Neil Kimberley's Bevnet Bevschool 101
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Neil Kimberley's Bevnet Bevschool 101
- 2. My Past
- 3. Your Opportunity Estimated Value Created From Beverage Enterprises = $33B $10,000 $5,400 $5,000 $4,100 $2,500 $1,700 $1,500 $1,100 $450 $375 $375 $237 $186 $104 $85 $80 $75 $50 $30 $28
- 4. Seth Goldman, Honest Tea TEO Run Away!
- 5. Agenda BEVERAGE ABC’S The Marketplace Who Wins and Why
- 7. WHO – Consumers & Occasions ?
- 8. WHAT - Categories Carbonated Soft Drinks CSDs Bottled Water
- 9. WHAT - Categories Alternative Beverages Ready To Drink Tea (RTD Tea) Juices/ Juice Drinks Lemonades Energy Drinks Enhanced Water Sports Drinks (Isotonics) Coconut Water
- 10. WHAT - Packages Single Serve Multi Pack Multi Serve
- 11. WHAT - Packages Single Serve Multi Pack Multi Serve
- 12. WHAT - Packages Single Serve Multi Pack Multi Serve
- 13. HOW - Retail Channels Convenience Stores Food Service UDS
- 14. HOW - Channels Convenience Stores Food Service UDS Grocery Mass Club Dollar
- 15. HOW - Channels Convenience Stores Food Service UDS (Mom and Pop) Drug Natural Grocery Mass Club Dollar
- 16. HOW - Route To Market (RTM) Collaborative Sales to Retailers Distribution System Delivers Distribution System Merchandises
- 17. HOW - Route To Market (RTM) Collaborative Sales to Retailers Distribution System Delivers Distribution System Merchandises Direct Selling to Retailers Product Shipped to Retailers Distribution Centers Merchandized by Store Employees
- 18. HOW - Route To Market (RTM) Collaborative Sales to Retailers Distribution System Delivers Distribution System Merchandises Direct Selling to Retailers Product Shipped to Retailers Distribution Centers Merchandized by Store Employees Retail relationship with Broker Product Shipped to Retailers Distribution Centers Merchandized by Store Employees
- 19. HOW - Route To Market (RTM) Collaborative Sales to Retailers Distribution System Delivers Distribution System Merchandises Direct Selling to Retailers Product Shipped to Retailers Distribution Centers Merchandized by Store Employees Retail relationship with Broker Product Shipped to Retailers Distribution Centers Merchandized by Store Employees Retail Buyers relationship with Broker Product through multiproduct distributor Merchandized by Store Employees
- 24. The Runa Strategy… Consumer – Category - Tea Young Urban Professionals Seeking A Healthier Energy Alternative Product – Guayusa Package – Single Serve Glass Price – Category Average RTM - Natural Channel & DSD Retailers – Natural/Urban UDS Marketing – Sampling, PR, Word of Mouth
- 25. The Strategy Decisions… Category RTM Product Retailers Package Organization Price Marketing (Profitability) Capitalization Consumer THESE DECISIONS ARE HARD TO CHANGE
- 26. Rules of Thumb – Margins ~42% Grocery Retailers Immediate ~38% Consumption Retailers ~35% Mass Retailers ~28% DSD Systems 10%20% Natural Channel Distributors 3%5% Of Gross Brokers
- 27. Rules of Thumb – Business ~15% of Gross Sales Trade Spend ~12% Of Net Sales Marketing Spend ~45% Of Net Sales Gross Margin
- 28. Agenda Beverage ABCs The Marketplace Who Wins and Why
- 29. The Squeeze HEALTH(IER) BEVERAGES Bottled Waters RTD Teas Juices CARBONATED SOFT DRINKS FUNCTIONAL BEVERAGES Sports Drinks Energy Drinks Emerging Functions
- 30. LRB Retail Revenue ($B) Carbonated Soft Drinks Source: Beverage Digest Annual Fact Book 2012
