eCommerce: Thriving in Our New Normal

Written By Betsy McGinn and Bill Sipper

I started working with Betsy McGinn several months ago.  Betsy is the leading expert on selling on Amazon and has written and excellent book called The Amazon Roadmap: How Innovative Brands are Reinventing The Path to Market.

Betsy has given us an MBA in Amazon and since we have started working with her and since she has been coaching us our clients have greatly increased their Amazon sales. Betsy handles the strategy and we handle the execution.

Betsy and I decided to co-write an article a few months ago.  However, I will be the first to note that Betsy is the author of this article and I am just the “co writer”. The information contained in this article will hopefully help you understand and prepare to increase your Amazon sales…

A byproduct of the threat of COVID-19 is that it’s taken eCommerce in the US to new heights. Amazon.com has hired 175,000 new employees, Instacart has been forced to scale in ways and at a speed never dreamed of, and high demand has resulted in continuing out-of-stocks on some essential items we all need. The subset that so many of our clients play in – grocery – has grown in ways no one predicted, and may even accelerate the adoption of online grocery by 4 to 5 years. Brands are scrambling, not only to meet consumer needs, but to up their game in eComm. eCommerce no longer represents incremental “nice-to-have” sales; it’s now essential to a brand’s success, and maybe even its survival.

But here’s the challenge: eCommerce strategy and execution aren’t one-size-fits-all, and can’t be relegated to a single division within your company to handle. Everything about this new retail dynamic requires a commitment of the whole organization to truly understand, and to meet the needs of this varied and often confusing channel. Here’s why:  Amazon is nothing like Direct-to-Consumer (DTC), which is nothing like Fresh Direct, which is nothing like Instacart. Yet, many companies lump any retailer with a .com in their name into one bucket.

Let’s break it down.

Source: Biggcommerce.com

Amazon is the beast of eCommerce. Whether you love ‘em or hate ‘em, they account for 49% on online sales, and are by far the largest online grocery retailer. Their 105 million Prime members convert at a rate exponentially higher than most other eComm options. Seems like a no-brainer to take advantage of the power wielded by this giant, right?

But here’s where it gets tricky.

First, all but the largest CPG brands must sell their products in Amazon’s 3d Party marketplace, which works beautifully for many of the companies we work with, the digital natives that are scrappy and nimble. But it can be anything but simple for many others. Because 3rd Party marketplace means you’re the seller. You own the product, and if you use Amazon’s fulfillment feature, Fulfillment by Amazon (FBA), you’re essentially adopting a consignment model for your brand. So here are the questions: is your company prepared for this? Is finance able to adapt? Can operations label and ship product to Amazon’s fulfillment centers and meet Amazon’s standards? Do you have the right product packs (selling a single unit of most grocery items will not be profitable for your company)? Lots of considerations for your team to work out.

Secondly, there are eComm partners like ThriveMarket and Vitacost, which you may sell through one of your distributors. They provide a basket-building model where individual selling single units does make sense, so are they really any different than any other of your retail accounts? Your major involvement will be around pricing, discounts and promotions – just like your brick-and-mortar partners. So, should your eComm team be responsible for managing these partners?

Third, there is eCommerce through Brick-and-Mortar grocery – either click-and-collect or delivery. Often everything about this business is merged with the processes and model of the grocery store itself – rather than a separate buying division, warehouse or operations structure. Promotions and advertising align with what is going on in the store which raises the question: is this a job for your eCommerce team? And to further complicate matters, there are variations on this theme, where a retailer like Walmart will sell some products on their site and the same products in their stores plus some products only through their Third-Party marketplace.

There are also dedicated grocery delivery partners like Fresh Direct, Peapod and Amazon Fresh that purchase product directly from a brand or may use its distributor. Are they eCommerce or simply another grocery account that happens to deliver?

Is your head spinning yet? Because we have a few more questions:

What about your own DTC? Should you sell from your own website (we say yes) and if you do, will you ship your products to your consumer, or use a fulfillment partner? Or fulfill from your Amazon FBA inventory? Do you sell the same products as you sell to other online and brick-and-mortar retail partners or a differentiated set of products? And who in your company manages this completely different model than eComm retail partners

Finally, there’s the “Grubhub of Grocery” – Instacart. They don’t buy or sell anything, but instead, act strictly as a delivery mechanism from grocery stores. But they have instituted features, like coupons and advertising, that can benefit a brand regardless of the retailer the consumer chooses to purchase from. So where does this business live in your company?

