Blog Entries by Andrew Kaplan

Becoming a small fish

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Category: General Blogs

It’s an issue that a good many beverage companies have faced over the years, some with success, some with failure. And for those who haven’t yet faced it, somewhere deep down they probably have at least a passing wish that they will one day. The issue I am talking about is how to maintain your company’s culture when being swallowed up by a much larger company. What do you do when you find yourself suddenly a small fish in a much bigger pond?

The beverage world is notorious for putting companies in this position. Like a minor league ball player hoping to one day make it to the big time majors, many smaller beverage companies—especially in the non-alcohol space—hope to one day be bought out by a Coke or Pepsi. 

Our Disruptors ranking, which begins on page 27 of this issue, refers to several instances where this has happened. Mergers and acquisitions is a constant part of the beverage industry as many of the categories face maturity.

But how does a smaller company maintain its carefully crafted culture when suddenly being bought? One of the Disruptors on the list—in fact, our No. 1 Disruptor, Seth Goldman—has much experience in the matter. Honest Tea, which he cofounded with his partner Barry Nalebuff, was bought by Coca-Cola in March of 2011 after an initial 40% investment in 2008. At first, there were many concerns all around about what the joining would mean to Honest Tea. The company received its share of critical comments from consumers right off the bat, concerns that it had sold out, for instance.

While the relationship continues to be a work in program four years later—Honest Tea just this past year graduated from Coke’s Venturing and Emerging Brands (VEB) portfolio to its water, tea and coffee group, and as a result is now being included in plannograms with other products in Coke’s portfolio—Goldman did share with me some words of advice for other beverage entrepreneurs.

“First of all, I think it’s great that Coke has had the Venturing and Emerging Brands model,” Goldman says. “You often see companies that get bought where there is not really an infrastructure to support the brand or to help steward the brand.” By this he means VEB colleagues are able to deal with a lot of the bureaucracy of the vast organization that is Coke that otherwise he and his people would have to spend time focusing on.  “One good way to kill an entrepreneurial organization is to make them sit through meetings all day,” Goldman says with a laugh. 

The way Coke began as a minority investor in Honest Tea, and maintained that for the first three years, also wins high praise from Goldman. “It meant that we still ran the business with our own team in place and Coke was a supporter and followed the conversations and was an advisor, but they weren’t dictating how we did things,” he says. “Call it a dating period.” 

During this time, both organizations got to know each other closely and were able to scale the Honest Tea business as well. “So when it came time for Coke to exercise the option and to buy the company, we realized what we wanted the organization to look like was what it looked like. We didn’t try to change what was already working. This was a much more gradual exchange of DNA and I would say a healthier one, too.”  

Don’t tread on me

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Category: General Blogs  |  Tags: soft drink

The Second Big Battle against the soda industry ended on last month’s election day, November 4, with one win for the industry—and a big loss. First, the loss: In Berkeley, California, 75 percent of voters said yes to a new penny-an-ounce tax on sugary beverages. And then there was the win: just across the Bay, in San Francisco, a similar vote to enact a two-cents an ounce tax on sugary drinks lost because it could not garner the two-thirds of votes needed to pass (though it did get 55 percent of the vote).

Now I call this the “Second Big Battle” because it comes on the heels of failed efforts last year by former New York City Mayor Michael Bloomberg to pass a ban on sales of some sugary drinks larger than 16 ounces. 

The Berkeley loss was greeted by some health advocates as a major victory or even a turning point in their battle against the industry. One of them, Jim Krieger, even called it’s a “breakthrough moment.” I am not so sure he is right. I think advocates may have overestimated this victory and may be in for a surprise in the coming months about how much opposition they,  and not the soft drink industry, end up generating among the American public. 

I feel this way because Berkeley has always been a unique place culturally, or perhaps I should better say, counter-culturally. Walk its streets today and it’s easy to feel like you’ve stepped back in time to the 1960’s—yes, it still even has hippies. It’s not hard to see why they embraced a measure that is so anti- business. 

But much of the country is not like that. They dislike big government telling them what to do even more than they might a big corporation. And restrict their freedom of choice and you have crossed the line. Case in point was the outcry that erupted in Westminster, Mass. in November when the local Board of Health held a hearing over a proposal to ban the sale of tobacco products. A public hearing had to be shut down after just 20 minutes because the crowd was so infuriated by the possibility of the government restricting their personal choice—and we’re talking tobacco here. 

In New York City, the soda industry cloaked its campaign against the sugary drinks ban behind a group that played off those anti-government sentiments. But New Yorkers, ever a cynical bunch, didn’t quite go along with it. But I have a feeling the industry won’t even have to go to that length in other parts of the country—like Westminster, Mass.—to defeat any proposals by government getting between them and their choice of what to drink.  

