"If life hands you lemons…" Well, manufacturers didn't exactly make lemonade, but they certainly found plenty of uses for lemon flavor in the past year—and consumers responded.
The top 10 products introduced in the last year accounted for over $1 billion in total sales, and in what may be a surprise to some, beverages posted a strong showing, taking the top four spots and six of the top 10.

In developing their annual Pacesetters report, Information Resources Inc. (IRI) (Chicago) evaluated all new brand names or extensions. Once such products achieved 30% distribution, IRI began tracking their next 52 weeks of sales, which composed the products' year-one sales total. A total of 547 food and beverage brands made the cut in the last year.

Those with over $7.5 million in year-one sales are identified as the Pacesetters, those products setting the trends. This year saw 130 food and beverage brands pass this criterion. While IRI did not include Vanilla Coke among its Pacesetters (the product had been on the market for only 36 weeks), the product's strong showing made it the food and beverage industry's bestseller, despite the other products' 16-week head start.

As a further demonstration of the strength of this year's results, IRI found that total sales for the top 10 Pacesetters were 25% of the $5.0 billion total posted by all 130 of 2002's Pacesetters. The food and beverage Pacesetters were larger and more successful than in years past, posting higher percentages in the over-$20 million, over-$50 million and over-$100 million sales segments.

PepsiCo introduced Sierra Mist, a lemon-lime offering that would draw attention from 7Up, and added a cherry flavoring to the popular Mountain Dew. The pair serve as further evidence of the power of the tried-and-true when it comes to consumer acceptance.
The over-$100 million mark was at its most popular this year, as a record number of “century millionaire” products debuted. Although one had a brand-new name, all seven of these “century millionaires” demonstrated the power of the tried-and-true. Several were brand extensions, as Pepsi (Purchase, N.Y.) and Diet Coke (Atlanta) added lemon, Mountain Dew had a Code Red, and Coke ventured into vanilla. However, others went a different—if still familiar—route. Smirnoff Ice was Diageo's (Huntingwood, New South Wales, Australia) venture into the crowded market of flavored alcoholic beverages (FABs), and Pepsi bumped Cadbury-Schweppes' (Plano, Texas) 7Up from its distribution system in favor of its own take on lemon-lime, Sierra Mist. In the face of the risks confronting the launch of a completely new name unfamiliar to consumers, food and beverage manufacturers are freshening their top brand equities with line extensions.

The nine-to-one ratio of brand extensions to totally new brands continues the trend of the past five years. Nonetheless, on average, new consumer product goods (CPG) brands fared favorably well in sales in 2002. New CPG brands averaged $36.1 million in first-year sales, a fairly positive result considering line extensions tallied $35.5 million, on average.

Still, when pondering the marketing investment required of a completely new brand, companies cannot be blamed for going the safe route of line extensions. Also, increasing competition in the various food and beverage categories often demands a “freshening” approach to longtime brands. Extensions typically have shorter lead times and are quick to post strong results, and they bestow new benefits to loyal consumers.

Whereas past Pacesetters reports were dotted with more healthful offerings—including the top spot in several recent lists—only one such product impressed consumers this year. Yoplait Whips from General Mills (Minneapolis) is a low-fat offering combining yogurt's healthful benefits with the light mouthfeel and texture of mousse. The six flavors—Cherry Chiffon, Orange Créme, Key Lime Pie, Peaches 'n Crème, Raspberry Mousse and Strawberry Mist—proved quite popular. In fact, the demand for Yoplait Whips was such that the company had trouble keeping up. The results were obvious—$85.8 million in year-one sales and the top spot in its category. By year-end, Yoplait Whips accounted for 34% of the market. However, healthfulness was not the driving force in this year's top product introductions.

