BevNET Live Report

From luring investors to locking down trademarks, BevNET Live Summer 2011 offered a full look at the state of theentrepreneurial beverage business. Held on June 6 and 7 at the Sheraton Tower Hotel in Times Square, New York, the event was the culmination of a six-month planning process designed to provide attendees with up-to-the-minute advice on the way innovative beverage companies can find growth in the current economy.

But the instruction was also accompanied by high drama, as a slate of six entrepreneurs competed in the first-ever New Beverage Challenge, with one, Ojo fortified eye care nectar, taking home cash, merchandise, and advertising credits that will help launch it on its journey through the search for distribution, investment, and marketing plans.

For companies in Ojo’s position, those further up the chain, and the distributors, retailers, suppliers, investors and other industry members who work with them, however, if there was no cash prize, there was nevertheless plenty of knowledge to take home.

Beginning with an opening series of presentations that focused on how companies have moved from startup into fast growth, entrepreneurs Mike Kirban of Vita Coco and Tom First of Nantucket Nectars joined with distributor Gerry Martin of Polar Beverage and Anonymous Consulting’s Andy Steele to discuss the organizational, mechanical and branding adjustments that become necessary as innovation evolves into revenue.

Those individual presentations were matched by a second-day slate of entrepreneurs who offered advice on nurturing the spark of innovation. Mark Rampolla of ZICO, Bryan Reese of Bolthouse Farms and Julie Smolyansky of Lifeway Foods all gave presentations on how an original idea is just part of the playbook when it comes to growing a new beverage brand – and that deploying that idea into original marketing and merchandising strategies is just as important. In discussing their search for “white space” the trio touched on patience, planning, and the sense of purpose that can help drive a new beverage enterprise.

On the retailing side, high-ranking representatives from both mass retailer Target and nutrition house GNC encouraged entrepreneurs to seek them out as important stops in the growth of a national brand. GNC is happy to partner with brands in the nutritional space at an early stage, according to the company’s (now-outgoing) president, Beth Kaplan. Meanwhile, Target will try new beverages out in smaller “test programs” but is as interested in building new categories within the store as it is in debuting new products, according to former Senior Beverage Buyer Ross Widmoyer.

Brand-building was also on the mind of one of Monday’s featured speakers, Karin Rotem of PepsiCo. As that company’s Senior Director of Global R & D Strategy, Rotem’s presentation gave entrepreneurs the knowledge that beverage companies need their ideas in a variety of ways – but that the road to partnership from the outside can be as rocky as the internal struggle to foster a good idea inside a large company. Focusing on the “Innovation Bullseye” as her target, Rotem explained that large beverage companies like to work with entrepreneurs because they are often risk-averse institutions – but that small organizations need strong leadership and firm footing to win investment precisely because of that risk averse attitude. Her views were balanced on the next day by veteran beverage trend spotter Ken Sadowsky, who shared stories from a career spent working with innovative brands in a variety of roles, both as a distributor and investor.

The risks of innovating in the beverage category – be they financial, regulatory, or operational — featured prominently into all manner of discussion during BevNET Live, but most prominently into discussions of investment, a topic that was featured on both Monday and Tuesday. On Monday, Silverwood Partners Managing Director Mike Burgmaier unveiled key attributes of the innovative companies that strategic investors are seeking out, and a broad panel of investors reviewed the current market for attracting investment in entrepreneurial beverage companies. Tuesday featured a discussion of the changing role of the entrepreneur after ownership changes hands, with a presentation helmed by Zola Brazilian Superfruits CEO Chris Cuvelier and a panel discussion that bounced issues of control between three former beverage company board members.

With nine breakout sessions – including the now-traditional “Beverage School” curriculum – held on Monday and the views of a pair of potential strategic partners airing on Tuesday (in Mike Ohmstede of Coca-Cola’s VEB group and consultant Henry Hidell, describing the Indian conglomerate Tata), there was plenty of variety to be absorbed by entrepreneurs over the course of both days. There were also a pair of views representing the entrepreneurial class in a broader sense, one coming from Bevology CEO Brad Barnhorn, who had hosted a unique round-table discussion on entrepreneurial problem solving the day before, and another from longtime beverage company lawyer and advisor Nick Giannuzzi, who offered advice on key decision points in a beverage company’s life cycle in an entertaining presentation that ranged from boxing to Madonna to binding contracts.

Contracts also came up repeatedly during discussions of distribution as a key to brand-building. With consolidation continuing in the beverage distribution community, a panel of DSD experts debated the potential influence of “super-regional” distribution houses and what the overall growth toward regional distribution networks can mean for emerging brands.

With carve-out clauses and termination fees hanging over the heads of both distributors and suppliers, the life of the beverage entrepreneur is pressure-packed – a finding that was reflected in Barnhorn’s findings from the roundtable group. Still, the sold-out audience of 400 didn’t seem deterred – especially considering the fact that there were dozens of new products on display in a sample bar. Considering the traffic during a two-hour “mini-expo” presenting new supplier wares and other arrangements designed to help out beverage makers, it was apparent that there’s just as much competitive pressure inside the pipeline as there are external pressures that are localized for each company.

Which means that it should come as a relief for innovators to know that the opportunity to learn even more – at the December 5 and 6 BevNET Live winter event in Santa Monica, Calif. — is just around the corner.