September 11-15, 2017

Blog Entries in Category: General Blogs

Happiness in smaller sizes

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Category: General Blogs

Warren Buffett made headlines late last month with comments he made at the Berkshire Hathaway Inc. annual meeting in Omaha, Neb.

“Buffett Says Happiness From Coca-Cola Beats Broccoli Benefit,” the Bloomberg headline blared.

Buffett, the chairman and CEO of Berkshire Hathaway, has millions of reasons to derive happiness from Coca-Cola. Berkshire reportedly owns 400 million shares of Coke, about 9 percent of the company, making it the largest single shareholder. From a purely investment point of view, Coca-Cola is doing just fine, generally out-performing the overall stock market in recent quarters, providing Buffett even more context for his happiness.

But at the meeting, Buffet, 85, found himself defending Coca-Cola against criticism that sugary drinks are the cause of the nation’s obesity problems. And he did it in his usual simple, straightforward way. “I elect to get my 2,600 or 2,700 calories a day from things that make me feel good when I eat them. That is my sole test.  I like fudge a lot. Peanut brittle. I am a very, very, very happy guy. I have not seen evidence that convinces me that I’ll be more likely I reach 100 if I suddenly switched to water and broccoli.”

He added it seemed "spurious" to argue that calories from Coke alone were a significant factor in obesity levels, CNBC reported.

The Buffett stories came as we were putting this issue to bed and provided a touch point for the features we were preparing.  This issue features the Beverage Almanac: The State of the Beverage Market, our annual “beverage world by the numbers” report. Over the last dozen of years or so, this report has shown the relative decline of carbonated soft drinks as consumers have switched to less sugary alternatives like bottled water.

The cover feature, “Making soda cool again,” written by Managing Editor Andrew Kaplan, leads off the Almanac coverage.  It provides an analytical context for how marketers of carbonated soft drinks—starting with Coke and Pepsi—are reinventing themselves in the face of the headwinds they are experiencing.

In the feature, Andrew chronicles that marketers are in the midst of trying to reverse decades of their own tactics to pump up the volume by making CSDs ubiquitous and cheap. Now marketers are more focused on making them special and premium primarily to appeal to the millennial generation, who haven’t grown up with a “Coke and a Smile.”

The millennial generation also is not he “supersize me” generation, so we are more likely to see sodas in single-digit-ounce bottles and cans. As such marketers can focus more premiumization and profitability by selling the smaller sizes at higher per-ounce rates.

So while Buffett hoisted a 20-ounce soda to punctuate his comments last month, most of us will derive our happiness from smaller containers.

A fever for the flavor of a...tonic?

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Category: General Blogs  |  Tags: spirits

At some point when the world was busy talking about the global whiskey resurgence, gin managed to sneak in a renaissance of its own. The epicenter of the modern gin explosion is in the country that put the spirit on the map in the first place: the United Kingdom (one could argue that the credit belongs mostly to the Netherlands because gin is an evolution of the Dutch juniper-flavored spirit, jenever, but that British adaptation of that product is what we traditionally think of as “gin”). Small gin distilleries have sprouted up all over the U.K., in the U.K.; in 2015, a record-breaking 49 new distilleries opened in the country, The Guardian reported. Sales, on and off premise topped £900 million (US$1.3 billion) last year and there’s no better place to witness the gin frenzy in action than in the capital. Throughout most of the nineteenth and into the early twentieth century, gin production was booming throughout London.

But consumer tastes changed and by the 1950s, all but one distillery—Beefeater, today owned by Pernod Ricard—had left the city; some sought less cost-prohibitive real estate, others simply shuttered. Beefeater remained the only one until 2009 when Sipsmith Distillery official opened its doors. Now there are close to a dozen gin distilleries in London. There have been so many beneficiaries of the British gin boom—from the distilleries themselves to classic English pubs that have been able to reinvent themselves as major gin destinations. But it became clear to me in February when I attended Gin Festival London and embarked on a subsequent gin-centric pub crawl that the biggest winner was neither a gin brand nor a bar or off-premise retailer that sells it. I would argue that it’s tonic water and one brand in particular: Fever-Tree.

It’s funny because Fever-Tree, the trendy brand packaged in premium glass bottles, has been on my radar for some time. In the weeks prior to either the Fancy Food Show or the National Restaurant Association Show, I would, like clockwork, receive press releases showcasing the brand as part of a British imports pavilion. Fever-Tree boasts several tonic varieties, from an original, unflavored offering, to an elderflower tonic. And all mix remarkably well with gin.

