Blog Entries by Andrew Kaplan

Crafting a Positive Message

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

I’ve found myself spreading the “craft beer word” quite a bit recently. Not really on purpose. It’s just that when you become familiar with the craft beer movement, it can become hard not to evangelize a little about it. After all, there are few stories in the beverage world these days that are as exciting as the meteoric rise we are seeing with craft.  And, it’s hard to not educate others about that and the fact that a fundamental shift is currently taking place in how Americans consume beer.

That shift, as you might expect, is still underreported when it comes to the mainstream press. Whether it’s on TV or in the newspapers, beer consumption can still automatically rack up its share of negative press coverage. Instead, few may be aware of what an economic powerhouse the craft movement has been for the U.S. Few probably know that as of June this year the U.S. recorded its highest number of breweries (2,126) in 125 years (in 1890, it had 2,011).

As a result, some still tend to look at the glass half empty when they hear beer. For example, I’ve recently found myself trying to convince some of my neighbors here in the Queens, N.Y. town where I live that a soon-to-open gastropub will actually be a big plus for our downtown shopping area. The pub says it will offer a wide selection of craft beer, whiskey, scotch and delicious foods to go with them. Sounds like a classy joint to me. Our downtown could use just the type of consumers who buy craft beer. That demographic tends to be young and educated and has money to spend, something our main shopping drag, already with its share of empty storefronts, could only benefit from. Unfortunately, some of my neighbors have immediately jumped to an opposite conclusion. They only see drunken patrons stumbling out onto the sidewalk, disturbing the peace.

Nevertheless, I continue to do my share to talk up the craft movement wherever I can. This Thanksgiving, I realized I had some unopened craft beer samples lying around my apartment (yes, one of the perks of being an editor of Beverage World is that we get our share of samples!). Suddenly it occurred to me that several of the people coming to Thanksgiving this year I knew to be beer lovers. Maybe a tasting was in order? It would kill two birds with one stone. After all, my Thanksgivings have several times in recent years taken a turn towards the Dark Side thanks to some bitter political divides. What better way to gird against the possibility of any more drama than by a pleasant beer tasting?

Turns out, my instincts were right on target. The beer tasting was a huge hit and even served to educate those around the table about the different varieties of craft beer. I think it opened some of the beer lovers’ eyes to the wider world that craft affords us all. And I’m happy to report, this exercise in beer discovery was just the thing to unite an otherwise politically polarized group soon after the bitterness of the recent election. Yes, craft beer at the Kaplan Family Thanksgiving was a uniter, not a divider. You might want to give it a try at your celebratory gatherings this month. Happy Holidays!

Bringing Home the Beverage-Making Experience

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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.  

All Good Things?

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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?  

Slowing Down

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Category: General Blogs  |  Tags: craft beer

Have consumers finally had enough of the fast, crazy pace of life? Is society experiencing an overall slow down? And if so, what will this mean for the beverage business?

Case in point: I recently had to travel from New York City to Washington and decided to go by train instead of plane. And coincidentally, right before I left for my trip an article came out in i>The New York Times about how Amtrak’s Acela express train has swallowed up the business that airplane travel used to dominate in the heavily-trafficked corridor between New York and Washington. Amazingly, 75 percent of travelers between New York and Washington now take the train.

If you factor in the hassle of a cab to the airport, the security lines, checked luggage, etc. associated with plane travel today, the train has just become more appealing as an alternative. And yes, this is despite the fact that the train, even the Acela express, still will take you longer. If you factor in the entire trip of getting to the airport, maybe not a whole lot longer. But the point is consumers have made the choice of convenience, and yes, comfort and pleasure, over getting there faster.

And then there is another trend I’ve noticed here in New York. Suddenly, all around me, there seem to be stores popping up dedicated to tea. There are stores that just brew and sell tea. And there are stores dedicated to selling the various equipment and accessories to make your own tea at home. I was in one of the latter the other day and couldn’t believe the variety—and complexity—that goes along with the tea brewing experience.

