Big Deals: Is the First Wave the Only One?

A beverage executive stopped by our office recently to knock around some ideas and steal free out of our cooler. He couldn’t have been more optimistic about the way the year is going at this, its approximate mid-point.

What had him so fired up? In a word, activity.

Big companies have opened their wallets to recognize innovation in the best way – financially. Smaller companies are starting to find their way up the funding and distribution ladders as decision makers at the higher levels notice that non-carbonated and functional products are continuing to attract new consumers. Independent distributors – some of whom are flush with buyout cash – are going to be looking for a new line to replace the loss of Vitaminwater. All that creates the anticipation of even more activity.

There’s a lot of jostling for position – new brands like FRS are trying to work as hybrids of established categories, water beverages like Function Drinks seem to be the 2.0 version of Vitaminwater, and teas and coffees continue to gain momentum. It’s been at least a week since I was forced to try the hot new flavor “pomegranate.” Once-odd ingredients are becoming mainstream – perhaps a bit too mainstream, as this issue has a New Products listing for an açai-flavored vodka.

Even more interesting, a lot of talent is disseminating to other companies – the inevitable departures that accompany brand purchases result in sales and marketing people moving on to help energize other products.

Yes, an infusion of cash seems to create an air of excitement around an industry. But it’s sometimes hard to tell, once the money starts flowing, whether you’re in a gathering wave or one that’s just peaked.

With Coke’s purchase of Glaceau, there have to be questions about whether there’s going to be room for a continued rush of functional waters, for example. There are still scads of new energy drinks being introduced, but at the same time, there has been a real consolidation of the leadership pack. There haven’t been exciting new CSDs in a long time, although Coke Zero continues to keep people talking. One has to wonder, now that Vitaminwater has a route to ubiquity, how many competing products consumers will want to try, no matter how innovative they might be.

Breakout hits in the new beverage world are hard to come by – for every Glaceau or Arizona or Gatorade, there are plenty of small products that might be just as tasty or functional but just don’t make it for a variety of reasons. There’s always a pack of beverages chasing consumers, but retailers need to be careful. They need to think about this as they face an onslaught of products that will be the “next Vitaminwater” just as they’re finishing sorting through the “next Red Bulls” of the world.

Now that Glaceau has become part of the establishment, the questions retailers have to ask are these: How many more major game changers are out there? Is this the next link in the chain, or the spike?