Markets

Like father, like son: beverage brands adopt vertical marketing strategies

20-Jun-2014
Last updated on 20-Jun-2014 at 16:36 GMT - By Lynda Searby
Beverage brands are establishing brand verticals for parents and children. Photo credit: Till Westermayer
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Euromonitor International has clocked an emerging beverage industry trend, whereby manufacturers of premium and healthy beverages are creating child oriented extensions of adult brands. The trend is gaining momentum as the ‘millennial’ generation of young adults begins to start families and their purchasing habits impact the beverage choices they make for their children.

“Rather than double down on childhood brands, beverage manufacturers are finding success by creating extensions of brands typically chosen by adults,” explains Jonas Feliciano, beverages analyst with Euromonitor International.

Keeping it in the family

For years, younger parents, cast into the throes of parenthood before truly establishing their own habits when it came to product purchases, were more apt to serve their children the same products they consumed whilst growing up. Traditional drinks like Ovaltine flourished under this cross-generational branding. However, with consumers having children later in life, more parents are entrenched in their own purchasing habits – finding and purchasing products that were not available to them growing up. The result, says Euromonitor, is a growing number of consumers questioning the beverages they drank as children. This is further exacerbated by the growing fears of obesity caused by high sugar beverages such as carbonates and juices.

There are examples of mainstream brands that are embracing this strategy, such as Evian, which launched a bottled water with a lid designed specifically for infant use onto the French market in 2013, and Innocent, with its line of six different ‘Innocent smoothies for kids’. However, according to Feliciano, the trend is really playing out among niche brands, particularly those with a healthy and premium positioning.

Exploring niche brands

“These consumers are starting to expand beyond the large brands they grew up with,” he says. Consequently, the trend is most apparent in markets that are experiencing brand proliferation, such as the US and UK, and, to a lesser degree, France and Germany.

Feliciano cites Vita Coco Kids as an example of one such niche product, saying: “Coconut water is a product that is trendy, has a functional purpose and is naturally healthy without the inclusion of artificial ingredients.”

By contrast, carbonated soft drinks and juices are likely to suffer at the hands of health-conscious parents.

“Five to eight years ago, parents wanted 100% juices, but now, juices and nectars are really struggling because consumers are questioning their sugar content – sugar is a big factor in determining what parents give to their kids.”

With regard to carbonated drinks, Feliciano says: “Younger consumers may indulge but they are not drinking carbonated soft drinks in the volumes they did previously – a soda a day is becoming less and less common because of health concerns and the variety of available alternatives.”

An early-stage trend

As yet, vertical marketing is an early-stage trend, and Feliciano believes there is plenty of untapped opportunity – particularly in ready-to-drink ice tea and flavoured waters.

“Obviously products have to be marketed in the right way – I’m talking about herbal tea paired with juice rather than a caffeine-loaded black tea drink,” he says.

Related topics: Functional Beverages, Markets