If sugar is the new tobacco …
… why are Bionade’s sales in decline? The lemonade for LOHAS (that’s consumers seeking a Lifestyle based On Health And Sustainability) once proved immensely popular. From its launch in 1995, when it was solely sold in health food shops, the brand grew to become the almost uncontested leader in its “better lemonades” segment. Having grown at a rate of almost 300 percent each year, Bionade sold over 200 million bottles (600,000 hl) in 2007, ranking fourth among Germany’s most popular lemonades – behind Fanta, Sprite and Sinalco. Since 2008 when turnover reached EUR 40 million, sales of the premium-priced lemonade have been in free fall: by 2010 it had dropped to about 230,000 hl, it was reported. Many wonder: what are the reasons for this decline?
The past success of Bionade showed that even lemonades aren’t all the same. Many consumers picked a Bionade over say a Sprite because they thought that drinking Bionade was ecologically sounder since it was produced from a fermented malt mash. Bionade may have been more expensive than any of Coca-Cola’s products but who cared since drinking it gave them a good conscience?
Bionade’s rise was certainly helped by its underdog image. Its inventor, a small family brewer in northern Bavaria, basked in the limelight as the little guy who had taken on the soft drink industry heavyweights.
In retrospect, many industry observers think that it was Bionade’s ill-timed price hike in 2007 that dented its positive eco-image. It received further cracks when in 2008 the consumer watchdog Foodwatch criticised the low content of “natural ingredients” in most so-called “bio” lemonades, including Bionade.
It was revealed that a bottle of Bionade contained almost 5 cubes of sugar. That revelation came a few months after a Düsseldorf court had prohibited Bionade from promoting itself as being rich in Calcium and Magnesium.
The third blow to Bionade’s image was administered when in 2009 Bionade’s owners sold a majority stake (valued at EUR 20 million) to Germany leading beer and beverage producer Radeberger Group, a subsidiary of Germany’s food company Oetker, famous for its custard powder and frozen pizzas.
Germany’s consumer research company GfK told media in March 2011 that they thought Bionade’s decline was due to Bionade losing out with consumers for exactly those three reasons.
We at BRAUWELT International don’t think that this was the case. Price hikes, even at a rate of 30 percent in one year, have never deterred consumers from purchasing a premium-priced product. Especially since price does not seem to enter into their purchasing decisions. That’s one of the lessons Bionade’s competitors took home from their own consumer research. When asked, consumers could not remember how much they had spent on a bottle.
Moreover, there has not been a perceptible shift from Bionade to other brands in the segment. Although there have been quite a number of me-too products, most of them are still tiny in volume and lack large-scale distribution. That even applies to Bionade’s major competitor, the Coca-Cola Company. They did not exactly cover themselves with glory when they launched their own Bionade look-alike “The Spirit of Georgia” in 2008. Try as hard as you may you will not easily find a bottle of “Georgia” anywhere in Germany.
Ultimately, if Bionade has gone under and with it the whole segment, who is to be held responsible?
BRAUWELT International thinks that Bionade never obtained.the critical mass or large-scale consumer loyalty required to weather the storms in the highly competitive soft drink market. Anybody who thought that Bionade could become another Red Bull was deluded.
While we think that Bionade’s price hike was ill-conceived, we blame the retailers for subsequently giving Bionade the thumbs down – not the consumers. Also it should not be forgotten that Bionade relied on other brewers in Germany to contract-produce and distribute it. As soon as Bionade ended up under the wings of Radeberger Group (for production and distribution), they did not think twice about dropping it from their distribution.
In our opinion, Bionade’s decline is due to it having lost major distribution venues. As soon as it lost visibility on the shelves, it lost its relevance too. Out of sight, out of mind.
Which is a shame. Bionade’s future may not be rosy but that does not mean that the market can do without a “better lemonade”. The public debate over the ills of sugar in soft drinks may have calmed down for now – yet it hasn’t gone away.
