THE FLAVORED STILL

WATER MARKET (cont'd)

2005 Competitive Landscape (cont'd)

• In May 2002, PepsiCo had also introduced vitamin- and mineral-enhanced Aquafina Essentials in clear 20-ounce PET bottles. It contained a fructose-glucose mixture that imparted 40 calories per eight-ounce serving. Aquafina Essentials, which came in several flavors, was later discontinued.
• In late January 2005, PepsiCo will introduce Aquafina FlavorSplash in Raspberry, Citrus Blend and Wild Berry flavors in 20-ounce and six packs of 0.5-liter PET bottles. (PepsiCo will also begin to sell Aquafina Sparkling water in Original, Lemon-Lime and Berry varieties.)

• In 1999, Coca-Cola introduced Dasani.

• Coke bottlers produce Dasani in about 10 or 11 plants across the U.S. and Canada.
• In late 2002, Coca-Cola introduced Dasani Nutriwater in Lemon Tangerine, with calcium magnesium and B vitamins, Pear Cucumber, with B and C vitamins, Mandarin Orange, with vitamin C and zinc, and Wild Berry, with vitamins B, C and E, flavors. Blue-tinted 16-ounce PET varieties Dasani Nutriwater contained 20 calories per eight-ounce serving. The company pulled the plug on Nutriwater in 2003.
• In the first quarter of 2005, Coke will bow Dasani in Lemon and Raspberry flavors.

• Part of the reason for the failure of Dasani Nutriwater and Aquafina Essentials was their relatively high calorie count. The taste may not have appealed to consumers as well.
  • It is essential therefore that flavored waters are low- or no-calorie. Current market leader Fruit2O uses Splenda and has no calories. The upcoming entrants will use Splenda as well.
  • In the past year or two, public acceptance of Splenda has seemingly blossomed and food and beverage manufacturers are becoming more willing to utilize the sugar substitute.
  • The new products thus strive to meet what consumers seem to be asking for: good tasting, flavored, sweet hydrators that are low in calories and carbs.

Flavors

• One success driver is flavor innovation - whether the companies can come up with new flavors to bring "new news" into the category on a periodic basis.

• All four companies have (or will soon have) raspberry flavors in their portfolios. Lemon, orange and strawberry are also found in at least two companies' portfolios.