Foods, Fluids & Beyond

For Food & Beverage Companies, The Mission Has Not Changed

2011-08-08T09:13:00.000-04:00

While the world focuses on the challenges of debt and macro-economic budgets, food and beverage companies have again become a refuge for investors.

The challenge will be to maintain the momentum that has been made by the structural changes in the food/beverage marketplace:

- Build and leverage the margins created by truly functional products
- Find ways to bring "coolness" through design to budget products
- Create brand loyalty through establishing closer links between products, brand activators and consumers to build a virtuous circle of trial, awareness and availability.

A downgraded America may face some new issues, but Food and Beverage companies face the same issues they have faced since the last downturn. Now is the time to recognize and act on the opportunity.

Relaxation Foods and Beverages

2011-08-05T10:59:00.000-04:00

Long distance travel is often a great opportunity for sleep. Long plane rides can only be improved by unconsciousness. So recently I had the opportunity to put a couple of "relaxation" products to the test on planes. While there are many items like Purple Stuff and Drank out there, I ended up with two products to compare at different times:

The first was I AM SLEEPY, from the I AM line - taste was tough, but the impact was great. Peaceful sleep from LAX to New York.

Second was Marley's Mellow Mood - Citrus version - and tasted like a pleasant Lemon Tea. Again, after a long couple of days of travelling the flight to Brussels passed rapidly, peacefully - and with plenty of zzz's.

So, the products work. Is there an opportunity?

While the Marley idea is very cool, I would be concerned that it is not a refreshment beverage idea. The shot is more convenient, and delivers a functionality in a fun way. I would be concerned that the only relaxation times are in the evening - when the competitive set is alcohol.

Then there are Lazy Larry's melatonin brownies... These "Amsterdam-inspired" relax with a brownie concept is edgy and cool. But may be at the edge of what is OK.

Delights of Twitter...

2011-08-05T10:35:00.001-04:00

I have recently been using Twitter far more frequently as a way to highlight the mist recent emerging tidbits of information that pique my interest. So, follow my food and beverage thoughts at @foodsfluidsbynd, and my personal comments on life, cricket and any other interesting items at @Justcoz.

Apparently @Justcoz is misquoted a lot from the non-profit community... I get a lot of followers from there. Hope they enjoy the diversity

The New Quosh

2011-02-24T09:06:00.000-05:00

A lot has been made of the new Kraft "liquid flavoring" product Mio. But in the spirit of what is old is new again, it looks to me that it is just a re-imagining of what is often called a coridal in the USA, and orange squash in England.

Their opportunity has been the stick pack powder business that has grown dramatically in recent years. The brand leading that charge has been Kraft's own redoubtable Crystal Light. Now they see the chance to make the er-constitution category more contemporary - and reach a younger consumer.

Certainly I applaud their creativity in their "Liquid Water Enhancer", but unless there is a significant taste improvement, it may struggle to sell at the premium price they are asking. People fundamentally buy reconstituted products to save money.

So this is a good opportunity to show an old Quosh package - but I'm struggling to find one. Instead here is some vintage advertising that is from way before my time...

Make Your Own Coca Cola

2011-02-15T12:32:00.000-05:00

This week Ira Glassman's This American Life (I am sourcing their Facebook page because their homepage has been overwhelmed) has an interesting exploration on Coca Cola - and its taste.

We all know the story that the Coca Cola recipe is a guarded secret because it cannot be replicated. Well, Ira used a published potential original recipe from the Atlanta Journal Constitution to see if he could replicate it.

Here's the recipe I transcribed:

Coco Cola - From 1897

To create the flavor base mix the following:

20 drops Orange Oil

30 drops Lemon Oil

10 drops Nutmeg Oil

5 drops Coriander Oil

10 drops Neroli Oil

10 drops Cinnamon

8 oz Alcohol

In a separate container mix:

2 oz of the Flavor Base

3 oz Citric acid

1 oz Caffeine

2 1/2 Gallons Water

2 pints Lime Juice

1 oz Vanilla

1.5 oz Caramel Coloring

30 lbs sugar

Fluid Extract of Coca (yes - the one with Cocaine)

Ira Glassman had this made up by Jones soda and Sovereign Flavors- only to discover that it is not necessarily about the generic ingredients but the source of the ingredients that can make a difference. And that flavor technology and tastes have come a long way since the 19^th century.

In my experience a good flavor technologist can replicate the taste of Coke - or Pepsi. The guys at RC used to test my taste buds by presenting store bought Coke vs their lab-made sample. I could not pick the difference - and often preferred their lab sample.

Is the above recipe correct? Or an abandoned ancestor? Tough to know. But it also shows that it has become the strength and distribution of the brand that is as or more important as the taste or efficacy off the product.

Homeopathy in the UK and Integrative Medicine in The USA - Contrasting Approaches

2011-01-19T10:47:00.000-05:00

The NBJ has reported that the US government would purchase integrative (ie natural) medicines from the public purse worth $15B over the next 10 years. Frankly, this a stunning number and endorsement for Complementary and Alternative medicine.

At the same time, homeopathy has been under fire in the UK. Above is the BBC investigation into homeopathy from Newsnight which paints a very negative picture of the practice.

An amazing divergence of opinions...

Off Topic

2011-01-18T20:05:00.001-05:00

I remember when you watched the movie to avoid having to read an assigned book in lit class. Now there are even ways to avoid sitting through the movies...

- Posted using BlogPress from my iPhone. Typos courtesy of predictive text.

I don't know about you...

2011-01-18T20:04:00.003-05:00

I don't know about you, but when I think iced tea, I think cage fighting...

-
Ok, so the young male consumers of 99c teas may be the right connection, but Chuck Liddell seems an unlikely way to engage the tea consumer, even with the popularity of MMA.

Posted using BlogPress from my iPhone. Typos courtesy of predictive text.

Yesterday's news...

2011-01-18T20:04:00.001-05:00

Sweetbay's own brand of vitamin-enhanced water appears to be on the way out...

- Posted using BlogPress from my iPhone. Typos courtesy of predictive text.

The joys of a big display.

2011-01-18T19:59:00.001-05:00

I have been in Florida for the weekend, and visited a few Supermarkets. Being January they are dominated by the merchandising of beverages, snacks and beer to get people in the mood for the superbowl. Some were big vertically, some horizontally- but my favorite was the fake truck bed from a Publix in Fort Myers.

- Posted using BlogPress from my iPhone

Location:Main St,Sarasota,United States

A Wander Down Memory Lane

2011-01-13T15:18:00.000-05:00

Vimto - An Early Favorite

As a tween, my family moved from Sheffield in the Northeast of England to the Northwest: To be precise St Helens. Actually a city of around 200,000 it was a similar industrial center - we swapped a decaying steel-making city for a decaying glass-making town.

But the change of locales included a change of available foods and drinks - and my first encounter with Vimto. Most Brits can identify Ribena - the GSK blackcurrant drink. But there are a select few that really know Vimto. I can remember the first time I saw it - and had no idea what it was - at a small independent grocery. I bought it and enjoyed for the first the time the sweet, yet complex purple fluid. It is not as sweet or simple on the palate as Ribena, it is a mix of spices and juices that remains unique.

After a quick check Vimto on Wikipedia, I note that the canned version I used to buy was carbonated (I remember it was still) and it can be a cordial too (vaguely remember that as well).

But mostly I remember Vimto as a new, underground discovery (since it was created in 1908 - I was wrong).

And apparently they have had a good year and are now in a new PET bottle. Ah, for a Huyton's Iced Bun and an ice cold (well lukewarm) Vimto...

Twitter n'Stuff

2011-01-11T11:04:00.001-05:00

I decided to start a tweet stream of the interesting food and beverage stuff that I come across... Follow me at http://twitter.com/foodsfluidsbynd . I will continue to do my personal tweeting (hope you like cricket and music) at http://www.twitter.com/justcoz.

Bye Bye Caffeine in Four Loko... Luckily there are lots of other replacements

2010-11-17T15:24:00.001-05:00

With thanks to Lehrman Beverage Law...

