Beer Marketer's Insights
Anheuser-Busch portfolio "dominated the Super Bowl conversation," AB spokesperson said. "We are invigorated by the results we are seeing," spokesperson added, detailing other big numbers and talking points. Co "accounted for more than 40% of all advertisers' social conversation," according to AB, while "next closest Super Bowl advertiser "was 10%." Within "alcohol category, AB represented more than 93% of all social conversation," said spokesperson. AB got more than 21 bil PR impressions since Jan 1, "nearly double the results of all category competitors combined." And AB brand commercials have more than 71 mil views on YouTube, with next closest category competitor at 33 mil views. "As we reflect, we are thrilled to see that our brands connected with millions of fans on broadcast, on social media, via e-commerce and in post-game celebrations," concluded AB spokesperson.
AB may have given up its exclusivity on Super Bowl ads, but it still came out on top among beer/alcohol spots in USA Today's 35th annual Ad Meter Survey. After falling out of top-10 last yr, Bud Light danced its way to #6 spot with "Hold" ad featuring Miles Teller and his wife Keleigh Sperry. This was AB's best showing in 4 yrs in Ad Meter, which it last won back in 2015. (Recall, at 1 time, it won 10 yrs in a row.) Molson Coors' debut on big stage ranked #16 in survey for spot that managed to promote 3 brands in 30 seconds.
After the deluge of dozens of ads for Super Bowl, and in a new twist, at least 10 alcohol ads (including regional buys), what are some key takeaways? Well, the Super Bowl still matters a ton, as last night's thriller amply demonstrated for many cos. And plentiful online and cultural conversation followed after the fact, much of it quite favorable towards several alc bev ads.
Keeping to Beverage Business Insights’ new-year’s tradition, we reprise our annual resolutions for entrepreneurs lookin’ to navigate the shoals of an increasingly complex and perilous biz. These are inevitably subjective to some extent: for instance, the go-big-or-go-home “landgrab” strategy that had encountered increased skepticism in recent years was vindicated by the outsize buyout won by Bai Brands from Dr Pepper Snapple Group earlier this year, as well as the progress of other big-thinking brands like Body Armor and Core Water. As always, we credit the insights entirely to you, our readers, who've communicated your hard-won knowledge to us over staticky cellphone calls, via semi-scrutable txt msg and atop not a few barstools.
It’s better to be slightly starved of capital than over-endowed. This is worth repeating at a time that there’s oodles of capital out there, including from tech-oriented VCs who write checks not just in millions but tens of millions. Still, having not-quite-enough capital forces you to focus on key priorities and let distractions go. By contrast, too much capital almost inevitably fosters waste. Besides, once retailers, distributors and prospective new hires know you have the dough, their hands come out. So try to keep the round modest. Don't let the institutional guys talk you up by too many millions. Don’t necessarily go for the highest enterprise valuation you can land – that could come back to bite you if things don’t go entirely according to plan. And better to find your funding from people who can offer more than just a check to help you grow your biz.
Make your mistakes off-Broadway. There's much to be said for foregoing a national landgrab in favor of starting small, in a market or two, preferably including your backyard. By staying contained in a single region or channel, you can figure out what makes your brand tick, while staying out of the spotlight and not getting tarred as a failure while you work out the inevitable kinks. You'll burn through less capital and less credibility if you make your mistakes locally, not nationally. And capital providers and strategics will notice: by now, they’ve learned to focus as much on velocity growth within your chosen channels as on the overall top line.
Learn to say no. "Getting to Yes" may be the name of an evergreen negotiation handbook, but "getting to no" is a better ambition for bev entrepreneurs to harbor. Learn to say no to big distributors you won't be able to adequately support, and to retail chains where you may get lost on a bottom shelf and endlessly chiseled for pricing concessions. Tho audacious moves into the likes of Walmart or Costco seem to have worked out well for some intrepid bevcos, such as Vita Coco, the annals of troubled bevcos are filled with those who outkicked their coverage. That said, recognizing this pitfall, major general-market retailers have been making it easier to enter their stores at a more organic rate, in a highly encouraging development for innovative brands. It’s also worth bearing in mind that every retailer is intensely paranoid about some other rival – so if they’re really important to you, you might have to say no to the other guy, or at least offer a different product or package. For Whole Foods, for instance, that paranoia extends to HEB’s Central Market imprint in Texas and Trader Joe’s just about anywhere else. (Grown Up Soda founder Steve Hersh offers some more color on this theme in our lead article above.)
Don't be overawed by the big systems. The Coke, Pepsi, Dr Pepper Snapple and beer systems are finely tuned engines for moving high-volume, high-velocity products at affordable price points through the chains. That doesn't mean they're right for you. Big systems seem to work best for big brands, or at least those with a clear path to mainstream acceptance. For smaller, premium brands, their default reflex, at the least sign of resistance, is to hit the 10-for-$10 button (or worse). Even if you do partner with one, try to maintain flexibility over what distribution option you employ in a given market until you're further along. That said, DPS now seems fully committed to its so-called allied brands, and its rivals Coke and Pepsi are recognizing they need to do better in emerging segments, including refrigerated ones. As a corollary: don't be so dazzled by the resumes of big-company vets. Their credentials may be only remotely relevant to your own needs - unless your overarching strategic aim is to cook up those 10-for-$10 deals with large-format retailers.