There’s an App for That

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Category: General Blogs

I was having breakfast with some friends and the conversation drifted to how the emerging so-called “sharing economy” is changing our lives. We started discussing apps like Uber, which can locate a driver when you need a ride, which I had heard about.  My friends also filled me in on some I never even heard of, like TaskRabbit, which apparently enables you to get help with any kind of chore you have around the house. 
Being in my 40’s, I guess I am right on the cusp between those who are open to all these new sharing-economy options and those who would reject them outright. Let’s face it, I’ve lived most of my life hailing yellow cabs, staying at Holiday Inns or Hiltons, and yes, doing my own laundry. To suddenly have a wave of internet-enabled service providers come along offering entirely new ways of doing these things is a little disorienting. 
Anyway, back to my breakfast conversation and how it ties into beverages. One of my friends began insisting that home brewing was tied into the sharing economy as well. The idea seemed to fall on deaf ears in the crowd, including my own. On first thinking, I just couldn’t see how people brewing their own beer could possibly become a sharing economy service. 
But the idea has stuck with me ever since. Not so much about its particular viability, but about what the sharing economy might mean to the beverage industry in the future. After all, the Internet has been around for a while now and yet it appears that just in the past few years the sharing economy is really getting off the ground. Who’s to say what other industries—including, yes, beverage—might soon be impacted by it?
So far, the closest the beverage business seems to have come to this new economy is when it comes to crowdsourcing. Companies like MobCraft use input from users to decide the next beer they’ll brew. It’s still quite different from having thousands of home brewers making their own beer and then using an app to sell or even trade with each other. But is it too far-fetched to think that in the not-too-distant future that actually might happen? Sure, there would probably be some major quality issues, but it would be a lot of fun, no?
And then what would come next? Could household kitchens the world over suddenly be selling and/or trading fresh-squeezed juices? What about home-brewed coffee? 
If you want evidence of how technology can revolutionize a beverage category, then just consider how SodaStream managed to upend the soda business—for a time, anyway. And that was kind of old-school technology, if you think about it. Plug it into the internet and who knows what the future holds?  

Is Packaging Being Overlooked?

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Category: General Blogs  |  Tags: packaging

This column’s headline may sound a bit odd. After all, if any part of a beverage is hard to overlook, it’s got to be the package. But it’s not consumers who are overlooking packaging, apparently, it’s marketers, who aren’t making it a priority, and are really hurting their brands as a result. 

These are the findings of a new study on the impact of beverage packaging by the global marketing technology company Affinnova. 

At Beverage World, we have been thinking a lot about packaging lately, so this seemed like the perfect time to discuss the results of this study. Between this issue and the November issue, we present three major sections on packaging, In this issue you will find The Future of Packaging beginning on page 51. You’ll also find our in-depth preview of the Pack Expo show beginning on page 66. I’m also very excited about the winners of our 2014 Global Packaging Design Awards, which will be announced in the November issue. I’ve already seen the winners and I can assure you they are quite impressive indeed. 

But let’s get back to the Affinnova study. Titled “Packaging Design Trend Watch—The Beverage Aisle,” it used Affinnova’s Design Audit technology to analyze the packaging in the water enhancer, energy drink, flavored sparkling water, flavored enhanced water and sparkling fruit juice categories. Designs were measured on their ability to grab and hold consumer attention, strengthen consumer brand perceptions and help convert consumers to purchase.

 The study discovered that in the energy drink category, relatively newer brands—NOS and AMP—have struggled to gain share against Red Bull and Monster, despite the distribution and advertising muscle of their parent companies, Coca-Cola and Pepsi. Affinnova’s study suggests that inferior package designs by NOS and AMP are primarily to blame: they fail to attract consumers’ attention or drive purchase at shelf. However, in the sparkling water category, recent entrant Sparkling ICE used effective package design to overcome limited distribution and advertising support, beating out long-established category leaders such as Perrier. 

In short, package design is a powerful driver of a product’s success or failure. Says Waleed Al-Atraqchi, President and CEO of Affinnova, “Package design is the least expensive and most essential part of the marketing mix, helping to drive trial, repeat purchase and brand equity—yet it only gets a fraction of the attention that advertising or promotion receive. Brands that put energy into creating strong package designs gain a tremendous competitive advantage.” 

Among the study’s other findings: Exceptional package design helped Minute Maid overcome a late start in the liquid enhancer category; products like Starbucks Refreshers have gained ground by using package design to attract consumers who seek softer, less macho brand qualities, and Glaceau Vitaminwater trailed Pepsi’s Sobe Lifewater when it came to grabbing consumers’ attention and driving brand equity through package design.

The study was conducted in April 2014 and involved 5,000 U.S. consumers—and there’s a lot more information from it, which can all be accessed at