The reason I bring up tea is because to me it is kind of like the antithesis of the coffee-drinking experience. Americans, especially, have used coffee to jump start their fast-paced day. And they then supplement that initial jolt with subsequent trips to the coffee pot whenever that tired feeling starts overtaking them.

So where does the sudden interest in tea fit in here? Tea is the polar opposite. It contains a lot less caffeine, so it isn’t that useful for an energy jolt. And the overall experience of drinking it just seems more relaxing. The experience of brewing the tea—when done right—can be just as enjoyable as drinking the beverage itself. Is this sudden trend of tea retailing another sign that Americans are ready to slow down just a tad?

And the slowing down trend has even reached the beer industry. You’ll find in the packaging section of this issue a profile I wrote about a new beer company, Churchkey, whose cans require an old-fashioned churchkey to open them. Forget about simply popping the tab. To drink this beer, you must undertake the ritual of making two holes in the top of the can first. The actor Adrian Grenier, who is one of Churchkey’s founders, told me it’s about “making the most of every moment” and not about “guzzling it down without regard.”

If Americans are indeed deciding to slow down just a bit, maybe it has something to do with the economic times we live in. Has the stubborn economic crisis of the past several years made all that rushing to and fro seem a little futile? Maybe.

Perhaps another relaxing trip on the Acela will allow me to ponder that question some more.  

The Local Advantage

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Category: General Blogs  |  Tags: beverage, local ingredients

Whoever thinks being an urban dwelling resident of New York City in 2012 means you don’t have access to food straight from the farm, hasn’t visited the Big Apple in a while. Today, NYC is literally overflowing with fresh fruit, vegetables, jams, breads, and even wines, juices and milk products, thanks to the expansion of the green market system throughout the city. GrowNYC, the organization that runs the green markets, says there are currently 54 in the city, with four new ones opening so far in 2012 in the boroughs of Brooklyn and Queens.

I’m a huge fan of the green markets, usually stopping by a couple of times each week to pick up a freshly made juice, pretzels made in nearby Philadelphia, and a variety of fruits and vegetables. And as a resident of the city, I can attest that there is a really big difference in the taste of a piece of freshly picked fruit from an upstate New York farm compared with one that’s been traversing a supply chain across the country—or even farther—for months.

But while many products rely on such global supply chains, the beverage business is different. Sure, beverage is increasingly a global business. Just look at the beer industry and you see how consolidated that’s become. But at the same time, it’s increasingly becoming a locally oriented business as well. In that same category, beer, the biggest growth has been among craft brewers. I dare you to find a craft brewer out there who doesn’t pride him or herself on being able to provide fresher beer to the local marketplace than the bigger brewers. It’s become a huge competitive advantage for them, appealing to an emerging generation of consumers who prefer local products. And these consumers do so not only for the improved taste and quality. They also are attracted to the greenness associated with shorter supply chains and oftentimes a reduction in the amount of packing material that has to be used.

In fact, the food and beverage industries are really lucky—they are able to take advantage of this local trend like few other industries can. Craft breweries are opening in cities all around the country at an amazing rate.

And this trend extends well beyond craft brewers. In July, Starbucks broke ground on a $172 million plant in Augusta, Ga. that will produce products currently manufactured abroad, including Starbucks VIA Ready Brew, the coffee base for Frappuccino blended beverages and many of Starbucks ready-to-drink beverages. The soluble plant will be Starbucks fifth manufacturing facility in the U.S., adding to the company’s existing network of four roasting plants in Kent, Wash., York, Pa., Sandy Run, S.C., and Carson Valley, Nev. The 180,000-square- foot plant will be capable of producing up to 4,000 metric tons per year. Peter Gibbons, head of Starbucks’ global supply operations told The Wall St. Journal:  “This will increase speed-to-market while reducing inventory costs and helping us ensure a more predictable supply.” As a company-owned plant, it will also allow for more innovation, Gibbons said.

So it seems that in the future, to borrow a phrase from the late Speaker of the House Tip O’Neill, it seems it won’t only be all politics that is local.