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Envisioning The Future Of Beverages
1. ENVISIONING THE FUTURE OF BEVERAGES
Another Decade of Change…
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2. NEIL KIMBERLEY
(914) 482 0534
NEILGKIMBERLEY@GMAIL.COM
• Born in the UK, • Brand Director on • Networking
Why Would You Listen To Me?
Why Am I Here?
Who Am I?
now live in Snapple 97 -00
Brewster, NY • Business
• VP Strategy CSAB Development
• Moved to the US at 00 - 07
21, went to GWU • I want your
• Foray into thoughts and
• Past careers ownership in 2008 opinions
include Audio
Engineering and • Started FF&B in 09
Advertising servicing private
equity investors,
• Last 18 years in beverage
beverages entrepreneurs and
Wall Street
analysts
2
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3. OBSERVATIONS
1. The ability to exploit change is the
ability to win
3
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4. WINNERS HAVE EXPLOITED CONSUMER
CHANGE
$5,000
$5,000
$4,100
$4,000 $3,600
$3,000
$2,000
$2,000 $1,600
$1,400
$1,000 $800
$375 $400
$237
$95
$-
4
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5. The Business Development Theory
BUT “WINNING” IS NEVER IMMEDIATE
Innovation Brand Volumes Since Launch Through 2007
120.0
100.0
80.0
Vol (288 oz EQ)
60.0
40.0
20.0
-
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year Year Year Year Year Year Year Year Year Year Year
10 11 12 13 14 15 16 17 18 19 20
Frappucino SoBe AriZona Snapple
Source: Beverage Digest 2007
Glaceau Fuze Nantucket Nectars Propel
Red Bull Hansens Rockstar
5
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6. …AND CHANGE HAS NOT JUST BEEN IN PRODUCT
1999 2009
Value
Taste
Consumer
Function Innovation
Drivers Fun Health Wellness
Design Convenience
Sociability
Conversation Buzz
More SKUs
Retail Discipline Retail Distribution
Consolidation Consolidation
Commercial
Drivers Relationships
Tech-Based “Fact-Based”
Selling Selling
People
Data For Fewer People
Everything
6
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7. OBSERVATIONS
1. The ability to exploit change is now
the ability to win
2. A Unique Idea is Not Enough
7
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8. THE DRIVERS OF SUCCESS
Attribute Implication
1. Tenacious, but flexible • Strong enough to have
management strength of conviction
• Realistic enough to change
when it is needed
2. Consumer Relevant • Easy to understand and
Product Difference dimensionalize
3. Willingness to Drive own • Challenge conventions
Distribution Strategy when needed
4. Effective Capitalization • Focus on the business, not
the investors
6. The Right Marketing • Build a brand from a product
8
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9. BIG BEVERAGE HAS THE IDEAS AND PROCESSES…
But innovation and
incubation run counter to Ineffective
their business model Portfolio
Strategy
Fear of failure
Slow to respond
Over-Analytical
Ineffective
Impatient for success
Over-invest too early
Incubation
Lack of Prioritization
Strategy
Silo-ed Responsibility
9
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10. COKE AND VENTURING
Acquisition
Approach Investment
Approach
Glaceau, Fuze, NOS, Honest Tea, Zico, Illy
The approach is a step in the right direction, but the brands are still vulnerable to
the challenges that have always beset big beverage incubation.
No Scale = No Focus
10
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10
11. NEW BEVERAGE DYNAMICS
Entrepreneur View Big Beverage View
Build To Flip
Easier to buy
than Innovate
Maximize
Keep Investors
Growth No More
Hopeful
Minimize Profit Portfolio Fit Bathtub
Millionaires
When to hold,
Set Up Bidding Overpay and Needs to be a
when to fold?
Underperform big idea
Distributor View
Portfolio Ease of 11
Ability to Support Fair Share of Value
Incrementality Management
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12. OBSERVATIONS
1. The ability to exploit change is the
ability to win
2. A Unique Idea is Not Enough
3. Change is Inevitable
12
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13. MAINSTREAM BEVERAGES ARE BEING SQUEEZED
Medium Margin Low Margin High Margin
Mainstream
Beverages
Health CSDs Functionality
Water Milk Sports
Tea Coffee Energy
Juice Emerging
13
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14. SO, WHERE ARE WE GOING?
Short Term
2010
- Bringing The Pain
- Consolidating for
Success
- Slowing Innovation
14
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15. Short
Term
BRINGING THE PAIN
Soft Drink Businesses have performed well in the recession
Retailers will look to increase their share of value
Input costs increasing
Consumer buying power flat – and willing to compromise
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17. Short
Term
DPS VS HANS VS SWY VS KR VS WMT
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18. Short
OIL PRICES Term
18
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19. Short
Term
ALUMINUM PRICES
19
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20. Short
Term
CONSUMER VALUE INDICATOR - COT
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21. Short
Term
CONSOLIDATING FOR SUCCESS
Opportunites Risks
Consolidated Less More Distance
Split Model
Model Dissonance from from the
Boardroom to marketplace
Shelf
Ability to Be Held Hostage by
Retailer Intimate Retailer
Less Overhead Less Nimble,
in Management Less Nuanced,
Greater Portfolio Less Focused
More Less
Value Value 21
Available Available
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22. Short
Term
SLOWING INNOVATION
Fewer innovations likely
Small Beverage Co’s
Less Angel and Venture capital
available
Big Beverage Co’s
More Risk Averse
Barriers to entry increasing
Distribution and Retail
Consolidation
Consumer retrenchment
22
More Risk Averse
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23. SO, WHERE ARE WE GOING?