# 3 AM Vodka with Caffeine and Guarana
# 3 Sum Malt Beverage with Caffeine
# 24-Seven Malt Beverage with Caffeine and Guarana
# 808 Vodka with Caffeine and Guarana
# A:M Vodka with Caffeine
# Agwa Herbal Liqueur with Guarana
# Alexandra Cream Liqueur with Coffee Beans
# Atwater Malt Beverage with Coffee Beans
# Axehead Malt Beverage with Guarana and Caffeine
# Bacchus Meadery Honey Wine with Coffee
# Barley Island Black Magic Java Stout with Coffee Beans
# Bee Creek Stout with Coffee
# Bell's Java Stout with Coffee
# Belvedere IX Vodka with Guarana and Ginseng
# Big Boss Beer with Coffee
# Big Shot Stout with Espresso
# Bluegrass Brewing Co. Stout with Coffee
# Bold City Coffee Stout with Bean Coffee
# BooYa Tequila with Caffeine
# Bootlegger's Black Phoenix Ale with Coffee
# Borghetti Cafe Sport Espresso Liqueur
# Brooklyn Intensified Coffee Stout Ale with Coffee
# Bruery Turtle Doves Ale with Cocoa Nibs
# Burnett's Espresso Flavored Vodka
# Buzz Bomb Vodka with Caffeine and Guarana
# Buzz-A-Rita Margarita with Caffeine and Guarana
# Cafe Boheme Liqueur with Vodka and Coffee
# Cafe Lue Orange Wine with Coffee
# Captain Lawrence Stout with Espresso Beans
# Captain Morgan Rum and Cola
# Catalyst Malt Beverage with Caffeine
# Chang Rai Green Tea Wine
# Charbay Aperitif Wine with Tea Leaves
# Charbay Tea Flavored Vodka with Whole Leaf Green Tea
# Chicca Ale Brewed with Coffee Beans
# Cofia Vodka with Hazelnut Espresso
# Cohete Rum with Guarana
# Core Malt Beverage with Guarana and Caffeine
# Corner Stone Ale with Espresso Coffee
# Dark Horizon Ale with Coffee
# Dark Horse Perkulator Malt Beverage with Coffee Grounds
# Deschutes Black Butte Porter with Coffee and Chocolate
# Dizzy Panda Green Tea Wine
# Dogma Ale with Kola Nut and Guarana
# Dolce Nero Liqueur with Espresso Beans
# Dogfish Sah'Tea Ale with Black Tea
# Dogfish Theobroma Ale with Cocoa Nibs and Cocoa Powder
# East End Literally Just a Coffee Porter
# Ecstasy Liqueur
# Esprexxo Coffee Flavored Vodka with Caffeine
# Everglo Liqueur with Caffeine
# Firelit Coffee Liqueur made with brewed coffee
# Flying Fish Ale with Coffee
# Fort Collins Ale with Coffee
# Founders Breakfast Stout Brewed with Coffee and Chocolate
# Four Malt Beverage with Caffeine and Guarana
# Freaky Ice Vodka with Guarana
# George Dickel Whisky and Cola
# Goose Island Bourbon County Stout with Coffee
# Grind Rum with Coffee Extract
# Gruv Malt Beverage with Guarana
# Hard Wired Malt Beverage with Caffeine and Guarana
# High & Mighty Sono Distrutto Stout with Espresso Beans
# Holt's Cyclone Lager with Guarana, Kola Nut, Ginseng
# Hoodoo Majic Rum with Caffeine
# Iki Beer with Green Tea Leaves
# Illy Espresso Liqueur
# Ineeka Ale with Green Tea
# Ithaca Eleven Malt Beverage with Coffee
# Jack Hammer Malt Beverage with Guarana
# Jah-Va Stout with Coffee
# Jakk'd Grain Neutral Spirits with Caffeine
# James River Plantation Sweet Tea Flavored Vodka
# Java Head Stout with Coffee Beans
# Java the Hub Porter with Coffee
# Javara Rum with Coffee
# Jett Vodka with Caffeine and Guarana
# Jim Beam Bourbon and Cola
# Joe Mama's Milk Stout with Coffee
# Joe Porter with Coffee
# Joose Malt Beverage with Caffeine and Guarana
# Kahlua Coffee Liqueur
# Keweenaw Mogiana Ale with Coffee
# King Mocha Java Stout with Coffee
# Kona Brewery Da Grind Buzz Stout with Coffee
# Koval Liqueur with Coffee
# La Granja Stout with Coffee
# Lagunitas Cappuccino Stout Brewed with Colombian Coffee
# Laurelwood Espresso Stout
# Lefty's Porter with Coffee
# Leopold Brothers Coffee Liqueur with Ground Coffee
# Liquid Charge Malt Beverage with Caffeine and Guarana
# Long Trail Malt Beverage with Coffee
# Lost Coast Java Brown Ale with Coffee
# Lotus Vodka with Caffeine and Guarana
# Luna Coffee Stout
# Macarsi Coffee Liqueur
# Mancos Valley Liqueur with Coffee
# MateVeza Ale with Yerba Mate
# Max Malt Beverage with Caffeine
# MacTarnahan's Goose Bump Stout with Coffee Beans
# Meantime Malt Beverage with Coffee
# Mette Grape Spirits with Coffee
# Mezzaluna Espresso Liqueur
# Mickey’s Stinger Malt Beverage with Caffeine and Guarana
# Mikkeller Black Hole Stout with Coffee
# Mikkeller Oatmeal Stout Brewed with Coffee
# Minx Vodka Cocktail with Guarana
# Mobius Lager with Caffeine
# Mocha Death Ale with Coffee and Cocoa
# Modern Spirits Abstract Standard with Caffeine and Guarana and Tea Leaves
# Modern Spirits Vodka with Green, Black and Oolong Teas
# Mokka Liqueur with Coffee Beans
# Moonshot Beer with Caffeine
# Natty-Up Beer with Caffeine
# New Belgium Giddy Up! Ale with Espresso
# New Belgium Lips of Faith Ale with Yerba Mate
# New Glarus Stout with Coffee
# Nigata Malt Beverage with Green Tea
# Overcast Espresso Stout with Coffee
# Oxtails Vodka with Ginseng and Guarana
# P.I.N.K. Vodka with Caffeine and Guarana
# P.I.N.K. Sake with Caffeine
# Peak Ale with Organic Coffee
# Peak Spirits Grappa with Coffee Beans
# Peche Mortel Stout with Coffee
# Pinnacle Double Espresso Vodka with Caffeine
# Pipeline Porter with Kona Coffee
# Pozharnik Stout with Coffee
# Qi Liqueur with Smoked Black Tea
# R2 Rum with Taurine and Caffeine
# Real Ale Porter Brewed with Coffee
# Red Eye Black Ale with Coffee Beans
# Redhook Double Black Stout with Coffee
# Rhythm Liqueur with Caffeine
# Ricochet Malt Beverage with Caffeine and Guarana
# Rize Malt Beverage with Caffeine and Guarana
# Rockstar Malt Beverage with Caffeine
# Roundhouse Corretto Liqueur with Coffee
# Saint Aubin Rum with Coffee Grains
# Santa Cruz Brewing Porter with Coffee
# Sao Vodka with Guarana and Caffeine
# Seagram's Coffee Flavored Vodka with Caffeine Added
# Shango Rum Liqueur with Guarana
# ShotPak Gravity Vodka with Caffeine
# Slingshot Vodka with Caffeine
# Smirnoff Espresso Flavored Vodka with Caffeine
# Smirnoff Raw Tea Malt Beverage with Tea and Caffeine
# Smirnoff Vodka and Guarana
# Southern Tier Mokah Stout with Chocoloate and Coffee
# Spykes Malt Beverage with Caffeine and Guarana
# Starbucks Coffee Liqueur
# Stella di Natale Ale with Green Tea
# Stirrings Liqueur with Espresso
# Stone Brewing Coconut Porter with Kona Coffee
# Surly Coffee Bender Beer with Coffee
# Surly Four Stout with Coffee
# Swamphead Midnight Oil Ale with Coffee
# Sweet Horizon Ale with Coffee
# Tenure Espresso Flavored Vodka
# Terrapin Coffee Oatmeal Beer with Coffee
# Terrapin Depth Charge Espresso Milt Stout with Coffee
# Thirdrail Beer with Caffeine
# Three Olives Vodka with Caffeine
# Torque Malt Beverage with Caffeine and Guarana
# Tosta Ale with Cacao
# Trader Joe's Vodka with Chocolate and Espresso
# Troll Liqueur with Guarana
# Twin Shot Java Cream Vodka with Espresso
# Twisted Pine Espresso Stout Malt Beverage with Espresso
# Twisted Tea Malt Beverage with Tea
# Tyranena Porter Brewed with Coffee Beans
# Underground Grain Neutral Spirits with Guarana and Ginseng
# V2 Vodka with Caffeine
# VAD Vodka with Caffeine, Guarana and Ginseng
# Valdamor Grappa with Coffee
# Van Gogh Double Caffeine Coffee Flavored Vodka
# Vicious Vodka with Caffeine
# Vinergy Table Flavored Wine with Caffeine
# Volta Vodka with Caffeine, Guarana and Yerba Mate
# Voyant Chai Cream Liqueur with Black Tea
# W. Willy's Wine with Caffeine and Taurine
# Walders Coffee Liqueur Made with Coffee
# White Birch Malt Beverage with Coffee
# Wide Eye Liqueur with Caffeine
# Williamsburg Coffeehouse Stout Ale with Roasted Coffee
# Wolaver's Ale with Coffee
# XZO Vodka with Caffeine and Guarana
# Yeti Great Divide Stout with Coffee
# Zen Green Tea Liqueur
# Zygo Citrus Flavored Vodka with Guarana and Yerba Mate

The Rush To Judgement

2010-11-15T13:13:00.000-05:00

Over the past week since I first wrote the Four Loko post Oklahoma, Washington and now New York have pulled the drink off retail shelves- all accompanied by suitably outraged politicians and shocked media.

We can now await the crackdown on Vodka/Red Bull, rum & coke and Irish Coffee with baited breath...

Fascinating Cocaine Infographic

2010-11-12T08:12:00.001-05:00

From http://www.pharmacytechnician.net/ - click on the image to see it full size.

Especially like the Coca Cola trivia.

Via: Pharmacy Technician

Four Loko And the End of RTD Caffeine/Alcohol Beverages

2010-11-09T10:18:00.000-05:00

Sometime in July, I had arrived at the Mad Dogs cricket ground in Greenwich, CT and had begun the process of getting ready for the game. I unlocked the front gate and the club house - all pretty normal. Our ground is located by the local recycling center (ok, the dump) and is often used by the local teens to do what teens do. They disappear into the nearby woods during the day to get high. And at night they hang outside our clubhouse to drink a beer or three. Normally this ends with the ritual smashing of bottles on our steps, requiring some clean up. But not this time.

The alcohol of choice for the previous evening - and would be for the rest of the summer - was Four Loko.

Four Loko is a caffeinated malt liquor. As an article in Fast Company put it, one 23.5 oz can contains the equivalent alcohol of a six pack of Budweiser (yes, its over 12% alcohol by volume) and the caffeine equivalent of two Red Bulls (around 160 mg).

At the time, I was happy that we just had a few cans to throw away, somewhat surprised to see another alcohol/caffeine product and noticed how spilled product more resembled a New Age juice drink in smell and color, rather than a beer.

Later at the local bodega (yes, there are some in Greenwich), I saw the cans, on the bottom shelf, and priced at $3 each (double the normal price), I asked the owner how it was selling. He responded "Like you would not believe".

I googled the product at home to discover that 4 Ohio State grads had started the brand and were trying to get their idea off the ground. Unsurprisingly however, they were becoming the new bete noir of the campaign against alcohol/caffeine.

The "caffeine+alcohol" issue has been under debate since last year. The argument is that the depressant effects of alcohol are masked by caffeine's stimulant effects, thereby enabling the drinker to imbibe for longer, and causing them to drink too much, which results in more people drinking and driving, getting into fights and generally becoming a menace to society.

