Blog Entries

Fighting Words

Category: General Blogs  |  Tags: beer, beverage, alcohol, festivals

It’s time to tone down the language a bit. No, I’m not suggesting everyone’s got to keep their daily discourse airplane-friendly by filtering out expletives. I’ve been known to use a colorful metaphor or three from time to time (just ask anyone who works with me). What I’m proposing is that we take the inter-category smack-talk down a notch.

Last month at the National Beer Wholesalers Association’s 75th annual convention in San Diego, the usual hand-wringing over wine and spirits grabbing more and more of beer’s alcohol market share took place, but it seems like the verbiage being used in such discussions has been amped up quite a bit (and I’ve gone to every one of these conventions in the past decade, so I’ve got a pretty good personal history to draw upon). 

It was one of many topics of conversation on the panel of beer executives including Bill Hackett of Crown Imports, Luiz Edmond of Anheuser-Busch, Tom Long of MillerCoors, Dolf van den Brink of Heineken USA and, from the craft realm, Sam Calagione of Dogfish Head. 

During the course of the panel, I heard terms like “threats” and “adversaries,” being used to describe the wine and spirits categories. Pledges to “kick” wine and spirits’ “rear”—and less euphemistic terms—were hurled around. 

I get it, it’s a very competitive market place and competition is what makes the beverage and any other market great. But what’s being lost in all of the posturing and machismo is that fact that consumers, by and large really don’t care. There are actually very few drinkers of alcohol beverages that only drink from one category. Most are cross drinkers. I myself am a cross drinker. I’ve made no secret of my partisanship toward craft beer, but I do enjoy drinking a good glass of Cabernet, a single malt Scotch or a straight bourbon pretty frequently. I’ve taken personal trips to beer-centric areas like Belgium and Asheville, N.C. But I’ve also spent multiple vacation days in Napa. And I recently figured out how to make a pretty good mint julep (if I do say so myself), which has found a spot on my growing list of go-to drinks. 

The cross-category lines have blurred in distribution as well. Beer distributors increasingly have taken on products beyond their core segment, including wine and spirits. Look at a major wine and spirits distributor like Wirtz, which does some pretty healthy beer volume. 

In my cover story on the craft distilling movement, I talk to Rick Steckler of Click Wholesale, which has made a name for itself distributing beer and wine. With the privatization of spirits sales in the state of Washington, the company saw an opportunity to use its existing distribution infrastructure to excel in the spirits segment as well. 

I hardly think companies like Click or Wirtz are pitting one segment against another with such hostile rhetoric.

The mission of the Beer Institute has been to build “Brand Beer”—as well it should be because that’s within the organization’s purview. However, as an editor of a magazine that serves all drinks categories and as a consumer who drinks a little bit of everything I’m becoming an advocate for something more radical: Brand Beverage.  

Bringing Home the Beverage-Making Experience

Category: General Blogs  |  Tags: beverage, soft drink, coffee

Several months ago, during a visit to the home of one of my brothers here in New York City, he and his wife proudly introduced me to their newest gadget: a SodaStream.

I’m sure most of you reading this are probably familiar with SodaStream, the home soda making device. It has been around for many years—mainly in Europe—and recently made some big inroads into the U.S. market. The company generated a lot of attention when it went public on the Nasdaq in 2010. Betweeen 2007 and 2011, according to a recent article in Forbes, its U.S. sales jumped from $4.4 million to $85 million. 

The device comes in something like seven versions, with the price ranging from $80 and $200.

When I first heard about Soda Stream, my initial reaction could best be described as interested on a personal level, and at the same time, putting on my Beverage World editor hat, a bit wary. What would this mean for the beverage companies I write about all the time? If consumers are able to bottle their own soft drinks at home, well, then, where does that leave the bottlers? Yes, SodaStream only has about 0.7 percent of the CSD market, according to the Forbes article. But there are plenty of examples in history of simple inventions that upended entire industries.

So, what happened during a more recent visit to my brother’s home in October was a bit surprising to me. There, in the corner of their kitchen counter continued to sit the SodaStream. Only this time, when the subject came up in conversation, gone was the unbridled enthusiasm they had regaled my ears with months before. Instead, clearly expressing shopper’s remorse, they both explained to me they had fallen out of love with their soda-making device. My curiosity piqued, I asked my sister-in-law, what happened?

“It just doesn’t make enough,” she told me.

Understanding what she was getting at, I asked: “You mean it’s too much of a hassle for what it does?” That was precisely it, she said.