All of this is to say it’s time to get serious, figure out how to make this complex opportunity work in your organization, and get in the game. Grocery eComm was already a fast-changing, fast growing channel, and the pandemic crisis has increased that exponentially. Creating an eCommerce team, and putting all these diverse business models on their plate simply won’t cut it. Every brand has to decide if they have the bandwidth to embrace the unique business models listed above, and if they do, figure out how to structure themselves around each one of them.

Picturequotes.com

Albert Einstein said, “In the midst of every crisis, lies great opportunity.” And as devastating and painful as the crisis we’re facing now has been for so many people and companies, many of the brands we work with have not only avoided loss, but have been able to able to thrive. By taking time to understand the landscape and doing what it takes to adapt, amidst the chaos, they’ve found their own great opportunity while also providing a great service to their customers.

Written by Betsy McGinn and Bill Sipper

So You Want To Launch A Brand? Why You Should Start Now (Part II)

This is the second installment of So You Want to Launch A Brands? Why You Should Start Now and we will discuss Branding, Positioning, Logo and Label Development as well as Intellectual Property and FDA Label Compliance.

Brand Positioning and Logo and Label Development

While you are waiting for your shelf life test results, if you haven’t already started, let’s focus on Positioning/Branding/Label/Logo Development. This is a very critical step in the process if not the most critical step.

To start, you need to determine what your Unique Selling Proposition will be. The food and beverage graveyard is cluttered with great tasting food and beverages that don’t sell because there is no Consumer Need. What makes your product different?  What makes your product special? Why should a consumer purchase your product?

Sometimes this information is crystal clear to entrepreneurs and sometimes it takes a while.  Please understand the world does not need another regular energy drink in the same size can and with the same ingredients of the Energy Drink market leaders.

There are a few ways you can handle product positioning.  The first way is to do it yourself.  Develop some reasons why you are unique and discuss it with friends and family.  Sometimes this works.  One of the risks involved in this scenario is that your friends and family might not tell you the truth because they don’t want to hurt your feelings.  Another potential problem is your friends and family might not be the same as the consumer demographic you are targeting. However, it can be done and it has been done this way.

Another way to approach branding and positioning and your Unique Selling Position is to hire a professional like Cascadia (in fact Cascadia can do most of these steps for you) or you can hire other professionals like Arena Partners or Modernized Mobile, for example, or another reputable agency who will work within your budget. I have seen very good, small branding firms charge a few thousand dollars and done a great job and I have seen larger ones charge between $50,000 and $100,000.  In this case, larger agencies do not always equal better work content and unique positions.

Listen to this. I am going to tell you a secret that will save you potentially millions of dollars. If you do not have a Unique Selling Proposition don’t start a food or beverage company.  You will just be setting yourself up for failure.

The branding and positioning process should take about 30 days if you and your branding firm turn around content and feedback quickly.

Assuming you have your Unique Selling Proposition as well as your brand positioning, all of your marketing efforts will flow more smoothly.

Once you have the USP, it is time to design your logo.  Logo development is a very iterative process.  It can be done within 2 weeks to 4 weeks, again, if you and your designer turn around feedback and work product quickly.  However, you need to be careful how you coach your designer and what you tell them.  If you tell them you want squiggly lines that is what you will get, but it might not be good for the brand. The better approach would be to tell them you want some sort of abstract art in the logo. Don’t tell them you want the logo in red, for example. Let the designer do their job and give you various options to consider. Wanting what you want just for the sake of having it can create problems in this phase.  After all, you don’t want a logo that you love but consumers hate.  Remove your ego from the process.

Most branding and positioning firms can also create your logo and label.

Now that you have your logo it is time to start working on your label.  Keep in mind during the development of your label you want to create something that will get the consumers attention AND is in compliance with FDA regulations.

First, your agency or designer need to create your label. After that, you should send it to an FDA attorney for review.  Just because other people are saying certain things on their labels doesn’t make it correct or legal.  An FDA attorney will also usually give you advice about the best ways to avoid class action lawsuits which are rampant in the industry, especially in California.

The label design and FDA label review (oh by the way, your website copy, point of sale material, sell sheets, and social media content should also be reviewed by the attorney but I won’t include that in the timeline) take about another 6 weeks or so, unless you need to live photography or custom illustration for the label.  That will add more time to the process.

Intellectual Property and FDA Compliance

We work with several excellent FDA attorneys. Here are a few:  Justin Prochnow, Rachel Gartner, and Rakesh Amin. These firms can also handle your trademarks and patents if necessary. Be prepared for a lot of comments to your label review.  Very rarely have I seen a good review without a lot of comments.

