MONSTER TO DEVOUR RED BULL IN US ENERGY DRINKS ?

Red Bull celebrates its 20th anniversary this year. It has been an outstanding example of brand development and market leadership, creating a new premium opportunity and generating astonishing growth. With 2006 sales of 2,600 million euros, its value could easily be over 10,000 million euros. It has achieved this despite the challenge of very little real competition except in a limited number of countries. Until now. A Californian brand called Monster could seize the retail crown in Red Bull's largest market this year. Monster has learned from Red Bull's successes such as edgy imagery and extreme sports sponsorship, but has also gone well beyond - most notably in double size cans at better value prices, but also with flavour and ingredient innovation. The 2006 US retail volume figures show Red Bull charging ahead by 27%, but down 7 share points to a 30% share, against Hansen's Monster and other brands roaring up by a fiery 88% and gaining 5 share points to a 27% share. Hansen looks set to boost its overall business sales to well over US $1,000 million this year and has every chance of overtaking Red Bull. Red Bull, meanwhile, has tightened its strategy, restructured its distribution and strengthened its team. So there will certainly be a locking of horns. But nothing ever stands still in consumer marketing. As Red Bull defends its US stronghold, Monster has declared plans to expand internationally. Stimulating times.

TAX ANOMALIES ENCOURAGE OBESITY

Over the weekend, I learned that the expression 'daylight robbery' stems from when a form of UK property wealth tax was introduced on window panes. It was curtains for the tax long ago, but many buildings still have bricked up windows or windows with large panes. In the same way, Value Added Tax in Europe needs adjusting to reflect new social concerns and product innovation. I'm thinking here of VAT on food and drink set against the continuing rise in obesity, especially amongst young people. It seems so simple to me. Most of us know we should take more exercise, but probably won't on a regular basis. We are more likely to moderate our diet, especially if given an incentive as well as the knowledge to do so. If the balance of our diet were a bit healthier, there would be less obesity. This could be assisted easily by adjusting VAT levels on healthier food and drink. Each country has its own anomalies, but in the UK two that stand out the most are :

• 17.5% VAT on pure fruit juice including smoothies
• 17.5% VAT on bottled water whether still or sparkling

Yet the general rate on most other foods is a giant 0%. Hmm. Governments want us to consume 5 portions of fruit and vegetables a day and less high calorie drinks, yet they also make it more difficult for people, especially those with smaller incomes and often less good health, to achieve this. Politicians are not known for their public acceptance of shame, but this state of affairs is truly shameful. If governments mean what they say about health, diet and obesity, then VAT on juice and water should be reduced to encourage rather than discourage consumption.

NO MORE BULL FROM DAIRY

The dairy industry has been pre-occupied with production issues for as long as anyone can remember. Today it is definitely turning the corner. Last week, I had the privilege of chairing the First Global Dairy Marketing Congress in Amsterdam, attended by over 200 delegates from more than 30 countries. The mood was upbeat. The energy was palpable. Why ? Because dairy innovations are now leading the way across many food and drink categories. Because their health benefits are backed by proper science. Because consumers are responding with real enthusiasm. And because the result is a better deal for farmers as well as dairies. What did I learn that was new ? This is always a good test for any conference. Much, of course, was reaffirmation. But perhaps I realised for the first time just how many drinking milks, desserts, spreads and cheeses now have added health benefits beyond their valuable natural ingredients. Three prevailing long term changes stand out in today's market:

• the scale of lower fat, lighter diet products,
• the rapid growth of probiotics for those who simply want their bodies to function more efficiently and
• the surge in a whole range of functional shot drinks with all kinds of merits from cholesterol reduction to cognitive enhancement.

One revelation was how far the US market must move to catch up with these trends elsewhere. Three new emerging themes also seem to be taking shape:

• the idea of satiety products, which make you feel more full and were the winners of an informal delegate vote as The Next Big Thing,
• the need for muscle repair drinks to redress the slow weakening of ageing muscles known as sarcopenia and
• the introduction of cosmeceutical products to improve skin suppleness.

Surprisingly little was said about the need for more exercise. Which must mean that the dairy industry is concentrating on what it can do to help, rather than trying to suggest solutions are up to others. The weather is set fair for dairy to enjoy new pastures.

BOTTLED WATER - SCOURGE OR SAVIOUR ?

Some people think the world would be better off without bottled water. I believe the opposite. They say bottled water is unnecessary and wasteful. Unnecessary because there is a direct substitute in tap water. Wasteful because of all the packaging and transport. There are also criticisms of comparative cost without real benefit. These are all good arguments, but they could be levelled at almost any element of consumer choice. My reasoning starts from the premise that all water is good. Drinking more water will do almost anyone more good. Whether from the tap or from a bottle. If we all drank more water, our minds would be clearer, our skin would be more supple, our organs would naturally flush out more toxins and our bodies would weigh less. If you had to invent the perfect product for the 21st century, it would have to be water. Water is natural, healthy, calorie free and abundant. Abundance, however, is not universal and nor is it without cost. Many regions of the world do not have adequate municipal supplies and bottled water is often part of the interim solution. In more developed countries, people still need hydration at work, at leisure or while travelling and bottled water provides that convenience. Waste is an issue for the bottled water industry and it needs to do more in responding to increasingly widespread concerns. The full facts, I suspect, will favour bottled water more than its producers might imagine. First, they waste very little water itself, less than any other beverage and way below other food or even non-food products. Secondly, they actually use only a tiny fraction of water resources in most areas. Third, natural mineral water is not treated at all and other waters are safeguarded by minimal purification. Tap water requires massive long term investment, all of it has to be treated, regardless of ultimate use, and leakages amount to many times the level of bottled water consumption. Bottled water does use a lot of packaging and transport, but here too its record is among the strongest in industry. Most bottled water is sold at very low prices and is distributed only locally. It uses lighter weight materials than most other beverages and packaging is increasingly returned or recycled. The earliest biopackaging initiatives started with bottled water. The number and volume of premium international brands is actually quite small. Is there any defence for them ? In my view, consumer choice is paramount within the bounds of social acceptability. And there are so many much more important concerns to address before this. If there is something wrong with buying a French bottled water outside France, that logic applies just as much to wine or coffee or bananas or toys or technology. Open and competitive free markets would fall apart if any one of these became a political football. My last point is about benefit. Why pay hundreds of times more for bottled water when you can't taste the difference and it is no healthier ? Well, some people can taste the difference and many bottled waters do contain a particular beneficial balance of minerals. You do at least know exactly where a natural mineral water has come from, that it is from a protected environment and that it has not been treated. Personally, I enjoy all water and do not have a very discerning palate. There are many times when I buy a bottled water out of convenience or preference, but I drink a lot from the tap too. Increasingly, I expect I will pay more attention to products which tell me more about their environment and ethical credentials. If anyone wishes to stop me, then please look at the alternatives first. Oh, and when there's a natural disaster, what is always one of the first priorities for rescue teams ? Yes, quite.