If day one of BevNET Live Summer 2017 offered the goods on how to innovate and scope out the future of the beverage industry, day two was a crash course in the nitty gritty details of monetizing that future.
Wednesday morning at the conference, held at Metropolitan West in New York City, began with a conversation with Bill Moses, the co-founder and former CEO of KeVita, a maker of probiotic beverages and kombucha. Moses gave his account of the brand’s evolution from conception to its high-profile sale to PepsiCo, which was announced in November 2016. Early on, Moses saw an opportunity to gain market share and reach a broader audience by reducing the suggested retail prices of KeVita drinks to a mainstream-friendly option of $2.99.
“At $2.99 we knew that we could gain trial, we could win at shelf, but we didn’t have the gross profit margin; we were running at the low 20 percent profit margin,” Moses said. “But what we really focused on doing is we took the time to look at the plan of execution to really get our cost of goods down and to get our profit margin up. Around that we premeditatively had a plan of execution.”
Having a plan and a road map took KeVita to a sale, reported to be worth $230 million. Moses explained that KeVita focused on developing strong partnerships with co-packers and suppliers to achieve its pricing strategy. Although it often involved tough negotiation, the company’s efforts to reduce production costs were to everyone’s advantage, he said.
Investment was another big area of discussion on Wednesday. While Presence Marketing CEO Bill Weiland outlined emerging beverage category trends on day one, a panel of investors laid out the current state of beverage investment. Nick Giannuzzi of The Giannuzzi Group, Tom Spier of Boulder Food Group, and Mike Burgmaier of Whipstitch Capital (which facilitated the KeVita/PepsiCo deal) shared their insights from the money side of things about where the industry was heading in terms of financial growth.
Deals, Burgmaier said, are happening at earlier stages of a beverage’s lifecycle than any other time in recent memory. Giannuzzi described the market for investment as “absolutely on fire.”
“We get a call once a week from another brand that has the opportunity to sell,” Giannuzzi said. “And both the big brands — the ones you’re going to read about for hundreds of millions of dollars — as well as the smaller brands. And the acquirers are the traditional acquirers in the space, and there’s private equity firms saying we want 80 or 100 percent of the company and we’re willing to pay $20 million for it.”
Later in the afternoon, Zoe Feldman, managing partner with venture capital firm Cleveland Avenue, shared her experiences learning the ropes of the food and beverage industry under the guidance of PepsiCo CEO Indra Nooyi and now former McDonald’s CEO and Cleveland Avenue head Don Thompson. Feldman discussed implementing those lessons in her work as an investor and incubation partner.
Continuing upon BevNET Live’s special focus on e-commerce retailing, speakers on Wednesday described an immense opportunity to connect one-on-one with consumers. Bonin Bough, host of The Cleveland Hustles, took direct engagement one step further when he put his person cell phone number on the cover of his book “TXT ME,” in order to get a better understanding of his customers.
Leveraging the addictive nature of mobile devices, Bough said, is key to entrepreneurial success in the modern day — as evidenced by young companies like Facebook and Uber, which have grown to triple or quadruple the market capitalization of ones that have been around for more than 100 years. With new apps and technology, companies are able to access greater information about consumers, whether that come in the form of Facebook profiles or consumer engagement apps that turn research surveys into a recommendation product itself.
Through algorithms and aggregation, brands will need to adopt “The Hacker Way” if they seek peak success, Bough said. It was a powerful message, and one that followed up on a statistic offered by Kerrie Lopez, the Sr. Category Manager – Fresh for Jet.com. In her presentation from earlier in the day, Lopez reported that 20 percent of food and beverage sales are expected to be online by 2025.
As for getting hands on that data, CircleUp CEO and co-founder Ryan Caldbeck discussed Helio, his company’s machine learning aggregation tool that is currently tracking over a million companies.
“People are using data,” Caldbeck said. “And if you’re not, you’re probably being overtaken by someone who is.”
Data, Caldbeck said, not only works to predict and drive consumer behavior, but it can predict a company’s chances for success based on known factors. The companies that succeed most often are the ones that do things differently than the crowd, he said.
But even in the era of hacking, artificial intelligence, and medically diagnosable cell phone addiction, BevNET Live was a showcase for the notion that a great mind will most often be the deciding factor in the world of business.