September 11-15, 2017

Blog Entries

Shape of things to come

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Category: General Blogs  |  Tags: beer, brewing, mergers

As this issue hits e-mailboxes and desks across the beverage world this month, we may already have had the first glimpse of a brave new world in the beverage business.
Anheuser-Busch InBev had until October 14 to make an offer for London-based SABMiller, according to British law following A-B InBev’s formal approach to SABMiller’s board about a merger last month. 
Turn the calendar back one year to September 2014: SABMiller had made acquisition overtures to Heineken NV, which turned down the advances outright. Analysts speculated that the move by SABMiller was designed to undermine a potential takeover by A-B InBev. Speculation that a mega merger of the world’s two largest brewers was, well, brewing was further fueled by reports that A-B InBev was speaking to banks to line up financing for a really big deal.
All of the chatter led us to produce a cover story in November last year [inset], “What’s the big deal? Mega M&A moves that could shock the industry.” And here we are a year later, a year in which the big brewers continued to see their core markets shrink, even to the point last month when MillerCoors announced that it was closing a U.S. brewery. All of this is leading some in the industry to believe that a merger of the world’s biggest brewers would happen, and perhaps even be necessary.
In fact, many observers are looking passed the deal to what the beverage landscape will look like post-merger. After all, most agree that for such a deal to be approved by the U.S. Justice Department (the two companies control 75 percent of the U.S. beer market), not to mention regulators in Europe and China, chunks would have to be unwound and sold off before a deal could get done.
In our cover piece last year, Editor at Large Jeff Cioletti wrote: “The consensus among industry experts has been that not only would SABMiller and Molson Coors unwind [their] joint venture [MillerCoors], SABMiller would have to sell most if not all of its U.S. business to avoid being a lightning rod for antitrust scrutiny. ”
That thought prevails a year later, with speculation over where those assets would land being a red-hot topic. Some believe that much of  MillerCoors could end up with Molson Coors, though Heineken and even Diageo could be willing buyers. There is global intrigue, too, about SABMiller’s reported 49 percent stake in the CR Snow joint venture that owns Snow, the best-selling beer in China.
Our cover story last year also speculated about the potential for a consolidated beer king—whatever the new entity would be called—to flirt with the likes of a Coca-Cola about a hook-up. Observers then and now think the idea has merit—at least from an M&A perspective. For one, Coke (and PepsiCo, too, for that matter) are experiencing the same sales issues the mass brewers are with respect to newer consumers not exactly embracing their core brands. On an operational level, such a merger of beer and soft drinks could present a number of opportunities to combine and reshape distribution channels.
A deal between A-B InBev and SABMiller could be the start of a massive reshaping of the beverage world. We’ll keep watching.  

Finding a happy medium

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Category: General Blogs

Moderation is a commonly used term in the alcoholic beverage industry, but maybe it should be applied to the beverage industry as a whole.

I think so much of the news coverage of the beverage industry today is bursting with extreme language. “This or that is bad for you, cut it out of your diet completely!” “This is great for you, drink nothing but this; replace everything you drink with it!”

Come on now. What ever happened to what we used to call the ‘Happy Medium’? Have a little of this, a little of that. It won’t kill you.

I was recently interviewing Matt McLean, the CEO and founder of Uncle Matt’s Organic juice, and the conversation quickly turned to all the negative publicity the juice category had been receiving lately from the press. Those of you who have been following the category already know that in the eyes of some people, a glass of orange juice is no different than any drink high in sugar. “Sugar = bad,” these folks say, and therefore anything that contains it should be avoided like the plague.

I think it’s time we moved passed such all-or-nothing declarations. The science just doesn’t support it, for one thing. In fact, current science is beginning to observe that medicine is not the exact science we’d all love it to be. The latest research shows that different people, depending on their ancestry (basically their genealogies) are much better at tolerating and digesting certain types of foods and beverages than others. And what’s more, they have even developed immunities that those from other gene pools have not. In other words, certain ingredients, yes, including sugar, may be perfectly harmless for whole swaths of the population.

In our conversation, McLean pointed out that his brand’s core product, orange juice, yes, has natural sugar, but it is also a “nutrient dense” beverage. “It is not a sugary soda so it breaks down in the body differently,” he told me. “And when eaten with a meal it helps the uptake of those nutrients even better.” 

It got me thinking that, like we recently got it wrong with fats (remember “all fats=bad”?), are we now doing the same thing with sugar? Is the media painting sugar with such a broad brush that we are depriving ourselves of all the nutrition, and pleasure, that comes from downing a cold, refreshing glass of orange juice?

I recently read a story in The NY Times about how sales of digital books have suddenly stalled, while print book sales have started rising again. What does this have to do with beverages, you might ask? Well, print had been written off—pardon the pun—a while ago. But not so fast!  It appears some people like to sometimes read a digital book, but they also sometimes like to read on paper. The same may go for any beverage category that may be challenged today—orange juice, macro beers, macro sodas, you name it. Don’t believe the negative hype. There’s probably a happy medium in there somewhere.  