We had a client who owned an AMAZING Trademark for a name.  In fact, this client could most likely have made a lot of money from a much larger company who was infringing on their logo.  Unfortunately, while day-dreaming one day, I searched their trademark (to this day I still don’t know why) only to find they never renewed it and it expired.  They lost all the leverage they had on the larger company and, in fact, had to get the larger company to explicitly allow the Company’s trademark in a very specific channel.  Not optimal at all. But I digress.

Cascadia Managing Brands is a strategy, brand management and sales execution firm that helps startups succeed. In this bi-weekly series Bill Sipper, Managing Partner, shares his insights on:

Brand Positioning and Logo and Label Development

Intellectual Property and FDA Compliance

Future articles will discuss:

Brand Positioning and Logo and Label Development

Intellectual Property and FDA Compliance

Point of Sale Material and Presentation

Liability Insurance

Distribution Strategy

Sales Execution

Overall Timeline

The History Of The Beverage Industry (Part 8) – All Time Commercial Advertising Campaigns

Advertising can be traced back thousands and thousands of years to ancient civilizations. Be it in ancient Egypt, Greece, China or Rome – sharing a message to spread the word to others is a concept as old as time itself. From wall or rock paintings, to papyrus posters, newspapers, billboards, all the way up to radio, television and digital commercials – its transformation is synonymous with the evolution of society.

In terms of its role in capitalist economies, that really took off in the 19th century with the promotion of books, tobacco, automobiles, food, beverages and cosmetics among other things. The concept of creating a campaign around a product to attract and educate consumers started to boom in the early 1900s. Creating a culture, a lifestyle, in which a specific company’s product “embodied” is a concept that, despite its evolution, has been practiced for well over 100 years now. The means in which it is delivered however, has never been more captivating than it is in the modern era.

As televisions became a staple in family homes, so too did commercials. As computers became a staple in family homes, so too did digital ads. These advances in society opened up the capabilities for ads, in a more creative fashion, to captivate a larger audience with slogans, reads and visuals effects that connect with the belief systems of a larger population of people.  

Back to the specifics of the food and beverage industry, certain companies have been exponentially more successful in creating a culture through their advertising campaigns (commercial or digital), than others. How do you turn a taste into a visual spectacle? Can you think of any that come to mind? Here’s a good place to start – if you can remember a commercial from over one, two, three or four decades ago, odds are, that company did a pretty good job. 

Coca-Cola comes to mind, Pepsi comes to mind, Budweiser comes to mind among many others we will dive into. In this blog, we will take a look at some of the best commercials from the food and beverage industry that have become timeless identifications of a company creating a culture that goes beyond their product.

Coca-Cola vs Pepsi

When it comes to all-time commercials in the beverage industry, it is no surprise two of the industry’s giants produced some of the most memorable. Coca-Cola and Pepsi have set the pace for generations while competing with one another tooth and nail. They battled over product placement in movies, running long ads in the 1950’s 60’s, as well as competing for celebrity endorsements. The two combine to spend over $3 billion on advertisements on an annual basis across their different products. Naturally as industry leaders, many of their ads be it during Super Bowls or around the holidays, have become model templates for how to create a successful campaign. 

Let’s look at a few of the best from the core products, that exclude the companies sub products such as Sprite, Mountain Dew, Frito-Lay, 7-Up, Gatorade Powerade, Aquafina, Dasani and Vitamin Water.

I’d Like To Buy The World A Coke – Coca-Cola

I’d Like To Buy The World A Coke to this day is still one of Coca-Cola’s most famous commercials from 1971. It portrayed a positive message of hope and love by a group of teenagers from all different cultures that brought a sense of unity around the product. The song was so popular it later became a full-length song and was a hit record in the U.S. and the UK. Coke has used this ad nearly a dozen times since it’s original airing in 1971 which ran during the Super Bowl. The ad cost approximately $250,000 at that time which was the most expensive commercial in history. 

“Hey Kid, Catch!” -Coca-Cola

Chances are whether you are a baby boomer or a millennial you know where that line is from. That is the power of a great commercial. That is the power of a message that resonates so deeply within its viewers that it essentially becomes timeless. “Have a Coke and smile” personified by the Pittsburgh Steelers star defensive lineman Mean Joe Green, who didn’t get his nickname for being a happy and nice guy. 

Because of his rugged personality, and being that he was probably among the last to show any sort of empathy, especially to a child, the commercial really drove home the message during the 1980 Super Bowl as the hobbled Green gave his game jersey to a kid who gave him his Coke. If Coke can make Mean Joe Green smile, it can make you smile too. 