Not only did Fever-Tree’s sponsorship of Gin Festival make its products and signage ubiquitous at events, but its presence in pubs with vast gin lists has made it something of a mark of quality. It’s listed by name on many bar menus; you’re not ordering a gin and tonic, you’re ordering a gin and Fever-Tree. The premium packaging also makes it more of an attractive component of a mixologist’s tool chest, as well as in one-s home bar—much better than the generic yellow-labeled PET bottles we’re all used to.

The craft cocktail movement has spurred plenty of innovation in the natural, artisanal mixer space (there certainly was no shortage of them at the most recent edition of the aforementioned Fancy Food Show). But sometimes, as in a brand like Fever-Tree, real innovation lies in tried-and-true simplicity.

Jeff Cioletti is editor at large of Beverage World and author of the book, The Year of Drinking Adventurously, now available at AmazonBarnes & Noble and independent book stores across the U.S. 

A most disruptive year

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Category: General Blogs  |  Tags: distributors

In this issue we present our second (now “annual”) ranking of the people who are shaking things up in the beverage world. A year ago we ranked our first Beverage Disruptors, a comprehensive list of the people driving the enormous degree of change that’s reshaping the beverage business.
Our first Disruptors feature received a good deal of acclaim; we were praised for its comprehensiveness of insight, and we were admonished a couple of times for individuals who did not appear on the list. In the ranking this year, our editors managed to identify practically an entire new roster of beverage disruptors (we have a handful of holdovers, those we believed continued to make notable innovations within the last year). 
This year’s list was no easier to produce than the inaugural list last year, but for different reasons. The challenge last year was to clearly define what we meant by “disruptor”; this year, the challenge was a way to limit the size of the list. Our editors identified so many individuals who fit the description of someone “changing the status quo” in the beverage business, I came to the realization that 2015 could very well be remembered as the most disruptive year in the beverage world in recent memory.
One would need to look no further than the disruptive change in the beer business in the past year. Last month I wrote that no single event would have as much impact on the beverage world in the coming months and years than the AB InBev deal to take over SABMiller, creating the largest beer company in the world. The effects of that deal alone will reverberate across not only the beer sector, but through the wholesale distribution tier, retailing and across other beverage categories as well.
Closely linked to the beer mega deal, is the fate of the craft beer business here in the U.S. and around the world. Craft beer has been cast in the role of causing disruptive change in the beer sector, but in the last year the craft beer sector itself was disrupted by a number of brewers deciding to sell their businesses to big brewers or to private equity firms.
The year started off with the news that Elysian Brewing was selling to AB InBev—an announcement that caught a lot of people by surprise. But that deal proved to be just the tip of the iceberg.
Many other craft brewers entered into deals: Lagunitas (sold a 50 percent stake to Heineken) and Ballast Point (sold for $1 billion) were among the most notable. The pace of buyouts picked up in the last month of 2015, as AB InBev purchased three craft breweries in the span of one week.
And disruptive change was not limited to the beer business. The liquid refreshment category continued to be reshaped as consumers continued to seek out alternatives to traditional sweetened carbonated beverages. The spirits business, too, saw notable innovation as craft distillers brought new ideas and products to market.
Yes, 2015 was a disruptive business year, with 2016 expected to be the same. And the Disruptors list goes on. Enjoy.  

2016 disruption forecast

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Category: General Blogs  |  Tags: disruptors

Since this is our annual Disruptors issue, I thought it would be useful to also take a look at what we can expect in 2016 in the way of beverage category disruption. 

There are a few overall trends that are behind most of the disruption the industry is currently experiencing. These include: a shift in many categories from mass-produced or mass-marketed beverages to hand-crafted, artisanal and local; a shift to beverages perceived to be more healthful and/or natural, and finally, a shift in beverage distribution. I’ll delve into each of these and explain why I think they will be the disruptions to watch in the coming year.

The shift from mass-produced, mass-marketed beverages to premium local, craft aka artisanal, is one of the most obvious trends the industry has been experiencing in recent years. The trend is far from over; 2016 will see a continued shift to craft beer and spirits and increasingly craft sodas. Authenticity is one of the big mega-trends behind this shift. Younger consumers today, armed with the ability to communicate with each other and fact-check over the internet, resent brands that they believe disrespect them by clouding the truth about things like ingredients or place of origin. 