Packaging Award Winners TBA

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Category: General Blogs

We are a little behind in announcing the winners of this year's Global Packaging Design Awards. Stay tuned! They will be announced in the coming weeks...


Thanks to everyone who entered this year....

The window into a product

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Category: General Blogs  |  Tags: packaging, labels

As we were putting this issue to bed late last month, news broke that a California judge had dismissed a suit claiming that Jim Beam falsely claimed on its label that the product was “handcrafted.”

The judge wrote: “A reasonable consumer wouldn’t interpret the word ‘handcrafted’ on a bourbon bottle to mean the product is literally ‘created by a hand process rather than by a machine.’”

We had been following this story and other related stories for months. In fact, two similar lawsuits against Maker’s Mark bourbon, another Beam Suntory brand, were dismissed this year. Those suits also focused on the bottle labeling, which also touted the bourbon as handmade.

Hearing of all of the stories—legal cases, really—surrounding beverage labeling prompted us to look into the issue. The result is this month’s cover story written by Heather Landi [page 55].

The issues are much greater and more complex than it just being about marketers making claims on their labels, as the story points out. They incorporate widely debated issues over ingredients and what and how ingredients are listed on a label that include federal legislation that is under consideration.

As Heather writes: “The legislation comes at a time when the issue of transparency in the food and beverage business is a hot topic as consumers are increasingly demanding that food and beverage brands come clean about what is and isn’t in the products, where the products were produced and how they were manufactured.”

Millennials are much more label-savvy than their predecessors. Fueled by the immediacy and omnipresence of social media, their perceived issues about a product’s authenticity or ingredients are shared and amplified way beyond what product marketers have experienced before.

This demand for more information about products has an emerging technology component, and one related to the product label as well.

“Next generation” product codes, similar to ubiquitous product barcodes, are in development that will allow products to carry information that consumers are seeking, such as ingredients, allergen information, where the product was made, and the like. 

GS1, the non-profit organization that assigns the unique numbers in barcodes, has developed a double-layered barcode it calls the “data bar,” NBC News has reported. The data bar can be scanned by the consumer using a smartphone app to access the information and provide links to additional information about the product.

The technology has been deployed by German retailer Metro, which has launched the PRO Trace smartphone app. With the technology in hand a consumer can see, as NBC News reported, that a filet of salmon on sale in Berlin on August 25 was caught at the Bremnes Seashore fish farm off the coast of Norway on August 17 and processed in Germany on August 21. “It’s about trust. Our customers challenge us to offer sustainable and safe products,” Lena vom Stein, a responsibility project manager at Metro, told NBC News.

As beverage marketers are increasingly challenged by balancing the demand for transparency and accuracy with successfully marketing their products’ points of differentiation, could technology solutions be far behind?  

The power of disruption

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Category: General Blogs  |  Tags: Califia, Coca-Cola, PET

With summer having just ended, so too ends one of the busier movie-going periods of the year for me personally.  You see, I’m a huge move fan and will go to see pretty much anything on the big screen—yes, for better or worse, even all those wild and crazy summer blockbusters. 
And while as a beverage industry journalist, I’m always touting to my friends and family that they should try this brand new drink or that one, when I enter that dark, air conditioned movie theater, a ritual involving an old classic soda takes over. It’s a pretty simple ritual, actually, one common to millions of movie-goers, and involves a bucket of salty popcorn, interrupted every few minutes by the reliably thirst-quenching joy of a sip of an ice cold Coke (Ok, I prefer Cherry Coke these days, so that’s an update on a classic, I suppose), positioned right by my hand in the arm rest older. 
It’s funny because for one reason or another, recently I found myself at the movies and decided to get just the popcorn, no Coke. And then I had the bizarre experience of my hand every so often reaching for that nonexistent Coke in that cup holder—where it usually would have been awaiting.  I must have searched for that nonexistent soda three or four times during the movie, only to have my hand grasp at thin air.  Talk about the power of ritual, and then about the power of disrupting that ritual!  I have been telling people for weeks now about how my hand kept drifting to that empty arm holder space in search of my Coke!
That experience left me appreciating the importance of ritual when it comes to beverages—and the power of disrupting ritual. My morning coffee is pretty much the same thing. Getting that coffee brewing—I scoop out my coffee as I’ve done for years, no K-cups please—is another beverage ritual pretty much only interrupted by when I am away from home. 
Packaging is another part of the beverage business often associated with ritual. After all, consumers spend a lot of their time interacting with a package. It’s not until it changes that many even notice how they take it for granted. But this same reliance on expectation, can also be skillfully used by a brand to get it noticed. A good recent example is Califia Farms’ almond milk in a PET carafe.  The company was recently named a “Top 10 Challenger Brand” by consultancy firm Seurat Group for disrupting the dairy case with its unique bottle.
This relatively new brand has brilliantly used a disruptive package to cut through the sameness of the almond milk category.  Its shape is so different, I thought it might not fit in my fridge or would even be too heavy to carry. I was surprised to find I was wrong in both regards. The container is more appealing than the typical gable top carton, it’s lighter than I expected and makes ordinary almond milk feel more like a premium experience. It’s one disruption that makes you want to keep coming back for more.