOSVitacoco

Zico

CHALLENGEDFanta7-Up

ArizonaSchweppes

FuzeNestea

FEEBLEAmstelBuschSoBe

Sierra MistHoegaarden

LeffeNaturalShasta

Keystone LightAMP

Canada DryFoster’sModeloBeck’s

KronenbourgMiller Genuine Draft

Full Throttle

GENIUS



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September 29, 2014




17 108

18 106

19 105

20 99

20 99

22 98

23 96

Rockstar

Molson Coors Brewing Co.

SABMiller

The Coca-Cola Co.

Constellation Brands

Sierra Nevada Brewing Co.



24 95

24 95

26 93

27 92

27 92

29 91

29 91


Living Essentials

Diageo

The Coca-Cola Co.


The Coca-Cola Co.

All Market

AVERAGE GENIUSRed Bull

Bud Light



HeinekenDiet Coke




RockstarPowerade




SnappleGuinness


NOSVitacoco

Zico

CHALLENGEDFanta7-Up

ArizonaSchweppes

FuzeNestea



LeffeNaturalShasta

Keystone LightAMP



Full Throttle


29 91

32 89

33 88

34 85

35 81

36 79

37 72

The Coca-Cola Co.


Suntory Holdings

The Coca-Cola Co.

AriZona Beverage Co.

The Coca-Cola Co.

Nestlé

CHALLENGED



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September 29, 2014




38 67

38 67

38 67

41 63

42 61

43 57

43 57


Heineken

PepsiCo



PepsiCo


GENIUSRed Bull

Bud Light



HeinekenDiet Coke




RockstarPowerade




SnappleGuinness


NOSVitacoco

Zico

CHALLENGEDFanta7-Up

ArizonaSchweppes

FuzeNestea



LeffeNaturalShasta

Keystone LightAMP



Full Throttle


51 49

53 42

54 17

FEEBLE

Carlsberg Group

SABMiller


45 56

46 53

47 52

48 51

49 50

49 50

51 49

National Beverage Corp.

PepsiCo

SABMiller

Molson Coors Brewing Co.


Constellation Brands


The Coca-Cola Co.



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September 29, 2014



LoyaltyAcross 16 categories of products, Food & Beverage registers the lowest level of customer loyalty recorded—with approximately 40 percent of global consumers indicating their likelihood to switch brands across both alcoholic and carbonated beverages.13 Beverage brands would be wise to take a cue from peers in the Retail sector, where 23 percent of consumers indicate their loyalty to a brand increased due to an adherence program.14 Despite evidence for how to combat a persistent problem, less than one in three beverage brands are leveraging customer relationship management (CRM) capabilities to enable user-specific accounts. Of these, only a third encourage purchases via transactional loyalty programs (e.g., bottle cap code redemption programs). Several brands, including Budweiser and Dr Pepper, offer account creation with no clear incentive for users to volunteer personal information. This stands in stark contrast to Stella Artois’ “La Société” initiative, which offers various discounts to lifestyle brands in line with the pilsner.

13. “Nielsen Survey: 84 Percent of Global Respondents More Likely to Visit Retailers That Offer A Loyalty Program,” Nielsen, November 12, 2013.14. “How Seamless are You?” Consumer Research Results, Accenture, March 24, 2014.

Beverages: Site Account FeaturesPercent of Brands Incorporating the FollowingSeptember 2014, n=17

Stella Artois’ La Société offers participants a range of member benefits, including discounts on apparel and special events.

Pepsi’s answer to My Coke Rewards (see page 18) is Pepsi Experience Points, which can be acquired by interacting with brand’s digital properties.

100%

Facebook Connect

35%

Transactional Loyalty Program

35%

Mailing Address Capture

24%

Listing Offline Events

18%

Mobile Alert Opt-In

12%

Product Preference Capture





http://www.accenture.com/Microsites/retail-research/Pages/consumer-research-results.aspx#results

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September 29, 2014



8

Retailers: Online GroceryThe food and beverage industry may be the last industry to be disrupted by e-commerce, with only 1 percent of the $600 billion in sales attributed to online purchases.15 However, while most brands know where and how their products are stocked on physical store shelves, location and prominence online is much murkier and proves largely immune to brand influence (for now). Amazon.com remains in prime position to own the online grocery market because of its physical distribution network, 20-million-strong Prime membership program, Amazon Fresh expansion, and as of April, Amazon Prime Pantry offering for household staples.

