Blog Entries

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?  

The Heart of the Business

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Category: General Blogs

I find it difficult to resist the intrigue surrounding the biggest companies in the beverage business. I’m drawn to the big stories, and what big companies do make for big stories. Sometimes what they do reverberates across the industry, like when the Big Three soda makers pledge to cut the calories consumed from their products, or when the biggest beer producer is rumored to make another huge M&A deal. And sure enough, both of these stories are covered in-depth in this issue.
But I’m also drawn to the stories of the individuals who come along with an idea and a lot of heart.  The beverage business is full of these stories and more come along every day. 
Fourteen years ago Seth Goldman worked out of a storefront in Baltimore, with a van outside painted with logos touting a bottled tea made from fair-trade ingredients. These were the days when Seth literally peddled door-to-door to get someone, anyone to try his tea.  Today Honest Tea is a featured business of  The Coco-Cola Company, but Seth still steers the business, still drives the van so to speak.
Jim Koch started brewing Samuel Adams in his kitchen at a time when the number of breweries in the U.S. were at an all-time low and way before there was a clamor for craft beers. Now Boston Beer is 30 years young, Sam Adams is distributed nationally and overseas, and Jim is the dean of craft brewers.
Here are some of more recent vintage, and who knows how these stories will play out:
Brothers Shawn and Aaron Grose are set to open Windmill Pointe Brewery in a Detroit neighborhood that was once the home of the Stroh Brewery Co. They want to produce good beer and be a part of a Detroit turnaround.  They’ve also come up with a novel way to, ah, “pedal” the venture: they intend to outfit the brewery with stationary bikes wired to produce the energy needed to brew the beer. “We’ve been talking about this [for] seven years, and there comes a time when you either keep on dreaming or bring that dream to reality,” Shawn told The Wall Street Journal.
Adam Gayner is a self-professed anti-sugar crusader, which is the basis for Fred Water, which he co-founded. Fred’s been marketing its water in a hip, flask-shaped bottle, but now is selling the bottles empty. Gayner says, “We get a lot of questions about our business model with this mission of promoting water, refilling and now Empties…We innovate around consumer desires and know that we’re creating affinity and tremendous brand value with Fred.”
BeatBox Beverages founders Brad Schultz, Aimy Steadman and Justin Fenchel recently appeared on the ABC show “Shark Tank” to pitch their line of bag-in-box, fruit flavored wines. Their pitch resulted in Mark Cuban investing $1 million for a third of the company. “We knew Mark was our guy all along because he’s a genius and he gets that we’re not just selling drinks, we’re selling fun,” Fenchel told Austin Business Journal. “Since then he’s been way more hands on than I ever would have dreamed of.”  

For Your Consideration...

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Category: General Blogs  |  Tags: beer, brewing, alcohol, spirits

We tend to use the term “Emotional roller coaster” so much in our every day lives, both personal and professional, that we’ve become numb and oblivious to just how much of a cliché it’s become. But there really is no better way to describe major global beverage alcohol news from the past month and a half or so. Reading the headlines of the past six weeks has been akin to watching all of the most hackneyed cinematic clichés play out on screen.

There’s the tragic romance in which the overtures of a much more well-to-do suitor (SABMiller) are ultimately rebuffed by the object of affection (Heineken). Of course, that unrequited pursuit may have been in defiance of a forced marriage (AB InBev).

Then there’s the tale of the rebellious, sardonic hipster whose tough, above-it-all exterior really hides a delicate vulnerability (Pabst). That all comes to the surface when the rebel falls for an exotic stranger from a faraway land (Russia).

And, especially this time of year, there has to be plenty of Oscar bait. And who doesn’t like a good, sweeping epic? It’s the story of a nation in conflict (Scotland) and the common hard-working folk (The Scotch whisky industry) just trying to get by as the world around them is nearly torn at the seams. I say ‘nearly,’ as at the 11th hour, that world was forged back together.

Okay, I should get serious for a bit, put on my movie critic’s hat, and tackle each of these in reverse order.

The Scotch Whisky Association sees last month’s “No” vote on Scottish independence as the dodging of quite a bullet. If Scotland had left the United Kingdom, uncertainty and instability in the Scotch market would prevail. Whisky exports already have been falling. If the industry suddenly faced new tariffs as it tried to ship to its biggest markets in the EU—which it would have to go through a potentially lengthy process of rejoining as its own entity—it wouldn’t bode well for the bottom line.

