Investors and innovators took the stage Tuesday during day two of BevNET Live Winter 2016, offering an audience of entrepreneurs insight into the decisions big money funders make before deciding on which brands to back.
The day’s presentations kicked off with a “State of the Market” address from Kathryn Peters, executive vice president of business development at SPINS, and Brian Reed, principal at IRI. The duo provided clear and rapid-fire delivery on the beverage market as it stands heading into 2017. According to Peters, the carbonated soft drink category is continuing a five-year decline while natural and organic drinks rise up as consumers slowly head toward healthier options.
“The whole face of the beverage industry really has changed,” Peters said. “What used to be cutting edge is now really converting to mainstream.”
While only comprising eight percent of overall beverage sales, she said, natural beverages are driving 40 percent of dollar growth in the industry. While there are still swaths of consumers who remain traditionalists or actively resistant to natural beverages, the better-for-you trend has managed to integrate itself into many beverage categories to establish true staying power.
“Some of these categories are actually reaching a point now where natural is the norm, natural is part of the mix, it’s not different, it’s actually part of the entire category,” Reed said.
Next in the morning line-up was KarpReilly analyst Drew Skolnik and vice president Ryan Greene to discuss “Growth Investment Case Studies,” focusing on their firm’s own experiences investing in Kevita, Spindrift, LifeAID and Zola. The pair shared their experiences “following the growth” in the beverage and restaurant industries, which includes a consumer demand for better quality ingredients.
“More recently there has been great success in the fast casual segment where customers have looked to better quality ingredients without paying more and the restaurant response to that is a smaller format with less service to keep the labor cost down,” Solnik said. “Those same shifts in consumer preferences that we’re seeing in retail and restaurants are absolutely true in (the other parts of) our investment portfolio, which is the brand and consumer side.”
These trends, Solnik said, are what drove the firm to invest in Kevita and its other brands.
Investor interviews later in the program featured Melissa Baker, president and CEO of Fenwick Brands, and Arif Fazal, founder and managing director of Blueberry Ventures.
Baker said her work involves turning brand founders in to CEOs. An average revenue range with Fenwick Brands can range from $1-5 million and it is often the first, half-million dollar investment in the door to add new brands to their portfolio. Her closing advice – “build in your own backyard” and get a brand going locally before trying to reach too many markets at once.
Fazal said his typical investment size is about $500,000 for a first check in companies whose revenue ranges from $2-3 million for low end and $10-15 million for high end. One big element of investing, he said, is working with a brand for a time to grow the product and holding off from expecting overnight success.
Other speakers for the final day of BevNET Live included WTRMLN WTR founder Jody Levy who shared the importance of having a voice and mission when establishing a brand.
Ripple Foods co-founders Adam Lowry and Neil Renninger discussed innovation in dairy and dairy-substitute products and issues with nutrition, calling into question the purported health benefits of almond milk. Orion Melehan, of LifeAID, shared the story of how he turned his brand around from faltering to success. Finally, VEEV Spirits co-founder Courtney Reum discussed the spirits industry and how growth strategies from the liquor world could apply to non-alcoholic beverages.
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