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Envisioning The Future Of Beverages

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Presentation looking at the various success factors behind success in beverage innovation, and the future of beverages in 2010 and beyond.

Presentation looking at the various success factors behind success in beverage innovation, and the future of beverages in 2010 and beyond.

Published in: Economy & Finance

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

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