There’s a reason, I guess, why there’s an entire industry devoted to bottling soft drinks in large factories. And that’s because for most consumers they prefer their soda to remain a pleasurable experience, not work. What my brother and his wife were telling me is that once the novelty of making their own soda at home wore off, the experience—from replacing the CO₂ cartridge, to buying the syrup refills, to making the soda itself and then chugging it down quickly before having to do it all over again—became just another at-home chore. And we have enough of those.

This is not to say that there isn’t a lasting place for some machines that bring home the beverage experience. Heck, Mr. Coffee is proof enough of that. And Starbucks just recently introduced the Verismo, a machine that aims to bring the Starbucks store experience to the home by allowing consumers to brew their own lattes and espressos. 

But time may prove that some drinks are well enough left up to the experts.  

Beverage Branding Fit for a Dragon

Category: General Blogs  |  Tags: beverage, marketing, lifestyle brands, innovation

I came across a program while in the U.K. called “Dragons’ Den,” which is similar to the U.S.’s “Shark Tank” that airs on ABC. The dragons, like the sharks, are big time moneymakers in their respective industries and are looking for their next big investment. On this episode of “Dragons’ Den,” two men, Padrig and Dewi, present their toffee-flavored vodka, Toffoc, to the panel and ask for a £75,000 investment to help expand their brand. 

Though Padrig and Dewi had the backing of Michelin-starred celebrity chef Gary Rhodes, they revealed to the dragons that while the Anglesey-based company made a profit in its first year, the following two were not profitable. Dragon Hilary Devey, an English television star responds, “Well, something is wrong there isn’t it.”

Another dragon, Peter Jones, founder of the U.K.’s first Enterprise Academy, asks why Rhodes’ name isn’t on the bottle and how much he’s invested in the brand. His advice: “Get your celebrity endorser to do more work for you.”

The duo came up with the idea to create a toffee-flavored vodka about eight years ago while skiing in the French Alps. The spirit, apparently, is a popular drink choice among skiers there. This particular brand is available in Wales and retails for about £15 for a 70cl bottle, according to its website. The vodka, along with apparel and other swag items, also is available for purchase online. It is triple-distilled U.K. grain vodka that is infused with toffee that results in a clear, golden-hued liquid.

The dragons got to sample the vodka and most seemed impressed with the flavor and quality, remarking that the smell and taste were good. However, none of the five dragons were interested in investing in the brand. In the drinks industry we’ve seen scenarios like this before. A new product that is struggling to get the word out, partners with a celebrity or a pop culture entity, and then what? Does celebrity affiliation automatically equal success? 

That depends on the celebrity and the brand. I recall going to a Sopranos wine tasting at the Trump World Tower in New York City a few years ago. It was for a range of Italian wines that were branded with “The Sopranos” TV series that aired on HBO. While there was a lot of hype surrounding the brand at the time produced by The Sopranos Wine Co./Vesuvio Import Co. the buzz seemed to fizzle out with the show. 

On the other hand, take brands like Ciroc with P Diddy or Jim Beam’s Red Stag and its affiliation with Kid Rock. Those are two good examples of celebrity done right. That’s because these celebrities do more than just attach their name to a new brand, they embody that brand, they live it and they represent what that brand stands for. In turn, consumers that relate to a particular lifestyle—luxury or rock ’n’ roll in this case—directly relate to that brand.

While Padrig and Dewi seemed reluctant to get Rhodes more involved in their brand, saying that it was “their toffee” and not Rhodes, Jones was on target with his advice. A successful celebrity endorsement needs more than just a face or a name printed on a sell sheet; it requires an authenticity that consumers won’t compromise on—and neither will the dragons.  

The Festive Season

Category: General Blogs  |  Tags: beer, beverage, alcohol, festivals

Since the Great American Beer Festival is going on right about now (and I am happily among the 50,000 strong at the annual Super Bowl of beer in Denver), I’ve been thinking a great deal about the festival experience. And I’m not the only one: If you tuned in last month to our webcast, “Craft Beer’s Climb: Tapping Into Profit,” you will have heard panelists Irene Firmat (Full Sail Brewing Co.) and Dale Katechis (Oskar Blues Brewing Co.) share their own festival memories, both good and bad. 

The consensus seems to be that when brands are determining which festivals to be a part of, steer clear of the ones organized by opportunistic promoters looking for nothing more than to cash in on one of the hottest trends in the beverage business. Stick with the ones that have a proven track record or, if the fest is new to the scene, are run by organizations, individuals or groups that are reputable within the craft beer world (or wine, spirits, etc., if it’s a festival for one of those sectors).