15. “How E-Commerce Is Finally Disrupting The $600 Billion-A-Year Grocery Industry,” Cooper Smith, Business Insider, September 10, 2014.

Beverages: Brand Visibility on Retailer.comSeptember 2014 ■ Stocks Brand ■ Brand Appears on First Page of Category Search

Beverages: Online Pricing of Diet CokeSeptember 2014

Locations selected, when necessary: Amazon Fresh- Seattle, Fresh Direct- Manhattan, Peapod- Chicago,Instacart- Washington D.C., Safeway- Washington D.C., Walmart To Go- Philadelphia. *Note: Instacart does not support purchases of alcohol.

Retailer

Price,12 Pack,

12 oz.Cans

Safeway

$7.39

$7.99

$6.59

$12.95

$4.99

$5.99

$4.12

$9.99

$4.89

$5.99

$7.49

Variable

$4.00

$9.95

Harris Teeter

$8.29

$7.99

$4.38

$9.99StandardShipping

Cost

Target Safeway Walmart To Go BevMo! Amazon

Fresh Peapod FreshDirect

Instacart-Safeway*

Instacart-HarrisTeeter*

Instacart-CostCo*

AmazonPrimePantry

Instacart-WholeFoods*

89%

N/A N/A

83%63% 80%87%

N/A

76%2% 80%33% 72%26% N/A57%

N/A

48%

N/A

35% 28%26% 22%0%



http://www.businessinsider.com/e-commerce-disrupting-600-billion-grocery-industry-2014-8#ixzz3D1z0aitL

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September 29, 2014



Email Much like the Beer industry, the wider Beverages category is consistently underinvested in email marketing, despite evidence that 14 to 28 percent of shoppers conduct digital research food purchases prior to shopping.16 While seven in ten brands offer email sign up, only half of those followed up with even a single message. The category averages just 0.27 messages per week—ahead of the Beer industry’s 0.07 and Spirits’ 0.04, but behind the Food industry’s 0.40. All three industries significantly trail e-commerce heavy brands in sectors such as Specialty Retail, which send between three and four emails per week.

16. “What Happens Online Before a Consumer Ever Walks into a Grocery Store?” eMarketer, August 28, 2014.

Beverages: Email Marketing EffortsSeptember 2014

FOLLOW-UPn=38

OPT-INn=54

WEEKLYFREQUENCY

Top 5

26%

Solicits MailingAddress

WelcomeNote Sent

Diet Coke

2.0

31%

18%

Offers Express1-Field Sign Up

Promotes New/Seasonal Products

Red Bull

1.1

6%

Brands OffersEmail Sign Up

MessageSent

Coca-Cola

2.0

70%

50%

Solicits Dateof Birth

More Than OneMessage Sent

Coca-Cola Zero

2.0

39%

39%

Requires Confirmationof Sign Up

Promotes Events

Pepsi

1.4

7%

26%



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September 29, 2014



Social MediaBeverage brands are heavily invested in social platforms as the digital media of choice. All but one (Full Throttle) has a Facebook page. Only one brand (Canada Dry) fails to maintain a YouTube channel. All but three are active on Twitter—and all but four have profiles on Instagram. While eight in 10 brands are on Google+, only three have communities exceeding a million followers (Coca-Cola, Pepsi, and Red Bull). Consistent across all categories L2 tracks, Tumblr continues to trail in terms of traction and significance. Facebook delivers the largest average community size across competing social platforms, but Instagram continues to differentiate itself with an average engagement rate 35 times that of its (big) sister platform. On Pinterest, Coca-Cola is the only brand that has attracted more than 4,500 followers.