Tied into this is the continuing concern about the healthfulness of products. As the story on energy drinks points out in this issue, and the ever-growing size of the trade show Expo West attests to, there is no end in sight to the demand for healthier beverages. Functionality is a part of this. I think 2016, for instance, will be the year that probiotic drinks finally turn the corner in the U.S. and start to really gain traction. Even some in the American medical community are warming to the efficacy of probiotics. You can expect in 2016 a thinning of the probiotic herd, however, as those offerings with real efficacy survive while the others that don’t deliver real benefit fall by the wayside. 

So expect continued rollouts of probiotic beverages in 2016. Also, disrupted by the health trend will  be older, bigger brands that aren’t able to adjust fast enough and alter their ingredients to be more natural. Also, plant-based beverages like almond milk should continue to benefit from the shift toward more healthful and natural.

The fact is, consumers are increasingly looking for simpler ingredient labels with words they easily understand and recognize. It’s no accident, for example, that one of the major disruptions occurring is the shift from sugary sodas to simpler offerings like naturally flavored carbonated waters. Expect that disruption to continue unabated in 2016.

And finally, there is distribution. Technology is changing the way consumers buy their beverages with companies like Amazon, Drizly, and others really beginning to disrupt traditional brick and mortar retailing. Still find delivery drones amusing? You may want to take them more seriously. Just think about the disruption when it takes just hours to get product delivered to the home by drone. 

Some other disruptions to keep an eye on in: marijuana-based drinks (just in their infancy), the continued shift to premium juices, and the individual packaging sizes in age-old categories like wine. There’s a lot of disruption to look forward to—or adjust to—in the coming year.  

The case for shochu, Japan's native spirit

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Category: General Blogs  |  Tags: spirits, cocktails, spirits pairing, shochu, Japan

I recall, a couple of years back, singing the praises of the Japanese spirit shochu and believing that it’s got so much potential here in the states, especially with a dominant consumer base that prides itself on trying new things (yep, it’s those millennials again). I believe that even more now that in just the past nine months I’ve taken two separate trips to Japan with the express purpose of touring shochu distilleries (most recently on a tour organized by the Japan Sake and Shochu Makers Association). And I’ve gotten a little more clarity on what sort of messaging importers and distributors of the spirit—which, at this juncture, are relatively few and far between—might be most effective in winning over a market that, for the most part, has never heard of it or, at best, confuses it with the Korean spirit, soju (the myriad reasons the two aren’t the same would be enough to fill a column or article of its own).

For one thing, younger legal drinking age consumers are supposed to like brands with authentic stories. You can’t get much more authentic than 100- or 200-year-old family businesses currently being run by nth generation descendants of the founders. And, for each generation including the current crop of sons and daughters taking the reins, it’s more than a career choice. It’s a sacred duty.

Then, there are those consumers for whom authenticity is more about ingredients than it is about folksy tales. And shochu’s got plenty of that as well, from the rice-based shochu of the Kumamoto Prefecture made from the pristine waters of the Kuma River to the sweet potato-based shochu produced from the starchy staple crop of the Kagoshima Prefecture. And the fact that the distinct flavors of these disparate bases assert themselves through the alcohol directly connects the consumer with varying terroirs of this far-away land.

If those concepts still prove abstract for consumers, there’s one very practical application for shochu brands that’s tangible for even the most pragmatic of drinkers: food. While the marketers of other spirits categories have been promoting culinary pairing for their products, there are very few that actually work with particular dishes (a notable exception, of course, is the match made in heaven that is bourbon and barbeque). More often than not, neat spirits or cocktails precede the first course or follow (or replace) dessert (again, there are exceptions, of course). With shochu, it’s distilled with food pairing in mind. After all, Japanese drinking occasions typically are sit-down affairs involving edibles, be they large mains or small plates. And shochu’s ideal culinary companions aren’t limited to Japanese cuisine. 

The gastronomic and authenticity angles are good preliminary approaches to making these spirits accessible to the masses. Importers still need to figure out how to apply meaningful branding that distinguishes one brand from another on the shelf. And they still need to win the hearts and minds of mixologists, chefs and other so-called taste-makers. But, to paraphrase Obi-Wan Kenobi (hey, there’s a new Star Wars movie opening as we speak!), shochu has taken its first steps into a larger world.       

Jeff Cioletti is editor at large of Beverage World and author of the book, The Year of Drinking Adventurously, now available at Amazon, Barnes & Noble and independent book stores across the U.S.