And we all know how much the media likes a "menace to society". In 1976 it was the Sex Pistols (well at least in the UK), In 1988 it was wine coolers, in 1997 it was Smirnoff Ice, Zima and other "alcopops", in 2000 it was Red Bull and Vodka, last year it was Sparks (only 6% alcohol), and today it is Four Loko.

This is a simple and easy story for local TV, and its easy to get a dramatic quote from parents, college presidents etc etc.

A few examples of the hysteria are here:

New Mexico

OK... a few observations

The real insight here is that Four Loko has a real value proposition. - Fruit taste, and a significant kick that does not put you to sleep - all for around $3.

The image and reputation of the product are creating the phenomena... getting the names "liquid cocaine" and "blackout in a can" are great for their young male purchasers - but a real scare for the rest of puritan American society. Remember prohibition only ended 78 years ago.

Four Loko has also become a favorite for young urban black and hispanic drinkers. And they are also making viral videos for the brand.

Youtube is also the location of viral videos in competition to see who can chug the product fastest.

Or Shotgun it

or Beer Bong it...

Alcohol and caffeine is not inherently bad for you. Like other recreational substances, it is about your tolerance and ability to be responsible with it. Four Loko has combined taste, effect, branding and price into a powerful proposition that engages and excites its consumers - while scaring just about everyone else.

So go and buy one for the experience now - I would guess that it will only be available on the black market by 2011.

Leaving a Bad Taste...

2010-10-20T18:22:00.000-04:00

Trident Layers - So Good You'll Want To Get Paid in Gum

There are three objectives in launching a new brand: Awareness, Trial and Availability.Often the "Trial and Awareness" is generated an by innovative sampling technique. So it was with interest that some friends of mine saw the Trident Layers Brink's Truck in lower Manhattan on Monday.

Being interested marketers they went over to see the nicely decked out vehicle and see what the trial experience was all about. With the campaign around "So good you will want to be paid in gum" the Brink's truck appeared to be a cute idea, with he staff sampling dressed as security guards.

Then the strangeness happened. They were given an scratch off instant win game card - with Four Potential prizes. $50, $25 or $10 in cash - or free gum. This is, of course a sampling technique, so my friends were expecting at minimum a free sample of new Trident Layers.

After six "not a winner" cards it became apparent that the only way to try the gum would be to go to the local Duane Reade and buy some Layers. Read the small print on the game card and only 1 in 12 won free gum.

Why?

The objective of this event is to sample the product: Surely if you have anyone walk away without the product you have missed your chance for Trial, you may have frustrated a potential consumer.

Come on Kraft, it's chewing gum. It has massive margins.

Why would you go to all the trouble of dressing a Brink's truck and providing game cards (which were probably as expensive as a pack of gum) and NOT give the intrigued consumer a gum sample?

Did the sampling budget run out of money? Was the Marketing Director asleep at the switch? Or is this just a marketing department over-thinking everything?

Alan and Ted walked away thinking "F*** Trident Layers, I'm buying Wrigley".

The Day After, There Will Be Beer...

2010-10-12T15:20:00.000-04:00

SAB Miller creates brewery on a tanker... for those "just in case" scenarios.

One of the great joys of being in strategy is playing "what if...". Normally we speculate about sugar taxes, M&As, ingredient shortages. But occasionally you get asked about that time horizon greater than 5 years out when imaginations can run wild.

Apparently SAB Miller just had that exercise, and created their own "beyond thunderdome" scenario where global weather has become so unpredictable, and water/energy are in such short supply that man returns to a more nomadic existence -relying on the sea for much of its subsistence. Therefore SAB imagined this brewery on a tanker concept that could be used to provide beer for those survivors. And you would have to guess that if we really face such nightmare scenarios, we will need a beer to relax with!

A quick POV...

Pluses - ability to relocate rapidly and go to where the people and resources are:

Minuses - Tough to stockpile ingredients, packaging and inventory

(If anyone has an actual copy of this study to share, I would love to read it - send to neilgkimberley@gmail.com).

Coffee Drinkers Dying Out - Or Consumption Patterns Changing?

2010-10-11T12:48:00.001-04:00

Van Gough illustrates the look of today's coffee drinker...

Mintel has been analyzing coffee and seeing precisely these trends.Older consumers still drink their coffee as a daily routine. Younger consumers drink less at home and not everyday. In fact just 27% of 18-24 year olds say they are drinking coffee on a daily basis.

In other analysis, it is apparent that the dollars spent on coffee is holding/increasing as Starbucks (single serve away from home consumption) and K Cups (single serve at home consumption) have made carafe coffee consumption (at home multiserve) less frequent. Changes that will be margin enhancing, but not scale producing.

This is a new model for coffee, one that has take root over the past decade. Coffee has gone from the all purpose caffeine delivery system to a relaxing personal beverage occasion. With, I would believe, more changes to come.

Will The Future Be Quite So Bubbly?

2010-10-06T17:25:00.000-04:00

The past year has been dominated by concerns about the impact on obesity of Carbonated Soft Drinks. Whether it has resulted in renewed calls for social engineering through a soda tax, or availability bans (most recent of these has been Boston's Municipal Buildings), the press coverage has been negative.

One bright spot has been the impact of the Pepsi Refresh Everything project. The project is visibly and creatively changing the discussion about Pepsi in a positive direction.

Refresh Everything started as a social media experiment and has become the marketer's dream combining relevance, interactivity and a positive message that reflects well on the brand. In contrast the big movie and sports tie-ins found on other CSD brands this summer feel empty and self-centered.

Over the length of the recession the big CSD businesses have delivered big profits despite the carnage around them as consumers have returned to their value offerings. The big question that has highly paid executives up late is whether these trends will continue to drink them as the economy improves?

My observation is that the old way of marketing CSDs is becoming irrelevant as their level of commoditization increases.

Finding a way to drive relevance - like Refresh Everything - will be essential to giving the category a chance as consumers seek more healthy and functional alternatives.

The Change Is (almost) Complete

2010-10-06T16:48:00.000-04:00

So, early on Saturday morning KO took over CCE in North America to align most of the big North American beverage businesses. As with both Pepsi and Dr Pepper Snapple the fanfare will be overshadowed inside Coke by the talks of duplication and synergy. In real terms for the employees this change will mean relocation and lost jobs for many employees. It will be a trying time, and efficiencies will be made. Wall Street will applaud.

But we are now left with three behemoth beverage businesses, with massive challenges regarding what portfolio they sell, and the degree of autonomy that can be left to the marketing manager, branch manager, route salesman and merchandiser. It remains to be seen whether such centralization can be successful, or whether it creates more opportunities for the small, nimble innovative companies.

Generation Gap or Food Politics? The Complexities of Caffeine

2010-09-07T09:57:00.000-04:00

There are number of issues within the politics of food that are always interesting: Organic Vs GMO, soft drinks in schools - and my own personal favorite, coffee Vs energy drinks.

In Huffington Post today is such an article by Matthew Edlund MD. His observations are as follows:

Coffee is an important social lubricant: Energy Drinks are for loners
Coffee comes from trees: Energy Drinks are chemical creations
Coffee is for everyone: Energy Drinks are for teens

But "Used regularly all such drinks create caffeinism, the addiction to caffeine which can move from the buzzing speed of the addict to the withdrawal hell of headaches, nausea, vomiting and terrifying sleeplessness." All this is used to support his thesis that we get too little rest.

While I have some sympathy for his view that, we are all busy... but believing that consumers have no understanding on how to use caffeine is naive. Consumers are well aware of the caffeine in their beverages.

But also thinking that there is no sociability to caffeine drinks is false. Red Bull is drunk just about in every night club around the world. And there are plenty of 7 Eleven parking lots in Arizona where friends are drinking their Monster together.

Now, if we were talking about 5 Hour Energy... well, that is a different discussion.

Welcome to the L Shaped Recovery...

2010-08-16T14:02:00.000-04:00

Nielsen analysis is saying that its unlikely that any significant recovery will occur until more people get back to work. Until then as opposed to a V shaped recovery (steep increases in confidence etc) we will get the L shaped recovery.

And its not even an issue of lack of credit anymore. Nielsen believes that credit is available - but its at such a price that no-one is interested - or has the confidence to borrow.

And simultaneously, earnings reports remain strong, and financial services are back in the black in a big way...

It all seems to be out of balance...

Gourmet Soda in New York

2010-08-10T14:50:00.001-04:00

There are some really interesting things going in Boheminan NYC - a movement that the New York magazine is calling "Noveau Soda" - but its really a throwback to the days of drugs store prepared soda.

There places in Bed-Stuy, Carrol Gardens and the east village...

Must say that this does look interesting. Anyone up for a tour?

Simple

2010-08-09T11:43:00.000-04:00

Interesting report from Mintel that products are getting "simpler" ie fewer ingredients. This is a logical extension of the natural trend (which has just entered its 20h year) and a desire from consumers to avoid highly processed foods.

Alcohol Info

2010-08-07T10:52:00.000-04:00

Really interesting information from Gallup on the alcoholic preferences of Americans. Overall we now have the highest penetration of alcoholic beverages in last 15 years.

While Gallup does not go into the causes for this, you would imagine that a combination of the poor state of the economy, the increasing variety and kinds of alcohol and competitive pricing are encouraging consumption even as health and wellness trends may mitigate against them.

The additional detail provided is also interesting. While beer remains the dominant beverage, there is an increasing interest in wine across all demos. It is also interesting to see that spirits have an almost uniform interest across the demographics.

Obesity and Soda.

2010-06-03T13:18:00.001-04:00

A study by UAB was released today saying that there is no direct correlation between consumption of sugary drinks and obesity.

Anyone out there surprised?

It does appear that we as a society have sought a one-size-fits-all approach to nutrition - and weight loss. From the food pyramid to the Atkins diet, we seek a single over-arching philosophy that will our stomachs to satiety and our bodies to six-packs and thin waists.

But these approaches seem extreme and simplistic. In reality the personal genes and metabolism of each individual hold the keys to a healthy diet. Right now we get to our ideal state by trial and error experimentation. But it is likely that within a few years, a simple assessment of an individual's DNA will be all that is needed.