- 31. LRB Retail Revenue ($B) Alternative Beverages Bottled Water Carbonated Soft Drinks Source: Beverage Digest Annual Fact Book 2012
- 32. LRB 8 oz Per Capita Comparison 2001 Total 1,062 2011 Total 1,173 Source: Beverage Digest Annual Fact Book 2012
- 33. LRB 8 oz Per Capita Comparison 2001 2011 Total 1,173 +111 CSD 691 (151) Bottled Water 239 +154 Alt Bevs 243 +108 Source: Beverage Digest Annual Fact Book 2012
- 34. The Implication Each Beverage Category Share point is worth $1.2B Beverages Category is Growing 2 Pts/Year CSDs are declining at 1.5 pts/Year Every Year Consumers Are Spending ~$3B Incremental Outside CSDs
- 35. Alt Bevs $34B At Retail Alternative Beverage All Channel Retail Sales 2001-2011 $40,000 10 Yr CAGR $35,000 +38% $30,000 $25,000 +9% $20,000 +8% $15,000 +7% $10,000 $5,000 +6% $0 2001 2002 2003 Juice/Juice Drink 2004 2005 Sports 2006 Tea 2007 2008 2009 Dairy/Other 2010 2011 Energy Source: Beverage Digest Annual Fact Book 2012
- 36. 2011 Revenue By Brand ($M) Source: Beverage Digest Annual Fact Book 2012
- 37. Venturing Groups Pepsi Naked Brands Venturing Group
- 38. Agenda Beverage ABCs The Marketplace Who Wins and Why
- 45. Vitamin Water - Targeted Distribution Market Blitz 30+ People Retailer Visibility Distributor Confidence Consumer Events 45 High Quality Execution
- 46. Channels & Package Strategy
- 48. Red Bull Street Activation Activation Teams In Every Major City Red Bull Activation Create unpaid local exposure • Coolers at radio stations • Coolers at local TV news • Locker rooms at local sports teams Links to Distributor • Maintains link between microcell and distributor • Develops driver sales people Field Marketing Manager Plans and executes bar/club events On Premise Manager Field Sales Manager Field Sampling Manager Plans and executes local sampling events at retail and events Key Account Manager Executes Nationally Driven Off Premise Retail Events 48
- 51. Hazards
- 54. Complexity
- 55. Failing To Gather Insight On Success
- 57. Strategic Acquirer Hot Buttons
- 59. What Will An Exit Look Like? Dependent on Size, Profitability and Growth Potential Profit is less important Revenue Multiples at Exit Vitamin Water 11.7 Naked 3 Current multiples of revenue are around 2x to 3x Fuze 2.6 Izze 2.5 (Don’t use Vitamin Water as an example) Sweet Leaf 2.4 Honest 2.3 0 5 10 15
Notes de l'éditeur
- What I’m here to discuss:Beverage InnovationCategory BackgroundWhat Drives SuccessSome Hazards to avoidHow Big Strategic Businesses Look at the innovation companies
- I started at a promotion agency working on MillerI was a Brand Manager on RC and Diet Rite in the mid 90s Marketing Director on Snapple in the late 90s and Vice President of Strategy at Cadbury Schweppes before spending a couple of years working as an independent consultant to some emerging brands before I came to Hershey.I joined Hershey last December as Director of Global Innovation Strategy, the latest step in a career that has focused on Marketing and Commercial Strategy drop today’s trends into the context of the overall beverage marketplace and understand the changes that are happening
- To Quote Seth Goldman – Teo of Honest Tea - Run away from the beverage industryEveryone who has ever opened a can of Coke is an expert and then if you speak to an industry insider, costs, margins, investment levels, all become a subject for debate.
