When Titans Battle for Balance

As much as we love to rag on them for being the slow, silly galoots that they are, another way of looking at some of the biggest companies in the beverage space is through the lens of the long-term business.

Ultimately, that’s the struggle that we’re seeing companies like Coke, Pepsi, AB-InBev, Campbell’s, and others undertake – once built around one potent brand, they are adjusting to changing times and changing tastes, including some consumers who disdain their core brands altogether. It’s not just a problem that the beverage companies face, and it’s not just related to lifestyle-type consumable brands like tobacco companies or fast food, either.

Think about companies like Yahoo, Microsoft, even GE or IBM, who have had to adjust their companies when their core brand offerings are no longer in vogue – they either become something else, something bigger, capitalizing on both their cash and their ability to think strategically, or else they become zombies, targets for companies that want to take what’s still worthwhile and discard the rest. Coke, Budweiser, even Evian and Perrier have had remarkably long lives as consumer brands, but there’s always adjustment.

This issue of BevNET Magazine features a look at two of those big companies, Coke and AB-InBev, as they enact strategies that attempt to make themselves more relevant even as their core brands play out what have been exceptionally long life spans. We also look at some well-established bottled water companies that are looking to burnish their brands.

Despite what they might say to keep shares up, it’s a sure thing that very few executives at either company thinks their futures will be dependent on growing the size of Coca-Cola or Bud Light. Rather, the companies are trying to figure out how to maximize those brands’ remaining years of high performance while slowly bringing them into proportion with their next stage of the business.

CocaColaAB

At Coke, as reporter Neil Martinez-Belkin writes this month, the world’s biggest brand is trying to figure out how it can be a company that can stick around for the long haul, considering its assortment, its route to market, its technological and media capabilities. It’s not just based around having a Coke within reach everywhere, but actually, via its relationship with Keurig, with its development of the Freestyle, having a Coke machine within reach in the home and on the road.

At the international conglomerate that is AB-InBev, as we see in a story from our Brewbound editor, Chris Furnari, the giant ship is currently commandeering craft vessels. The company has been on a remarkable spending spree for craft breweries in recent months, trying to secure credibility and presence by committing millions of dollars in a rollup direction that many had recommended but few had predicted. Are any of these brands going to be the flagship for Bud anytime soon? It’s not likely, but remember that Bud is itself the new flagship in a union that is with InBev less than a decade old. While proportional volume will long ensure that it’s not Goose Island/Elysian InBud anytime in the near future, it’s good to see the company elevating craft within the portfolio.

Still, these companies need to understand that they can’t just plug-and-play with their new brands, but they need to adjust their ways of thinking. It’s mind-boggling that, while it was spending millions on its promising new acquisitions, Bud was spending an equally large amount on a Super Bowl ad dissing the same craft movement. It’s hard to imagine someone cutting off their nose to spite their face in such an expensive way, and it’s enough to make you wonder if sometimes these companies’ divisions are truly aligned, if they think they are big enough to accommodate dissent, or if they have any idea what they are thinking, at all. Certainly, there have been times at Coke where even model entrepreneur Seth Goldman has run up against larger corporate goals, and the rebel values that folks like John Bello, Larry Trachtenbroit, and Steve Demos have brought to their own acquirers have been the same values that helped bring them to the exit door.

We wish all of these companies the best of luck as they try to foster change, internally and through acquisition. But when thinking of entrepreneurial businesses as their next stage of the empire, we suggest that it’s never a great idea to slap your offspring, especially if you plan on having them help care for you down the road.