Blog Entries by Jeff Cioletti

The Mother of Reinvention

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Category: General Blogs

Lately I’ve been doing a fair amount of speaking at industry events across the country on a range of topics, everything from cider to managing SKU proliferation in the warehouse. Each presentation has had its own unique challenges, but I have to admit, none have been more challenging that the one for the panel I moderated last month at The Beverage Forum. And the reason for that is the disparate nature of the four speakers (other than me) on the panel: Becky McAninch of Kraft, speaking specifically about the company’s MiO water enhancers; Paddy Spence, CEO of Zevia zero-calorie CSDs; Andy Thomas, CEO of Craft Brew Alliance (CBA) and Charles van Es of Heineken USA (who graced our April cover), addressing the company’s Strongbow brand.

So what was it exactly that binds this diverse lot together? That was my conundrum. And then it hit me in the form of one word: reinvention. It’s a concept that has driven some facet of each of the brands that will be showcased on the main Forum stage.

When Kraft launched MiO it was essentially reinventing the way consumers drink water. More specifically how they enhance their water. Value-added water has been on a bit of a downward trajectory over the past couple of years, according to Beverage Marketing Corporation (BMC, our partner on The Beverage Forum). Last year, BMC reports, value-added water dipped nearly 7 percent. The emergence of flavor drops, such as MiO was really rooted in the overarching customization trend. In this age of social media, Spotify and Pandora, consumers, especially the mammoth millennial demographic, are looking to have everything their way. And with products like MiO, they can determine just how much flavor and functionality their water has.

Zevia seized on a similar downward market trend—albeit one on a much grander scale than functional water. The CSD market has been declining for most of the past decade, as consumers are looking beyond just simple refreshment in their liquid refreshment products. Two terms that keep popping up are “natural” and “healthy” and those are words that often are associated with Zevia’s signature ingredient, stevia. Zevia, in essence, is a reinvention of the struggling soda category.

The whole craft beer phenomenon, one could argue, is a reinvention of the overall beer category and some of the core brands in the CBA portfolio, Widmer and Red Hook in particular, were among the pioneering players in the segment involved in that reinvention. However, companies like CBA are reinventing the specialty segment even further through their marketing strategy. They’re recognizing that there’s not really such thing as a “craft drinker” but sub-segments within the craft universe that need to be targeted with the utmost precision.

And a similar scenario is playing out in the surging cider market. As the category enjoys its current explosion, brand owners are realizing that there really isn’t a “cider drinker” per se.  It’s segmenting much like the overall beer market has: There are the premium domestics (think A-B’s new launch Johnny Appleseed and MillerCoors’ Smith & Forge), the crafts (such as this month’s Breakout Brand Virtue) and then the imports (Stella Artois Cidre, for instance). But Heineken USA has recognized that there’s segmentation even beyond imports into the upscale, lifestyle, “badge brand” space—a space that it hopes to define by the reinvention of its venerable, classic Strongbow trademark.

The general rule in today’s beverage market is that there are no rules. Those who try to adhere to “the way things have always been done” will be mere spectators as the world is reinvented around them.

Don't Let Quality Be Blinded By Quantity

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Category: General Blogs

If there’s one theme that sticks in my head from last month’s Craft Brewers Conference (CBC) & BrewExpo America in Denver, it’s quality versus quantity. Or, more specifically, how much does the latter help or hurt the former?
 
The quality issue has been a running theme at the past handful of CBCs and has been a core talking point in Brewers Association director Paul Gatza’s annual State of the Craft Brewing Industry address. And it kind of has to be, especially when you’re bringing quantity into the equation. By quantity, I mean, of course, the exploding number of new breweries getting into the craft business year after year. Just last year the number of new craft operations surged by about 15 percent to 2,768 at the end of 2013.  

It’s exciting but it’s also somewhat frightening and that sentiment’s certainly not lost on the folks at the Brewers Association. It’s a segment whose key players have survived and thrived largely because of an uncompromising commitment to quality. The pioneers got in the business when there was no bandwagon on which to jump or wave to ride.

But now, as everyone from financial community to amateur brewing hobbyists are hip to the accelerating growth of craft, there could be many getting into the business without getting their heads around what’s truly involved. I’ve spoken to more than a few people who’s said, “I’m a pretty good home brewer and my friends said I should start a brewery. So I did.” And more than a few others among the moneyed classes who’ve said, “I hear craft brewing’s hot, so I’m going to invest in it even though I don’t know much about it or really care all that much about beer.”

I can somewhat relate with the first group. It wouldn’t be immodest of me to say that the dozen years I’ve been writing about beer (not to mention every other beverage) that I know slightly more than the average consumer about it.

But I could never claim to know as much or more about beer than actual brewers or authors who’ve had several books published on the topic—many of whom I count among my friends. The friends not involved in beer in anyway, however, think I know “everything” about the beverage because I know a few more things about it than they do. So I’ve had them tell me on more than one occasion, “Hey, you should start a brewery.” Umm, no. There are two types of insight my experience has afforded me. No. 1: Running a brewery is hard work.  No. 2: The more I learn about brewing the more I learn how little I know about brewing.

So it scares me when folks say they’d committed their every penny to a business based on nothing more than the urgings of less-knowledgeable friends.
   
Don’t get me wrong, I’m thrilled that there’s so much interest in craft beer and so many new players. I fell in love with craft beer my first year at Beverage World and the rise of the segment over the past decade-plus has paralleled my own personal beer geek adventure.

This is personal for me. I don’t want this surge in quantity to be at the expense of quality. Because it’s quality that really makes craft...well, craft.