Beverages and convenience items dominated this year’s top 10. ConAgra attracted consumers in need of some time saving, to the tune of a combined $311 million in sales for its three top-selling introductions.
Among the new benefits most needed by consumers are dinner solutions, a trend reflected in several of this year's top 10. Appealing to time-starved individuals and families, Marie Callender's meal options—both Complete Dinners and One-Dish Classics—and Banquet's Homestyle Bakes all debuted from ConAgra (Omaha, Neb.) and accounted for a combined $311 million, each posting over $90 million in first-year sales. However, all may not be so rosy for the dinner solutions, as the category faces increasing competition from carryout dinner options. IRI considers these freshly prepared meals “a major strategic and innovative challenge” to the segment.

“We know that yogurt consumers like variety in their yogurt,” Doug Pritchard, marketing manager for Yoplait, told Dairy Foods magazine, a sister publication to Prepared Foods. “This was a way to provide a unique textural difference for these consumers that was somewhat indulgent.”

The Pepsi Challenge

The challenge facing Pepsi in the coming year may be fending off an increasingly new product-oriented Coca-Cola. Both cola giants went the lemon route, and Pepsi's Sierra Mist was another entry in 2002's lemon pop parade. Additionally, Pepsi added a berry flavor for Pepsi Blue, which tallied $30.8 million in its first 24 weeks. However, the coming year may be big for vanilla flavoring in colas.

Vanilla Coke was Coca-Cola's first new flavor extension of the Coca-Cola Classic brand in 16 years, and it followed a trend firmly set in the foodservice arena. Coca-Cola described the drink as reminiscent of drinks from 1950s soda fountains, offering the taste of Coca-Cola Classic with a hint of vanilla flavor.

Launched on the 116th anniversary of the Coca-Cola Company, the vanilla version of Coke derives its distinctive flavor from natural vanilla flavor extracted from vanilla beans. In addition to their anniversary, Coca-Cola Classic and Vanilla Coke also share some design elements.

The Vanilla Coke packaging has the brand name “Coke” in the Coca-Cola Spencerian script for the first time ever. Plus, the dynamic ribbon device—the “wave design,” as Coke terms it—reinforced the connection to the Coca-Cola brand.

The launch of the new product went on to become the biggest since the company's infamous introduction of New Coke in 1985. Vanilla Coke was this year's only $200 millionaire, and its $208 million 36-week total puts it on a pace for a $315 million first year. Following that success, the competition was bound to venture into vanilla, and PepsiCo has announced plans for its own vanilla-flavored Pepsi Cola.

In fact, Pepsi has a pair of debuts on the horizon that will mimic its chief competitor. In addition to Pepsi Vanilla, Pepsi also will rehab the packaging on its 12-pack cases to make them more “refrigerator friendly,” much like Coke's successful fridge pack containers. Pepsi North America's chief marketing officer, Dave Burwick, says the company is seeking to “spark excitement with big ideas and big activities.”

In launching its version of vanilla cola, Pepsi might do well to remember a few years back when Coke launched a product in direct competition with an already-established product. Coca-Cola's Surge was a soda designed to compete with Pepsi's Mountain Dew, one of the most powerful names in the beverage business.

Surge had a strong first year, logging 69 million cases in sales after it hit the market in 1997. Time, however, has not been kind to the product. Recent sales figures show that Surge's numbers had dwindled to 2.8 million cases.

Lemon may have been the flavor of the past year, but could vanilla be the flavor to watch in 2003? Vanilla Coke is on pace to eclipse $300 million in first-year sales, and Pepsi has announced its own take on vanilla.

Ice, Ice Baby

Indeed, Coke has thrown down the new product gauntlet for the coming year. A new version of Sprite is in test markets in Canada and Belgium. The lemon-lime fave is getting a citrus-y remix. Currently testing, Sprite Ice tries a minty route. Adding mint flavor to the beverage is a means “to provide an even deeper sense of refreshment. The crisp and cool attributes of mint made it a logical addition to Sprite,” says David Vivenes, group manager of Coca-Cola Ltd. The folks at Coke believe mint is “the flavor of the moment…popping up on food and drink menus everywhere.” Time will tell if the flavor has been added to the menus in consumers' homes.