Medium Term
2011- 2012
- New Model Marketing
- “Evil Sugar”
- Outsiders Take An
Interest
- Distributor Leverage
23
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24. Medium
Term
A MARKETING MODEL FOR THE DIGITAL AGE
• Differentiation based in marketing
• Vulnerable to price-oriented promotion
Old Model • Awareness driven by one-way advertising
• Availability bought
• Differentiation based in product
• Price-oriented promotion less effective
New Model • Awareness built by consumer
conversation
• Availability earned
24
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25. Medium
TRADITIONAL BEVERAGE MARKETING Term
APPROACH
Trial • Prioritizing
Build Consumer and Availability alone
Retailer Experience is not enough to
of brand generate success
• But generating
trial and
Awareness Availability
Create a brand awareness are
with target Get Distributors and considered
consumers Retailers to carry your expensive and
brand inefficient.
25
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26. Medium
Term
FEET ON THE STREET – RED BULL
Red Bull has been the master of resourcing street level “Feet on the street” activity.
Red Bull Micro Cell Plans and
On
Premise
executes
Creates unpaid local Manager bar/club
Field
exposure Marketing events
• Coolers at radio stations Manager Field
• Coolers at local tV news Sales
• Locker rooms at local sports Manager Executes
teams Key
Account Nationally
Links to Distributor Manager Mandated
• Maintains link between
Field
microcell and distributor Sampling Off Premise
• Develops driver sales people Manager Retail Events
Plans and executes
local sampling
events at retail and 26
events
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27. Medium
FEET ON THE STREET – GLACEAU
Term
Glaceau organized their model targeting the weakest links of the selling chain:
Point of contact with retail.
Glaceau’s marketing model
relied on product trial with
retailers and consumers Distributor
R Retailer
Confidence
e Visibility
Market Blitz Momentum H
forced availability s
u
o Consumer
m Events
u
Developed distributor a
r
confidence n
c
Visible sign of
e
commitment
s
Trial + Availability
27
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28. A NEW WORLD? Medium
Term
A New Approach To The Old Issue…
Business
Strategy Digital
Activation Real Life
Execution
Product Efficient consumer delivery, Sales Calls
Positioning Drive to store (co -marketing), Store Promotion
Targeting Impel to purchase Sampling
28
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29. Medium
Term
EVIL SUGAR
New Tax is almost
inevitable despite the
inequities
Cause multiple
complications for the
industry
Will become a political
football
The more we oppose, the
more likely the tax will be
poorly thought through 29
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30. Medium
Term
DISTRIBUTOR LEVERAGE
Drivers…
Scale
Tactical Opportunity
Vanity
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31. Medium
Term
OUTSIDERS TAKE AN INTEREST
One of the non-US global players will want to be
bigger in non-alcoholic US beverages
31
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32. SO, WHERE ARE WE GOING?
Long Term
2012 – 2014
- Food is Medication
- The Big Shakeout
- Customer Evolution
32
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33. Long
Term
LONG TERM
Food is The Big Customer
Medicine Shakeout Evolution
• The next level • Ineffective • Fewer, more
of functional pricing and powerful
products promotional customers at
• Nutrigenomics models put the top
• Greater multiple • Multiple
Understanding retailers in smaller
of Diet” jeopardy customers in
• Real, • Failure of emerging
Believable inefficient channels at
approach to retailers the bottom
healthy results in even
greater
consolidation 33
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34. AN EXAMPLE OF A PROJECT LEVERAGING
THIS THINKING
Unmet
Product Effective Flexible New Model
Consumer
Execution Capitalization Sales Marketing
Need
Trial
PhyGital Marketing
Availability Awareness
34
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35. APPETITE SUPPRESSION IS
THE NEXT BIG DIET TREND
Even diet plans have begun to address the
appetite suppression need…
•Research
identifies that “Focus is shifting Weight Loss Programs
appetite towards foods and • Example: Weight Watcher’s
Momentum featuring
suppression is beverages that can Hungry
a key need be digested more • “Control Hunger, Beat
Temptation, Stop Dieting,
for dieters, slowly, reducing Start Living”
but there is a hunger pangs
lack of between meals and Weight Loss Books
effective food allowing dieters to • The Volmetrics Weight
or consume less.” Control Plan
supplements • “Feel Full on Fewer
Calories”
- AND NO
BEVERAGES!
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36. THE 1ST APPETITE SUPPRESSION
BEVERAGE LAUNCHES FEBRUARY 2010
Brooke Burke - Spokesperson
Winner – Dancing with the Stars
Host – Making the Band
underWAY is simple CEO Modern Mom Magazine
and effective
Dow Superfiber stops
“gastric emptying” -
increases feeling of
stomach fullness -
without gas or bloating
Low GI Sweeteners
stop insulin and blood
sugar spikes that tell underWAY will drive awareness
the brain you are through significant TV, Outdoor and
hungry PR support at introduction and on an
ongoing basis.
B Vitamins increase
energy levels
36
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More at www.under-way.com
underWAY - The healthy way to put hunger on hold™…
37. ENVISIONING THE FUTURE OF BEVERAGES
Thank You!
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