So no decisive link between sugar and obesity. The tax lobby loses a key argument... And the rest of us have to continue to look for our own nutritional answers elsewhere.

The Worst 20

2010-05-25T16:54:00.001-04:00

1 Sierra Nevada Bigfoot = 1 case of Michelob Ultra

Always love a good "worst" list: here are the top (or should that be bottom?) 20 most harmful beverages in the USA.

Enjoy...

More positives for Caffeine

2010-05-25T11:35:00.000-04:00

And more negatives for sugar...

Interesting new study from LSU says that it is the sugar in soft drinks that is bad for you - and increases risk of heart disease. The caffeine is OK.

“Sugar may actually be the nutrient that is associated with blood pressure and not caffeine which many people would suspect.” - Liwei Chen, Assistant professor of Public Health LSU.

Supermarket Segmentation

2010-05-11T14:03:00.000-04:00

It has been said that the days of the consumer segmentation have gone, but when you find one, it is always interesting. The folks at Supermarket News have just published their own view of the supermarket shopping world. Its a nice topline view, but it would be better to understand the relative importance of each group.

See my slideshare account for a hard copy of the full document.

Trying to Be All Things...

2010-04-26T11:33:00.000-04:00

The KFC Double Down... targeting young men...

The KFC Double Down has been in test for a year, and chain wide availability for a few weeks. The sandwich which replaces the bread with 2 chicken breasts was designed to appeal to a young male demo that the franchise was losing.

The issue is that KC has been attempting to reposition itself as a healthier alternative, using KFC Grilled as its monicker.

Result of the intro/exposure of doubledown - according to NRN - confusion in consumer's minds... And a position of weakness for the healthier rebranding.

Food Inflation... The Next Big Issue?

2010-04-23T14:09:00.002-04:00

undoubtedly there is a feel good factor around right now. The stories in the media are less negative, and the stock market is up. But the spectre of inflation, absent so far in the economy, may be emerging.

This press release from the National Inflation Association is very bearish...

"Some of the startling food price increases on a year-over-year basis include, fresh and dry vegetables up 56.1%, fresh fruits and melons up 28.8%, eggs for fresh use up 33.6%, pork up 19.1%, beef and veal up 10.7% and dairy products up 9.7%. On October 30th, 2009, NIA predicted that inflation would appear next in food and agriculture, but we never anticipated that it would spiral so far out of control this quickly."

And "The U.S. government is now paying out more to Americans in benefits than it collects in taxes".

I have no idea whether this data is true, but certainly it points to some big structural issues in the recovery.

The First Political Test For Energy Drinks

2010-04-22T12:11:00.003-04:00

I get a lot of questions along the lines of "when do you think the government will start regulating energy drinks?".

My response is normally "Never - because it would require them to regulate coffee too."

In Louisiana, a representative put a bill into legislative committee that would ban the sale of energy drinks to under 16's. As ever energy drinks were called "speed in a can". The committee did not proceed with the bill precisely because it would unfairly discriminate against one source of caffeine Vs another.

See the story here.

if you want to lose weight, you don’t necessarily have to go for a long run. “Just get rid of your chair.”

2010-04-21T13:20:00.003-04:00

There was a fascinating article in Sunday's New York Times about the relationship between diet and exercise in remaining thin. The net of the article was that extreme physical exercise creates an appetite that is greater than the calories expended in working out, and that lower impact, less strenuous exercise over time is more effective because it does not drive the appetite.

It is always good to see some nuance in the coverage of weight loss issues. Too often coverage defaults to a sound bite that demonizes one food or behavior, rather than putting that in the context of everyone's real life. The article itself also mentions how America's Puritan approach to diet and exercise may be counter productive.

Very interesting...

Its All In The Genes...

2010-04-07T08:17:00.003-04:00

Over the past few years the subject of Nutrigenomics has occasionally appeared in the press. Basically this is the belief that there is no one-size-fits-all approach to nutrition, and that your genes play an important role in how food can keep you healthy.

Today there is a new study from Stanford University that continues this theme. In prior iterations there have been the blood type diet etc, but this study appears to move the research forward. And we are one step closer to DNA analysis providing the best diet alternative for each individual - and away from the FDA's Food Pyramid.

Geek Time Again

2010-03-24T15:09:00.002-04:00

The end of the year data always provides an interesting snapshot of the trials and tribulations of the previous year. For beverages, however, it only tells part of the story. Beverage Marketing Corporation just released their year end numbers for 2009, with the headline that consumption declined in 2009 by -3.1%, losing around a nine hundred million gallons from the previous year.

Interestingly they estimate that the top 10 beverage brands (responsible for close to 50% of the market) declined at -4.5%, where the smaller brands declined at -1.7%: They also estimate that Gatorade lost an amazing 100M cases (over 10% of the total loss) declining -15%.

What the data does not reflect is that the price and profitability of the remaining 28.8B gallons. Those metrics are as positive as they have been in a decade.

Three Faces for Gatorade

2010-03-08T10:42:00.003-05:00

Confused yet?

I have written in the past about the challenges that Gatorade faces: Lost occasions to Vitamin Water, a 1970s approach to personality marketing etc etc.

Well, their response is finally filtering out. Its the idea of 01 Prime, 02 Perform and 03 Recover.

Prime will be a carbohydrate boost before an activity, Perform will be hydration (now without HFCS) and 03 will be a "hydrating protein beverage".

While Gatorade should be congratulated for embracing change, and for taking all sports need states seriously, the bombast that surrounds this rebranding feels fake and forced. But there are many consumers using other beverages in this way...

Preparation - Red Bull
Rehydration - Gatorade/Water
Recovery - Muscle Milk

Gatorade has only gone 50% of the way. It still feels the need to bang on about rehydration in all its phases rather than understand that engaged consumers in this space. And Caffeine is a legit preparation. And protein is needed for recovery.

Does this "fix" Gatorade?

Probably not. These changes leaves the casual, non-salty refreshment space all to other brands.

School Beverage Sales Are Down - No Surprise

2010-03-08T10:21:00.002-05:00

Interesting discussion in the WSJ about the schools declining in total beverage sales. The data provided is pretty staggering - looking at some of the declines in big school sellers like regular CSDs and Sports Drinks (no wonder Gatorade has issues).

The issue of beverages in schools has been a hot one for many years. A decade ago the objection was marketing to kids before they knew any better. Today it is about sugar/obesity.

So, is the battle won? Well, hardly likely. Kids will have gone to other places to buy what they want, while schools that benefited from the incremental beverage income are in the process of ending programs and firing teachers that they were funding from rich, multi-year drinks deals.

And in the interim, beverage costs have increased and the profitability from the channel is now compromised. Is there a way back? Probably only through innovation. But since kids like the taste of sugar, its unlikely that just offering a limited range of either low sugar or stevia sweetened products.

There is no simple solution here, kids want good tasting products, schools need funding, but cannot endorse full sugar beverages, and the beverage industry lacks the right single serve package size.

Come back 6 oz Coke bottles, all is forgiven?

Shopper Information

2010-03-01T15:30:00.001-05:00

Liked this story from the New York Times. Apparently consumers - on average - enter a grocery store intending to spend around $40, but with the mental preparation of spending around $60.

CAGNY Presentations

2010-02-24T11:34:00.003-05:00

GAGNY - the consumer analyst group of New York held its annual meeting in Florida, and the major CPG companies came before them to update them on their progress. I have uploaded the presentations that were made available on the various investor relations websites to my slideshare account.

The KO and PEP reviews focused on their non-USA businesses (Coke made a big presentation in November, Pepsi is in the middle of restructuring its US business). DPS, HSY and KFT re-iterated much of what they have said previously.

Perhaps the most interesting presentation is from French giant Danone. In other posts I have looked at their interest in functional food. Their presentation here is a breath of fresh air, really thinking about the future of food.

Anyway - if you are in the Food and Beverage business, it is all worth a look.
If you are not... I will call you later to wake you up.

Loading Up At the Wegman's has a whole new meaning

2010-02-23T20:32:00.002-05:00

According to the Philadelphia Inquirer you can now visit the pub while you are shopping. Surely a ciunning plan to reduce shopper inhibitions - and really make the fresh produce section a singles bar!

Either way I like the idea. Done right it would make for a more interesting retail experience.

Signature Sausages Are Coming

2010-02-11T16:24:00.002-05:00

According to www.flavor-trends.com signature sausages will be a prominent trend in 2010.

Bad For You Sandwiches...

2010-02-05T09:22:00.003-05:00

Meatball Marinara Sandwich from Subway 1,160 Calories

If you needed any more information about bad lunch choices, this piece on Yahoo! is interesting. If for no other reason but for the trivia value of discovering whose sandwich is 1,930 calories...

How Much Sugar in Mountain Dew Throwback?

2010-01-29T14:36:00.005-05:00

Mountain Dew has always been a guilty pleasure of mine, so I was intrigued to taste some made with cane sugar. Then I noticed the amount of sugar in the product...

There are 73 grams of sugar in a 20oz single serve bottle.

Innovation Slowing

2010-01-29T11:27:00.002-05:00

Unsurprisingly, Mintel is reporting that the rate of rate of innovation of food and beverages is slowing, with 30% fewer new product entries in 2009 over 2008. After a decade of massive growth from innovation retailer's category management, a reduction corporate resources and the focus on value is taking its toll.

Its That Most Wondeful Time of the Year...

2010-01-26T15:14:00.002-05:00

Well maybe for statistical geeks like me. It is that time when annual numbers for 2009 are solidified and we start to get a better picture of the American consumer and the retail marketplace.

Today we have been provided data on consumer use of coupons. With the recession, it was likely that coupon use would be up - but the results are jaw dropping. Coupon use is +27% worth over $35B in retail sales.

A quick quote from the article...

“There has been a noticeable increase in page count over the past year,” said News America Marketing EVP of Marketing, Jesse Aversano. “Manufacturers understand that in a tough economy, coupons are an effective and efficient way to spend their advertising dollar.”

