Chatting with investors and analysts Tuesday after PepsiCo bottler Britvic reported its full-year 2013 results –Simon Litherland announced a 15-year bottling and distribution deal with “fundamental partner” PepsiCo Americas Beverages (PAB) for Fruit Shoot, to cover 75% of US distribution points.
In the 52 weeks to September 29 2013, Britvic’s FY sales grew 4.4% to £1.321.9bn ($2.158bn) and net sales rose 6.5% on a constant currency basis to £61.9m.
What is Fruit Shoot? Main ingredients in the orange variety are water, sugar, 8% concentrated orange juice, natural flavors and colors; no added-sugar varieties use acesulfame K and sucralose.
Pointing to a “key moment” for Fruit Shoot in the US –– Litherland said the deal secured Fruit Shoot’s position and focus in the PAB portfolio and provided a long-term growth platform.
Fruit Shoot packaging is key USP
Secondly, Britvic’s CEO said it will unlock more retail opportunities for the brand, with a further nine states and new retailers where PAB can secure listings and significantly increase distribution.
Fruit Shoot is now available in the high-margin impulse channel across 32 US states, with a further nine to follow in 2014 when PAB commissions a second manufacturing plant in St Louis, Missouri.
Matthew Dent, president and COO of Birmingham, Alabama-based Pepsi bottler Buffalo Rock, has been involved with Fruit Shoot since 2007/8 and cites the taste profile, UK success and, above all, the packaging (with a non-spill sports cap to cater for kids) as key advantages.
“The packaging probably was the largest selling point for us to want to partner up at the time,” Dent said. Buffalo Rock is a significant independent Fruit Shoot bottler – along with Pepsi Bottling Ventures (in North Carolina), Gross & Jarson (Ohio) – that reaches areas not serviced by PAB.
On this week’s analysts call Litherland said: “The evidence for Fruit Shoot remains compelling. We now have market data for areas where PAB distribute into, and Fruit Shoot is not only taking share but it is growing the kids’ single serve category.
“As other brands decline we are offsetting this and growing the single-serve category, which is clearly important for both our commercial partners and retailers,” he added.
‘We won’t sacrifice margin in multipack move’
In the Great Lakes Fruit Shoot’s share of the kids’ single-serve category is almost 25%, Litherland said, while in the mid-Atlantic (between New England and the South Atlantic States) it is circa. 20%.
Nationwide the kids’ single-serve category is worth around $200m, Litherland noted, rising to around $2bn when multipacks and all kids’ juice drinks in the grocery sector are included.
Fruit Shoot’s distribution over the past year has grown to nearly 60,000 outlets and Litherland said new listings include Kroger stores on the Eastern Seaboard, LEGOLAND Florida and Buffalo Rock.
Buffalo Rock is trialling a six-bottle multipack of Fruit Shoot, developing the right pack, price and promotional strategy, and Litherland said Britvic plans to enter the grocery market in a “meaningful way” after establishing the brand through the gas and impulse channels.
But Britvic did not want to sacrifice margin via the move to multipack, he said, adding that the big US retailers also prefer brands to have national coverage2 before taking this step.