Innovation in Liquid Concentrates in the US

September 18th, 2012
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IntroArticle_blogAnalyst Insight By Rick Haffner, Head of Global Beverages Research at Euromonitor

Recent liquid concentrate developments in the US demonstrate
that effective new products can stem from combining existing technologies in
innovative ways.  Kraft is leading this
innovation with its MiO brand. 

MiO was introduced in March, 2011.  It is sold in 1.62 ounce (48ml) containers
that can fit in a pocket.  The container
allows the liquid concentrate to be dispensed into water one drop at a
time.  It is available in fruit
flavour and functional energy enhancer
sublines.  Also, it is calorie free, sweetened
with sucralose.

Following the preparation instructions, each container
prepares 24 eight ounce (240ml.) servings. 
The average price per litre (on a reconstituted basis) is about
US$0.70.  This compares to US$0.60 per
(reconstituted)  litre for liquid
concentrates in Western Europe.

While the product itself is a liquid concentrate, Kraft
refers to it as a liquid water enhancer. 
In addition to the unique reference, there are two innovations.  First is the packaging that makes MiO
portable and also allows for precise control of the amount of concentrate added
to water.  The second innovation is in
the positioning of the product.  MiO is
positioned as a liquid water enhancer that allows water to be customized to
individual taste at any time. 

Despite the current niche nature of liquid concentrates in
the US (US$27mn.  in retail sales in
2010-prior to MiO’s introduction), the category appears poised for rapid

This is evidenced by Coca-Cola introducing a competitor to
Kraft’s brand.  Coca-Cola recently
announced it was introducing Dasani Drops in October.  The major characteristics of Dasani Drops are
similar to MiO.  It is a liquid
concentrate in a portable squeeze bottle (Coca-Cola’s press release states
“perfect for those on the go”) and is sugar free.  The number of drops added to water can be
controlled so consumers can customize the flavour intensity.

The new competition most likely is good news for Kraft and
liquid concentrates.  Kraft appears to
have succeeded in finding an effective positioning for the category (otherwise
Coca-Cola would not be entering) and they have had one and a half years to
establish a brand identity for MiO.

Coca-Cola’s marketing and distribution muscle will raise the
category profile at a faster rate than Kraft could do alone.  This most likely will cause liquid
concentrates to grow at a faster rate than Kraft could accomplish.  While Kraft will lose share, sales for MiO
should be higher than if Coca-Cola did not enter. 

Kraft and Coca-Cola have identified a set of relevant
characteristics for success in liquid concentrates in the US (portable
container able to dispense sugar free concentrate one drop at a time).   Assuming the category expands rapidly, there
should be room for more than two competitors.

This may present an opportunity for European liquid
concentrate manufacturers to enter the US market.  These companies already have the technology
to make the product (although it may need to be made in a more concentrated format
to fit in a smaller container).  Kraft
and Coca-Cola have demonstrated how to position it to consumers.  Now is the time to enter, while consumer
buying habits are still developing.


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