Beverages: Social Media AdoptionPercentage of Brands with Official Presence by PlatformSeptember 2014, n=54

Beverages: Social Platform Performance by Size, Growth, and EngagementJune–September 2014

98% 98% 94% 89%79%

67%50%

41%33%

Facebook YouTube Twitter Instagram Google+ Vine Pinterest Tumblr BuzzFeed

AVERAGE GROWTH IN COMMUNITY SIZE

AVER

AGE

ENGA

GEM

ENT

RATE 2.50%

1.50%

0.50%

10% 20% 30% 40% 50%0%

INSTAGRAMSize: 96,927Growth: +43%Engagement: 1.79%

GOOGLE+Size: 127,849Growth: +28%Engagement: 0.10%

FACEBOOKSize: 6,820,357Growth: +12%Engagement: 0.05%

PINTERESTSize: 683Growth: +4%Engagement: 0.23% TWITTER

Size: 362,698Growth: +15%Engagement: 0.08%



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September 29, 2014



Mobile & TabletAlthough 70 percent of consumers prefer mobile devices for tasks tied to grocery shopping, an explicit preference for smartphones versus tablets varies by activity type.17 For example, nearly three times as many consumers prefer smartphones to tablets for managing shopping lists, but nearly twice as many consumers prefer tablets for browsing recipes. Usage is similar on both devices when it comes to looking up nutritional information. The consumer’s propensity to switch devices leading up to purchase requires Beverage brands to ensure broad site compatibility while optimizing select features to conform to user behavior. Sixty-three percent of Beverage brands have adopted mobile-optimized sites, but only 17 percent have implemented UI/UX templates distinct to the tablet.

17. “Mobile Audience Q3 2013 Insight Report,” CPG Research & Purchase Behaviors, Ninth Decimal, September 2013.18. Ibid.

Overreliance on desktop sites compounds errors rates on the tablet form factor. A third of brand sites feature broken or buggy elements, with one in 10 requiring Adobe Flash to load select pages. The severity of these errors can range from dead landing pages (DrinkArizona.com) to diminished interactivity on multimedia-rich destinations (Fanta). Across mobile sites, brands demonstrate little effort to rethink feature implementation beyond navigational elements. Although “availability in-store” ranks among the top five influencers to add a CPG product to shopping lists,18 only 41 percent of Beverage brands support retail finders on the small screen. Of these, less than 1-in-4 take advantage of geolocation. Gatorade provides a prime example of rethinking “Where to Buy” for mobile users.

Beverages: Site Configuration on Mobile and Tablet DevicesSeptember 2014, n=54

Smartphone

ResponsiveDesign

48%

Unique MobileDomain

15%

No MobileOptimization

33%

No SitePresence

4%

LoadsDesktop Site

LoadsMobile Site

No SitePresence

Tablet

Unique TabletUI/UX

17% 11% 4%68%



http://www.ninthdecimal.com/wp-content/uploads/2014/06/ND_Insights_Q3_2013.pdf

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September 29, 2014



SITE

15 Site Features

17 Loyalty

18 SPOTLIGHT: MyCokeRewards.com

19 Retailers: Online Grocery

21 SPOTLIGHT: Walmart Grocery

DIGITAL MARKETING

22 Search

24 Email

SOCIAL MEDIA

26 Social Media

27 Facebook

29 YouTube

31 Twitter

33 SPOTLIGHT: Cola Wars on Twitter

34 Instagram

35 Vine

METHODOLOGY

DIGITAL IQ RANKINGS

6 Genius

8 Gifted

8 Average

10 Challenged

10 Feeble

KEY FINDINGS

12 Distribution

13 Enterprise Effects

5

39

48

49

6

12

MOBILE

36 Mobile & Tablet

37 SPOTLIGHT: Gatorade’s Where to Buy

38 Mobile Apps

FLASH OF GENIUS

39 Mountain Dew: Baja or Bust

40 Monster Energy: CoD Ghost Giveaway

41 Heineken: @WhereNext

42 Budweiser & Bud Light: Social Gifting

43 Sprite: #ChangeTheGame

44 Gatorade: #WinFromWithin

45 Lipton: #ExtraSUNday

46 Coca-Cola: Happiness Flag

47 Surge: Amazon Exclusive

L2 TEAM

ABOUT L2




13


September 29, 2014



RESEARCH

Digital IQ Index®: The definitive benchmark for online competence, Digital IQ Index® reports score brands

against peers on more than 850 quantitative and qualitative data points, diagnosing their digital strengths

and weaknesses.

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on platforms or geographies of future growth. Critical areas of investigation include: Mobile, Video, Emerging

Platforms, APAC and Brazil Russia India.

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resources, human capital, budgets, and priorities supporting digital strategies.

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Upcoming Research

DIGITAL IQ INDEX® REPORTS:

Personal Care: U.S.

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beverages - ranking the brands iq beverages 2014, l2... · spread of the disease beyond the united...

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