Whole New Generation – Pepsi

As Coke had the leg up on Pepsi during the 70’s, Pepsi Co worked hard to inspire the next generation of Cola drinkers to transition over to their product. To the tune of Michael Jackson’s famous “Billie Jean” the “You’re A Whole New Generation” campaign was born in the 90 second commercial featuring Michael Jackson and his crew along with a younger group of talented dancers, all drinking Pepsi. This 1984 classic also aired during the Super Bowl. Jackson actually suffered burn injuries on the set of making this  commercial in a pyrotechnic accident. 

Cindy Crawford – Pepsi

No Pepsi commercial is referenced quite as much as Cindy Crawford’s 1992 moment, in which she does nothing but walk out of a car and drink a Pepsi. Pepsi was featuring a new can in a sexy way with the stunning Crawford who had two poor young boys drooling the entire time. It’s doubtful even an ice cold Pepsi would have quenched their thirst. The commercial was shot to the famous “Just One Look” song by Doris Troy.

Budweiser

No beer company has had more of an effect in advertising than Budweiser over the last century. Their campaigns have successfully hit multiple different demographics, often at the same time. Between their core product, Budweiser, and Bud Light which has grown with the popularity of the light beer sector, none of their competitors have been able to replicate the cultural influence that their campaigns have generated. While their commercials over the last 5 years have been more “light” centric to the younger audience, here are some of the most notable Budweiser commercials in the company’s history. 

“Bud – Weis – Er” – Budweiser

Airing during Super Bowl XXIX in 1995, the Budweiser Frogs fittingly named Bud, Weis and Er revolutionized the alcohol advertisement campaign industry with their catchy croak of their respective names shot at “the swamp”. It has been dubbed as one of the greatest Super Bowl commercials of all time and as a result of its success, the american beer company produced several commercials at “the swamp” afterwards, with other animals taking the place of the original frogs. Throughout the 90’s it became a mini series in itself on Super Bowl Sunday as viewers anxiously awaited the new year’s version. 

“Whasssssup” – Budweiser

One of the most memorable sayings from the turn of the century, Budweiser single-handedly turned a greeting into a cult icon and pegged it to their drink. It became a cultural saying even among kids which demonstrated the kind of outreach the campaign had. Budweiser’s website traffic had almost tripled as a result of this ad. There were several other renditions that came to follow as a result of its success. 

Clydesdales 2002 & Clydesdales 2013 – Budweiser

The Clydesdales have been around since the 1930’s and have been a staple advertising campaign for Budweiser through the decades. These two touching commercials hit home for Americans in the 2002 and 2013 Super Bowls (see the campaign trend here). Respectively, the ads captured the theme of unity, patriotism and brotherhood. Perhaps none more powerful than the ad of 2002 that ran in honor of 9/11. 

Other Notable Campaigns

The Most Interesting Man In The World – Dos Equis

“He’s been known to cure narcolepsy just by walking into a room. The Police often question him, just because they find him interesting. His blood smells like cologne. He once had an awkward moment, just to see how it feels.” He is,the most interesting man in the world, and while he doesn’t always drink beer, when he does, he makes it a Dos Equis. 

The Most Interesting Man In The World campaign made Dos Equis a desirable product in a time when craft beer was taking over the U.S. and sales on imported beer were dipping. Their campaign broke the norm of other beer companies advertising to a younger audience, where on the contrary they portrayed their product as the sophisticated selection. 

Red Bull Gives You Wings – Red Bull

You probably remember some of the first  Red Bull commercials made, the famous cartoons that were vital in creating the culture of “Red Bull Gives You Wings”. The commercials early on were nothing extraordinary, at times even a bit corny. It was some variation of a cartoon, someone drinking a Red Bull, growing wings, then flying. So simple yet so effective, the slogan actually led people to believe the product would give them wings. This was later settled in a lawsuit believe it or not as people actually thought they would be able to fly. The effectiveness speaks for itself. 

The company has been the most successful energy drink world wide as a result of their marketing campaigns. The commercials have taken a shift towards athletics, specifically in extreme sports, as Red Bull is a major international sponsor for events, teams and athletes. Those campaigns have become known as “The World Of Red Bull” which include powerful sporting footage along with inspiring quotes. Despite the new style, Red Bull still close those campaigns with the catchphrase “Red Bull Gives You Wings” be it verbally or written. 

Be A Pepper – Dr. Pepper 

Airing in the 1970’s, the David Naughton “Im A Pepper” jingle has been renowned as one of the most catchy jingles in advertising history. “Be A Pepper” was the catchphrase for the minute long ad that even included Popeye the Sailor Man chugging down a Dr. Pepper in place of his regular spinach. The song was written by, at that time, jinglist Barry Manilow.

