SKU’d Reality

Over the course of the past two weeks, I’ve had personal friends and friends of personal friends reach out to me about beverages. Usually industry connections are the ones who recommend me so the interest from my own personal circle was a little strange. But they, like so many others, were considering launching brands, and determined that I would be their sounding board. We got together for a few hours, discussing the industry, the opportunities, the pitfalls, the upside, and the downside – which is the more likely side.

We covered chapter and verse on launching a brand. There was so much to cover, a BevNET Beverages 101 cram course, in essence. The variables are vast, as there are so many paths to take, but for those who were thinking about launching, we found ourselves spending an inordinate amount of time trying to figure out how many SKUs make a good opening salvo. So we took to the streets to check it out.

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I took my friends for an afternoon journey across the width and breadth of New York City retailers to see what the opportunities are.

It was actually a great exercise for me, as well. We covered CVS and Walgreens, a traditional supermarket, Gristedes, and the unconventional Trader Joe’s. We hit Whole Foods, our own Fairway markets, and even threw in higher end specialty shops such as Garden of Eden, Citarella and Gourmet Garage.

As expected, the drug and standard markets didn’t have the selection of the other stores. They had rows and rows of Gatorade, Dasani, Muscle Milk and all of the portfolios of the bought shelves of Coke, Pepsi and Dr Pepper brands. I did see a few newer, innovative brands, but they were mostly the new acquisitions of the big guys. There were facings of 8-12 SKUs for so many of those brands, all at the expense of the more exciting, creative brands that are enlivening the beverage landscape. You wouldn’t be aware that the wave of innovation in beverages was upon us. The smaller brands were lucky to get four facings on the shelves.

The stores my wife and I shop at, those places like Whole Foods and Fairway, were a different story. There was a vista of excitement. Here were dozens of brands, each with 4 to 6 SKUs dotting the shelves. Water brands took more facings as did the teas and the high-end juices. I was impressed with the selection at Whole Foods and the display treatments there – they seemed to give every brand their moment in the sun. Many brands actually had 8 to 10 facings, along with endcaps and freestanding displays. The other retailers weren’t slackers, but Whole Foods was the standout.

To new brands entering the marketplace and looking to make an impression, I’d say start with 4 sku’s, with rollouts at the ready. There are just too many options for retailers to devote more space to an unproven brand or fledging ones. Start slow, and be realistic. You’re not going to garner more space, so take what you can get.