Analysis: Kraft’s Dual Brand Strategy with Crystal Light Liquid

We welcome back Jason Chong, who covers the beverage industry for both BevWire and Canadian Grocer. With previous experience in the non-alcoholic segment of the industry, he maintains a keen pulse on the marketing aspects of beverages. Today, he provides analysis regarding the increased exposure of liquid flavor enhancers from a single company.

Most people by now have heard of Kraft launching Crystal Light Liquid to grow (or compete) in the liquid flavor enhancers marketplace. Similar to some MiO offerings, Crystal Light Liquid is calorie free and sugar free. It currently available the United States in 6 flavors: Strawberry Lemonade, Blueberry Raspberry, Iced Tea, Mango Passionfruit, Peach Bellini and Pomtini. It comes in a squeeze bottle that should satisfy 24 servings (of 250 ml liquid), similar to the Kraft MiO squeeze bottles.

Crystal Light Liquid

Crystal Light Liquid

Although the product is predominantly targeted toward women – the packaging, colors, and communication portray as much – will this not end up cannibalizing their MiO product? Or will this launch not cannibalize Crystal Light’s powder-based products? Why introduce such a product when all signs point toward it being harmful to Crystal Light, and possibly Kraft overall?

Contrary to the traditional thinking of market cannibalization, launching Crystal Light Liquid is beneficial for everyone – especially Kraft. Back in September, BevWire wrote about Dasani Drops’ entry into this segment and how its presence helps in growing liquid flavor enhancers. The Crystal Light Liquid will further bolster this growth and solidify the promise that exists for these products. And since not all consumers are aware that MiO and Crystal Light are under the same parent company, this will help increase both product’s market penetration.

What appears to be three separate branded players in this space, is actually two manufacturers. And as the market potential grows from $100 million, Kraft’s size of this market potential will grow as well behind the support of these two branded players. This dual brand strategy of Kraft may be their response toward Dasani’s entry and a signal to others interested in saturating the segment. It shows that Kraft is committed to defending their product and shelf space, and maintaining healthy margins for the retailer and themselves. Crystal Light Liquid’s entry will also make it easier to get the retailer’s attention and gain shelf space, since it signals the manufacturer’s seriousness in supporting this segment and legitimizes it as an important focus.

This gain in shelf space may appear to be detrimental for Crystal Light since it could come at the expense of their powder-based offerings. After all, both powder and liquid form products fall under the same category of “flavor enhancers” and are shelved in the aisle of grocery or mass supermarkets. However, one must also consider that the Crystal Light Liquid offerings are potentially more profitable for both the retailer and Kraft. While they may be trading shelf space away from powder-based products, the trade-off could potentially increase both parties’ “profit-per-square-feet.” That is, consumers may ultimately be paying more for Kraft MiO and Crystal Light Liquid than Crystal Light powder.

Think of how MiO Energy is priced identical to the MiO flavors but comes in a “down-counted” 18 servings instead of the 24 serving sizes. The cost-per-serving indicates that MiO Energy is actually a more expensive product than  regular MiO. So while the drinking occasions have not increased with Crystal Light Liquid, the limited serving sizes increases the need to re-purchase the flavor enhancers. This ultimately translates into wins for Crystal Light, Kraft, and the grocery store.

On the issue of cannibalization, Crystal Light Liquid is ultimately targeting a different consumer. The company’s views may be that the two products are not cannibalistic but complimentary instead. Crystal Light Liquid messaging and imagery concentrates on women’s lifestyle and social circles, while Kraft MiO’s messaging highlights individuality and customization. MiO’s messaging is “Your Drink. Your Way,” while Crystal Light Liquid centers around “For Every Shade of You.” The female shopper that buys MiO may also buy Crystal Light Liquid, but for someone else (i.e. her friend, mom, etc).

Crystal Light Liquid

Branding emphasizes lifestyle and sociality, unlike MiO, which focuses on customization
(Source: Crystal Light Liquid Facebook Page)

The Crystal Light Liquid launch is certainly positive news as it shows everyone’s commitment to supporting liquid flavor enhancers. While Kraft wins with two brands, and Dasani competes with Dasani Drops, both the retailer and consumer will benefit from aggressive promotions. A win-win-win situation.