Finding Your Niche

I’D LIKE TO HAVE a dollar for every time I hear someone, often a retailer or distributor, tell me that a new product is just a niche brand and isn’t significant enough to consider. I’ve spent 17 years in the industry hearing that refrain. In my earlier years, every launch had to be mainstream and have aspirations for national penetration, competing with the “big boys.” It was a simpler time with little or no innovation. Then along came the Snapples, the Arizonas, the Perriers, the Samuel Adamses, the Fijis – niche brands all, right? – and the shift had begun. Niche brands have redefined the industry, and the end product of the beverage revolution has been that there are very few mainstream beverages today.

Niches are now the center of the industry. Just as the above-named companies blazed new trails in the beverage landscape, other ones began to follow, run by folks who recognized the trend. I remember my numerous conversations with Darius Bikoff, the founder of vitaminwater, when I would try to temper his enthusiasm about the importance of his creation. I always said that I thought what he had done was great, but as a niche brand, it would only achieve limited success. I have never made that claim again.

The playing field is different from how it was back then. Now, the dynamics of distribution have made it harder, if not impossible, to break in without the potential to either expand on or create a major niche. Not too many distributors are looking for solid mainstream performers now.

It’s easy to see why they wouldn’t. Red Bull, followed by Monster, started as a niche brand for an exotic new category. Billions of dollars in sales, and dozens of competitors later, energy drinks are a mainstay of the industry. Honest Tea led a charge for organic drinks that has spawned dozens of companies that serve that segment, one that truly is for the benefit of consumers and for society in general. The variety is amazing.

Today, the functional benefit category is flush with brands that claim to soothe, calm, excite, give muscle and joint relief, and supplement your diet. If these benefit claims can be realized, then they too will be a niche that joins the main stream. I am excited about the new category of protein shakes, like Muscle Milk, that are moving into view. Aside from being great tasting, they have very clear, proven efficacy. They took a different route to market coming from the nutritional supplement side, but they’ve been right at home on beverage shelves. Another niche, another shelf, another door.

And it’s gotten to the point where the niches have started recombining with the mainstream. Even the venerable CSD category has many new entries with a natural, fortified, and enhanced twist. Many are tea and juice based. Their taste profiles are distinctly different, and very good.

Niche positioning and marketing are the keys to success in beverage retailing today. Everyone take notice. The next niche brand might be the next to enter the mainstream.