It's better to underplay than overplay your nutritional claims. We're in an era of heightened regulatory scrutiny and class-action litigation and, given the excesses of the recent past, can't really claim it's undeserved. So you're better off underplaying your nutritional and functional claims than overplaying them - that can only increase the likelihood of unwanted attention from regulators and sleazy lawyers, and won't do as much as you think to impress jaundiced consumers. As a corollary, think hard during your inception phase about whether you want to offer an ingeniously engineered functional drink. An increasing number of consumers, particularly younger ones, respond more to drinks with a minimal ingredient list, none of them sounding like a chemical. For instance, cold-brewed coffee – just coffee and water in its simplest form – may already be taking a bite out of the growth of elaborately formulated energy drinks.
Think strategically about the strategics. If your main game plan is to launch your product, fake it for a few years and get taken out by Coke, Pepsi or DPS at a nice premium, then you shouldn't be in this biz. Figure you're going to be in the game for a while, and think of strategics as cos that offer real help in staying in the game. That might mean less easily defined partners, from overseas firms like Tata and Asahi to family funds like Verlinvest and Emil Capital to well-connected incubators like Coke-affiliated LA Libations, not just KO, PEP and Nestle. There’s an argument to be made that, soon enough, the beer systems will be upping their game in non-alc bevs, starting with Anheuser-Busch via its rollout with Starbucks of Teavana teas, its acquisition of Hiball and its venturing stakes in switchel and probiotics brands. Look at Vita Coco again: tied into DPS’ distribution system, everyone thought it was in a box regarding an exit, but conjured up a Red Bull billionaire in China as a substantial investor and prime partner to ignite a new round of growth in a promising region. Voss Water tapped into that same investor, and Celsius found its own Chinese billionaire to help fund its growth. There are more of those players out there.
Stop pounding on the DSD guys already. True, some DSD distributors are grasping, whining, endlessly finagling operatives. (Maybe we at BBI watched too much Seinfeld, but we find those personality traits endearing.) Maybe they really aren't right for your brand, at least at the earliest stage of development or in the channels you're targeting. Fine. It's worth keeping in mind, tho, that there haven't been any shelf-stable brands that have achieved megasuccess without going through the DSD network during their prime growth phase. So pick a limited # of DSD partners - maybe just one - make sure you're on the same page, and see if it can work for you. Like democracy or America's Got Talent, it's sloppy and occasionally unsightly, but nobody's found a better way. Or perhaps look at it this way: as frustrating as this system can be to work in, plenty of marketers in promising refrigerated segments like cold-pressed juice, cold-brewed coffee and kombucha wish they had a tier like that to draw upon and are hoping more of these DSD players venture into refrigerated distribution. Oh, and about this craft beer mania we’re all marveling at: the mania finally is subsiding, meaning beer wholesalers are likely to find themselves less dismissive of NAs as a leg to the stool.
Stand for something, from the start. We don't buy that old saw that certain categories - tea, coconut water, energy - are tapped out, with no room for new entrants. Nor does innovation have to mean employing some earth-shattering new ingredient that sounds like a by-product from an oil refinery. As existing brands move through their life cycle, there's room for reasonably straightforward brands to emerge, even without a lot of bells and whistles – often, as noted above, offering a fresher, cleaner take on the category. But that only works if your brand stands for something, right from the outset. Trying to paste on values or personality down the line is way harder, and less likely to be convincing to consumers. Having that “story” adds excitement and meaning to brands ranging from GT’s Kombucha to Califia Farms to Mamma Chia. It’s always better if the story is true.
If you haven’t yet, read Mission in a Bottle. That’s the graphic-novel-style treatment of the rise of Honest Tea, with a level of detail and frankness that we’d never encountered elsewhere – down to how many cents each label cost. Cofounders Seth Goldman and Barry Nalebuff offer an unvarnished primer on what it takes to build a bev biz, including frank discussions of their many missteps along the way. If you’re far enough along to regard yourself as an insider by now, you can also play the parlor game of identifying the faces (without names attached) that pop up in tough encounters portrayed in some panels. Way to use the novel format to innovative effect! Other salutary new year’s reads? Zico founder Mark Rampolla’s stirring High-Hanging Fruit: Build Something Great by Going Where No One Else Will offers a close-up of the human side of being a bev entrepreneur, while including its shares of bev-war hijinks. And you could do worse than reading former journalist Steve Hindy’s often-gripping account of his launching of Brooklyn Brewing, Beer School, back in the years before “Brooklyn” became a synonym for hip, artisanal and cutting-edge.
