DAY ONE: IN THIS TOGETHER
As Barry Nalebuff and Seth Goldman traded stories on stage during the first day of BevNET Live in New York, it seemed as if the conference’s attendees were being handed an inside look at the School of Organization and Management in New Haven. Nalebuff, co-founder of Honest Tea and Kombrewcha, teaches game theory at Yale University. Goldman, co-founder and CEO of Honest Tea, was a student of Nalebuff’s at Yale. And here they were, chatting it up about the history of Honest Tea and the importance of a good partnership, seemingly forgetting the crowd before them.
While focused and informative, the conversation easily veered into jabs and laughs. Goldman hinted toward Nalebuff’s occasionally insular personality.
“You are somebody who doesn’t really see the world the way I do,” Goldman said.
Nalebuff, who also specializes in self-deprecation, said that he just doesn’t interact with people (students must not be people). On the contrary, he said that Goldman is naturally likeable. He pointed to Goldman’s strong family background as a good sign of a business partner — it shows that somebody else can tolerate the guy, he said, drawing laughs from the crowd. With such a jovial breed of conversation, one wondered if ripping Harvard football was on deck.
Instead, it was all talk of their partnership, no jokes withheld.
“You don’t want to find somebody that’s better looking than you,” Nalebluff said. “Because then they’re going to get all the press.”
Walking through the gestation and eventual boom of Honest Tea, Nalebuff and Goldman repeatedly praised the benefits of working together. Both bright and capable entrepreneurs, they admitted the shortcomings of going solo and touted each other’s complementary abilities. Goldman has a knack for getting people on his side and for making cogent, rational decisions. Nalebuff asks the tough questions that are often overlooked by a natural proclivity of choosing what’s easier or more comfortable.
There’s a lesson here, smoothly extrapolated to the beverage industry as a whole. Sure, great ideas often sprout from one mind alone. And it’s possible to thrive in this industry as a solo act, especially with a can’t-miss brand. However, as Nalebuff and Goldman indicated in their discussion at the Metropolitan Pavilion, partnerships can offer entrepreneurs advantages that just can’t be found alone.
After hearing the conference’s diverse roster of speakers, one gets the idea that the industry supports this thinking. From entrepreneurs to retailers to investors, the many strands of the beverage industry believe in the movement of healthy, good-tasting innovation, and they believe in shaping the future together.
The evidence can be seen not just in the camaraderie of Nalebuff, flavored sweet and sour, curls in disarray, and the ever-smiling Goldman, but also in the investment world. Janica Lane, a managing director with investment bank Piper Jaffray, documented the active participation of investors and retailers with the industry’s top innovations.
Boulder Brands and Alliance Consumer Growth, which aims to find and fuel next-generation versions of existing products, have both funded the growth of cold-pressed juice brand Suja, among other food and beverage outfits. Whole Foods has maintained its commitment to the Local Producer Loan Program, which provides up to $25 million of low-interest loans to local farmers and food artisans. The recent history points to a healthy stage of food and beverage business development polished by successful partnerships. Lane just hopes that these deals indicate emerging trends and not fads.
“I don’t think I’ve ever seen the market quite like it is today around food and beverage,” she said.
The evolution of togetherness was also examined by Kerry Corke, the head of U.S. operations for Kantar Worldpanel, a global market researcher and analytics supplier. Corke shared a case study of Coca-Cola and studied the brand by its history of slogans.
In 1896, it was the matter-of-fact: “Drink Coca-Cola.” In 1979, “Have a Coke and a smile.” In 1985, as the Cold War neared its end, “America’s real choice.” In 1993, “Always Coca-Cola.” In 2003, “Coca-Cola Real.” In 2009, “Open Happiness.” And last year, acknowledging the heightened awareness of CSD ingredients and their relation to obesity and other ailments, Coke went with “Coming Together.”
Even the major beverage powers like Coca-Cola are having a harder time of grabbing consumer attention, Corke said. This derives not only from the growing knowledge of health and wellness, but also because of brand proliferation. The consumers, she said, hold the power and sculpt the industry’s identity.