You also can get a good sense of the quality of a festival just by looking at the quality of the attendees. Are they, by and large, aficionados/curious consumers looking to sample new offerings and enhance their beer education in the process or are they fratboy binge drinkers looking to consume as much volume as is humanly possible in the space of a four-hour tasting session? If the answer is yes to the former and no to the latter than it’s a pretty safe bet to align your brands with such an event. 

The events that offer the best experiences for beer drinkers tend to be the ones that sell out quickly and are talked up incessantly across social media. 

Then there are those that, in many ways, transcend even the best of them. It’s one thing to participate in a festival and connect face-to-face with your brand’s biggest fans. It’s an entirely different scenario when your brand IS the festival. That’s what struck me about this year’s edition of Brewery Ommegang’s annual Belgium Comes to Cooperstown, presented this past August on the vast, 140-acre grounds of the Upstate New York farmhouse brewery. It was the first time I had been since 2007 (having been in 2005 and 2006 as well) and the event was bigger than ever. Tickets always sell out in minutes based on reputation alone, and this year was no exception. Craft beer lovers make the trek into the countryside, turning the brewery property into a sprawling tent city for the weekend as they camp on site following the afternoon tasting session. Imagine that the brand profile you’ve created is such that—for a weekend at least—you don’t have to reach out to where consumers are; they come to you. And it’s also a testament to the dynamic of the segment you’re in that you invite 50 or 60 other brewers—what most would call “competition”—to sample their wares alongside your own. There’s a good chance that many of those visiting products might be superior to your own, but that matters little because A.) as the cliché goes (and as I’ve heard repeatedly from craft brewing evangelists) a rising tide lifts all boats and B.) everyone there knows it’s your house and your party. 

Now that’s what I call branding.    

All Good Things?

Category: General Blogs

I’m writing this in the midst of “iPhone 5 fever.” Yes, the latest iteration of the iPhone has just hit stores, accompanied by the usual long lines and various examples of hoopla.

By the time you read this, it will probably be ancient history (technology news seems to have a short shelf life), but the big complaint about this latest iPhone has been its new maps feature. If you remember, Apple dropped Google maps to make room for its own new map, which was widely viewed as a major disaster. Misplaced landmarks and incorrect directions led to an uproar among consumers.

In fact, it even led one reporter, Joe Nocera of i>The New York Times, to write a column that gained quite a bit of attention entitled, “Has Apple Peaked?” In it, he found bigger meaning to the map fiasco, writing: “And maybe that’s all it is—a mistake, soon to be fixed. But it is just as likely to turn out to be the canary in the coal mine. Though Apple will remain a highly profitable company for years to come, I would be surprised if it ever gives us another product as transformative as the iPhone or the iPad.”

Wow. That’s a big prediction to make. And Nocera then goes on to ponder whether Apple has grown too huge to still take big risks on innovating, spending most of its time instead protecting its hugely profitable business model.

Remind you of anyone in the beverage business? As I read this I couldn’t help but think of the big guys, Coke and Pepsi. The biggest criticism directed toward them in recent years has been on the innovation front. Yes, they have introduced some incremental innovations every so often—a mid-calorie soda here, a more natural formulation there. But it seems when it comes to big new beverages, their idea in-boxes have been empty for a long time. Instead, most of their innovation has occurred around their brands—such as in packaging (the PlantBottle, see my story in this issue’s packaging section), or in vending (Coca-Cola Freestyle).

Inventing new drinks has mostly been left to the small start-ups who have less to lose, and everything to gain. Honest Tea was a perfect example. And what has been Coke and Pepsi’s solution? Buy them, as Coke did with Honest Tea.

This strategy seems to have been working out pretty well for quite some time now. But my question is, for how much longer will it continue to work? How much longer can they rely on some other, smaller company, as a replacement for their own innovation? 

The soft drink category is increasingly under attack as we have just seen in Mayor Bloomberg’s victory in New York. And Bloomberg’s message is being heard by a new generation who are foregoing sugary soft drinks for more natural, more healthful offerings. 

Will Coke and Pepsi be able to rise to this challenge and come up with the innovative new drinks these consumers are looking for? Or are they positioning themselves for a slow decline, or at best stagnation, by guarding their current positions and being afraid to take the big risks that real innovation necessitates? 

As the saying goes, all good things must come to an end. Can Coke and Pepsi, and Apple for that matter, delay that end for many more years to come?