Niche marketers are clamoring to the beverage aisles in part because of a supply chain that supports their needs. They introduce beverages either in regional markets or to targeted national audiences.
These niche companies can’t afford the costs of producing a custom bottle or the expensive machinery required to fill and package it. They frequently rely on the know-how of contract packagers, as well as the co-packers’ supplier networks, to bring these specialized products to market efficiently.
It’s a matter of the right product in the right package—filled by the right contract packager—that works with smaller production volumes.
Such was the case for MD Drinks, Santa Monica, CA. Dr. Alex Hughes, a surgeon at UCLA Hospital, and Dayton Miller, a Harvard Business School graduate, founded the company. The two entrepreneurs develop “effective, science-based, all-natural” functional beverages under the Function brand.
“Nothing in the market had true functionality, and no beverages were taking advantage of deregulation from the 1990s, which made a lot of new intriguing ingredients available,” Hughes says.
In the spring of 2006, the company introduced one of those beverages to stores on the West Coast and in the Southwest. Hughes describes the product, marketed under the Urban Detox subbrand, as a remedy for hangovers.
“Hangovers are a specific need and lend themselves nicely to word-of-mouth marketing,” Hughes says. In other words, with such a product, the right package can be a powerful tactic for inducing sales.
Hughes and Miller created Urban Detox using proprietary ingredients developed through Wild Flavors (www.wildflavors.com), a flavor house in Cincinnati. The two partners believed they had the right product formulation. Next they needed the right bottle to support the message of a beverage that had broken new formulation ground with ingredients previously unused in beverages.
Hughes notes, “Because our drinks were cutting-edge, we also wanted the bottle to symbolize that.”
The value of the right expertise
The two partners who created MD Drinks needed the right bottle to support the message of a beverage that had broken new formulation ground with ingredients previously unused in beverages. In these situations, niche co-packers, with expertise in filling and packaging specific products, can help fledgling entrepreneurs get inventive products into distribution.
In these situations, niche co-packers with expertise in filling and packaging specific products can help fledgling entrepreneurs, and a little investigative work paid off when Hughes contacted H.A. Rider & Sons (www.hariderandsons.com) for direction. H.A. Rider, based in Watsonville, CA, was once a producer of fresh juice but has been operating exclusively as a contract packager for the past eight years. The company’s transformation now enables it to package a wider range of beverages.
H.A. Rider introduced Hughes and Miller to PowerFlex, a new line of panel-less, ribless, hot-fill PET bottles from Amcor PET Packaging (www.amcor.com). The two partners selected one of two stock bottles in the PowerFlex line, a 16.9-oz domed-shoulder bottle design with a 38 mm finish.
The other stock bottle in the PowerFlex line is a 16-oz longneck design. H.A. Rider was already successfully filling that bottle style to produce a bottled-water line for Trinity Springs.
“H.A. Rider was happy with its performance on the production line,” Hughes says, referring to the Trinity Springs project.
Tom Rider, co-owner of H.A. Rider, says his plant blends the ingredients for MD Drinks’ Urban Detox line, hot fills the bottles at 180 to 200 bottles/min, glues the adhesive labels on the bottles, applies 38 mm translucent caps from Alcoa (www.alcoa.com), packs the bottles in 24-pack trays, and then ships the trays to customers.
“MD Drinks sources all the components,” Rider says. “We put all the pieces together. We do all the little things. It has been a very smooth project.”
The bottle itself is a key to smooth performance on the production line and in warehousing and distribution. Historically, sidewall panels have been necessary in hot-filled beverage bottles to absorb the distortion that occurs as the liquid cools to room temperature. The PowerFlex bottle absorbs this internal “vacuum” through a proprietary base rather than through the sidewalls.
A specially designed diaphragm within the base draws upward as the liquid cools inside the bottle. Its geometric characteristics enable the inverted, cone-shaped diaphragm to deflect upward as the vacuum is created.
The technologies in the bottle base enable the sidewalls to be panel-less and ribless. Therefore, the sidewalls provide more design options for marketers, explains David Andison, Amcor’s vice president of business strategies.
“Bottles with panels create constraints that dramatically limit design options and, therefore, a brand owner’s ability to use the container to creatively market the product,” Andison says.
With a smooth label surface on the sidewall, the package gets a more desirable marketing “billboard.” However, the smooth surface also benefits co-packers.
H.A. Rider applies the adhesive labels on a Krones Canmatic labeler, and Tom Rider lists several benefits to the bottles’ panel-less sidewall construction. First, there’s no concern about mislabeling by missing the vertical bars when applying the labels. Second, the bottles have a smooth side for proper label adhesion.
The panel-less sidewalls eliminate what Rider describes as the “crinkly” label. This effect occurs often when labels are placed over the panels. “It’s easier to keep the label in registration, and it makes for a nicer looking package,” Rider says.
The PowerFlex bottle’s panel-less structure provides one additional benefit, during warehousing. The geometry of the straight-wall design gives the bottles stronger top-load characteristics than other PET bottles, Andison says. This straight wall has no points of stress concentration, which removes the potential of bottles bending during both stacking in the warehouse—good news for contract packagers, who may do warehousing operations. [CP]
Offer services that impact a fragmented market
Urban Detox is one in a line of functional beverages that MD Drinks is rolling out under the Function brand to retail stores, with the hope of national distribution.
The second and third beverages in the line are Brainiac and Youth Trip. Brainiac is a stimulant-free drink formulated to improve mental acuity and enhance memory. Youth Trip uses targeted antioxidant synergy to support strong connective tissue, bones, and youthful skin, according to MD Drinks literature.
The beverage market—especially in tea—has become very fragmented, with niche companies sprouting up to introduce products targeted to niche audiences. Generally, they focus solely on developing and marketing new products. They are seeking co-packers that not only produce shorter runs and smaller volumes, but also offer connections to suppliers providing the right materials and compelling package design in support of their product’s position within the category.