In the Weeds

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Category: General Blogs

I have to be honest; I really hadn’t given marijuana or any form of pot legalization much thought before this year. I’ve more or less been indifferent on the whole movement, as I don’t really have any skin in that game, personally or professionally. It wasn’t until I attended Harry Schuhmacher’s Beer Industry Summit at the end of January that it started occupying any space in my brain because it seemed that a disproportionate number of attendees were talking about it—the stuff had just become legal in that big beer state of Colorado only a few weeks before. Some pondered whether it would be a competitive threat to the beer business.

The short answer, in my take-it-with-a-grain-of-salt opinion: of course not.

This isn’t 1933 when suddenly a substance that the public had, for 14 years, been clamoring to make legal again (and only became illegal in the first place because savvy, manipulative advocacy groups that didn’t represent the majority of the U.S. population wanted it that way) was once again legit. The three-tier system was born. The beverage alcohol supply chain was defined for generations. And, technological advances, consolidation and SKU proliferation nothwithstanding, it’s still pretty much the same system it was 80 years ago.  

The logistics and infrastructure of pot are a lot more, well, foggy (pun intended). Also, for those avid beer drinkers who also partake of the wacky weed on the down-low, it’s hardly ever been an either/or proposition when it comes to bongs versus brews. And, if you’ve spent as much time hanging around brewers as I have, you’ll know many of them are pretty flexible when it comes to their philosophies on pot.

Then there’s the obvious fact that consumers enjoy beer, especially craft beer, for its flavor and refreshment, not primarily for its intoxicating effects. Few talk about the subtle notes of citrus and chocolate when toking on a joint.

That’s not to say there aren’t some dangers inherent in the legalization debate. Schuhmacher, of Beer Business Daily fame, pointed out that a major talking point among weed advocates is that it’s safer than alcohol. Rhetoric like that is something folks in the beverage alcohol business really don’t need in their lives. All that it does is provide fodder for neo-Prohibitionist organizations (Alcohol Justice comes to mind), allowing them to just sit back and watch the alcohol industry and marijuana advocates destroy each other. Sort of a passive “divide and conquer.”

In my view the beverage alcohol industry should really just stay out of the pot debate and focus on the things it does best—product innovation, logistical excellence and corporate citizenship. Let it play out organically. If it does become a legal reality nationwide, there’ll be room enough for everyone. There may even be cross-merchandising opportunities. After all, a cold, refreshing beer comes in handy when a munchies-stricken consumer needs something to help wash down that impulsively purchased tube of Pringles.

I’m joking, of course. Stay away from the pot, kids

Fernet-aissance

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Category: General Blogs  |  Tags: brewing

Ever get the feeling you’re being followed? That’s exactly the sense I’ve been getting recently from a certain herbal digestif that’s been popping up in my many travels for the past year. I’m talking about Fernet, the classic spirit whose flavor has been described as a cross between black licorice and minty-fresh mouthwash. It’s enjoying a renaissance of sorts, clues of which it seems to have planted, “Doctor Who”-style—at various points in space and time for me to see.

It started last year in Buenos Aires. Before I departed for South America, the spirit barely had been on my radar, little more than a curiosity that I’d see behind the bar at some taverns and Italian restaurants. But as I was researching local tipples in Argentina I discovered that it’s enormously popular there. Italian immigrants and their descendants comprise a significant portion of the Argentine population. They pretty much brought the spirit with them.

Several months later I was in San Francisco and there it was, just about everywhere I turned—not just in bars but in ads for Fernet Branca, the leading brand, strategically posted throughout the city (I never noticed the ads all the other times I’d been to San Francisco, so it supports my theory that some nefarious time-jumping force had retconned it into my personal chronology). It’s had quite the cult following there since pre-Prohibition (and during). I asked my cousin, Tom, a previous resident of the Fog City (now residing in Los Angeles), what the deal is with Fernet. “It’s a restaurant industry thing,” said Tom, an accomplished pastry chef. “Everyone in or around the restaurants in SF drinks it...Hang with any cook and you’ll wind up drinking some.”

And, last fall, when I was in Denver for the Great American Beer Festival, a friend told me I just had to try Odell Brewing Co.’s porter aged in, you guessed it, Fernet barrels. The best way I can describe that combination is to ask you to imagine eating a handful of Andes Candies and Good ‘N’ Plenties at the same time. Not quite, but that’s about as close as I can get. But good on the Fort Collins, Colo.-based brewery for being at the forefront of a spirit-ual renaissance.

And a true renaissance it is, as noted by the folks at Sensient in last month’s issue detailing the flavor company’s 2014 Taste to Trend report: “Long seen in a small number of cocktails, Sensient researchers report that Fernet has taken the bar scene by storm. Bar patrons appreciate the vintage feel of classic cocktails, but with a contemporary spin.”

In light of that, I suspect that a great many consumers will be experiencing that “am I being followed?” sensation this year—all the way to the bar.

Customizing the Future

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Category: General Blogs

I got a call from CNBC to offer a few thoughts on the news that Coke was taking a 10 percent stake in Green Mountain for a cool $1.25 billion. It'll certainly give SodaStream a run for its money and it'll be interesting to see how Pepsi responds in the coming days/weeks. (Another deal in the near future, perhaps? Pepsi is mum).

"Gamechanger" is CNBC's word, not mine. I think it's a bit strong. The deal doesn't necessarily change the game. It does, however, make it a bit more fun to watch.

Here's a link to the segment:

http://video.cnbc.com/gallery/?video=3000243774