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- LRB market in 2011 is $114 B. CSD -1B Cases, but up $5B in sales to $66B
- Growth of Alt Bevs is most strikingFrom $14B to $34B Volume 2x from 1.6 – 3.1B casesExpect Energy to be a big contributor – and is at around $9BAll other Alt Bevs together contribute $11BCSD share drops from its high of 86% in 1997 to 75% in 2001 to 59% in 2011So, what caused this
- By 2011 we were drinking around 1173, servings – an 10% increase.111 incremental consumption occasionsWhile this is a great thing for the industry, Even without any segment swings, this is a big change
- Decline of CSD’s - 151 lost occasions, was 842 / -18%Water up from 85 occasions to 239, 181% increaseAlt Beverages +79%, 108 occasions
- As a result in 2011, of the $34B in the Alternative BeveragesGrowth in energy at around 38% throughout the decade has been a big driver, by high single digit growth in most other categories identifies this sector as being in good health. So, this is the source of the opportunity: Your reason to believe as a beverage entrepreneur.
- See the impact of Beverage Innovators in the important brandsOnly Gold Peak, All Sport, Full Throttle and Amp originated inside one of the big bevcos (we can debate propel)Of the $34B in sales, $11B came from brands that did not exist in 1997. Brands mostly created by entrepreneurs: and not by the big beverage companies. But just because trends are on your side, and beverage entrepreneurs have a track record of success, it does not there is a potential market for your idea, So this is all really easy – right? Rising Tide? Big Opportunity
- See the impact of Beverage Innovators in the important brandsOnly Gold Peak, All Sport, Full Throttle and Amp originated inside one of the big bevcos (we can debate propel)Of the $34B in sales, $11B came from brands that did not exist in 1997. Brands mostly created by entrepreneurs: and not by the big beverage companies. But just because trends are on your side, and beverage entrepreneurs have a track record of success, it does not there is a potential market for your idea, So this is all really easy – right? Rising Tide? Big Opportunity
- I also have one note about some definitions:Liquid Refreshment BeveragesAny Carbonated Soft Drink number does not include Energy Drinks.Bottled Water is Bottled Water – and does not include enhanced watersI will use the term Alternative Beverages: which refers to Any beverage that is not a CSD or Bottled WaterA case is a 192oz Equivalized CaseTranisition to population
- As an independent consultant, a major area I analyzed was the drivers of success in a beverage startup. Before I start on this part of the presentation, I just want to advise you that what I am about to say is incredibly difficult to do: Its so difficult that the big beverage companies have all but given up in this area – and look to this community to create big new ideas.
- A lot of time and effort is spent on finding a way to carve out a unique space in an increasingly crowded market.- Distributors will no doubt tell you – Retailers are not increasing shelf space just for you…- And then there is my own personal salesperson favorite “please tell me where the “white space shelf is”
- It is often said in private equity that “you don’t invest in plan, you invest in a person”. People with the ability to create a proposition, strategically figure out how to position the proposition for success – and then execute the plan: And if the plan encounters issues, is flexible enough to figure out a new approach.There is no doubt that entrepreneurs are special people: Yes, they normally have amazing vision, but they also have the ability to translate the vision into action, and they have the ability to recognize very early why they were being successful and find a way to emphasize it.
- There is well-trodden way to the consumer through the independent beverage distribution systems, into the visicoolers of the up-and-down the street accounts in urban markets and into the mouths of your drinkers. The process has built multiple innovative beverage businesses – and is the perfect Route To Market for the right brand.
- Perhaps the brand that best leverage the independent system was Vitamin Water. The team understood both the strengths and shortcomings of the system and built their activation plan that effectively supported the system.Glaceau focused almost totally on trial and availability to seed itself. Local market sales people were often supplemented with huge blitz teams that brought excitement into distributor warehouses, and delivered new accounts, sold in new products and performed sampling on the street. High intensity approach, that put cash in the pockets of the local route drivers: And had a big impact in improving the quality of sales call to the retailer.
- There was a recent editorial in one of the beverage trade publications complaining against the use of the term “activation”. I disagree. My own definition of beverage activation is the combination of sales and marketing activities designed to rapidly build a brand with distributors, retailers and consumers.Most emerging brands do not have the luxury of separating sales and marketing activities: there is no separation for where marketing activities end and where sales activities begin. Everyone is responsible for the vision and bringing it to life in every decision that is made inside the organization. From decisions on which retailers to promote in, all the to which celebrities to approach to support the brand – these are activation decisions: Not just sales – and not just marketing.
