Entrepreneurs, investors, brand builders and retail experts from across the global beverage industry came together today for the opening session of BevNET Live Summer 2019 in New York City.
The event began with opening remarks from BevNET editor-in-chief Jeff Klineman, who described the industry as going through a “time of contradictions” in which category and retail dynamics are being pushed, pulled and stretched in different directions at a rapid pace. In order to stay on top of these changing conditions, beverage brands need to be fluid, adaptable and hyper-aware of the forces currently shaping the industry.
Mike Messersmith, the general manager of Oatly, opened the day’s program of on-stage presentations by exploring how the Swedish oat milk company managed its rapid rise to popularity, only to be faced with a critical product shortage. But the company found that the nearly 18 months it was out of stock forced it to adapt and develop an “emotional humility” that served the company well moving forward. Having emerged from that experience a stronger, Messersmith said that other beverage makers should focus on setting realistic expectations, being transparent with promises made, and supporting their team.
“We’ve screwed up things before, and we’re going to screw up again in the future,” he said candidly. Rather than being cautious, he said brands shouldn’t operate out of fear and be aggressive.
Next, Iris Nova founder and CEO Zak Normandin took the audience on a journey through the history of beverage technology. Starting with the creation of artificially carbonated water by Dr. Joseph Priestly in 1772 he covered the evolution of the beverage business through to the advent of branded beverages and into the fiercely fought “soda wars” of the 1970s and 80s. He then traced the path of innovation as companies have sought to bring their products to larger and larger audiences in more convenient ways. Iris Nova has picked up this legacy with its text message-based ordering platform and vending machines, as well as pop-up shops in major U.S. cities. The idea, he said, is to find ways to personalize the beverage experience and bring consumers closer to the one-on-one connection that previous generations enjoyed at the soda fountain.
The next presentation brought BodyArmor co-founder Mike Repole and the brand’s president, Brent Hastie, to the stage to share lessons from their experience in tackling sports drink category leaders with an ambitious and outspoken approach.
Long before he joined BodyArmor, Repole was a key member of the team that helped build Vitaminwater into a billion dollar brand and guided the company following its acquisition by The Coca-Cola Company in 2007. After vowing to “never return” to the industry, Repole said the “action of beverages” brought him back in with a new focus: to top his previous achievements by mounting an even bigger challenge.
“We only had two choices [with BodyArmor]: become the number one sports drink on the market, or go bankrupt trying to get there,” he said.
To chart the path forward, Repole said embracing a spirit of “evolution” was critical. While its main competitor, Gatorade, has stayed largely true to its original formulation, BodyArmor went through multiple iterations in-market before capturing a taste and ingredient profile that connected with the public. The experience confirmed his view that “being an entrepreneur is calling audibles,” and that brand leaders should embrace facing up to those unexpected challenges and big decisions when they inevitably arrive.
“Nobody wants to be right more than me, but getting to right is the journey,” he said.
Meanwhile, Hastie, who worked with Repole on Vitaminwater while at The Coca-Cola Company, said that BodyArmor structured its August 2018 agreement with Coke as a two-step deal in order to reinforce accountability at the company and ensure that it remains focused on its own problems rather than seeking external solutions.
The on-stage program continued with a deep dive into the CBD beverage phenomenon, led by John Simmons of Colorado-based hemp-infused food and beverage brand Weller. Sharing a snapshot of the category and current attitudes towards it from retailers, distributors and consumers, Simmons said that companies from both inside and out of the space will be “forced to reckon with this category in one way or another.”
For CBD beverage manufacturers, Simmons listed flavor, solubility and supply chain confusion as three major challenges in the current market landscape. However, even when they answer those questions, brands will still need to find an attitude or outlook that connects with consumers. Simmons broke those down into three major categories: the first — populated by names like Recess and Kickback — embraces a sense of relaxation and relief, while the second is comprised of brands emphasizing activity and energy. Finally, the third category reflects a more stylish or aesthetically interesting approach.
As such, Simmons said beverage companies should think about psychographics rather than demographics by targeting a shared set of emotions and values that carries across multiple consumer groups.
Next up on stage was a panel of speakers representing the new face and outlook of beverage venture capital featuring Patrick Finnegan, founding partner at TGZ Capital; Tracy Dubb, co-founder of M3 Ventures; and Bryan Bulte, managing partner at LiveWell Ventures. Each offered different pieces of advice and guidance to help young brands through the process of seeking investment.
Dubb emphasized the importance for founders “to be clear in what they want from an investor” so that they can take initiative in the process and make it easy for the prospective investor to add value. Meanwhile, Finnegan warned that investors can sometimes overstate their own value, and that any form of capital infusion should not be seen as a “magic bullet” that can fix anything. He also noted that he has become a more conservative investor, and that he now finds himself “looking for revenue rather than hype.”
Finally, Bill Weiland, founder and CEO of Presence Marketing, shared his insights with the audience on how he evaluates brands and business opportunities in the beverage world. The process of brand selection is a “craft, not a science,” he said, but there are ways to help increase your odds of success.
Weiland encouraged young brands to pay attention to high quality publications that can help explain major trends — like the keto diet, collagen or CBD — to mass audiences better than the brands themselves can. Following developments in the scientific community and in overseas markets can also provide valuable perspective on what consumers are looking for, he added.
Weiland also noted that “investing in people” is important, but doing so won’t solve underlying problems with a category or product that isn’t working. Finally, he shared his thoughts on several rising beverage trends, predicting that CBD will be a $20 billion category by 2025 and that keto friendly products will continue to sell at high velocities for decades to come.