Mix it up

When it comes to the drink mix category, it is undeniable that liquid water enhancers are currently "the cool kid in town." Water enhancers have experienced explosive growth, says David Rigg, senior director of marketing and licensing, Heartland Food Products Group, Carmel, Ind. Dollar sales are up 55 percent since 2012, and such products account for 25 percent of total dollar volume in the U.S. drink mix category.

"We project that water enhancers will top $500 million in sales nationally by 2015, with private label accounting for $100 million of those sales," he adds.

One reason for this growth is that liquid water enhancers allow for customization, unlike ready-to-drink beverages, says Anne Gentry, account manager for Alexandria, Va.-based DreamPak. Another reason is that they are easier than powder mixes to incorporate into cold water, she adds.

However, retailers shouldnt necessarily give up on powder drink mixes.

"For value-conscious consumers, powdered beverages offer the best value," states Gary Hemphill, managing director of research for the Beverage Marketing Corp., New York. "So for consumers with large families, such products make sense... and are likely to remain popular."

Do
look to differentiate store brand products with complex flavors and packaging claims.

Dont
give up on powder; continue to provide consumers with a variety of drink mix options.

Moreover, while liquid water enhancers have seen tremendous growth, notes Susie Frausto, vice president of marketing for Jel Sert Co. in West Chicago, Ill., that growth is beginning to slow. She recommends that retailers continue to offer a variety of drink mix formats to fit the needs of their customers.

"The strongest private label programs that weve seen are the ones that offer a variety of formats for consumers," she adds.

Dara Gniady, senior product manager, drink mixes for Oakbrook, Ill.-based Bay Valley Foods, agrees. Powder still comprises approximately 75 percent of the business, she says. But as more shelf space is dedicated to the liquid format, exclusive and dual powder shoppers are having a harder time navigating the shelf, leading to less healthy sales in powder.

Make it distinct

Regardless whether the consumer is shopping for a powder or liquid, flavor is the most important category driver, Rigg says. Currently, consumers are mostly interested in complex flavors.

Kim Holman, director of marketing for Wixon, St. Francis, Wis., agrees.

"The segment is moving beyond one flavor and looking to a combination of multiple flavors to achieve a more interesting and appealing flavor profile. So instead of cherry, it might be cherry-lime," Holman states.

Do
make the store brand a priority with aggressive in-store merchandising and proper product placement.

Dont
forget about add-to-milk and add-to-hot-water possibilities.

Additionally, consumers continue to shop for products that meet their specific needs. Retailers can leverage this behavior to their benefit by including claims on store brand product labels that speak to why a product is different from all the others.

"Focusing on the point of difference makes it easy for the shopper to quickly and clearly see what sets the product apart," Gniady says. "With so many brands in the category, retailers must ensure that store brands stand out."

Speaking of claims, "reduced calories," "reduced sugar," "gluten-free," "caffeine-free" and "slimming" are the most popular currently, Holman says.

And as retailers look to the future of the drink mix category, they also will find some interesting possibilities for new product development.

For example, there is a real lack of all-natural liquid water enhancers, Gentry points out.

"With such a large group of natural product shoppers, there is a lot of opportunity for growth in that segment," she says. "A major opportunity for store brands to differentiate themselves is to pursue an all-natural liquid water enhancer."

And dont forget to look beyond the "add-to-cold water" mixes. A growing market also exists for add-to-milk and add-to-hot-water mixes, she says.

Also, retailers need to remember that just adding more flavors wont increase sales, Rigg says. Instead, retailers should explore emerging segments such as sport or electrolyte mixes, kid-friendly mixes and tea enhancers to capture the customers attention.

Give it precedence

As retailers look to increase current sales and customer loyalty, Rigg recommends that store brands become their priority. However, the products dont have to be strictly a value offering. When speaking of a particular retailer with excellent performance in the liquid water enhancer category, he points out that it has not only a full range of national-brand-equivalent products, but also a variety of unique items. On top of that, the retailer has an aggressive in-store merchandising program, with its own brand of water enhancers displayed next to its own brand of water several times a year, which has resulted in high store brand share and category performance.

And be smart about product placement, Gentry advises, noting that misplacement is a common problem, especially with liquid mixes. For example, a tea concentrate should be in the tea aisle, but often it is placed among the liquid water enhancers and gets lost.

"Retailers are not viewing the water enhancers as a beverage with subcategories but instead are grouping them all together based on bottle type," she adds.