“Oh Yeah” – Kool Aid

Who didn’t love a Giant pitcher of Kool-Aid crashing through the wall to deliver a thirst quenching beverage? That became the synonymous theme of their commercials over three decades with the giant Kool-Aid man always showing up when children needed a cold drink. Starting in the 1980’s, it is so timeless it has been featured in Family Guy episodes and in a Dane Cook stand up special. 

Murder Your Thirst – Liquid Death

I wanted to include this campaign not only for how incredibly unique it is but to demonstrate a transition the advertising space is seeing now in the digital era, with companies running campaigns on YouTube and other online platforms. Liquid Death is a canned water product we represent, that brings quenching your thirst with water to a whole new level. “Murder Your Thirst” along with “Death To Plastic” are the two flagship slogans.

The brand appeals not only to an ecofriendly approach with their packaging, but additionally to a hardcore artistic audience in a beverage space that is generally thought of as a healthy yet boring. You’d be hard pressed to find a campaign like this airing on television, which is why brands like Liquid Death are utilizing other means to spread the awareness of their products. 

Fun Commercials

In effort to include a few more fun videos for you all to enjoy, take a look at these great videos below.

Top Super Bowl Commercials
Top Doritos Commercials
Perrier (1991)

Key Takeaways

There are creative advertisements that stick for a couple hours or become a topic of discussion among friends and family – and then there are creative advertisements that change the way you perceive and remember culture. These advertisements were so well done that they have become iconic, influencing us even till this day, in some cases over 4 decades later. Although they are all unique, the one thing they have in common is their innovation. It pays to be different and to set the trend.

How to Cut a Sound Trail thru the Amazon Thicket

As published in Beverage Business Insights May 11, 2020.

There’s little question that online sales’ continuing inroads in the bev biz have become accelerated as conventional shopping has become more tortuous during the coronavirus pandemic.  Data shared on Monster Bev earnings call last week showed that rival Celsius may be still modest at retail but it owns 10% category share on Amazon.  BellRing Brands’ ceo said ecomm has jumped to 10% share of sales and may stay that way even post-pandemic.  Those are eye-popping stats.  Should your early-stage brand make the leap?  Does the chaos of the current crisis make this a good time or a bad time do so?  Bill Sipper, partner at Cascadia Managing Brands in Ramsey, NJ (CascadiaFoodBev.com), offers a primer here on what factors should go into your decision-making and how to plot your strategy. 

“Our vision is to be the earth’s most consumer-centric company; to build a place where people can come to find and discover anything they want to buy online.”  That’s Amazon’s mission statement.  From a consumer perspective, they have achieved their goal.  But what is missing from that mission statement?  You, the vendor.

As much as Amazon cares about making consumers happy is as little as they are concerned about their vendors.  Amazon can be daunting for even the most experienced food and beverage executive.  (It certainly was a learning curve for those of us at Cascadia Managing Brands.)  It is even more difficult for an early-stage entrepreneur with limited understanding of their digital space. And as I noted, Amazon doesn’t necessarily work hard to make it easy and intuitive for you.  Having been steeped in these issues for our clients in recent years, I’m offering a few guidelines for navigating this challenging but potential rewarding channel.

A word first about timing.  Much has been said about Amazon focusing on “essential items” during this pandemic. Yes, food and beverages typically are considered essential, but your early-stage brand may not be so essential at a time many consumers are more focused on staple items. Does this imply you should put off a launch until things settle down?  Not necessarily, because of the time frame involved. It will usually take 8 weeks or more to get items listed on the platform.  Amazon people are very meticulous and want information the way they want it. For example, quite often Amazon will ask you to prove that you are the brand owner and require specific, and somewhat odd, documentation to support that. It is not uncommon to receive approval to steps in your account only to have them unapproved the following day, as the company requests additional information. So the sooner one starts this process the faster the products will find a berth on the great ship Amazon.

If you decide the time is right to proceed, you first need to determine which Amazon platform is right for your brand. Amazon is not one unitary service. Rather, it offers 3 options, each with its pros and cons: Amazon Vendor Central, Amazon Seller Central Fulfillment by Merchant, and Amazon Seller Central Fulfillment by Vendor. Which platform do you choose? It all depends on your brand’s needs and your operational strength. You need to think this through because success on Amazon starts by choosing the optimal platform.

