Innovation Blooms at Home

America is fertile ground for beverage innovation.

I mention this proudly in light of a recent conversation I had with a South American beverage industry analyst who made it clear that in many of the countries he loves, the economic structure is so poorly defined that food and beverage innovation is driven by only the largest companies.

Outside of major cities, he said, many countries have too few stable retailing opportunities to support small or midsize products – instead, large supermarkets and warehouse stores are stables for the largest brands. New products and ideas are generated only by a small group. Pools of capital aren’t readily available to allow good ideas to germinate.

We don’t think South America will remain fallow ground for long – the rush of domestic beverage companies to that continent for flavors and additives is ongoing, and the growth of infrastructure in many countries is inevitable. But here, the bonanza of new products and new levels of consumer awareness has created a highly favorable environment for new domestic products.

In America, we’re flush with small and medium-sized beverage companies – and these companies are supplying the juice for beverage innovation. The best indicator of this is the fact that the largest companies are no longer innovating from within. Instead, they are acquiring some companies and teaming up with others, using capital to purchase innovation rather than expect that it will be self-generating.

That’s an approach that has helped turn the beverage industry into a marketplace for ideas. There’s an argument that as large companies spend more time perfecting their financial status, positioning and distribution processes, they are no longer able to specialize in product innovation. It’s become both stated and implicit strategy at this point: after years of fumbling about, some of the largest domestic beverage companies are trying to innovate through acquisition.

Which is nice, if your ultimate strategy is to be acquired. But what’s even nicer is that with a stable set of retailing channels, medium and small companies are able to survive without that goal. With the right mix of marketing and funding, they can provide innovation to a dedicated base in a variety of venues. How far they go beyond that is the prerogative of the founder.

But if you want to create innovative beverages, the tools are available in America, and BevNET IBQ is here to help you find them.

To that end, we’ve got a mix of stories this month that figure strongly into the attributes of successful new beverages. A pair of case studies by rising beverage executives explain the key decisions that go into launching a new product line – and killing one off. Our cover story, by longtime beverage journalist Gerry Khermouch, provides a series of guidelines on how to take innovative products and imbue them with an aura that attracts consumers. Our sweetener guide offers a glimpse of that key taste element in current and future forms. And as always, we’ve got a number of stories on the folks who can help your products gain wider acceptance, both from distributors and financiers.

Remember, not every great new beverage gets picked up. A favorable environment doesn’t necessarily mean smooth sailing. But it does make starting the journey that much easier.