New recipe for success

With the guidance of a new chief executive officer, Concord-based Welch's tries to regain its status in the US beverage industry by lifting strategies from rivals - and by asking modern-day moms what they want to feed their families

CONCORD - These days, tasting good is not good enough at Welch's.

After cruising along for more than a century, the Concord cooperative known for its lip-smacking grape juice fell off a cliff in 2006 with its worst year ever, paying just $47 million to 1,200 growers across the country - almost 40 percent less than what the farmers earned three years earlier. Confronted with soaring commodity costs, a shrinking juice market, fierce competitors, and consumer health concerns, Welch's is finally shaking things up to survive.

Over the past year, with a new chief executive at the helm, Welch's has accelerated the introduction of new products, rolling out lower-calorie beverages, bags of dried fruit, and lickable ads promoting the great taste and nutritional benefits of the sweet purple liquid (twice the antioxidant power of orange juice). At the same time, the 139-year-old business has consolidated distribution plants, changed the formula of its juices and packaging to lower costs, and assembled a panel of moms to help figure out the future.

"Taste isn't enough anymore," said Welch's chief executive David J. Lukiewski. "We don't have the same relationship with Gen X moms as their moms who grew up with Welch's. Our philosophy was to stay to the core and we were a little lax in trying to come up with new products, with lighter beverages. Now there are so many options. We were at risk of losing our relevance."

To be sure, Welch's faces an uphill battle. The total fruit juice and juice drink market was valued at $14.7 billion in 2007, a 27 percent decline from 2002, according to a report published in February by Mintel, a Chicago market research firm. Beverage analysts say the low-carb craze had a lasting impact on fruit juice, morphing its reputation from a healthy drink for kids into a worrisome high-calorie beverage with a natural presence of high amounts of sugars.

Moreover, consumers in recent years have increasingly sought beverages that provide added health and functional benefits, such as vitamin waters, energy drinks, and organic options. Rival beverage companies, from Ocean Spray to PepsiCo to Cadbury Schweppes, caught on quicker to the trend, offering lower-calorie alternatives as Welch's stuck to its taste good philosophy. Between 2001 and 2007, Welch's slipped three notches to eighth place in terms of sales among all fruit juice companies, according to Mintel.

Now, Welch's is trying to fight back, stealing some strategies from local cranberry juice purveyor Ocean Spray, which has focused on health and nutrition to revive the brand. After struggling for years with an oversaturated cranberry market and facing a possible forced sale of the company, Ocean Spray capitalized on increased consumer knowledge about cranberries' health benefits.

The Lakeville cooperative has come back big with its "Straight from the Bog" marketing campaign and attention to antioxidants, offering numerous new products through health-focused advertising, including a new "Cranergy" energy drink aimed at moms and raising the profile on its sweetened dried cranberries, known as Craisins. The dried fruit category is one of the most profitable and fastest growing divisions for Ocean Spray, and Welch's finally caught on, launching five different flavors of dried fruit last fall.

"We've been working against the tide because this category is declining. Most people would have bet against us," said Ocean Spray chief executive Randy Papadellis, who worked at Welch's during the 1990s. "Welch's is where we were six years ago. It's not going to be an easy future."

Some analysts are skeptical of Welch's ability to differentiate its brand from juices crowding the shelves with promises of nutritional benefits.

"Ocean Spray has anchored itself as an immune [system] boosting brand. The message they give that cranberries are straight from the bog has definitely helped create a value added perception," said Garima Goel Lal, a senior analyst at Mintel. "Welch's focus on antioxidants could be advertising for any company. There's so many brands focusing on antioxidants. The connection is missing."

For its part, Welch's has invested heavily in researching the health benefits of Concord grapes, a slightly frustrating task, company officials concede, when red wine has already had success convincing consumers about grapes' good-for-you perks. Welch's, with about $650 million in sales last year, has redesigned labels and its website to prominently feature the high antioxidant properties of grape juice, including a section that shows how other fruits, such as pomegranates and oranges, stack up against the almighty grape. Antioxidants are a class of compounds that are thought to help prevent cancer and strokes.

Earlier this year, the grape juice giant spent more than $1 million for a lickable ad campaign in the Feb. 18 edition of People magazine, promoting the taste and nutritional value of Welch's grape juice. The full-page ad included a sealed pouch containing a thin grape juice strip that dissolved on your tongue, a splashy marketing effort intended to give a jolt to the struggling brand.

"Welch's was on the slower end of the curve in terms of offering more healthy options. But they've really stepped up," said Tammi Miller of Attleboro, an active member of Welch's "Moms Connection," which surveys mothers on new products, packaging, and other juice initiatives.

Miller, 40, said she grew up on Welch's grape juice and jellies but rarely buys them for her 3-year-old son, instead opting for organic juices and other low-sugar alternatives. She is a fan, however, of Welch's new Naturals line, a watered-down version of Welch's juices that has no high fructose corn syrup and only 100 calories per 10-ounce bottle, compared with 210 calories for the 100 percent grape juice.

"People are a little more savvy these days," Miller said. "They're looking for more benefits from what they're buying. Welch's is getting there, and there's a certain genuineness to what they're doing. It feels like they're looking out for the family, and not just the bottom line."

Jenn Abelson can be reached at abelson@globe.com.