“Brands saw coupons as a key to maintaining brand strength,” adds Matthew Tilley, Director of Marketing for Inmar’s promotion services division. “If they reduced their promotional presence, they stood to lose sales to lower priced competitors and store brands – so they doubled down hoping to create brand loyalty once the economic dust settles.”

Hmm. Coupons as a source of brand building? Sorry, nice try. Coupons have become a way to keep retailer prices high (ie not give back the hard won price increases of 2007) but still give price motivated consumers a promotional reason to buy their product. Coupons have become the path of least resistance and greatest motivation in a market place full of easily duplicated products.

I could buy that these are tactics to gain share, but in 2009 these were tactics of survival - and not cunning plans for brand domination.

90s Are Back

2010-01-14T17:38:00.002-05:00

At least in waist-lines.

Apparently the combination of eating out less and fewer dollars to spend has reduced American obesity to the levels of 1999. See the Wall Street Journal for info.

The Next Decade...

2010-01-14T16:04:00.004-05:00

I was recently asked by an industry group to provide a perspective on successful beverage innovation and the future of beverages... Here is the paper I gave.

Envisioning The Future Of Beverages

View more documents from Neil Kimberley.

Getting The Holiday Spirit...

2009-12-21T10:10:00.004-05:00

Any excuse to use this picture

The issue of alcohol (and more precisely beer) pricing in take home channels in the UK has been under debate for a while. From a pub culture where most alcohol was consumed away from home, Britain is now buying alcohol cheap at the local supermarket and drinking at home.

While this is good in that it keeps drunk drivers off the narrow and icy streets at this time of year, it has also created a bulge for cheap booze at the bottom end of the market.

The Times has some interesting coverage of this issue, now saying that "Beer is Cheaper than Water", but read a little more closely and you will see that the comparison is between the cheapest beer and "brand name" mineral water. If you went into just about any store in the US and compared PBR to Fiji Water on a $/oz basis you would see the same thing.

From my perspective, it is interesting to see that the government is considering a price floor for alcohol, something Canada already does. Also it may have implications for the future of sugared soft drinks here in the USA. Currently we are seeing an influx of promotional dollars into take home channels that are driving branded soft drinks to almost Private Label levels.

Price floors for our beverages? Due to sugar for CSDs, alcohol for beer and plastic for bottled water? Stranger things have happened...

Pulp Cola... Anti Cliche Beverage?

2009-12-10T11:14:00.000-05:00

Enjoyed this piece of advertising humor from Paraguay...

Alcohol/Caffeine Debate Continues...

2009-12-09T10:13:00.003-05:00

RIP Sparks...

This morning there is coverage of a study by Dr Thomas Gould of Temple University that discusses a study of mice who are given ethanol or ethanol and caffeine. The result of the study (not surprisingly) is that Caffeine does not sober you up - you remain drunk. The more interesting finding is that caffeine still boosts your alertness but the alcohol reduces your ability to learn and inhibitions.

Dr Gould's inference is that "the co-use of caffeine and alcohol could actually lead to poor decisions with disastrous outcomes", "people who have consumed both alcohol and caffeine may feel awake and competent enough to handle potentially harmful situations, such as driving while intoxicated or placing themselves in dangerous social situations".

The evidence for this was that it appears in the mice who are given both alcohol and caffeine "ethanol blocked caffeine's ability to make the mice more anxious. Conversely, caffeine did not reverse ethanol's negative effect on learning. As a result, alcohol calmed the caffeine jitters, leaving an animal more relaxed but less able to avoid threats."

This is the first time I have seen some real evidence against caffeine + alcohol.

In effect the argument is that if people behave like mice, they will make more poor decisions. They are more likely to drive while drunk, that "sexual misconduct" may a problem (or more likely that the "beer goggles" effect gets worse). And finally - "needing "medical assistance" (maybe because people will drink more because of the caffeine).

So what do we do? Is this enough evidence to restrict caffeine/alcohol products? Should bars stop selling Vodka/Red Bull? Irish Coffee? Rum and Coke? Or just selling coffee, or Coke.

Ultimately, as with any functional product, I think this becomes a personal responsibility issue. I think that there would need to be greater availability of information the combination of caffeine/alcohol, but enforcing the restriction of its use will be almost impossible.

And back to the first question, should the FDA ban caffeine/alcohol products? I am still in the camp of allowing them. Frankly it does not matter since those consumers wanting the combination will create their own.

Retail Storm, Brand Shipwreck?

2009-12-08T14:02:00.002-05:00

The average price of food is down, now to pre-2006 levels. And with this decline will come value compression for food retailers, distributors and brand owners. In past posts I have highlighted some of the drivers behind this fall (low commodity prices and retailer competition), but this is beginning to really signal some big challenges for these businesses. Six months ago beverage businesses were celebrating that their price increases had held despite the state of the economy.

In recent calls, executives have expressed concern that retailers just aren't getting the traffic they used to resulting in an ever more aggressive marketplace. In fact the marketplace is -2.8% so far this year, the fastest deflation since 1959 (WSJ).

Now these business have to really figure out how to compete...

A Dose of Reality

2009-12-03T11:45:00.003-05:00

The discussion of nutrition and health is impacted by preconceived opinions that manifest themselves as "food politics". From the soda in schools debate to GMO vs organics to HFCS, much is portrayed as a conspiracy rather than looking at facts

A very interesting study from the University of Alabama has brought a new perspective to the debate, identifying that often studies that show "no significant difference" are shelved in favor of those that make headlines - and match their preconceived opinions.

Now, we will probably find out that Coke financed the study, but it is a welcome dose of reality in a field that is often over-simplified and misunderstood.

NPD and the Future of Food

2009-12-02T13:25:00.002-05:00

This looks like an interesting read. NPD's Future of Food since it claims to examine the changes likely with an aging population.

Too bad my budget will not stretch to it...

Naya Reborn

2009-12-02T09:53:00.002-05:00

Naya has always been a great tasting water. Very clean, very pure with an almost Evian-like smoothness that is rarely found in a North American spring. In the late 90s they spent big on a new manufacturing facility, but lost their Coke distribution - resulting in a swift decline into financial hell.

Now, as bottled water has been hit with the challenges of filters on fawcets, ecological concerns, private label gains and declining growth, Naya is poised to return to the market by using a recycled PET package and focusing on the gay market to rebirth the brand.

Any water proposition faces multiple challenges: Its low margin, highly commoditized and there is a low cost producer (Nestle) that has massive resources. It will be interesting to see if more ecological packaging and a niche marketing campaign will be enough to create a successful venture.

Not Your US Orangina...

2009-12-02T09:47:00.005-05:00

In the USA, Orangina is considered a sophisticated, cosmopolitan beverage. Orangina is left bank cafes, it is summer in Cap d'Antibes. A idealized version of the best things about La Belle France.

In Europe they are taking a different approach...

The Retailer Shoe Starts to Drop...

2009-11-30T10:47:00.003-05:00

Back in September I posted a comment about how beverage businesses were now as the strongest position that they were likely to be, and a combination of increasing commodity costs and retailer pricing pressure would be headwinds for 2010.

There is increasing evidence of the second part of that statement with the Costco rift with Coke. Ad Age has picked up on this theme in the context of building brands. In reality this is a value fight - and who deserves to make what margin. This will become an even bigger theme into the future, and with DPS and PEP consolidated, it will be more challenging for KO/CCE to come up with the right value division scenario...

Great Idea: Poor Communications

2009-11-24T17:40:00.003-05:00

There is a real challenge in creating compelling integrated advertising and entertainment. How do you achieve brand communications objectives without making the viewer's flesh crawl?

Today I watched "The Broadroom" from Maybelline, and the faux music video from Muscle Milk, and was disappointed by both.

The Broadroom has real potential - written by Sex and the City author Candance Bushnell, and has spared no expense to hire real talent. Unfortunately the premise and the script reads like a draft of the brand segmentation study, and cannot figure how to subtly include product ID's.

The Muscle Milk faux music video is used to to promote the sexy pilgrim... a guy with the ripped torso who got ripped because of Muscle Milk. Good idea for a gag, well produced, but just awful.

So here's to a new year with a better idea of how to do product endorsed entertainment. Otherwise the decade of the teens may be more of a throw back to the sponsored content of the 50s, rather than the brave new world of digital marketing.

Sparks - No: But Red Bull/Vodka - yes

2009-11-24T17:34:00.004-05:00

So in the infinite wisdom of the FDA, prepackaged Energy/Alcoholic drinks are too dangerous to sell:

But bars are still able to sell Vodka/Red Bull, Irish Coffee, even Rum and Coke. While I will grant that the interactions between alcohol and caffeine are not well understood, but people have been mixing these substances for years without FDA involvement.

I scratch my head...

The End Of Advertising And Bachman Turner Overdrive...

2009-11-23T16:07:00.005-05:00

Over the past few weeks, a recurring topic of conversation has been about how the agency and client model of marketing and communications is changing - and there are very few people embracing that change.

Most traditional commercial enterprises have people in outdated roles being serviced by consultants (agencies of every description) that no longer know what their role is.

I came across this interesting White Paper by (of all people) IBM, that really hit home. If you think we have seen change to date, you ain't seen nothin' yet...

The Coca Cola View of the Year 2020

2009-11-23T11:44:00.005-05:00

KO just completed a two day analyst presentation in Atlanta to give some insight into its vision for how it will double its consumption globally over the next decade. It is apparent that months were spent by their consultants and strategists to deliver a vision driven laid out in a strategy map format to show the assembled wise people of Wall Street that KO is ready for the challenges of the next decade.

I have uploaded all the presentations to my slideshare account, for those beverage geeks who are interested... but I have not had the time to sit through the webcasts... those are available at the Coke website in their investor relations section.

Overall it is an impressive treatise on the KO objective of global domination, and more precisely on their determination to make brand Coke even more omnipresent ( if that is even possible), through various marketing, sales and supply chain tactics. I particularly liked the insight into Japan and China -probably because I am so US focused.

A couple of things do feel forced into the agenda (sustainability comments, and platitudes on how Coke will get people to exercise more). But the biggest concern I would have for the red machine is that it remains so singularly focused on its core, refreshment-driven CSD products. I saw nothing that made me believe that anything can be done to elevate the business above commodity status.