- Every new beverage business needs capital to meet the demands of its plan. So having the resources you need to sustain a new business over time is critical to success.However effective should also mean efficient. The market is not interested in multi-million dollar start ups.This subject is worth a presentation of its own – and Michael Burgmaier has written extensively on this issue in Bevnet magazine: So here are a few thoughts on the issues and processes
- As an independent consultant, a major area I analyzed was the drivers of success in a beverage startup. Before I start on this part of the presentation, I just want to advise you that what I am about to say is incredibly difficult to do: Its so difficult that the big beverage companies have all but given up in this area – and look to this community to create big new ideas.
- For every mega-success, there tend to be two or three similar ideas that just failed to capture the zeitgeist of the emerging opportunity: In the late 90s there were a number of competitors responding to consumer interest in fortification and lower sweetness. But it was Vitamin Water that built its brand around those concepts. In my last role at Cadbury, I met with multiple brands who were either seeking investment or distribution from us. Often their biggest challenge was finding a way to effectively articulate their differentiation… and the number of times I heard “we are a better tasting energy drink”…
- While most of the time emerging brands are told “no” as they pitch their idea to distributors and retailers, sometimes unexpected opportunities emerge: And the tendency is to say yes to everything. While a degree of opportunism is appropriate, saying yes to everything can divert time, attention, capital and other resources to non-strategic objectives, that may be a temporary win… but a long term distraction because Saying Yes To Everything will drive…Remember that deeper is always more attractive than wider. To demonstrate proof of concept to potential investors and acquirers
- Complexity in Offering, Route To Market, Pricing, Geographic Focus, Salesforce Focus, and Supply Chain objectives exponentially drives the amount of management time required to manage all of this. And it will eventually increase overhead cost, reduce the ability of the business to invest in the brand and eventually – to articulate the overall vision of the brand.
- Since innovation beverage businesses spend a lot of time and effort of getting distribution, you have to retain your discipline to understand how the brand is performing on a store by store basis: And understand what is working and why.If there is a strong performing store - Work with your Route To Market partners to gather some salient data.Location, Pricing, Competitive set, movement, level of engagement from retail staff: Maybe even do a sampling event to get consumer informationThe information you gain will help you do more of what makes your brand successfulWhynatte example …
- “It’s a brand that sells itself” is a phrase that I have heard too frequently. Remember that even the best Route To Market requires time and attention: Distribution systems are, at their core, operational businesses that excel at distribution and delivery. Your brand organization needs to lead the charge in Sales and marketing everywhere you go. You have to deliver motivation and excitement.You have to plan for activities against each of the key contact and communication points: from consumer to retailer to distributor. And no amount of over-expenditure in one area will offset under-investment in another area. Activation is a high touch activity – being visible is critical – get to know as many people as you can from the GM of your RTM through his sales force and all the way to the local retailer’s staff.
- So what turns gates a strategic buyer interestedDifferentiatedGrowing Profitable So, I would suggest that these are just the ante’s into the game: The decision to acquire is based on a wider set of metrics that assess the value to the acquirer’s business. The more boxes your business can check, the more attractive the acquisition will be. Incrementality Business Fit And On trend Which brings me full circle, back to the underlying trends in the marketplace. Just for fun I extended the past ten year per capita consumption trends forward a decade.
- By my calculations around $37B in value has been created since the Snapple acquisition by Quaker back in 1994. And it’s a list of some of the great beverage brands of today that were created by entrepreneurs like yourselves. On an average most brands still sell as multiple of revenue rather than profit – and while Vitamin Water continues to be an outlier, and Monster’s valuation is very high at 6x revenue, most brands will do well to get between 2 and three times revenueWhat can drive that higher is exeptional profitability and growth potentialYou will also note an increasing number of smaller investment deals – thanks to Nestle and VEB
- What I’m here to discuss:Beverage InnovationCategory BackgroundWhat Drives SuccessSome Hazards to avoidHow Big Strategic Businesses Look at the innovation companies