As Barry Nalebuff and Seth Goldman traded stories Wednesday on stage at 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. On Wednesday morning, BevNET announced that Coke’s Venturing and Emerging Brands group has purchased a minority stake in L.A. Libations, a West Coast incubation firm. 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.
Complete video coverage of Day 1 of BevNET Live Summer 2014 is NOW AVAILABLE on BevNET FBU, our on-demand video learning site for the food and beverage industry.