Also it overshadows some of the good work being done in the Venturing and Emerging Brands area, where real innovation (outside the Atlanta homeland) is being recognized and invested in (Honest Tea, Illy etc). The corporate innovation presentation sounds like the standard approach: KO wants Big Ideas that warrant Big Bets. As ever the "Big Bets" approach flies in the face of how beverage innovation actually creates success. Small incubation has won, big bet innovation has lost.

It is an interesting read for anyone in beverages, but the overall message is really "more of the same". They are lucky that "more of the same" has a large iconic base that will not be eroded easily. However, ignoring the functional future of beverages (eg. Vitamin Water and energy drinks) will be something they will do at their peril.

Mainstream Sex... The wave keeps (ahem) coming

2009-11-15T20:25:00.002-05:00

Passionfruit-Viagra is the new desert created by some Colombian Chefs: Apparently the eaters enjoy "delicious tickles". ANyway, a couple of years ago I had heated arguments with some colleagues about a future trend called "mainstream sex". My theory was that in the next few years, "erectile assistants" and other libido enhancers would represent a mainstream opportunity away from the Horny Goat Weed at the checkout counter.

For those who scoffed... I start to claim victory.

Chocolate The Real Superfood

2009-11-13T10:41:00.002-05:00

Just to add to the ever growing list of things that Chocolate can do (reduce inflammation, improve heart health, etc etc) now add "reduce stress".

Soon every bar of chocloate will be stamped with an "S" and sold with a cape...

Coca Tea

2009-11-11T13:29:00.002-05:00

Last week, a friend (thanks Alex) drew my attention to Kuka. Well... Kuka Tea is coming to the USA, using de-cocanized Coca leaves.

A very interesting proposition.

A good idea from differentiation and innovation: But sailing too close to the wind of America's puritan ethics? Time will tell. In the interim, I am very interested in tasting it!

10% Growth in Tea?

2009-11-11T10:29:00.005-05:00

How to win in the tea business...

Nielsen is projecting that Tea is about to surge because "If the recession has proved anything, it’s that American consumers are willing to pay a premium for healthy products."

Really?

I would love to see their data, because from what I have seen, CSDs are leading growth (with a significant contribution from Private Label) and the leading tea brand (AriZona) is often the single cheapest product on the shelf - offering the retailer and distributor less margin that any other beverage product. Their 99c cans have been a success dating from 1992, and have spawned hundreds of imitators (for example Snapple now with 79 cent cans). Indeed both Lipton and Snapple have struggled to respond to AriZona's ownership of the bottom end of the market.

The release continues that "Over the next several years, tea’s health halo will gradually return the market to the double-digit gains it experienced prior to the recession, particularly as additional research solidifies the product’s healthful and functional properties."

Let's be clear. Tea has become a cheap, low margin player in beverages.

The days of success driven by hot filled premiumness have disappeared under 99c cans, $2.50 gallons, and players like Red Diamond who fill their gallons cheap at dairies. Undoubtedly tea can grow, and there is some residual interest in tea's health benefits, but the bulk of growth is driven by value, and not consumers willing to pay a premium for healthy products.

The choice beverage makers have to make is whether they want to disappear down the value tea rabbit hole, or whether they can build propositions that can command a premium price from consumers.

Gatorade Starts to emerge from the 60's

2009-11-11T10:18:00.003-05:00

From what Crain's Chicago is reporting, Gatorade has finally recognized that it needs to leverage its primacy in Sports Drinks to prepare formulas specific to sports needs, as opposed to an infinite variety of "replenishment" beverages.

Gatorade will have 3 line extensions: Prime, Perform, and Recover that correspond to the different need states of the sports person. Bravo for figuring it out - but they are probably a decade late compared to many of the leading sports nutrition businesses.

No details on the formulations, but I would guess is that Prime will be a caffeine-added, BCCA product, Perform will be standard replenishment product, and Recover will be Protein based (they have previously had Gatorshake in the works for a while).

Strategically it is a rejection the past "one size fits all approach", but I'm not sure that it does anything for the problem at the core of their business... there are better non-sport products with a similar sweetness and better taste (ie Vitamin Water). It does however position the business to be stronger and more focused in the future.

An Unexpected Protein Use

2009-11-04T13:58:00.006-05:00

Did not see this coming...

Well, I have been anticipating greater proliferation of protein enhanced beverages - but this one has me doing a double-take.

Devotion is a Protein-enhanced Vodka. Yes, its a vodka for the fitness fan. The fan that avoids carbs, and wants to keep their protein levels high whether its from Muscle Milk in the morning or from Devotion vodka at the club at night. I guess those pumping iron are not looking to get drunk at the same time.

Vodka is very crowded category, but very profitable. I will be looking forward to tasting the product... protein as an ingredient is a challenge at the best of times, be interesting to see how the challenge is handled in alcohol.

Personally, I am interested and open to it... but whether it can be mainstream enough to get the scale it needs... Well - time will tell.

Food in the age of Energy

2009-11-02T13:48:00.002-05:00

Now beef jerky with added energy.

Perky Jerky is certainly an interesting concept, using a higher quality beef and guarana; And it is well within the interest of the male energy consumer. In the linked article the creators talk about a desire to "take jerky upmarket"... And while the package is interesting (it will be tough for Red Bull to stop them from using a bull) the name Perky Jerky belies a pretty serious product.

This may not be THE big idea that will take stimulants into meat snacks, but it is an interesting progression in taking energy functionality to a new market space.

Overnight Sensations

2009-10-20T13:52:00.002-04:00

It seems that everyone believes that "next big thing" beverages are created overnight and leap to national prominence after a short gestation period. Lately this has been the vibe behind the Energy Shot business (nice article from Matt Casey at Bevnet here).

But it seems to me that shots are following in the footsteps of Snapple, Hansen's, Vitamin Water etc in taking a long period of time to reach the national consciousness. In past work, the average period of time takes around 5 years, and often includes some kind of "last chance" gut check in the brand's history.

The implication here is that the next big thing (due in 2 years) is already in the market, finding its feet - and hoping that its funding will keep it alive.

Back to the Blog

2009-10-20T09:53:00.003-04:00

After a couple of silent months, I thought I would restart my musings with a quick recap of the top three things on my mind...

First, its a project I have been working on - underWAY. I have been banging away in person and on this blog about real, differentiated functionality for a while - and this is something I believe underWAY has in spades. underWAY is the first appetite suppression beverage, using a combination of superfiber technology for "stomach bulk" and low GI sweetening for smoothing body insulin/blood sugar levels. The result is a beverage that can immediately end hunger in a great tasting beverage. We are out starting to introduce this to retailers, targeting the nutrition aisle... Contact me (neilgkimberley@gmail.com) if you want more info.

Second has been the exuberance in beverage stocks. A combination of higher retail pricing, M&A activity and lower input costs has made beverages a flavor of the month with Wall Street, led by the non-M&A bottling-driven stocks (DPS, CCE) and HANS. Will this last? How can these businesses sustain growth in an environment of more promotions and higher input costs?

Third, where are the other hot new ideas? Energy Minus (Purple/Drank)? Coconut Water (Zico, Vita Coco, ONE). Kombucha (look for it in the POM section of the grocery store!)? Can energy evolve one more time?

Here we go 2010!

Here Comes Coconut Water...

2009-08-14T11:12:00.003-04:00

Pepsico's Latest Purchase

In a summer when much of the focus of the beverage industry has been on the Pepsico move to buy its distribution systen, PEP showed that it still had its eyes on the future with the acquisition of Amacoco.

While the acquisition is dressed up as a move with international motivations, its is likely that PEP has also got a eye on the US with the move. In recent months media coverage of coconut water has increased, and the three current players in the US market (Zico, Vita Coco and ONE) have been in an distribution expansion for the entire year.

I personally like coconut water: Great original taste, nice unique packaging... Its ready for primetime: Now the question is - who will be the winner??

The Summer of 2009 is Over. Now What?

2009-08-14T10:42:00.003-04:00

This has been a good summer for the traditional beverage powerhouses.

While the recession economy has driven consumers to cheaper refreshment alternatives (ie CSDs) to boost consumer demand, everyone has benefited from the price increases of 2008 and the fall in input costs in 2009. As a result volumes may have been soft, but revenues and profits are up. As a bottler friend of mine observed, "This is the best summer for years. pricing is up, costs are down - I am profitable on every case that I sell".

Even the softness in bottled water is a reason for the big guys to celebrate. Bottled water has been a low margin, high volume distraction for a decade... the summer of 2009 has weakened a strong competitor (Nestle) and decreased retailer clout.

So all is well in the beverage world? Well, probably not.

It is now apparent that the traditional consumer marketing of commodity CSDs appears to be failing (see the failings of Pepsi for illustrations).

Underlying consumer interest in more healthful, more functional alternatives is still there: Attractive products in Energy, Sports, Enhanced Waters, and Functional Beverages are still making progress.

So, coming into the planning phase for 2010 what will be on people's minds?

- How quickly will Pepsico close the deal with their bottlers and what will the fallout be?
- Is bottled water at its maximum? Or is there more growth there?
- If input costs go up as the economy reflates, how much margin can the businesses keep?
- Can the businesses continue to cut overhead and marketing with no fallout?
- Coconut water is now front and center in the new beverage agenda (after Pepsi's purchase of Amacoco) - will it grow to scale? Who will the winner be?
- Can Gatorade evolve? Its single use positioning is no longer enough to sustain its 80 share.
- How quickly will energy resume its growth? And will shots continue to complicate the category?

Lots of questions...

Interesting year ahead.

Move Over Acai, Beetroots Are Coming

2009-08-07T08:46:00.004-04:00

Now there is scholarship on the humble beetroot, claiming that beetroot juice can increase the drinker's stamina by 16%.

It is fascination how we still are finding new perspectives on the foods we consume.

Soda's Moment in the Sun

2009-07-29T13:16:00.002-04:00

It has been a long decade for CSDs. Consumer's increasing interest in "better for you" and "functional" beverages has been arrested by the economy, and CSDs are benefiting.