Methodically building out its Ariz base, Scottsdale-based BFit Brands has won a spot for its FitWhey energizing protein bevs in the 35 Sprouts Farmers Market stores in Grand Canyon State, starting in Mar. Phoenix-based chain will take on FitWhey's Grape, Berry and Orange Cream, via broadline distributor KeHe. Besides the 3 flavors being picked up by Sprouts, BFit also markets Lemonade flavor and new caffeine-free Fruit Punch . . . Eyeing Monster Beverage's prospects, Macquaries' Caroline Levy wrote that she believed its Mutant energy CSD was on track to win distribution at 2,800 Kroger stores and 90% of Walmart units (up from 50%) by year-end.
Anheuser-Busch InBev "used to buy craft breweries. Now it's buying information," read subhead in Dec 29 Wash Post profile of ABI's "disruptive growth" unit, Zx Ventures. Tho this profile paints interesting picture of ABI's aims to be omnipresent, point about M&A ain't true globally. ABI bought at least 4 craft brewers in 2017 outside US. In US, it bought NA player Hiball, maker of organic energy drinks and sparkling waters, and low-cal kombucha player Kombrewcha, along with craft brewer Wicked Weed.
Stock prices of major bevcos performed well for the most part in a year in which it was tough to keep up with the Dow, which grew 25% and had 9 straight months of increases, the "longest streak of monthly gains since 1959," per Wall St Journal. Coca-Cola, under its new ceo James Quincey, rebounded from 3.5% slip in 2016 and posted 10.7% gain last year. That's best annual growth for KO stock price since 14% gain in 2013. PepsiCo stock price scored solid 14.6% gain in 2017 following gains of 4.7% and 5.7% for past 2 years. Dr Pepper Snapple stock price closed year up 7% following 3% dip last year. Recall before drop in 2016, DPS stock price had grown 30% in '15 and 47% in '14 as it rode relatively protected segments of CSD biz and fast-growing noncarb allied brands.
What's the new year likely to bring? If 2017 is a guide - then, there is no guide, because 2017 was full of surprises, from the strategics' frenzy of top-dollar deal-making to signs that segments like cold-brewed coffee and kombucha that were seen as arcane not so long ago are starting to break out. So, in a spirit of humility, we reached out to some of our more observant, articulate contacts - all of them with feet planted firmly in the trade - for their best guess as to what trends will be percolating in 2018.
Kathryn O'Connor's 8-year run at Philadelphia-based La Colombe Coffee Roasters apparently started with her reaching out as a satisfied café customer to see if she might be of help to owners as they expanded. The 5-year vet of Free People fashion brand duly was tapped to work as marketing director in 2014, and moved thru vp and svp promotions in following years, adding ecomm to her range of duties. Eight years in, "we're just getting started!" she posted today, recalling that "La Colombe left an imprint on me from my first visit to the Rittenhouse cafe. I remember getting a nod from the barista and rosetta art poured on my latte. These were simple and kind morning gestures. The vibe was more like a lively bar than an assembly line." La Colombe, of course, has moved thru eventful past few years as its cofounder and guiding spirit Todd Carmichael moved on and co inked - and then unwound - DSD distribution alliance for its RTDs with beer giant Molson Coors. Since that partnership rup
After saying acquired Leilo kava bev would be key prong of its renewed push into US, Fiji Kava Ltd said it won't be proceeding with acquisition after all, but rather will proceed on its own. "While we have worked closely with Leilo management to find a structure that will enable the transaction to proceed as an all stock and debt free merger, at this point in time we could not achieve consensus between Leilo's shareholders and noteholders on terms that the Fiji Kava Ltd Board could recommend to our shareholders," said Anthony Noble, ceo of publicly traded co. Announcement came today as exclusive negotiation period with Leilo ceased. So it will go ahead with prior plan of reentering US market with its own brands, including a return of Taki Mai brand that led unsuccessful earlier push in the form of shot line that's slated to enter 700+ stores in Vitamin Shoppe chain by mid-year. Also planned are sparkling and still RTDs and juice-based items, once co succeeds in commissioning a copacking partner in Fiji . . . Nirvana Water Sciences finally has gotten to finish line with plan to acquire Alder Creek Beverages LLC, a bottled water producer in upstate NY whose liquid underpins Nirvana's functional waters infused with HMB and other fortifiers. Deal includes 1,700 acres of undeveloped land in Boonville, NY, situated between Adirondack Mtns foothills and Tug Hill Plateau and including 5 state-certified springs and 20+ undeveloped springs feeding a bottling plant. "This transaction provides us with an almost limitless supply of ultra-pure spring water, an experienced production team, and a fully operational, state-of-the-art water bottling facility that creates the opportunity to develop Nirvana Water Sciences into an industry leader in the multi-billion-dollar functional water category," recently enlisted ceo David Vanderveen said of "long-anticipated" development. Sellers were Wade Abraham, now coo, and his childhood friend Paul Rayhill, now evp sales. Co plans to launch 8 more HMB-infused muscle wellness items this qtr. Recall that co has recruited Vanderveen to orchestrate pivot from earlier plan that had cadre of Voss Water vets building out DSD network (BBI, Nov 22).

