With literally hundreds of beverages launched each year, new companies have a hard enough time finding unique ways to differentiate their products by function or value, let alone develop the necessary marketing plans and lines of distribution. To address the needs of these new businesses, the beverage industry has seen a surge in the creation of consulting firms dedicated to brand incubation.
In most cases, the founders and executives of these firms seem to possess an established background and years of experience working with one of the big three CSD companies: Coca-Cola, PepsiCo, and Dr Pepper/Snapple. Many of these individuals have also held a role in the development of an emerging brand or business unit.
One such person is Stephen Horgan, the founder of consulting firm Brand Aspirations. Horgan worked for Coca-Cola for 22 years and was an integral part in the development of several emerging businesses for the company including the Wal-Mart and the North American Grocery/Retail unit and the Hydration Business unit, a joint venture between The Coca-Cola Company and Group Danone.
Horgan launched Brand Aspirations in 2010 with a specialization in brand development and strategic innovation for start-up beverage and CPG companies. While Brand Aspirations employs a number of former Coca-Cola executives, the company is primarily comprised of individuals with backgrounds from outside the beverage industry who Horgan felt would offer a broad perspective in marketing to an ever-evolving consumer landscape.
“Brand Aspirations works with start-ups, emerging companies or a just group of folks with an idea, but who don’t know how to bring the product to market,” Horgan said. “We help achieve objectives for these companies early in development – that don’t have a sales force, don’t have a VP of sales – and who we can help to identify talent and achieve goals.”
Brand Aspirations has also partnered with a number of marketing firms including Buzz Mouth and AP & Associates to develop new media and social networking campaigns by focusing on trend setting consumer markets.
“Our relationship with these companies allows us to find business drivers that can be adopted into leading edge markets for start-up and emerging brands and, eventually, build out a social and digital media strategy,” Horgan said. “[Social and digital media] is an economic way to tap into smaller markets and a key way to incubate brands fairly inexpensively.”
However, Horgan said that as the biggest problem that new companies face is an overextension of their supply lines. That means, he said, that new beverage companies to have a solid footing in one region before branching out to others.
“Our goal is to help create a portable concept in a couple of key test markets and develop a successful strategy that is transferable to other areas and regions of the country,” Horgan said. “But you don’t want to extend supply lines or connect with retailers without making sure that all of the elements of the product are done correctly and you have all of the kinks worked out.”
Horgan said that in order to transfer techniques in operation management and distribution from one location to another, a company must first have the resources to do so. He pointed to the example of Brand Aspirations’ work with MillerCoors on MGD 64, a low-calorie beer introduced to the market in 2010.
“MGD 64 was an example of a product we first tested in Miami to great success. We tried to find elements of that campaign that were effective and scalable to bring to the rest of the country but had varying degrees of success in New York and Chicago. The resources just weren’t there as they were in Miami, and a lot of it had to do with supply chain. The location of production and supply is important for the logistics when transitioning from city to city.”
Horgan and his team are currently working with an importing group from Holland to develop a distribution and retail strategy for a European microbrew and specifically noted that the group had the finances to achieve strategic goals for the brand, including national distribution.
“From a geographic standpoint, [clients] have to be crystal clear about the direction of a company. If you want a national presence, you have to take your product to national retailers… but you first have to have the resources,” Horgan said. “And we don’t like to – at the beginning of our relationship with new clients – get into a financial discussion. Our core competency is not chasing investors.”
For Jack Brennan, a managing partner at advisory firm GBS Growth Partners, raising capital for companies early in development is not necessarily the first discussion he wants to have with new clients, but it’s not a deal breaker. Part of the reason for that is his new firm – formed by combining GBS with another company and an investment fund – has capital to work with.
“We don’t like to raise money for new companies… but capital is always one of the limiting factors [for new businesses], and it’s in our own best interests to invest in something that we believe in,” Brennan said. “If a product has a niche, is scalable and has a good management team, then we might get involved [with financing].”
Like Horgan, Brennan had established entrepreneurial roots in The Coca-Cola Company and spent much of his eleven years with the company launching new business ventures in Asia including the development of its Taiwan … Amalgamated division.
With a high level of expertise in beverage distribution, retail sales, marketing and finance, Brennan and his partners in GBS, John Blackington and Gordon Hill, each of whom also spent several years working for Coca-Cola, most often work with clients to develop well-organized and forward thinking business plans.
“One of our main focuses is on brand commercialization,” Brennan said. “Some people like to demean it and call it ‘sales and marketing,’ but we’ve formalized the business planning process. It’s really about directing entrepreneurs and getting their heads straight from the business plan to operating plan. It’s a focused attack that includes measurements of success.”
“And if you need money, we know what to include in the business plan and what places to go for the right deals, hedge funds, venture capitalists and angel investors,” Brennan continued. “We want people to understand that we will go to our Rolodex and be able to help.”
Through its Capital Advisor Program, GBS has an informal relationship with a boutique investment firm and with it access to a $30 million health and wellness fund, Brennan said. Though he noted that GBS has yet to make use of the fund, he did say that GBS was looking for a new client “to bring into the fold.”
To enhance marketing efforts for its clients, GBS has partnered with Brand Action Team (BAT), a firm with expertise in social media and digital marketing, and designing innovative promotional campaigns. Additionally, BAT founded the US Drinks Conference, an international forum that, according to Brennan, gives GBS and its clients greater opportunities for global marketing.
GBS is currently working with a number of clients including Crunk Energy (“They are good at marketing and branding – not so much on the sales and distribution side. We’re working on getting them into 20 states by this summer.”); and Global Entry, Inc. makers of detox beverage Rebootizer (“Numerous players have entered the fray. We think Rebootizer has done it right.”)
Both Horgan and Brennan say they favor a patient and disciplined approach to brand incubation in both strategy and implementation. Indeed, their similar vision for new brands suggests an addendum to the famous idiom: Rome was not built in a day… and neither will your beverage company.
“Our passion is [helping] early stage companies to meet their potential,” Horgan said, “but it’s a step-by-step process.”