Results from Coke, Pepsi, DPS, CCE and PBG are all very similar. While CSD volume has declined, its pricing has increased while input costs are down. As a result there have been strong results from the major players and stock prices are up. As a large bottler put it to me recently - this is the best year this century for the bottler: the old price point paradigms for 2 Liters and 12 Packs have gone, replaced by far higher price points based on multi-purchase deals (two 2 liters for $3 etc).

In the past year the cost of gas is 60% of last year, aluminum is 50% of last year and corn (the principal sweetener) is 50% of last year. And all of the major players took out a significant number of heads from their budgets as they expected a similar cost environment in 2009 as they faced in 2008.

But it is unlikely that these results are little more than a short downhill stretch along an uphill road towards the challenges of tomorrow. Health and functionality trends are still there, just covered in the interim by the challenges of the economy.

The large CSD businesses still have to figure out the right portfolio for future success.

A Quick Trip Down Memory Lane

2009-07-15T15:26:00.002-04:00

Just found this blog entry about the RC Bottle Guy commercials we worked on back in 2000. Too bad we never got to properly run them - but I did get to wear the RC Bottle suit at a few sales meetings...

Big Press For Little Bottles

2009-07-13T15:14:00.003-04:00

Around 4 years ago, I was researching energy drink pricing and first came across a 2.5oz product called (I think) Lift. While doing a sort of highest priced per ounce beverages, it came top.

That was 2005, and now in 2009 Energy shots have made the big time. The New York Times has gee whizz coverage, and ConsumerEdge is reporting a category trending in $1B in retail sales this year.

And to the big boys of energy, this is both a blessing and curse. A blessing because it grows the category: A curse because it makes them compete from a position of weakness Vs 5 Hour Energy - the 400 lb gorilla of the checkout.

But more interesting to me is the expansion of the energy need state. So, now it is shots - next will it be chews? Hydrive is already there.

FRS: Lucky 13??

2009-06-30T13:54:00.003-04:00

FRS - out in front of the curve

Today there are news stories on the value of Quercetin as an antioxidant that can improve endurance. Over the past three years FRS has been promoting the compound as an endurance ingredient: well now they have their wish. The data claims that people taking Quercetin could increase their endurance by 13% - not an insignificant number.

FRS has employed some interesting approaches to the market, from free samples to DSD distribution to social networking - but this press may be the most significant. I wish them luck!

Rightsizing HANS...

2009-06-23T10:56:00.004-04:00

HANS is a very successful beverage business. It has created a powerhouse energy brand in Monster, and is steadily making strategic changes to maximize that performance over time. Their growth has been strong, their innovation track record has been exemplary, and their profitability reflects Monster's status as a highly functional, well differentiated brand.

As a result, the brand has become a darling of the investment set's chattering classes. Rapid growth, strong profitability and a history of beverage brands being sold at massive premiums to Coke, Pepsi and Cadbury (now DPS) built a high level of expectations around the business.

But all of this was dependent on growth:

Category growth in high margin energy beverages
Growth in market share in energy
Profit growth... scale benefits, Cost of Goods savings etc etc

So far this year Monster has increased share and COGs are lower - but the category is flat. And while their business is strong, CEO Rodney Sacks wanted to be clear that future growth was going to be challenging - even with the assistance of mega-distributors CCE and Inbev/AB.

This has had the result of knocking $14 off their share price, reducing the stock from $43.61/share to around $30/share in six weeks - a fall in market capitalization from around $4B to $2.7B in 6 weeks.

HANS 2008 revenue was around $1B per year, and their operating profit is around $200M before costs related to distribution agreement changes. In the normal world this would put the business value somewhere between $1.5B and $2.5B. Still a very large and successful business with significant upside as consumers continue to seek functional beverages. A position that would allow the business to operate successfully into the future.

However, if their stock price continues to fall, it is likely that the business becomes a more attractive target for the big beverage companies. But right now it seems that the business running well, positioned for the future - but without the irrational valuation that has had many of us pondering their high stock price.

Banging The Social Media Drum...

2009-06-23T10:51:00.002-04:00

I came across this presentation at slide share... does a good job of dimensionalizing the impact of how social media and the digital world has changed brand building.

As ever, it strikes me how far behind CPG businesses are behind in leveraging these changes. It will be interesting to see who will get there first.

Ritalin - Not Just For The Unruly Homeroom?

2009-06-19T14:11:00.003-04:00

The BBC has an interesting piece on the potential use of Ritalin as a functional aid to healthy people.

The main thrust of the article is that since Ritalin has no negative impact on healthy people, it is unethical to block its use. In the UK use without a prescription could lead to 14 years in jail.

The reality is that we are about to enter an era where new synthetic drugs, with no side effects could become available - effective drugs that do not endanger the user. The history of humanity has been to restrict such use, but we may be facing a new era.

Next stop Ritalin Tea? Its no longer an impossibility...

Rockstar Energy... A New Brand Facing An Old Challenge

2009-06-19T12:43:00.010-04:00

Urban Legends 2009

Rockstar is a very successful business. It was at the forefront of the development of the energy drink segment; it good tasting products and a wide variety of flavors, and today Rockstar is the third largest energy brand in the US, and has begun to roll-out worldwide.

The brand is the brainchild of Russ Weiner, a Las Vegas resident he made its image that of a serious "party" product... hence the tag line "Party like a Rockstar", events at stripclubs & the Playboy mansion, and suggestive imagery on its website (www.rockstar69.com). This makes the brand unsavory to some - but edgy and cool to some key energy consumers.

Sampling outfits that probably don't help with the activist community

Weiner is the son of notorious conservative talk show host Michael Savage. And that is where the problems start. Savage is now thought of as Rockstar's owner... leading to boycott calls from the activist community. See this website for an example of the spread of this rumor.

In the tradition of Snapple being owned by the KKK (a rumor driven by the Kosher certification on the bottle - and the rumor that the Boston Tea Party graphic on the label - was actually a slave ship), Rockstar is fighting a PR challenge of its own. An issue that may fatally hit the brand, disrupting its relationship with PBG - and with inherently conservative retailers.

In response, there is now a corporate "Truth about Rockstar" site, that addresses many of these issues and lists the charitable works of the owners. But the site does not link to the main Rockstar site.

The learning is that being edgy comes at a price.

While the rumors have not impeded the brand to date, they may become the story: When these stories get a life of their own the brand may struggle to recover. I wish them luck in shaking off these issues, but I think it will take more than a website and personal indignation.

Consumers are willing to believe the conspiratorial worst of corporations - Rockstar will have to arrest these rumors with actions.

Social Media and Convenience Stores

2009-06-12T13:57:00.005-04:00

Become a fan now for a Free Iced Coffee!

A recent project has had me thinking about how to reach C Store visitors. Since their shopper is normally young and male - social media seemed to be appropriate. What did I find? Well, the normal use of the corporate website was to sell franchises, and there was little interaction sought or built by these corporations with their consumers.

Well, it appears that a number of these chains have started to open their minds to these possibilities. For example Quick Chek (a NJ chain) will give a free iced coffee to all their Facebook friends - if they get to 1,500 friends.

Other stores are also getting active, according to this article in C Store news - including Kum and Go, and Sheetz.

Frankly, its an easy fit, and a small investment that could have a big payback for these retailers.

You know bottled water has issues when...

2009-06-12T10:37:00.004-04:00

The best ad for tap water I have seen...

In the NYT today there is a really interesting article on water in Venice (Italy not CA).

In short the article talks about how there is a local push to change Italian consumption habits from bottled mineral water to tap water.

From my perspective it is very interesting that they have taken a specific insight and built a brand image around it. Rather that focusing on a traditional taste cue, or a contemporary "green" cue they have focused on the simple dissonance that challenges bottled water... why pay for something that you can almost get for free out of the tap.

Aqua Veritas... True Water. Love it!

A New Challenge For Coke Zero...

2009-06-11T10:38:00.003-04:00

A victim of its success?

Apparently there are big issues with Coke Zero. Venezuela has banned its sale "to preserve the health of Venezuelans".

Coke Zero is the artificially sweetened, zero calorie taste-alike of regular Coke... and has apparently hit a nerve with President Chavez. Obviously this is some kind of political play rather than a legitimate health concern.

Perhaps Hugo owns some sugar fields??

Good Data...

2009-06-10T11:02:00.002-04:00

I love a good, well sourced report - and the GMA/PWC 2009 Annual Performance Report on the Food, Beverage and Consumer products industry is just that.

So, I posted it to my slideshare account.

The Semantics of Milk...

2009-06-10T09:59:00.003-04:00

The protein world is getting litigious. First Cytosport (make of Muscle Milk) has sued VPX over the trade dress of their Muscle Power product, and now Nestle has decided to go after Muscle Milk over "Milk" because its not actually Milk... its a high protein, artificially-created shake.

So, we run to the dictionary for a definition, and we find:

Milk –noun

1.an opaque white or bluish-white liquid secreted by the mammary glands of female mammals, serving for the nourishment of their young.

2.this liquid as secreted by cows, goats, or certain other animals and used by humans for food or as a source of butter, cheeses, yogurt, etc.

3.any liquid resembling this, as the liquid within a coconut, the juice or sap of certain plants, or various pharmaceutical preparations.

I guess we will be seeing the "pharmaceutical preparation" defense...

But those lawyer bills... ouch!

The Myth of Sustainable Competitive Advantage

2009-06-10T09:52:00.002-04:00

It may be a bit academic, but this article in the HBS review is very interesting.

The basic premise is that competition is now so aggressive that no advantage is sustainable over a long period, and that a successfull business no requires a process that builds a series of short term advantages.

The implication here is that the pace of innovation and change is only likely to accelerate, and that personal employment stability will be a thing of the past.

An interesting read, but with far reaching implications...

Vive La Fizzy Difference!

2009-06-05T09:32:00.004-04:00

Nice interesting perspective on what Americans call their Carbonated Soft Drinks... Soda, Coke, Pop or something else. A blogger has held a vote on Twitter.

I was personally hoping for a resurgence of "tonic" - a traditional favorite in Boston, and pronounced with great New England vowels as in tahnnik.

