J2O launched as an on-trade-only juice drinks range in 1998 to cater for consumers who wanted to avoid alcohol.
Although launching in the off-trade a few years later, the brand's heartland still lies in pubs. With the juice drinks category declining 2% in the sector last year, J2O was hit hard.
The market leader by some distance, J2O suffered a 2% sales dip to £174m (down 6% in volume). Although this may not appear to be a dilemma at first, it reflects the trend that consumers are on the hunt for healthier options. The on-trade has been slow to react to this compared with other retail channels.
As a result, pubs have been forced to become more 'food-led' than 'wet-led' within this context, to offer healthier options. Consequently, J2O is now pitted against an unparalleled number of smaller independent brands.
Moreover, these often position themselves as healthier, with fewer or no additives. Pub chain Orchid, for example, recently unveiled plans to sell the Feel Good Drinks range, in 'pub-friendly' bottle sizes. It aims to pip J2O to the number-one juice drink spot.
Britvic has been following the trend closely and last week revealed a 'lighter' range for pubs, designed to complement food. Whether this is enough to stop the assault of smaller, quirky brands is debatable, but it does show Britvic acknowledges it has its work cut out.
Where next for J2O? We asked Erasmus Partners chief executive Graeme Dignan, who is also co-founder of Suso, and G2 UK chief executive Tim Hipperson, who specialises in shopper marketing.
GRAEME DIGNAN, chief executive, Erasmus Partners
Let's be honest, J2O was originally and cynically developed to be nothing more than fruit juice in a beer bottle - and, in my opinion, it's not particularly good fruit juice in a not particularly good-looking beer bottle.
Over the past decade or so, it has had very little competition in the on-trade channel due to several factors, and not for a lack of trying from other fruit-juice brands. First, shelf/display space on the back bar for most licensed premises is limited and premium. As such, it very much comes down to a commercial rather than a product or brand choice for the landlords. Second, J2O has been grown on the back of the distribution muscle of Britvic and an ongoing aggressive approach to promotion; in certain chains, it has always been on promotion.
Taking these factors into consideration, I believe it leaves a trapped consumer with limited choices, who often settles for 'good enough' when making a non-alcoholic or refreshment selection.
Recently, J2O has made attempts to improve formulations, packaging and advertising. However, as the on-trade channel remains on its knees and consumers are a little more savvy and informed, it is no surprise that sales of a fruit juice that is neither one thing nor the other have started to slow.
Remedy
- Stop pretending it's cool and zany, and down with the kids - it's not and never has been.
- Understand the world has changed and so have consumers - review the J2O formula to deliver yummy refreshment - or a premium juice. Be one thing only.
- Be honest and authentic, and continue to serve up a credible and trusted brand promise.
- Be brave and stand for something.
TIM HIPPERSON, chief executive, G2 UK
J2O may still be the leading juice drink in the on-trade, but its dwindling sales show that it is beginning to lag behind much smaller brands in terms of innovation.
Consumers are becoming more health-conscious, and nowadays no amount of marketing can form a smokescreen around an unhealthy ingredients label. Yet J2O is by no means 'healthy': it is laden with artificial ingredients, and a 275ml bottle can contain up to four teaspoons of added sugar.
Moreover, as the pub trade continues to decline, the brand has had to court a new audience. Many pubs are becoming increasingly food-led in their approach, but sickly drinks such as J2O are having a dwindling place in this space. Although launched for the on-trade, J2O has failed to adapt to the changing needs of its original market, instead becoming complacent and allowing the likes of Feel Good Drinks to encroach on its territory.
Smaller brands such as Bottlegreen may have a niche presence, but with more appealing ingredients it won't be long before they, too, are poaching the punters turned off by brands such as J2O.
Remedy
- Develop healthier variants - as market-leader, J2O has a loyal following it could tap into, although newcomers may need persuading that the drink tastes good. Britvic has developed a 'lighter' variant, but I worry this could dilute sales of the original drink by highlighting its less-healthy nature.
- Acquisition could be an option. Britvic already has a huge distribution base, and a small appealing brand could be taken on and given the backing to flourish (think Coca-Cola/Innocent).
- Reformulate J2O's brand positioning - perhaps try to convince consumers that it is a good accompaniment to food.