While “Ice” may mean minty to Sprite, Diageo viewed “Ice” more as lemonade flavor in its Smirnoff Ice. Its Canadian counterpart contained vodka, but the U.S. version of Smirnoff Ice is malt-based; however, both incorporate lemon, apparently this year's signature flavor. While it may have been a late arrival to the FAB segment, Smirnoff Ice came on strong. It sold 300,000 cases in test and would ship 25 million cases following a strong $25 million ad campaign in 2001. The marketing campaign would increase in the product's second calendar year, and the $100 million would appear to have been well-spent, as 34 million cases of Smirnoff Ice were sold in 2002.

For its first 52 weeks, Smirnoff Ice would post $113.9 million in sales. Naturally, success of this nature warrants a follow-up, and Diageo will not disappoint. Smirnoff Triple Black, a less-sweet version of its sibling, debuted late in 2002.

Also enjoying a new flavor kick, Sprite ReMix remains clear and free of caffeine, but Coke added a tropical flavor to the lemon-lime beverage. The new version also incorporates strawberry and pineapple. Initially, it is available only in 20-oz. bottles, but the company plans to offer the beverage in 12-oz. cans, multi-packs and 1- and 2-liter bottles.

In launching its own lemon-lime, Pepsi attempted to usurp 7Up's position throughout much of the country, and the result was a strong $108.9 million first year. Pepsi notes that lemon-lime is a $6.5 billion flavor segment, and it captures close to 11% of all U.S. soft drink sales, placing it ahead of root beer, orange and ginger ale varieties combined.

Another PepsiCo success served to add flavor to an established brand. In the first Mountain Dew line extension since 1988's diet version, Code Red added a rush of cherry flavor to the industry stalwart. “Building on America's love affair with Mountain Dew, Code Red (served as) our answer to consumers' call for a flavor alternative within the Dew franchise,” states Dave Burwick, vice president of marketing, carbonated soft drink brands, for Pepsi-Cola North America, adding, “Dew drinkers played a direct role in developing Code Red.”

Longtime consumers also played a role in the development of lemon-enhanced versions of the princes of pop. The well-known foodservice practice of adding a slice of lemon to a soda selection prompted the development of Pepsi Twist and a Diet Coke offering with the same mindset.

Adding the twist of lemon for its unique flavor, Pepsi Twist actually targeted the brand's core 16- to 24-year-old demographic. However, Pepsi also noted that the regular and diet versions of Twist attracted new purchasers, especially lapsed cola drinkers. For its part, adding lemon to Diet Coke was a natural, considering Coke drew upon an idea initiated by its consumers.

“Many people tell us that they enjoy putting lemon in their diet Coke—it's a 'ritual' for them,” says Jan Hall, senior vice president, consumer marketing, Coca-Cola North America. “The idea behind diet Coke with Lemon is to provide consumers with a convenient way to enjoy that 'ritual.'”

Convenience was also a key to ConAgra's trifecta in this year's top 10. Two of their Marie Callender's line and the range of Banquet Homestyle Bakes settled firmly into consumer's shopping carts, reflecting the consumer demand for quick, easy, at-home meals. Time-starved consumers proved eager for the convenience of these items, whether frozen as in the Marie Callender's meals or shelf-stable like the Homestyle Bakes. Analysts believe this was, in part, due to the impact of September 11, 2001, and its emphasis of the importance of the family. Combined with the economic troubles and the ongoing war on terrorism, not to mention increasingly harried lifestyles, families are likely to continue the trend toward comfort foods prepared in a convenient manner. Manufacturers have to hope that consumers remain willing to put forth the effort to cook and do not opt instead for the supermarket deli.

Website Resources

www.infores.com/public/us/prodserv/default.htm  — Information Resources' U.S. site
www.PreparedFoods.com/archives/2002/2002_5/0502top10.htm — Prepared Foods' top successful new products
www.mountaindew.com/code_red/index.php — Mountain Dew Code Red site
www.pepsitwist.com  — Pepsi Twist 
www.yoplaitusa.com/products/Whips.asp — Yoplait Whips!
www.DairyFoods.com/articles/2002/1102/sf_outside_box.htm — 
Article discussing Yoplait Whips!, among other products