Innovation Process: More Is Better...

2009-06-04T11:32:00.005-04:00

Most large CPG companies are obsessed with an innovation process that will increase, if not guarantee success. They want innovation precisely targeted and accelerated to a massive scale as rapidly as possible. A solution that requires massive launch and investment: The "big bet" solution.

In reality, innovation in CPG is more iterative, and tougher to accelerate. This article from Booz Allen illustrates that a smaller, but more profligate approach looks to be more successful.

The winner therefore appears not to be the "big bet", but the "hedged bet".

This Modern Life...

2009-05-29T10:37:00.003-04:00

Not What Charlie expected.

Todays sensationalized over-reaction comes courtesy of the National Sleep Foundation, claiming that "many teens get 3 to 5 hours of sleep" per night - and this is caused by electronics and caffeine.

Within the story, they say that their sample averages 4 electronics items per bedroom (ipod, computer, TV and phone), and that they average 100mgs of caffeine a day required for them to stay up late - and not get the 8+ hours of sleep the NSF recommends.

It does seem to me that they are going after the wrong stuff. Surely it is the demands (and opportunities) of modern life that are the challenge. Combine schoolwork, after school activities and an active social life - and you squeeze the time resources available. Who could fault a teen for not wanting all of those outlets.

Back at Cadbury, we called this a "fully loaded life". The challenge is more about compressing those opportunities rather than holding the enablers responsible?

Evernote

2009-05-28T11:51:00.003-04:00

As we all become more digital-reliant, saving interesting stuff has become tougher... Especially if you just print everything - or rely on Google Desktop to do the heavy lifting for you.

A couple of weeks ago I was introduced to Evernote, which can save whatever you want to clip from online - and save it: Once saved the data is searchable (both in graphic and character form), and links back to the original source.

Love it!

The "Whys and Wherefors" of Sugar vs HFCS

2009-05-26T11:07:00.004-04:00

There is a substantial interest in traditional sugar-sweetened soft drinks Vs their current HFCS sweetened descendants, driven by Pepsi Throwback.

In some quarters the switch is regarded as a move back to a healthier product... with HFCS being an evil sweetener. This article from Agweek challenges the notion, with a nice analysis on the realities of HFCS vs Sugar as an ingredient.

To my mind the only real difference is in taste. Sugar (or medium invert as it often gets called), just tastes better - more pleasant mouth feel, less coating, and it helps fruit flavors blend. The products I have had the chance to work on always benefited from the intense and rounded sweet taste that real sugar provides.

So enjoy the real sugar alternatives while they are around. And use them as mixers for alcohol (a really good application)... But don't kid yourself that they are better for you.

Cola Sensationalism

2009-05-19T15:57:00.005-04:00

Coke's Cool Summer 2009 Look

So it turns out that drinking between 3 and 10 liters of cola per day could be bad for you. Anyone surprised? Thought not.

But this comment was most interesting: "In a commentary, Dr Clifford Packer from the Louis Stokes Cleveland VA Medical Centre in Ohio said... "With aggressive mass marketing, super-sizing of soft drinks, and the effects of caffeine tolerance and dependence, there is very little doubt that tens of millions of people in industrialised countries drink at least 2-3 l of cola per day."

Tens of millions of people drinking 5 - 9 cans per day, or 4 - 6 single serve 20z bottles. Must admit that seems high. Yes, I have seen and met the biggest consumers who love their chosen beverage to the tune of a 12 pack-a-day... but they are the exception rather than the rule.

Again sensationalism mixed with guestimation leads nowhere.

NY's Bigger Better Bottle Bill - What a Disaster!

2009-05-11T14:25:00.003-04:00

The politicians at NY state government want state specific UPC's for deposit required containers... And by June 1st!

Just insane!

It will increase consumer prices through increased complexity

It will be almost impossible for small beverage businesses to manage. It would build an almost insurmountable competitive advantage for the most sophisticated systems - Coke, Pepsi, AB.

Its a trend could grind the US food system to a halt. Imagine each of the 50 states decides its own UPC, for each beverage in its grocery stores...

I am all for a greener supply chain approach, but adding a NY specific UPC code is no solution.

Stop the insanity.

Innovation on the Ropes...

2009-05-11T11:34:00.003-04:00

Mintel is reporting that new product launches have declined by 51% in 1Q 2009 vs 1Q 2008. Looks like the constriction of capital, allied with changing consumer needs is finally arresting a decade of innovation.

Of specific interest to me is the data that the non-alcoholic beverage segment has declined by 56%. Its interesting that the new product with most interest within the investment community is Orange Crush through the Pepsi system, while the energy segment consolidates, the water segment declines and sports drinks enter a phase of price promotion.

Now is the time for a new idea to kick start the cycle again.

A new era for Coke and its Communications Agencies

2009-04-27T09:45:00.006-04:00

Ad Age today discussed Coke's move towards a "Pay for Performance" approach to marketing services, signaling continued pressure on the old agency/client marketing model.

The agency model of creating a defendable brand position, then guarding that position has been under threat for many years. Consumers are increasingly moving past the ephemera of "branding", and into a place where News, Innovation, Creativity and Excitement are far more important.

With the communications-driven era of branding disappearing, Agencies are looking for new ways to insert themselves into the model. A model where the Brand Manager and product strategy is important than its communications tactics.

Coke has a solution. They are asking their agencies to participate in the total marketing process... And assume some of the business risk. No more guaranteed margins for an "Agency of Record", but costs covered and a success fee if the business makes its numbers.

In theory this is an equitable solution for both client and agency, but it is rare that the marketing has control over the success. In reality strategic planning, portfolio strategy, sales focus, customer marketing, R&D, all have to be aligned before consumer interaction. Agencies will lose more of their leverage as creative is sidelined further.

There is no doubt that a creative resource is required to assist lead marketers on project, but with the success depending on so many disciplines beyond the agency's control, it will be interesting to see who will want to take that risk.

The Pepsi Re-Alignment And Small Brand Innovation

2009-04-23T10:04:00.007-04:00

What's on the truck?

There has been lots of coverage of Pepsico's (PEP) move to purchase its two largest bottlers - Pepsi Bottling Group (PBG) and Pepsi Americas (PAS). In short Pepsico, which owns a significant, but not controlling interest in these businesses, has decided that now is the time to fully align their system.

While this is not a revolutionary idea - Dr Pepper Snapple Group executed a similar plan in 2006 - it is likely have big ramifications for the beverage industry, and specifically for emerging beverage brands .

With the bottling systems separate to the parent companies, small emerging businesses still had a chance at gaining distribution through big beverage systems... and indeed Muscle Milk and Rockstar have recently taken advantage of the PBG/PAS system. It is likely that Pepsico will not be as tolerant to those incubation businesses - and block small competitor access to this resource.

Indeed, it is now possible to see an industry with four large centralized systems. Coke, Pepsi, Dr Pepper Snapple and InBev/AB could carve up the marketplace, and restricting small brand access to growth.

As a "glass half full" person, I would also believe that there will become an even greater opportunity for smaller, non-aligned distribution systems across the USA. But, importantly, these systems will need a new, high margin, breakout product to again disrupt the consolidation, much as Snapple did in the 90s and Vitamin Water did in the past decade.

The lessons of the past 30 years that every consolidation tends to create an equal fragmentation as long as there is high margin innovation to support the change. As ever beverages are a world of constant change.

Did You Know?

2009-04-21T13:55:00.002-04:00

Everything for your funeral can be purchased at Costco...

Grass Roots Demand for Surge? (..Really? ...Surge?)

2009-04-16T11:41:00.005-04:00

Ah nostalgia, for a time before real energy drinks...

C Store news ran this story about Surge today. Surge was Coke's updated answer to Mountain Dew (because Mello Yello was never going to cut it). Plus it was the brainchild of Coke marketing guru Sergio Zyman (hence the Surge - geddit?).

While it has been a decade since I tasted the product, it was only ever a me-too for the Coke system - with an inferior taste to Mountain Dew, and eventually a lower caffeine level than Red Bull.

The lesson here is a few Facebook groups does not a re-surge-ence make.

(Ugh, Sorry)

Gatorade Vs Powerade

2009-04-14T08:36:00.008-04:00

What's all the "flap" about?

Its always interesting when the big boys go head to head. Now PEP has brought out the big legal gun in the contest between Powerade and Gatorade.

From Ad Age - NEW YORK (AdAge.com) -- PepsiCo's Gatorade brand today filed a lawsuit against Coca-Cola's Powerade, alleging false advertising, trademark dilution, deceptive acts and practices, injury to business reputation, and unfair competition. The suit, filed in U.S. District Court in New York, takes Powerade to task for its new advertising campaign, first reported by Advertising Age.

Gatorade has dominated sports drinks with a combination of positioning, advertising and functionality since the 60's. But recently the brand has proved to be vulnerable, first to Vitamin Water's incremental functionality appealing to non-sports use occasions. And now second to a direct sports competitor.

As the second punch, KO has gone after Gatorade's core sports occasion with a "better" sports drink: Powerade Ion 4, that has 4 electrolytes, over Gatorade's 2.

To publicize this product advantage Powerade has run some partial flap covers on Magazines (like ESPN Magazine) claiming that Gatorade is "incomplete". Hence the lawsuit.

However, (while I am no lawyer) since there are no real definitions anywhere in beverages, and, as long as there is no disparagement to the trade dress, or mis-representation of Gatorade's formula, its tough to see how this lawsuit will work. In fact it may be that just bringing the lawsuit plays into KO's hands: It puts Powerade on the same plane as Gatorade.

The battle reflects the contest for the high ground in one of the key market segments in functional drinks. Gatorade may currently be the 400 pound gorilla of sports drinks, but that position is starting to slip as other brands are using new claims to challenge Gatorade's almost 50 year old formula, and positioning that it is the ultimate sports drink.

But both KO and PEP don't let reality get in the way of good marketing. There are 7 electrolytes that can be lost in exercise; protein is important for endurance; and caffeine can improves athletic performance: Neither of these beverages are complete functional sports drinks.

Interesting though, eh?