As a guy who last year put out 166 issues of my newsletter Beverage Business Insights (with an assist from my able colleague Jim Sullivan), I’m all about fast. Heck, I’m a New Yorker, too, and New Yorkers move fast. So anything having to do with slow is an adjustment for me. You’re right to assume I’m not a mindfulness kind of guy – though I’m mindful of that limitation.
Looking to make (lose?) a bit of progress on the issue, I recently slowed my roll enough to pop into the Slow Wine 2017 tasting in Eataly New York’s downtown branch. Slow Wine is an offshoot of the Slow Food movement that got started in Italy in 1986 during a protest of a McDonald’s slated to be built next to the Spanish Steps in Rome. It’s a rejoinder to fast food and all it stands for in the deterioration of the food economy and our diets, as well as a defense of regional culinary traditions and a slower pace of life.
As I sipped a few of the wines from nearly 100 Italian winemakers represented at the tasting – and stared at Slow Food’s snail emblem – I got to thinking about the tortoise-versus-hare debate in beverages. To some entrepreneurs, the mantra is “Go big or go home.” At conferences they’ll peg the cost of entry anywhere from $15 million to $30 mil and beyond, saying you’re deluding yourself if you think you’ll be able to create a national brand with anything less to start. If you’re a well-heeled entrepreneur with a credible track record who’s trying to launch a product of broad appeal, that may well make sense. (Think Mike Repole with Body Armor or Lance Collins with Core Water, though even those brands had brief incubation periods before doing the national landgrab.) Drawing on a receptive network of investors, distributors and retailers, you can scale up pretty quickly, getting into most regions and retail channels within your first year or two.
Of course, the brand still has to resonate with consumers, meaning the stakes are that much higher if market feedback shows that major adjustments are required to create it. Anyone remember Function Drinks? That’s a prime example of a high-flying startup with an all-star list of investors and allies who essentially tried to build their aircraft while piloting its first transcontinental flight. The untested brand raised big money at a high valuation in investors’ belief that it could fill the void created by Coca-Cola’s snatching of Vitaminwater from the independent distribution network. Lots of cash wasted, and several down rounds later, Sunsweet acquired the floundering brand for a presumed pittance and pulled it back just to Southern California, where it probably should have dwelled a while in the first place, before the product vacuum got everyone’s blood racing.
That’s just one example of what can go wrong for those who try to move too fast. Still, in certain precincts, I pick up a certain disdain these days for entrepreneurs who attempt to start small, with modest capital resources and tiny staffs, aiming to build their brand organically, minimizing the cash burn, even trying to get to a cash-flow-neutral position within a few years. “Nice if all you want is to have a little niche brand,” is what I hear, as if not swinging for the fences inevitably rules out getting around the bases in the long run.
Despite my own personal aversion to slow-moving objects, I still find the take-it-slow approach appealing, and worry that some entrepreneurs are in too great a rush to get past the teething stage, find an institutional investment partner and hit the gas. As I’ve often inveighed in these pages, raising lots of capital not only can distort your priorities, but it can put you on a slippery slope to losing control of your company. That’s not to mention the side effects, like everything getting more expensive for you once the trade channel realizes you have some dough. Retailers seem less likely to give a pass on slotting to a beverage marketer who just raised $10 million. And despite its being an often-expressed fear, I really can’t think of too many early-stage brands that found themselves leapfrogged by more aggressive copycats because they dawdled too long in the incubation phase.
So let me raise my glass of Le Caniette’s Piceno Morellone 2011 to entrepreneurs who’ve been content to take it slow, enjoying the journey rather than racing to the destination of an exit to a strategic. Going slow by no means attests to a lack of ambition: at the right time, when their product proposition has been proved and awareness has built in the channels they’ve chosen to ply, they’re willing to hit the gas.
Take Essentia Water, the alkaline bottled water brand founded by a real estate guy (and beverage novice), Ken Uptain, who operated it with minimal resources for a decade. He aimed narrowly at the natural foods retail channel and steered away from things like DSD distribution, marketing campaigns and even much of a staff, in the interest of growing the brand organically and not getting on the capital-raising treadmill. Only once he’d built a formidable base in natural was Uptain finally ready to do the landgrab, hiring seasoned beverage operatives, recruiting scores of DSD houses, and pulling in substantial tranches of capital from the likes of Castanea Partners and First Beverage Group. Though signs so far are good, it’s by no means assured that the brand will truly break out. But it’s making the effort from a very solid base.
Ditto for Q Drinks, the mixer brand that started with a single tonic water entry launched by a young entrepreneur, Jordan Silbert. Though the tonic water seems to have been quickly embraced by retailers, Silbert demonstrated a surprising degree of patience for a guy just out of college, for years refusing their entreaties to expand the line into other mixer stalwarts until he’d gotten his core entry properly seeded. True, Jordan had the advantage of continued advice from Honest Tea co-founder Barry Nalebuff, who’d been through the rigors of building a startup and is an investor and mentor, but how many young guys actually listen to or follow such advice? After patiently testing his concept, then deliberately adding line extensions and new packaging configurations, Silbert finally was ready to go big, pulling in $11 million last year and building a serious staff of seasoned beverage execs. Though many other mixer brands have come along during these years, they don’t seem to have interrupted Q’s growth in the least.
Incidentally, the maker of that Piceno Morellone that I enjoyed so much, a vintner from the Marche region of Italy called Le Caniette, itself has been exceedingly willing to take it slow, going organic back in 1996, growing on only 40 acres and producing just 120,000 bottles per year. They seem to be prospering, like other small producers exhibiting at Slow Wine. And fittingly, on my way out through the retail area, I passed a rack displaying four and a half shelves’ worth of Grown Up Soda – another take-it-slow brand, and now the only American soft drink brand stocked in Eataly’s U.S. units. GuS may or may not eventually break out, but it’s weathered a lot of storms in a cluttered boutique-soda segment and has its legion of ardent loyalists, including Eataly. That’s no mean achievement in this frenetic business.
Longtime beverage-watcher Gerry Khermouchis executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.