Editor’s Note: We’re cutting this rather lengthy piece up into two parts, so you can better drink in the amazing power of these people, ideas, companies and concepts. We’ll air Part II next week.
This marks our second annual A-to-Z of Power Listing for the beverage industry, and while we’re excite to make this a regular occurrence, we hate to repeat ourselves. So we haven’t. Not a single letter features a repeat of our original list, and that’s because when it comes to the beverage industry, power is diffuse. Distributors may have more ability to make or break an entrepreneurial brand than they may have over a giant soda company – until that soda company wants to invest in and incubate that entrepreneurial brand. Investors can’t control the winds affecting unique supply chains, while brands can kill a supplier by switching sweeteners or key ingredients. Keeping that in mind, the one thing we’ve repeated from last year is a willingness to consider power from many different angles. After all, while money is important, this industry is also all about delivering taste and satisfaction. That keeps it fresh. After all, if it was just the wealthiest who made all of the decisions, we might just be looking at President Trump. So in keeping with our alphabetical ordination, here’s the A-to-Z’s Beta List. We look forward to the discussions it creates.
A is for “Austin Mafia“
A collection of good ol’ miscreants that wreak havoc on shelves with perfectly honed products like Sweet Leaf tea and now High Brew Coffee. Clayton Christopher, David Smith, Scott Jensen, Brian Goldberg, Perry Abbenante, are drawn and determined to keep Austin on the map as a place where new CPG brands can take root and grow. Austin is a small town with big resources in cash and technology, and the team that grew Sweet Leaf is always on the lookout for a way to pump up its next venture. Add in the spirit of SKU (formerly Incubation Station) and a Brooklyn-sized chip on their shoulder, and this is a new kind of perfect storm of creative capitalization: The Texas Whirlwind.
B is for Bacteria
Live or dead, beneficial or deadly, the presence of these critters is compelling the growth of all manner of beverage categories. Whether it’s killing them through pasteurization – or not killing them for fermented drinks – they’re the key to determining whether a product will be able to get on the market, or stay there. Bacterial growth in a beverage can quickly cause a recall – unless it’s the right kind of live strain, in which case it’s a probiotic. Quixotic, no doubt – but such is the life of the one-celled.
C is for Jeff Church
One of the hottest questions in the beverage business deals with the ultimate fate of next-generation juice category leader SUJA, and the buck stops with co-founder and CEO Jeff Church. Having proven a savvy fundraiser for the infrastructure that supports the pedal-to-the-metal innovation and marketing operation, the veteran dealmaker is going to have to decide when to pull the trigger on an exit. The brand’s Essentials line – the true revenue escalator, as it’s aimed at conventional grocery – is growing exponentially, but it’s still tiny compared to Odwalla, Naked, or (see below) Bolthouse. Does he sell before the strategics make their own move into the category, or does he think there’s enough ammunition for a few more years of growth and a higher sales number? There are other influential members of the SUJA team, of course – investors like ACG and Boulder Brands will have their say – but so far under Church’s leadership there haven’t been many missteps at all, and as long as SUJA’s the Belle of the Ball, he’ll be the one calling the tune.
D is for Jeff Dunn of Bolthouse Farms
Once President of Coca-Cola North America, Dunn is seven years into a run at Bolthouse that has evolved the leadership of an important division of parent company Campbell’s. From his new platform, leading the company’s fresh division, Dunn will be able to leverage Bolthouse’s reputation and quality into new opportunities for Campbell’s. There’s synergy here: Bolthouse is already a huge name brand in supermarkets, as successful a platform as Kashi or Annie’s, and it’s moving to fill adjacent channels like convenience, where Campbell’s has a foothold already. It will be a big step to raise the venerable soup-maker’s profile among new generations, but the ever-energetic Dunn is driven with the conviction that he is making the world healthier on a broad basis. The canvas is there, and he’s raring to fill it up.
E is for Emerging Strategic Entities
– like White Wave, Hain, Boulder Brands Investment Group (BIG), General Mills’ 301 Inc., and the other companies that are forming a new wave of corporate venture capital and acquisition for entrepreneurial brands, creating a shift in the power of traditional beverage strategics. White Wave’s Earthbound Farms has invested in Daily Greens, while Hain has several beverage investments, shaking up the progress of categories like kombucha, tea, and juice. Meanwhile, Boulder Brands’ willingness to put its faith in products like Suja and, most recently, Temple Turmeric, validates bleeding-edge functional plays and combines it with the execution skill of its own team as well as close ally Presence Marketing. General Mills is using 301 Inc. like Coke’s VEB group, as a way to buy into entrepreneurial products before they scale up, but in the meantime it has taken its previous investment group, Small Planet Foods, and spread its acquisitions around, creating a new organizing principle among its verticals that is sure to attract growing brands. Interest from large-, mid- and small-cap strategics will be focused on entrepreneurs until they are able to recast themselves as armed for future consumer trends.