Product type and packaging are important here. Take ASC Fulfillment by Merchant, in which the order is placed on Amazon but the product is shipped by you, the seller.  This is a much better platform for pills and powders, refrigerated products and glass packages (9 out of 10 times Amazon will not ship glass directly). Then there is ASC Fulfillment by Amazon, where you deliver your product to the Amazon distribution centers on consignment and it is shipped to the buyer by Amazon. This most often is better for shelf-stable and RTD food and bevs. Each of these platforms offers different options and opportunities. For example, Vendor Central allows you to participate in Amazon Pantry, Amazon Fresh and Prime Now, while the other platforms do not.  ASC FBA automatically gets you a Prime designation while ASC FBM Prime offers that possibility but not a guarantee. This may all sound like gobbledygook to you now, but these are essential, crucial distinctions.

Your digital shelf on Amazon is completely different than your retail shelf.  Although you will find some level of uniformity, realistically there is much more flexibility in digital. For example, in traditional brick & mortar you would most probably want to offer each one of your sku’s, sometimes individually, sometimes in multipacks, and sometimes in cases. However, you are limited to the room a retailer allows you on the shelf.  The digital shelf is much different.  You can offer any pack you want, whether a 3-pack, 4-pack, 6-pack or 12-pack. Variety packs and packs that meet a consumer subscription cadence are the gold standard on Amazon. So this is a key part of your strategizing for this platform. You need to settle on the right size and the right pack count with the right order cadence, and of course make this all work with your supply chain. 

Price is also important – but maybe not as important as you might assume. When Amazon shoppers are polled on what’s most important to them, the top three responses tend to be: (1) free shipping, (2) most likely to have the product I want, and (3) better prices. According to Consumer Research Report by Salsify, 2019 69% of consumer will abandon a product page for lack of information or details, a significantly greater driver than price.

Therefore, the content on your digital page (again, think of it as a shelf) is critical, from the type and number of photos, to the titles, to the bullet points. All these things affect your search ranking. Reviews also help in the search rankings and consumers like to see what other people are saying. Focus on getting quality reviews, not quantity.

Last but not least is promotion and advertising. You don’t have an Amazon business without marketing inside Amazon and out. But don’t spend one penny until your content is right. Amazon offers programs ranging from pay-per-click (PPC) to brand sponsorship, product sponsorship and brand store.  These need to be combined with search engine optimization and key words on your pages. Yes, it’s a complex matrix, but again, you won’t have a successful Amazon business without thinking these issues through.

I should note that one of the downsides of Amazon is the lack of overall data you will receive about your consumer. Yes, Amazon captures a great deal of data about its shoppers and their purchasing habits, but it doesn’t share much of it. For vendors using Seller Central, the only consumer data you will be able to see is age, household income, education, gender and marital status. Amazon owns the relationship with the consumer. Vendors would receive a lot more consumer data if they sold their products on their own website. But consider this simple bit of arithmetic: Amazon receives 200 million unique views per month, while the average food and beverage startup’s website will receive no more than 50-100 visitors. So do the math. More often than not, even with a lack of consumer data, the sheer consumer volume on the Amazon platform will offer greater sales. Brands would have to spend a considerable amount of money to secure enough views of their website to come close to Amazon’s sales potential. It is a tradeoff that needs to be considered.

If you have a very large brand and if you have a lot of capital to invest in Google search terms and pay-per-click ads, and you have a large database of social media followers, you might opt to sell your product from both your website and Amazon. That could yield incremental sales and capture your consumers’ data directly. However, if you don’t have a large amount of capital (although you still need some to support your Amazon marketing), then it is best to focus on selling your product on Amazon. If you happen to generate sales from your website, that is great. But I would not invest a lot of time there.  It is worth noting in this context that Amazon is the #1 search engine for retail products.  More than 70% of online consumers begin their product searches with Amazon, versus just 11% with Google. Think about that.

If you’ve read this far, you understand that Amazon can be very difficult to set up if you don’t know what you are doing. It is not as easy as just throwing some photos and words on a page. Today, many brands launch exclusively on Amazon because the barrier to entry and costs are relatively low compared to the requirements of operating in the bricks-&-mortar world, from recruiting distributors to paying slotting fees to running in-store demos. Amazon sold $8.2 billion of grocery items in the US last year (compared to Walmart’s online business of just $2.4 billion). It can be a great place both for large brands and small ones. But only if you have a plan.

So you Want To Launch A Brand? Why You Should Start Now

I started writing an article showing the steps and timeline for creating a new food and beverage brand. I wrote more than I expected so I decided to post the article in bite size pieces here on a bi-weekly basis.

The pandemic, amongst other things, has caused many entrepreneurs to pause and re-think their strategy. Many entrepreneurs who have great new food and beverage ideas are waiting to see what happens.  I can say, that is a very bad strategy for entrepreneurs because while they wait, others will be moving forward and will be the first to gain shelf space when the country goes back to our new normal.