On the Pabst development, I was surprised (well, not really) at how many people expressed shock that the brand that’s enjoyed a renaissance at the hands of American hipsters would be (*GASP*) foreign-owned (and by investors in Mother Russia, no less). To that, I say, “Get over it.” Pabst has been playing ownership musical chairs for years. It’s essentially a trademark holding company, as it doesn’t operate its own breweries. Drinkers shouldn’t get too upset about something as abstract as a trademark. It’ll be business as usual.

As for the AB InBev-SABMiller dance and the SABMiller-Heineken dalliance: That’s a little more serious. If a merger between the two biggest brewers were to take place, it’d essentially create an entity that’s responsible for nearly a third of all beer volume in the world and closer to 40 percent of its revenue. That’s pretty intimidating. But I wouldn’t get too scared because there are far too many regulatory hurdles to jump before such a combination could become a reality. As for Heineken, my hat’s off to the family for, well, wanting to keep it in the family (at least for now). Though, it would’ve given SABMiller a solid and rapidly growing Mexican brand (Dos Equis) with which it can compete directly with the Modelo business that AB InBev now owns.

But I’ve had enough of these manipulative, heart-string-tugging films. I’m in the mood for a feel-good comeback story. And that’s exactly what’s happening in Kentucky. If there’s ever been any doubt that the bourbon renaissance is here to stay, just look at what Diageo’s been up to over the past couple of months. The company broke ground on its $115 million Bulleit Distilling Co. distillery and cut the ribbon on the visitors’ center at the rejuvenated historic Stitzel-Weller facility. When the world’s biggest spirits market gives the Bluegrass State and its distilling heritage that much of a vote of confidence, it makes me eager to get off that chaotic emotional roller coaster in favor of another cliché: raising a glass.

Consumers Make Lower-Calorie Choices

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Category: General Blogs

Last month, as this issue was going to press, Coca-Cola, PepsiCo and Dr Pepper Snapple Group, made the announcement that they were committed to cutting the number of calories in the drinks Americans consume by 20 percent by 2025. 

The announcement was staged for maximum effect in NY at the Clinton Global Initiative, the high-profile meeting staged each year by former President Bill Clinton, who quickly went on record with his tacit approval: “This is huge,” Clinton told the New York Times. “I’ve heard it could mean a couple of pounds of weight lost each year in some cases.”

It was the type of announcement that these consumer marketing companies do very well, and it comes at the time when the soda makers are fighting the soda tax coming to a vote next month in San Francisco and Berkeley, California. The proponents of the tax say they need to raise the sort of sums that can be used in consumer education to blunt the soda makers’ considerable promotional efforts. 

The plan seemed to take aim at that very point. In addition to the calorie-reduction goal, the soda companies pledged to expand the presence of low- and no-calorie drinks, as well as drinks sold in smaller containers; and to educate consumers and encourage them to reduce the calories they are drinking.

Put into action, the plan will change how soda and other drinks are merchandised in grocery stores, where and how they are presented in vending machines, and in coolers in stores and even at fountain dispensers in restaurants and movie theaters. Said Susan Neely of the American Beverage Association: “We’ll use the most critical levers we have at our disposal, and the focus really will be on transforming the beverage landscape over the next 10 years.”

Are the soda companies proactively trying to protect themselves from the tax in California or anywhere else? Undoubtedly they are. But here’s what they are also addressing: that consumers are already making their choice for lower-calorie and no-calorie beverages.

Sales of soda have been declining for more than a decade. Sales of bottle water, on the other hand, have soared. In fact, if those trends continue, bottled water sold by volume is expected to surpass sales of carbonated soft drinks within the next two years. 

We in the trade know how the landscape has changed. Entire categories like RTD teas have entered the mainstream and new lower-calorie drinks are entering the market every day. Smaller package sizes are already on the market and doing very well, and at a higher margin. These products are what consumers are looking for; they don’t need a tax to move them to healthier alternatives. 

That thought is no more evident than in the sales of refrigerated orange juice. Per capita consumption is down 45 percent from its 1998 peak, according to the USDA. How are juice marketers, with Coke and Pepsi the largest, responding: by offering lower-calorie versions of their Minute Maid and Tropicana brands.

Have Coke, Pepsi and DPSG addressed the ongoing obesity politics with this bold announcement? They have, but think of it as a wake-up call for the industry. With this announcement they have acknowledged what they’ve known for a long time: not that they’ve been the cause of the obesity epidemic, but that they must be more proactive in giving consumers what they want. 

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