“…Sundia has reason for optimism. Market research firm Euromonitor found that in 2004, sales of traditional juice flavors like orange, apple, cranberry and pineapple all declined, while "other flavors" grew by 50 million liters. Watermelon juice, which enjoys immense popularity in other countries, particularly in Asia, falls squarely in the "other flavors" realm…”
Brad Oberwager and his team at San Francisco-based Sundia Corp. are starting a campaign to brand the fruit, much as Dole has branded pineapples and Chiquita owns bananas. The goal is not just to sell more fruit, but to promote and support a product: watermelon juice.
Fruits bearing Sundia stickers will appear in produce aisles nationwide in several weeks. The watermelon juice is already available in Northern California SavMart, Food Maxx and Mollie Stone's stores. Three more grocery chains will soon carry it.
The market could be ripe for a new kind of fruit juice. While the overall fruit beverage market has been mostly flat in the past five years, the single-serve segment has grown, and that's where Sundia falls, said Andrea Foote, editor-in-chief of Beverage World Magazine . Single-serve fresh packaged juices were a $325.5 million market in 2004, just a small part of the $11.6 billion U.S. juice market.
Sundia has reason for optimism. Market research firm Euromonitor found that in 2004, sales of traditional juice flavors like orange, apple, cranberry and pineapple all declined, while "other flavors" grew by 50 million liters. Watermelon juice, which enjoys immense popularity in other countries, particularly in Asia, falls squarely in the "other flavors" realm.
Oberwager defines his strategy to become "the premium watermelon experience" as two-part. First, Sundia will brand fresh watermelons in stores. Some 22 percent of the U.S. watermelon market will brand its fruit Sundia, including the No. 1 and No. 3 watermelon growers. Once the brand gains recognition, Sundia will follow with additional products that it can cross-promote.
It's not a novel concept; Pom Wonderful of Los Angeles has done it with pomegranate juice to tremendous success.
Three years ago, there was virtually no such thing as pomegranate juice on U.S. grocery shelves, but pomegranate growers were keen to develop new markets for their product. Since 2002, Pom Wonderful juice has filled high-end grocery shelves nationwide, and the privately held company now has estimated sales of more than $60 million.
"Pom Wonderful and Red Bull are both examples of developing a category around a product and becoming the standard bearer for that category," Foote said
That path might prove as profitable with watermelons.
"With every category of fruit other than banana, watermelon and strawberry, the juice outsells the fruit," Oberwager said. "Oranges have a $3.7 billion juice market and a $370 million fruit market."
Nevertheless, the obstacles are significant. "They not only have to establish a brand identity, but also the idea in the mind of consumers that watermelon is a juice product," Foote said. "People have a preconceived notion of what watermelon is, and it's not necessarily as a health product, but as a candy or kids' product."
Yet watermelon contains lycopene, also found in tomatoes and a darling of the health industry. Pom Wonderful similarly played up the health benefits of pomegranates in its marketing campaigns, to great effect.
But Sundia is not aiming for the super-premium market, as Pom did.
"We're not trying to compete with Odwalla ," Oberwager said. "Our goal? We have to be mass market. We're not going to be sold in tiny grocery stores for $3. Watermelon is a mass product, it's not a niche product." Sundia's juice retails at SavMart for $1.59.
Oberwager raised a $2.25 million friend and family round, and he said he is sufficiently capitalized for this first phase of growth. Subsequent product launches will likely require a more formal, venture funding round.
Forecasts call for profitability by the end of 2006.
Having already started and sold three companies, including More.com , which raised $88 million in the heady Internet days and was sold for an undisclosed amount to San Francisco's Health Central, Oberwager knows how to build a company.
Sundia has already assembled a seasoned executive team. Dan Hoskins, a former Odwalla executive, co-founded the company and does sales and distribution. James Kairos, another experienced juice guy, runs operations.
"We're looking to be the Sunkist of watermelon," Oberwager said. "We're looking to get involved in a lot of different products."
Sarah Duxbury covers retail for the San Francisco Business Times. |