Let’s look at a typical timeline for a new food or beverage item.  For arguments sake, let say you already have an idea in your head.  What do you do next?

Research and Development

Let’s start with research and development.  You might be able to create your product in your kitchen today but it will be much difficult once you move to the production phase.  For a very basic example, let’s say you are using Heinz ketchup as an ingredient.  If you were to order Heinz ketchup in a 50-gallon drum, the minimum size you can usually order for a production run, it would be very expensive.  Depending on how much you use, Heinz Ketchup may make your product too expensive to sell or too expensive to make a profit.  Heinz ketchup has a certain taste profile.  When you move into production you will most probably need to buy a less expensive but high-quality ketchup.  Where do you go for that?  How do you sample the different types of ketchup being sold in bulk? Will the manufactures send you free samples if you are a startup? 

This all leads up to you probably should hire a person or company, like Parkside Beverage, Beyond Brands, or Metabrand amongst other reputable firms. Get your recipe or formula done right the first time. In the grand scheme of things their fees are not a lot of money and you need to get it right the first time.  Re-formulating takes time and money.

I have been on the floor of production facilities with clients who created their own recipes and were trying to adjust the formula on a fly.  It was a disaster.  I remember one time being on the production line when someone’s formula would not work because the ingredients were too thick and they were clogging the filters. That costs a lot of money.  The client had to pay for the entire day of production even though he/she was never actually able to produce their product.  My advice, stick with the professionals and they will save you a lot of money in the long run.

Now let’s look at the timing and timeline.  Formulation companies aren’t waiting for new entrepreneurs to contact them.  Even during these Covid 19 times, reputable formulation companies are still busy. They point is you can’t just pick up the phone and expect them to get started immediately.  It might take two weeks until they can accept your business. It might take them time to order special ingredients.

Once they create the first batch of samples for you, and I am sure this will not be the last batch of samples, and you consider the time it takes for them to mail you the samples, and the time it takes for you to review the samples and send comments back to the formulator, and they eventually finalize the formula, consider 4 more weeks go by.

Now you have your formula.  Great start.  Do you want it to be GMO free?  Organic?  Kosher?  These processes take time and someone has to fill out all the paperwork and get all the information for the certifier.  My last go around with a GMO-Free certifier took 6 months because they are backed up. However, let’s say it takes 3 months. However, assume you can work on other parts of your product during that time period.

Shelf Testing

Let’s consider the next step being Shelf Testing. Before you produce your product, you want to know what happens to your product after being exposed to different levels of heat, cold, light, etc.  Are any bacteria growing?  What about yeast, pH, mold, salmonella, E. Coli, listeria, staph, aureus etc.? How long will your product be on the shelf before the color or taste or aroma begin to change? And this isn’t just a “nice to have”.  Retailers and Distributors may request to see the shelf life test results.

According to RL Food Testing Lab, Product Safety Testing will take different times depending on the type of item you are testing. 

Here are a few examples:

  • Beef Jerky 9 months – 1 year
  • BBQ Sauces 4 months – 6 months
  • Pasteurized Dairy Products: 3 weeks
  • Raw Juices 5 days
  • Cakes, Cookies & Other Bakery Goods WITH preservatives 30 days
  • Salsa 3 months – 4 months

But now, you need to test for shelf life.  How long will your product last before going bad or before losing taste, aroma or even color?

The rule of thumb regarding shelf life testing, depending on the product, is that a product needs 1 week of testing for every month of shelf life you are looking for.  But, that timeline may be a little bit over cautious. For the sake of this article, let’s say it takes you 90-120 days until you get your test results.

Cascadia Managing Brands is a strategy, brand management and sales execution firm that helps startups succeed. In this bi-weekly series Bill Sipper, Managing partner, shares his insights on:

Product Formulation

Certifications & Testing

Future articles will discuss:

Brand Positioning and Logo and Label Development

Intellectual Property and FDA Compliance

Point of Sale Material and Presentation

Liability Insurance

Distribution Strategy

Sales Execution

Overall Timeline

Why Did Snapple Fail and What Can We Learn From It?

Snapple

Snapple failed? What do you mean by that? You’re probably wondering this because you know that Snapple is pretty much alive and kicking. The brand is still here, and the drinks are indeed being sold. However, that’s not a good enough indication of a brand’s success. What’s more, even though a brand is still there, it doesn’t mean it hasn’t failed.