F is for First Beverage
– always connected to cash and capabilities under founder Bill Anderson and key executives Tom First and J.B. Shireman, this specialty firm came into its own in a big way last year, both investing in new brands and helping orchestrate the sale of or investment in several others. After a slow period where much of its energy seemed to be devoted to building a consulting practice, the pace finally picked up for this high-powered collective in late 2013. Since then, the firm has been first among dealmakers, with its investment banking operation orchestrating the sales of 10 Barrel Brewing to Anheuser Busch, Xyience to Big Red, and craft operation Boulevard to Duvel Moortgat, and orchestrating capital raises for Argo Tea, and Southern Tier. Meanwhile, after raising a fund – with the Coca-Cola Co. as one of its investors – the company started making a new round of bets on brands, letting First and recent hire Jason Camillos offer hands-on help. With recent investments in growing brands Essentia, Project Juice, Health Ade, and software firm Repsly joining Purity Organic in its stable of properties, First Beverage is red hot.
G is for Gang Funding
– also known as Hat Passing, it’s become a key term in the fundraising process for hot brands. No, we don’t mean CircleUp, although that kind of online crowdfunding certainly invites the kind of $1-$3 million rounds we’re seeing these days. It’s more like an “in-the-know” echo chamber of affiliated funds who band together to help companies raise their first significant round of growth capital. Examples of groups who enjoy this include Finn Capital Partners, the ArcView Group,TheSimplePitch.com, Clover Capital, New Ground, Midori Ventures and many others – part family office, part private equity, part experienced operator, they rarely invest on their own, and they bring different skills to the companies they back.
H is for Judy Hong and Bonnie Herzog
This powerful pair of beverage industry analysts (Hong is a Managing Director at Goldman Sachs, Herzog at Wells Fargo) are key voices when it comes to the fates of both the beverage industry’s titans like Coke, Pepsi, DPSG, and Monster, but also the key convenience retailing channels these brands need to grow. Herzog pays special attention to emerging brands: she’s done interviews with Kevin Klock of Talking Rain, Paddy Spence of Zevia, and many more, and is willing to dive deep into private companies to try to understand what moves the big brands will make. Hong, for her part, gets extra bonus points because Goldman Sachs is also the investment banker for massive energy drinks brand Rockstar, one of the biggest independent prizes available.
I is for Incubators
Drink Tank, SKU, Brand Project, the new Chobani Food Incubator, Accel Foods are just a few examples of these increasingly important stops for brands that are trying to establish themselves and gain experience. While there hasn’t yet been a breakout success from these investor/mentor groups, it’s only a matter of time before someone hits it big. Meanwhile, they continue to attract a stream of small companies looking to learn the ropes.
J is for Jerry Brown
California’s once-and-future Governor Moonbeam. As water shortages continue, Brown’s recent order requiring a 25 percent reduction in water use is the tip of the evaporating iceberg. He left farmers untouched, despite the fact that they use 80 percent of the state’s water. Lots of insurgent and established brands will feel close-in ripples from Brown’s ongoing thoughts on water usage. Almond milk has unfairly been singled out by some as a cause celebre of the greener-than-thou movement, but in both the public eye and in the public process, nearly all California crops are under scrutiny, from artichokes and peaches to rice and other grains. Avocados have been growing as an ingredient in HPP juices: guess where 88 percent of the domestic production lies? Other staples like milk, orange juice, carrot juice and wine are heavily reliant on California’s production – and that production is directly related not just to rain, but farmers’ use of water as a resource that can be sold like pollution credits. Change the water usage habits of California farmers, and the entire agricultural makeup of the U.S. shifts.
K is for Mike Kirban
Back in the saddle again. Vita Coco’s co-founder and CEO, Kirban dipped back down into the president’s seat in the U.S. after spending the past couple of years building out the brand’s Asia operations and securing a $165 million investment from China’s leading Red Bull distributor. An entrepreneur who has started his own software company as well as Vita Coco, Kirban has proven restless and willing to take the tough steps by parting ways with veteran personnel. Now that he’s spreading the wealth around to new investments like WTRMLN WTR, along with rye whiskey play Whistle Pig, it’ll be interesting to see how much Kirban decides to play kingmaker.
L is for Labeling Lawyers
like Justin Prochnow, Rakesh Amin, and Steven Shapiro, who are constantly on the circuit as leading voices for brands to steer clear of regulatory authorities. At a time when class-action suits are becoming ever-more-common, having knowledge of controversial trade language and safe harbors for functional claims is the rule, and a careful, ongoing process of label review can save millions.
M is for Musicians
– from dance queens like Madonna and Rihanna (Vita Coco) to psychedelic warriors like Phish’s Jon Fishman (Runa) and the Grateful Dead’s Bob Weir (DripDrop); from hip hop celebs like Snoop Dogg (Arriba!), Juicy J. (CORE), or 50 Cent (Vitaminwater, SK) all the way to transcendent supernovas with musical ties like P. Diddy and Mark Wahlberg (both Aquahydrate), fast-growing beverage companies can’t stay away from the people who write the songs. Here’s a theory: songs are the only products that are “used” more frequently than beverages on a daily or weekly repeat basis. Here’s another theory: some musicians are rich and popular.