“They’re driving this change,” Corke said.
Kantar Worldpanel research indicated that of more than 60 million consumers, 38 percent in 2003 cited relaxation as a reason for beverage consumption, compared to 44 percent in 2013. Of more than 48 million consumers, 23 percent in 2009 preferred drinking “all-natural” beverages, compared to 39 percent in 2013. Of more than 37 million consumers, 24 percent said in 2003 that they drink beverages to stay in shape, compared to 36 percent in 2014.
And what has influenced the industry’s growing camaraderie? It might also be led by the actions of consumers. Of more than 15 million consumers, 15 percent said in 2009 that they drink something because it’s sociable, compared to 20 percent in 2013.
As consumers drink healthier beverages together, the industry’s many cogs continue to work together. When Coca-Cola acquired Honest Tea in March 2011, Goldman and Nalebuff realized that the purchase presented a new kind of challenge. They wanted to broaden their mission on their own terms while still working cordially and fluidly with a much larger partner in the cola giant.
They balanced this challenge by creating a three-year advisory board, from the point of Coke’s first investment in the brand to the eventual purchase, keeping Nalebuff as an overseer of the brand’s activity while Goldman continued to run the brand. By establishing the advisory board, the partnership with Coke has worked well, they said, following the blueprint set by their own partnership that began in a Yale classroom. And by Coke enabling both entrepreneurs to preserve important roles with the business, the deal accentuated the importance of the entrepreneur. Even when working alongside a massive company like Coca-Cola, they still have a say.
No matter a company’s stage — startup, mid-sized or post-acquisition — the job of the entrepreneur never relents. There’s production, sampling at retailers and trade shows, traveling to meet distributors, coordinating talks with investors, maintaining a content, productive staff at the home base. And that’s just part of it. It helps to have others around.
“It’s really too much to ask one person to be able to do all of those things,” Nalebuff said.
DAY TWO: BE THE BRAND
Janie Hoffman never wanted to be the star. She grew up in a small town in Illinois, where standing out from the crowd was, at times, deeply discouraged.
Yet by founding Mamma Chia, Hoffman was presented with a dilemma that revisited her quiet roots in the Midwest. Was she the real Mamma Chia or was she just selling the stuff? Loyalists seemed to believe that she was indeed Mamma Chia, in the flesh, but Hoffman wasn’t initially convinced. She told them that the Aztec chia goddess on the front of the bottle was the real Mamma Chia. It wasn’t her. She didn’t want to be the face of anything. She had to overcome her childhood programming.
“I really never wanted this to be the Janie Hoffman show,” she said.
But it sure was when she spoke on the second day of the BevNET Live conference. Hoffman had a few tips for the audience, which was rife with brand owners hoping to configure their own identity. The tips evoked laughter and hinted at truths learned from her own experiences: Tip #1: find a good therapist. Tip #2: Botox won’t help. Tip #3: find a good therapist.
After years of molding her role with the brand, Hoffman said, she now identifies herself as the real Mamma Chia. But regardless of Hoffman’s personal affiliation with the title, her steadfast commitment to her product and its key ingredient has anchored the brand since its inception.
Entrepreneurs such as the effervescent Hoffman, the metaphor-dropping Kevin Klock, CEO of Sparkling ICE, the systematic Chris Campbell, the president and CEO of Chameleon Cold Brew, and Jennie Ripps and Maria Littlefield, the city-savvy founders of Owl’s Brew, shared their various personalities and plans with the crowd at the Metropolitan Pavilion, speakers on the second day of BevNET Live.
As they explained their products and their histories and their strategies, a theme prevailed amongst the brand ambassadors. There’s no blueprint way to run a brand, but the finest entrepreneurs, no matter their style, tend to embody their brand and own it like a second skin.
Kevin Klock continues to personify his brand, even though many entrepreneurs at his scale might opt to sell their stake and celebrate the good life. Instead, Klock, the CEO of Talking Rain, envisions room for more opportunity. He said as much on stage at BevNET Live — an uncommon sentiment from the CEO of a brand that has shot well past $300 million in sales.
