After an opening day packed with discussions on how e-commerce is reshaping the beverage industry, day two of BevNET Live Winter 2017 at the Loews Beach Hotel in Santa Monica, Calif. took an even deeper dive into the internet’s total reconstruction of the marketplace. Speakers representing grocers, analysts, and brands went deep into cyberspace and back with a series of talks and presentations on what companies can do to make the best of both worlds.
To begin the day’s events, Andrew Henkel, SVP of brand growth solutions at SPINS, offered the lay of the land for beverages in the changing and increasingly all-natural landscape.
At this point, it barely needs to be stated who is driving these changes. According to Henkel, millennials are growing up and the demographic is creating new, often multicultural households as they get married and raise children. These new households, he added, often value convenience above all else.
“I used to live in Williamsburg, Brooklyn and I thought that every millennial was kind of a young hipster,” he said. “Well, the reality is that those young hipsters are now buying strollers because they’re creating families — and as they create families they’re introducing those beliefs we used to think about as being the domain of single millennials to their children.”
New niches are forming in the industry with e-commerce opening the doors for unique personalized products to thrive. The key engines of growth, he added, are natural products like kombucha and cold brew coffee.
“We will not see again another Coke or another Pepsi, a brand that is so dominant, so large, for so long,” Henkel said.
In this wave of growth, Kroger’s outpaced Whole Foods in sales of natural product last year, Henkel added.
From Kroger’s, VP of merchandising for natural foods Jill MacIntosh and CSD grocery merchandising coordinator Andrea Tyson sat down for a discussion on the retailer’s rules for beverages, offering insight into how the company views the industry and ensures that brands have a proper vision for their product before signing contracts.
According to Tyson, while Kroger’s will play in the ecommerce space, brick-and-mortar is not dead yet. Millennials may even be returning to the grocery store, she added.
“We continue to grow market share in several different beverage spaces from soft drinks to sparkling to energy,” she said. “We are continuing to win in that space, so that let’s us know that brick-and-mortar is still alive and thriving and we continue to win in that space.”
But in order to succeed in that space, brand must first find their way in. Kara Rubin, vice president of brand and product strategy for Just Goods Inc., offered the audience her advice on getting into brick-and-mortar by dishing up wisdom from her past life as the Northeast senior regional director of Whole Foods. Among them is the seemingly obvious but often forgotten element that grocery buyers are human — and, as such, value honesty. Anticipating buyers wants and needs and understanding whether or not your product is the right fit for a specific retailer is just as important, she said, as being transparent and realistic about your performance.
“Even in the relatively short time since I left Whole Foods [in 2016], the market has changed pretty wildly itself,” Rubin said. “Every buyer is in tune to that, and it’s your job to be in tune to that not only from the perspective of how you can take advantage of it with direct-to-consumer or the many various e-commerce channels available to you, but also speak to your buyer about how you’re going to work with them and how you can support them with your own initiatives.”
In another discussion, Kara Goldin, founder and CEO of Hint Water shared her perspective on retail and direct-to-consumer routes from the brand building side. The company’s online business accounts for nearly 40 percent of its current sales.
However, since launching direct-to-consumer, Goldin said, brick-and-mortar sales have grown by nearly 50 percent, and the relationship between online and offline is closely connected.
Focusing on a different sector in beverage Distill Ventures COO and co-founder Dan Gasper discussed changes in alcohol and on-premise accounts, namely the rise of non-alcoholic alternatives to beer, wine, and spirits. If it’s “5 p.m. in beer,” he said, then it’s only “five minutes past midnight” for the non-alcoholic category, but early adopters have been innovating to match the changing flavor trends seen in the natural channel, with bitters, teas, and coffee all being used as inspiration for mocktail hour.
Kevin Rutherford, CEO of nuun (or as he dubbed the position, the “chief eternal optimist”) spoke to the need to monitor company culture and maintaining positive outlook. Team members, he said, can be energy givers or takers, and a company culture can change as quickly as seven days if morale isn’t maintained and employees aren’t motivated.
Brent Willis, CEO of New Age Beverage Corporation, shared his adventure building a multi-brand business based on acquisitions and risky financial moves that required precise execution, including going public sooner rather than later.
Finally, the day’s presentations featured two more looks into how brands can embrace competition with a look into the gourmet coffee laboratory with sit-down talks with La Colombe and the recently acquired Chameleon Cold Brew.
La Colombe CEO and co-founder Todd Carmichael discussed the company’s multi-channel strategy, seizing on e-commerce, retail, and hospitality opportunities to rapidly grow the brand’s draft latte line and go from a small cafe to a powerful category player in under two years.
While La Colombe is still independent, Chameleon Cold Brew co-founder, president, and CEO Chris Campbell opened up about why he decided to sell the company to Nestle this fall. Campbell admits he may have waited too long on some opportunities. But timing is everything; when the opportunity with Nestle revealed itself he knew he had to take it.
“[The coffee market] is like being in various carts on a roller coaster,” Campbell said. “Sometimes you’re in the back, sometimes you’re in the front — I think the whole thing is really exploding in a lot of interesting ways. I think the old guard is getting upset and displaced, and so that’s exciting for us. I agree with some of what my esteemed colleagues in the cold brew coffee business have said over the last few days, it’s going to be a big space. The more convenient, the more tasty, the more affordable, the more approachable, I think that’s going to matter.”