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Target Identifies Emerging Brands, Begins Four-Wave Test

By Max Rothman

Add mega-retailer Target to the list of food stores that are making commitments to natural and entrepreneurial beverages. The company is joining Kroger, with its Taste of Tomorrow program, and Walmart, which recently took on Inko’s as part of its shifting business model.

Target, a Minneapolis-based mass retailer, has begun an enhanced water test that will eventually comprise four waves. The test features Sneaky Pete’s, Bai, Karma Wellness Water and ChiaVie in the first wave and Oatworks, Aloe Gloe, Fruit2O and Just Chill in the second wave, according to Just Chill CEO Max Baumann. The brands in the third and fourth waves have yet to be identified.

The waves will last for three months, beginning with the first wave from October to December. Of Target’s 1,856 stores, the test takes place in 56 stores scattered throughout the U.S., including locations in Los Angeles, San Diego, Denver, New York City and Boston, Baumann said.

Pat Bolden, a partner at brand incubator L.A. Libations, has maintained the dialogue with Target for ChiaVie, Aloe Gloe and Just Chill.

While the experiment has been dubbed the “enhanced water test,” the aforementioned brands indicate Target’s interest in various emerging categories with different features and benefits. For example, Sneaky Pete’s and Oatworks will test the viability of oat-based beverages in the channel. Bai‘s placement has put coffee fruit to the test. ChiaVie represents chia beverages and Aloe Gloe represents beverages made with aloe vera. Karma Wellness Water could reveal the marketability of functional water and proprietary cap technology. Fruit2O aims to follow the rapid success of Sparkling Ice, which has paved the way in the flavored, sparkling water space. Several years after the boom of energy drinks, Just Chill represents the opposite: relaxation beverages.

“[Target] might have seen an opportunity to be the first to take it on a bigger level,” Baumann said.

Kat Haddon, Bai’s business development manager, said that if the test goes well, it could lead to a national rollout for Bai in the first quarter of 2014. Baumann said that his brand’s threshold sits at $30 of revenue per store, per week. At Target stores, Just Chill will have a suggested retail price of $1.99. The company is still deciding on its promotional pricing, which could be three 12 oz. cans for $5, or two cans for $3.

Baumann said that he’s already visited Target stores and seen prominent placement for the beverages that are part of the test. The gang of four has its own section with a shelf strip that explains the characteristics and benefits of each beverage and their titles in big type. There’s also a large sign that reads “I’m new” in Target-red letters.

“There’s a pretty solid visibility in the stores that it’s in,” he said.

If the programs with Kroger and Target succeed, they could signify a gradual shift in the direction of the mass-retail channel and provide natural brands with a better ability to initiate conversations with buyers and receive key shelf placements.

“In terms of larger format stores outside the natural channel, Just Chill hasn’t received the interest that it has today,” Baumann said.

Source: Beverages