Klock said that Sparkling ICE’s role in foodservice is all but untouched. They’re just beginning to tap into the convenience channel. They just recently established a DSD network in all 50 states.
When talking about such massive sales figures as only the beginning of the company’s rise, Klock mirrored the bravado of a young Jay-Z, recalling the line: “I’m not looking at you dudes, I’m looking past ya.”
Looking beyond the hordes of Sparkling ICE imitators and the competitors of varying categories, Klock had his own version of the progressive businessman’s mindset.
“While they’re trying to catch up, we’re busy focusing on our next move,” he said.
It’s this restraint from moving too quickly, a kind of pragmatism and understanding of brand persona, that has helped elevate the company to the pinnacle of the beverage industry. Because of the brand’s consistent approach and easily comprehensible offerings, Sparkling ICE is able to launch a line of lemonades, for example, and become the top shelf-stable lemonade in the U.S. a mere six months after the product launch. When consumers buy a bottle of Sparkling ICE, they know what they’re getting. This business model has enabled Sparkling ICE to become 400 percent larger than its competitors combined, he said.
Chameleon Cold-Brew hasn’t reached the same foothold of Sparkling ICE because CEO Chris Campbell was still hand bottling two years ago. However, what it lacks in age, the Austin, Texas-based Chameleon compensates through direction. The brand serves as a category leader in the cold-brew RTD coffee space, which is drawing new brands from all over – the evening before, in fact, BevNET team members found celebrity chef Todd English discussing the possibility of fielding a play in the space as well.
From its founding in 2011 to its current stage, Campbell, a former consultant, has lived the brand and steadily managed the many forces that affect a fast-growing category. As it has heated up, he’s had to accelerate just about every part of the company’s plan.
From 2011 to 2014, Campbell told the audience, the company went from one convenience store to more than 800 stores across the country. He transitioned from self distribution to DSD distribution, no broker to national brokerage, zero paid employees to experienced industry hires, two SKUs of only-concentrate to more than 10 SKUs of RTD, self- and angel-funded to private equity, venture capital and super-angel investors, and natural retailers to a gradual push into conventional and mass.
Such acceleration leads to more than the just the struggle of keeping up. “You have external influences and you have internal constraints,” he said.
However, what kept Campbell’s business together was his unwavering dedication to the Chameleon brand, knowing its path and what would be best for the company in both the short and long term. Now, Campbell speaks about managing super-swift growth instead of wondering about the what-ifs.
At an even earlier stage but no less compelling, the founders of Owl’s Brew — Jennie Ripps and Maria Littlefield — symbolized the plucky nature of the New York City entrepreneur. While they’re still trying to prove their concept of tea crafted for upscale cocktails, they convinced some of the industry’s elite on Wednesday and Thursday by winning New Beverage Showdown, a “Shark Tank”-esque competition for startups. They faced strong competition in brands such as Rumble, a super-shake loaded with protein, fiber and omega-3s, and switchel brand CideRoad.
Scott Uzzell, president and general manager of Coke’s Venturing and Emerging Brands, served as one of the judges for New Beverage Showdown. He presented an interesting take on Owl’s Brew — a take that indicates not just the unique nature of the product in the sleek, black jug, but the uphill challenge ahead.
“It actually takes the hero spot away from the alcohol and makes this more the hero,” he said.
Hoffman would be completely fine with her product serving as the hero, but that’s not entirely the case. Not when you’re the face of a brand that needs a definable Mamma.
While the brand thrives as the market leader of a trendy category, she continues to adjust to the demands of her role at the top.
When Random House approached her for a two-book deal, she turned them down. She told the book publisher that she didn’t have the time. Perhaps she really just wanted to avoid the spotlight.
A little while later, she changed her mind. She called Random House and made the deal. She’s already released one book — Chia Vitality — that tells only some of her background and more about the research behind the benefits of chia. She has a cook book coming out this fall. And even more significant than the book deals: Hoffman’s growing confidence.
On the book deal, she said: “I’m glad I did it now.”
And these days, when people approach Hoffman and say “hey Mamma Chia,” she says “hey” right back.