In the 18-month gap between in-person editions of BevNET Live, the beverage industry has undergone significant evolution from the way startups enter the market to the way strategics are crafting their portfolios. On day two of BevNET Live Winter 2021 in Santa Monica, those seismic shifts were examined through the lens of one of the industry’s biggest conglomerates with a panel featuring members of The Coca-Cola Company’s New Revenue Streams group.
Under the leadership of CEO James Quincey, Coke has navigated the pandemic marketplace through a restructuring of not only its brand lineup, but the way it thinks about and approaches the industry overall. Since 2020, the company dropped well-known but underperforming lines like Zico, Odwalla and TAB, while picking up BODYARMOR and embracing alcoholic beverages through sparkling water brand Topo Chico.
As Daniel White, Chief of New Revenue Streams at Coke, described on stage on Tuesday, Coke has shifted its core focus away from “Brands” and towards “Businesses.” In the past, Coke’s Venturing and Emerging Brands (VEB) unit, had been focused on “finding the next billion dollar brand,” but today that idea is outdated and the industry has room for a broader array of companies to meet a larger, more diverse beverage market.
“Today it’s about finding the right model for the right brand,” White said, describing the new way of thinking as a transition from venture capital (i.e. investing and scaling brands) to private equity, where each brand and category needs to be met on its own terms.
Turning to Coke’s immediate interests, White highlighted five new revenue streams the company is focused on, including alcoholic drinks, the Topo Chico brand, coffee, mixers, and new packaging formats built around home use.
“The world is more open than ever, whether we like it or not,” he said. “Closed systems are difficult to build and difficult to protect.”
In regards to alcohol, White said that Coke is entering the space carefully, but at the same time very little is off the table — including potential line extensions from core brands. Though it didn’t come up during the panel, the move would follow in the path of PepsiCo, which announced this year it has partnered with Boston Beer Company for the launch of a Hard MTN Dew line.
Joining White on stage were Surbhi Lai, Director of New Revenue Streams, and Matt Hughes, VP of Emerging Brands Incubation for VEB Coca-Cola. Lai noted that as Coke adopts this new strategy, the focus is no longer on the growth of individual brands, but how each business “ladders up” to the greater platform. She also highlighted a need to pay more attention to baby boomer consumers as that generational demographic still commands the highest spending power in the U.S., as well as a continued focus on technology, with Bitcoin-accepting vending machines as one notable innovation.
Hughes, a longtime leader of VEB, also made it clear that Coke is still paying attention to entrepreneurial brands, but the hallmarks of a successful company have extended far beyond top line growth. He suggested that rising brands need to think about bottom line, profitability, gross margins and their ability to manufacture in the long term. Where VEB used to seek out small brands it could make big, the table stakes are higher today.
Still, even as Coke has turned away from last decade’s game plan and commits to a new philosophy for growth, the company will still continue to invest in and develop young brands.
“We’re open for business,” Hughes said. “We never really closed.”
Highlights from day two of BevNET Live also included:
- Cliff Morgan, founder and CEO of G Fuel, sat down to discuss how he built a thriving energy drink brand by honing in on the gaming community and how the company remains authentic through brand partnerships and savvy marketing tailored to its niche, but larger than you’d think, demographics.
- Nutpods CEO Madeline Haydon and United Sodas of America CEO Marisa Zupan both started their businesses as direct-to-consumer brands, but sat down to talk about the need to make the leap to brick-and-mortar retail and how they approached becoming omnichannel companies.
- Brian Kelly, the chairman and CEO of PearlRock Partners, delivered a presentation drawing from his experiences scaling Keurig to share how beverage brands can best meet the demands of their investors, their retailers and their consumers.
- The event ended with a panel looking towards the future of beverage investment, featuring Redbud Brands founder Brian Goldberg, Supply Change Capital managing partner Noramay Cadena and Cambridge SPG managing partner and COO Filipp Chebotarev. The trio dove into the current trends in financing and where valuations and deal-making are headed in the near future.