The First Drop: The Highest, Best Use Standard

I’m no homebrewer, but I’ve had the good fortune to have sampled the products of some great amateurs — some of which I’d suggest compares with great beer that’s on the market right now (like my man Chad’s mead — so good!). I’m no barista — hell, I’m not even a constant Latte Instagrammer like BevNET CMO Mike Schneider — but my own cold brew is mighty tasty. I’d never make kombucha at home, but my friend Joel recently unveiled some kind of monster brew that has many of Atlanta’s home chefs circling his house for free tastes. I’ve got a Sodastream to make seltzer and a not-bad recipe for sun tea as well. I’ve also, on many occasions, made Greyhounds using my own fresh squeezed grapefruit juice.

All this, and yet I have zero plans to turn pro.

Still, I’m starting to think this amateur status is an anomaly. So many of the brands we see these days seem to emerge, at least in their founding stories, from kitchen tinkering or from an idea encouraged by friends or some riff on a grandmother’s recipe. It’s strange, though: I could swear that a good subset of those brands also seem to evolve just when a grandmother’s old kitchen formula happens to correlate with an emerging beverage category that’s attracting a little bit of investment.

As more money has flowed into the CPG sector, the emergence of successful, emerging brands in new product categories has, at times, led to a contagion of knockoffs; that’s something we saw in the energy drink category, the enhanced water category, and are now seeing in many of the other products I mentioned. The leader’s success creates its own chase pack — and that’s a situation that doesn’t always serve the founders who come into that pack late in the game.

The fact is, this ain’t easy, and a lot of dollars and days have been burned by trying to draft off others’ success. And while capitalism should allow everyone equal access to compete, there’s nothing more frustrating than watching a massive game of follow-the-leader.

Maybe it’s just that producing beverages is getting to be too easy. The fact is, the higher the barrier to entry, the more difficult it is to develop a competitive set — so which even early products can be revelatory. Certainly, the growth of coconut water or HPP juice were both made more cash intensive due to the difficulty of creating a decent supply chain, but they took the world by storm with their originality.

When you’re dealing with infrastructure challenges, there’s a natural gate around a category that can allow for a series of brands to gradually build share and differentiate. That’s why you see something like a Harmless Harvest or a La Colombe able to get creative even as second-wave brands in categories that have long left the gate — they bring something creative to the table that broadens the category.

But there’s a different set of competitive dynamics for purely water-based, off-the-shelf ingredient products with shiny labels and names made distinctive only by their lack of vwls. When there’s a low barrier to entry, it’s wise to think about the necessity of a particular product (beyond any shipping efficiencies that may come without vwls weighing things down). Even for artisan products like Cold Brew and Kombucha, the move into CPG needs to serve a strategic purpose, because there are a lot of brands in the pool already.

That doesn’t mean I’m down on the idea of local or regional companies in those categories trying to cement a foothold in the economy by extending their brands into different formats: brewers, coffee companies, kombucha brands, even juice bars have long been able to serve a local constituency based on freshness, and the lack of national brands allowed them to grow in separate geographic pockets for a long time. The freshness attribute also served to push consumers toward on-premise consumption even as companies started to consider canning or bottling options. Here’s where the idea that there are more than 7,000 craft breweries starts to become too much of a blanket statement; about 5,000 of them are focused exclusively on serving on-premise. (Imagine if we started to regard coffee shops as potential CPG production entities — that would put the Brewers Association to shame, for sure.)

But information travels faster these days, and one brand’s success is another brand’s motivation, even for newer product types. The smell of the next big thing continues to create a million takes on lazy manufacturing: we’ve seen the same set of stock ingredients reskinned dozens of times, on dozens of products. That doesn’t mean that no one appreciates an original take, or a higher end, or a bargain. It just means that people don’t like being sold a bill of goods that a new product is different when it really isn’t. When that bill comes due, brands tend to go out of business, unfortunately. So think carefully, whether you’re starting a new brand or even extending a different one into a new category: does the world really need this? And if it does, how long are you willing to stick with the premise until consumers figure that out?