Category: General Blogs
Category: General Blogs
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.
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.
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 affinnova.com/beverageaisle.
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.