Wednesday, November 25, 2009

Zico: an America's Hottest Brands Case Study

Coconut water is a category that has seen major growth in the last year, with expected wholesale sales of $35 million this year, up from $20 million a year ago, according to Beverage Marketing Corp. And Zico, which was introduced by Mark Rampolla in 2004, is emerging as one of its leading brands. Sales have doubled each of the last few years, and Mr. Rampolla expects they'll continue to double for at least the next few years. It's no wonder then that the category has attracted the attention of major marketers such as Coca-Cola and PepsiCo. The former led a group of investors taking a less than 20% stake in Zico to the tune of $15 million this fall.

"Our objective in this business is pretty simple. We believe coconut water is a healthier, better product that needs to get out to the world. We want to see that scale globally," said Mr. Rampolla. "[The investment] means we get the resources we need to keep growing."

At this point, Coca-Cola has offered market and consumer insights, as well as research that is proving helpful, Mr. Rampolla said. There are no immediate plans to distribute through Coca-Cola's network, but Zico is getting advice on various channels and partners as it enters new markets, Mr. Rampolla said. Zico, which is made from green coconuts and positioned as a natural sports drink, can be found at Whole Foods, as well as gyms, yoga studios, college campuses and natural-food retailers in markets including New York, Los Angeles, Boston and Chicago. In the coming year there are plans to expand into new markets, including San Francisco, Colorado and Texas.

Still, Mr. Rampolla says the brand's strategy, which has worked exceedingly well so far, will remain intact as it expands. When Zico first enters a new market, it heads straight for hot-yoga studios, where it has had success in cultivating a crop of brand evangelists. It also does sampling and events, and recently it plastered ads on NYC pedicabs. The brand works with public relations firm Sandy Hillman Communications, Baltimore, and Suite 850, New York. Jesse Itzler, principal at Suite 850 and founder of Marquis Jet is an investor.

"It's a very guerilla marketing approach," Mr. Rampolla said. "We will start to take that up a notch, in select markets. But we still don't have traditional advertising today. That will come a few years down the road."

Pepto Bismol: an America's Hottest Brands Case Study

Pepto Bismol
Private label has been the clear winner in most over-the-counter drug categories, gaining 1.5 share points across all channels in the past year, more than in any other segment of package goods, according to Information Resources Inc.

One exception has been Procter & Gamble Co.'s 108-year-old brand Pepto-Bismol, which added 0.7 share points in its original stomach-remedy liquid category and 2.5 share points in stomach remedy tablets in the 52 weeks ended Sept. 6, according to IRI data. That comes despite a roughly 60% price premium for Pepto over private label.

Nathan Fox, brand manager on Pepto, believes a new ad campaign launched shortly after he took over the brand last year has been one key to the successful defense. The "Coverage" campaign has produced the best scores on copy tests since P&G acquired the brand 28 years ago, including the "Singing the Praises" Pepto campaign it replaced.

That campaign, which featured a dance to illustrate the five gastric distress conditions Pepto treats, certainly captured imaginations, particularly on schoolyards and YouTube, as people acted it out.

As endearing as the dance was, it was wearing thin. "'Singing the Praises' had been on the air for over five years, and over time our copy quality had been deteriorating a little bit," Mr. Fox said. "We saw it as a sign the campaign itself was wearing out."

The new "Coverage" campaign, which features a headset-wearing, pink-vested "Pepto Guy" fielding calls and offering humorous advice to gastro-intestinally challenged callers, does a better job of covering the growing range of products in the Pepto lineup, including a recently launched Insta-Cool product, Mr. Fox said.

"We wanted a more emotional approach," Mr. Fox said, "something that said using Pepto is almost like a good insurance policy."

The most recent ads focus squarely on Pepto as a cost-effective alternative because it works against a wide array of problems. Mr. Fox believes that message, along with steady product innovation, can keep the brand ahead of private labels.

Mr. Fox, 33, started his five-year career at P&G in the recently divested prescription-drug business, working on newer drugs such as Actonel and Enablex as well as upstream product development and acquisitions. The former engineer for Marathon Oil went back to get an M.B.A. at University of North Carolina because he was interested in marketing, and he saw P&G and the drug business as the places he most wanted to ply his new trade.