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I DON'T THINK COKE'S REVERSAL MEANS STEVIA HAS AN IMAGE PROBLEM': EUROMONITOR ANALYST

Coca-Cola Half Life? Zevia CEO predicts 'substantial damage' to Glaceau Vitaminwater after stevia U-turn

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By Ben Bouckley+

05-Aug-2014
Last updated on 05-Aug-2014 at 16:22 GMT

The secret of Zevia's success? It uses a wholly natural sweetening system and doesn't include 'empty calories', says Zevia CEO Paddy Spence
The secret of Zevia's success? It uses a wholly natural sweetening system and doesn't include 'empty calories', says Zevia CEO Paddy Spence

The CEO of soda brand Zevia insists Coke’s use of stevia in full-calorie Glaceau Vitaminwater has caused ‘substantial’ brand damage and says it raises questions over the future for mid-calorie sodas like Coca-Cola Life.

Yesterday we broke the news that Coke was reverting to its original formulations for the stevia-sweetened full-calorie (120) Glaceau Vitaminwater range after a social media tsunami/backlash at its taste. A Coke spokeswoman told BeverageDaily.com last night that the switch back to original formulations - using crystalline fructose and cane sugar  in lieu of stevia and cane sugar - came after it tried "something new" with Vitaminwater as “part of our continual effort to innovate our beverage portfolio”.

“Although many of our most loyal customers” preferred the previous version of this drink, she said, stevia leaf extract remained a key ingredient in 45+ products across Coke's portfolio in 15+ countries, while the soft drinks behemoth will continue to use it in its Vitaminwater Zero line.

Paddy Spence heads up Zevia, the US soda brand sweetened exclusively with stevia, erythritol and now monk fruit, which has hit $60m in retail sales from a 2009 standing start, and accounts for circa. 80% of the naturally sweetened US soda segment. 

'Consumers seek functional benefits - when brands don't deliver it undermines trust'

Speaking to this website about the Glaceau retreat, Spence said: “I think the consumer backlash against Vitaminwater’s recent reformulation underscores that consumers are seeking functional benefits from novel ingredients such as stevia, in this case a material reduction in sugar and calories, and when brands don’t deliver, it undermines trust in the brand.”

Spence noted that Vitaminwater has been “very successful” in using natural sweetener stevia in its Zero line, while Zevia has also seen “rapid growth based on our brand promise of zero-calorie sodas with no artificial sweeteners".

Zevia uses stevia for a purpose, to strip out empty calories

Shoppers are buying Zevia because they want to avoid what they see as ‘empty’ calories in CSDs, he said, and stevia is a natural sweetener “they feel good about”.

However, Spence insists Vitaminwater made the mistake of adding stevia to formulas without providing any material reduction in either calories or sugar content.

“So the brand’s fans, who made a conscious decision to select these full-calorie beverages as opposed to their zero-calorie counterparts, were being asked to accept a product that tasted different, with no accompanying benefits in nutritional content,” he adds.

The resultant social media firestorm caught Coke off-guard, and despite its quick response, Spence believe the Vitaminwater brand damage “has been substantial, and raises questions about the potential introduction by Coke and Pepsi of mid-calorie sodas with stevia”.

Mid-calorie sodas - an unsatisfactory halfway house?

“Will formulations with 50, 80 or 100 calories per can lure shoppers back to carbonated soft drinks, or will these be viewed like the Vitaminwater change, as a midway solution that satisfies neither full-calorie nor diet soda drinkers? So far, recent mid-calorie soda introductions have failed to excite consumers,” Spence said.

So is this simply a bump in the road for stevia-sweetened soft drinks (an ill-advised formulation) or a tire-bursting stinger stretched across the highway? Euromonitor beverage analyst Jonas Feliciano inclines towards the former.

Yes, he says, an all-natural, low calorie, high-intensity sweetener helps address issues consumers have with artificial sweeteners – but the Vitaminwater saga shows that taste remains an issue.

“I don’t think Coke’s reversal means that stevia has an image problem – at least not one that didn’t already exist,” he said.

Natural products are important to US consumers, Feliciano insists, citing a 2013 Euromonitor survey of 1,813 US adult: 40.3% said they looked for ‘all natural’ on labels, 35.6% ‘has limited or no artificial ingredients’, and only 23.9% ‘reduced or low calorie’.

Back to stevia school! Consumers need education

This suggests that naturalness is a more important mainstream play than low-calorie, but stevia should score highly on both counts – so what’s wrong?

Perhaps one clue is the flak stevia has drawn on Glaceau Vitaminwater's Facebook page this summer which sees some consumers lumping it in with aspartame, Ace-K, etc. as an 'unnatural' high-intensity sweetener that they don't properly understand, and thus distrust.

Feliciano says more consumer education is needed to convince people that stevia is a healthy, all-natural solution to what he dubs the “sweetener dilemma”.

“Products like HPP juices and coconut water have grown popular amongst the health conscious because consumers connect those products with things that exist in nature,” he said.

“A large number of consumers may not know that stevia comes from a plant, and those that do may not trust the process that the leaves undergo to be used in beverages. Furthermore, there is still debate as to the health properties of consumers using low calorie, high intensity sweeteners, whether they are artificial or natural,” Feliciano added.

Lastly, but perhaps most importantly, according to the Euromonitor analyst, taste is still king for many consumers – especially when so many less sweet and low calorie alternatives are available in flavors and formulations that aren’t being compared to established brands. 

Finally, taste is king...so avoid like-for-like comparisons

“Stevia definitely has a place in the realm of soft drinks – particularly for those consumers still seeking something sweet but want a natural, low calorie-alternative. Using them in established brands, however, will always make them susceptible to like-for-like comparisons, where each consumer becomes an expert taste tester,” Feliciano said.

Gerry Khermouch, editor of industry e-newsletter Beverage Business Insights (BBI) told us he had his own theory, one that has parallels with the views of both Feliciano and Spence, at least in relation to taste.

“Deep down inside, many consumers don't seem to really believe that these beverages provide meaningful nutrition or functionality, but are happy when marketers offer them a bit of psychological cover to indulge their propensity for a good-tasting, sweet drink,” he said.  

This is why Starbucks struck gold with its lattes and Frappuccino milkshakes for adults, he added, “under cover of being a caffeine fortifier for hard-pressed business people juggling many responsibilities”.

“That's also why rival launches like Coca-Cola's Godiva-branded line [pictured left] seemed destined to fail, because they failed to offer any such cover and were too explicitly an indulgence drink,” Khermouch said.

“But take away the familiar good taste, and Khermouch insists consumers won’t be swayed to keep purchasing the brand by any notion that they're drinking it for the vitamins. In other words, these are marketers' deceptions in which many consumers seem quite willing to participate,” he added.

*Click here to read today's allied article that sees stevia supplier PureCircle respond to the question of whether the Vitaminwater stevia storm will leave lasting clouds for the plant-based sweetener in the beverage space.

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