Blog Entries by Andrew Kaplan

Packaging of Tomorrow

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Category: General Blogs  |  Tags: packaging, Disney World, RFID tags

I found it fitting that Disney World, home of Tomorrowland, recently announced one of the more futuristic uses of radio frequency identification technology (perhaps better known by its acronym: RFID). For those of you not familiar with RFID, it’s a technology that uses small tags on items to beam signals back and forth to readers. The result is the ability to easily track products as they pass by the readers, like in the beverage warehouse, for instance.

The interesting Disney twist is that the RFID chip won’t be placed on any of the company’s products, but on people. That’s right, the park’s guests will be given what are called “MagicBands” containing RFID tags that will serve as a guest’s room key, theme park ticket, access to FastPass+ selections, PhotoPass card and optional payment account all rolled into one.

This innovative use of the technology reminded me of all the promises we’ve heard about RFID and other advanced technology over the years. Several years ago, the vision was that RFID tags would get to be so inexpensive that they could be placed on individual items, such as cans of soda. We’re not quite there yet, but as the Disney MagicBands bear out, we might be getting closer.

Just consider the possibilities. Individual packages of soda, beer or other beverages containing the tiny tags could one day be part of an advanced “smart home” system. Every time the consumer finishes drinking a bottle of Coke, for instance, disposing the empty package would trigger a reader that automatically orders them another one as part of their next home delivery from the local supermarket.

The possibilities of such technology are really endless. The only limitations so far have been the cost of the RFID tags, which until now have been too expensive for individual items.

RFID is just one technology that has the potential to revolutionize beverage packaging. Others are already in use, such as QR codes that enable consumers to scan the package label with their smart phones, linking to websites or videos with more information or special promotions.

David Turner, principal and founder, Turner Duckworth Design, recently emailed me his 2013 predictions for beverage packaging. He started by pointing out that beverage packaging really hasn’t changed very much in the past 100 years or so. So are we overdue for a major change? He believes so. “Not to the form of packaging, but to its role,” he said. “Packaging is the one part of a beverage brand’s marketing that’s guaranteed to reach the consumer. With the advent of image recognition technologies, the package can come to life through mobile devices as an interactive hub for information and entertainment.”

Now that sounds just about as innovative as Disney’s MagicBands. The beverage package’s role has remained unchanged for decades. All it needs are these emerging technologies to give it that extra layer of functionality.

So who knows what the future will hold. But if Turner is right, we may be entering a new era where the beverage package takes on even greater importance than it’s had until now. It truly will be the packaging of tomorrow.

Reaching New Heights

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Category: General Blogs  |  Tags: lifestyle brands, branding, energy, Red Bull

While I was researching and writing this month’s cover story on energy drinks, it occurred to me that there are few other consumer products that have been as creative, even ingenious, in their use of marketing.

Energy drinks didn’t get to be where they are today—one of the fastest growing, most vibrant beverage categories—just by fulfilling a need state, though that has certainly been a very important key to their success. After all, many consumers today, in all types of demographic groups, have come to rely on their daily energy drink for that extra bit of mental alertness and energy each day. To many of them, a cup of coffee is sort of their grandfather’s drink.

But a big part of the reason they feel that way is because of the category’s superb marketing. Energy drink companies have created excitement around their products that is unmatched by other beverages, and most other consumer products. Sure, other beverage companies like Coke and Pepsi are known as marketing powerhouses. There are few companies that can compete with them. But some of the smaller energy drink companies have taken marketing to a whole new stratosphere—literally.

For example, you must have been asleep under a rock this past October if you didn’t at least see some mention of the Red Bull Stratos project. Felix Baumgartner, sponsored by Red Bull, broke the world record for the highest and fastest jump in history—an incredible 24 miles. First, he rode in a space capsule attached to a 850,000 cubic meter helium balloon to a record-breaking altitude of 36,576 meters (120,000 feet). On his way down he broke the sound barrier at speeds near 1,110 km/h (If you haven’t seen the footage, it’s available on YouTube.) Red Bull financed the project and its logo was plainly visible for all to see on uniforms and the space capsule itself.

What a marketing coup for Red Bull! The company always has made this type of breathtaking, daredevil marketing a central part of its brand identity and that has been part of its genius—and its success. And now, thanks to Baumgartner’s jump, it is part of history as well.

Yes, even Coke and Pepsi can probably learn a thing or two about marketing from some of the energy drink companies. It’s one beverage category that continues to push new boundaries in CPG marketing.

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?