Envisioning The Future Of Beverages

ENVISIONING THE FUTURE OF BEVERAGES
Another Decade of Change…

FF&B Inc Confidential Use With Permission Only
Contact neilgkimberley@gmail.com

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

OBSERVATIONS
1. The ability to exploit change is the
ability to win

3

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

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

…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

OBSERVATIONS
1. The ability to exploit change is now
the ability to win

2. A Unique Idea is Not Enough

7

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

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

Contact neilgkimberley@gmail.com 9

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

10

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


OBSERVATIONS
1. The ability to exploit change is the
ability to win

2. A Unique Idea is Not Enough

3. Change is Inevitable

12

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

SO, WHERE ARE WE GOING?

Short Term
2010
- Bringing The Pain
- Consolidating for
Success
- Slowing Innovation

14

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


KO VS PEP VS SWY VS KR VS WMT Short
Term

16

Short
Term
DPS VS HANS VS SWY VS KR VS WMT


Short
OIL PRICES Term

18

Short
Term
ALUMINUM PRICES

19

Short
Term
CONSUMER VALUE INDICATOR - COT


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

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


Medium Term
2011- 2012
- New Model Marketing
- “Evil Sugar”
- Outsiders Take An
Interest
- Distributor Leverage

23

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
Contact neilgkimberley@gmail.com 24

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

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

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

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

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

Medium
Term

DISTRIBUTOR LEVERAGE
 Drivers…

 Scale

 Tactical Opportunity

 Vanity


Medium
Term

OUTSIDERS TAKE AN INTEREST
 One of the non-US global players will want to be
bigger in non-alcoholic US beverages

31



Long Term
2012 – 2014
- Food is Medication
- The Big Shakeout
- Customer Evolution

32

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


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

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!

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
More at www.under-way.com

underWAY - The healthy way to put hunger on hold™…

ENVISIONING THE FUTURE OF BEVERAGES
Thank You!

Use with Permission Only

Envisioning The Future Of Beverages

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