Those who’re into history about brands will also know about the famous disaster of Quaker Oats and Snapple. And yes, that’s precisely what we’re here to talk about. But that’s not all. I’m here to argue that Snapple didn’t just fail back in the 90s, I’m here to tell you that this failure never allowed the brand to truly recuperate and advance. The best way to support this statement is to look at the numbers. They never paint the wrong picture, and they are a great signifier of a brand’s success or failure.

Just take a look at the sales volume of Snapple Tea. Back in 2007, they sold 55.5 million cases, and in 2018 they sold 54.6 million. There were downfalls in between, and there were rises as well, but the numbers remained pretty much the same after an entire decade. They are unlikely to rise in the future either. And what’s worse, this is something that has been happening to the brand for a long time.

So, why is this so? We are here to argue that the main reason for this is the failed merger with the Quaker Oats Company. As Snapple was resold afterward and went over a number of significant changes, most of which haven’t produced any significant improvement, it can well be said that the failure Quaker Oats made to the brand was permanent. With that in mind, let’s take a look at what happened, what was done afterward, and all the lessons we can learn from it:

The History of Snapple

To truly grasp the failure and the lessons we can learn from it, we need to go back to the very beginning of the company.

Snapple was founded in 1972 by three American businessmen, Hyman Golden, Leonard Marsh, and Arnold Greenberg. They first envisioned the company as a part-time venture as they didn’t know much about juices and weren’t ready to give up their respective businesses.

The first apple juice they made gave the name to the company. As it was a carbonated apple juice, it fermented in the bottles it was in and caused the caps to fly off. Consequently, they made a portmanteau from the words’ snappy’ and ‘apple’ to show how the bottle caps simply snapped off the apple juice bottles.

It took a while for the company to truly come to its own, which happened slowly in the 1980s.That’s also when the first new juices were introduced. Snapple first added all-natural juices at the start of the decade and in 1982, they started selling natural sodas. The prices were high, but the products were still relatively successful. Part of that success was brought by their attention to details as each product took at least six months to develop.

Thanks to this initial success, Snapple expanded into fruit drinks in 1986. Then, it didn’t take long for the Snapple Ice Tea to be born. It happened in 1987 and the most successful drink they ever made became their Lemon Ice Tea. This major success was due to their unique method of bottling hot tea which eliminated any preservatives. This was never done before so it wasn’t strange that their bragging point was that they were the first to create a read-to-drink tea that didn’t taste like acid!

To translate that into numbers, just in a single year by the end of 1988, Snapple sales increased by 60%.The success allowed them to introduce 53 different flavors and in 1989, revenues from all noncarbonated beverages increased by 600%!

It’s worth noting that part of that success also came from the fact that Snapple gave retailers refrigerators as awards for stocking the entire Snapple product line in their stores. In essence, Snapple was ahead of the competition in many ways during this time.

In the early 1990s, Snapple attempted to find success throughout the country with aggressive advertising. They tried a great many things, the first of which pushed them into the eyes of the American public. Each commercial they had featured Wendy Kaufman, also known as the Snapple Lady, answering mail from Snapple fans.

After the Snapple Lady, the company attempted many other commercials and types of advertisements, and in the end, they expanded their business to every major city in the United States.

What’s interesting here is that all this time, despite the expansion, the company was still rather small with only 80 employees, most of which worked in a modest office building the owners had on Long Island from the very start of their company. They achieved this by not bottling their own product, but by outsourcing the work to as many as 30 different bottlers across the states.

In 1992 came the first sale of Snapple, but a lot of things remained the same afterward. For instance, the three founders of the company continued owning one-third of it and were still included in the management.

The heavy advertising that started before and continued after the purchase yielded success, at least for the new owner of the company Thomas H. Lee. Snapple was sold off for $1.7 billion, and Lee pocketed around $900 of that money for himself in 1994. The buyer of Snapple was none other than Quaker Oats, which is where our main story begins.

The Infamous Quaker Oats Acquisition

Quaker Oats had enormous successes at the time they purchased Snapple. Their Gatorade brand was bringing in around $700 million annually for a while, which created some significant amounts of cash the company could burn. What they did now seems like a literal interpretation of this metaphor. They decided to expand, and thus they purchased the Snapple brand for the enormous amount we just mentioned. Many experts considered the amount to be unnecessarily high, and in hindsight, it seems that it was.

Some two years later, when Quaker Oats sold Snapple off, they made around $300 million, which is a net loss of $1.4 billion for a single brand. So, why was this merger such a colossal failure?

Most now believe that there are several reasons for it:

  1. Wrong sales strategy

The sales strategy Snapple had before Quaker Oats purchased it was mainly supported by the gas stations and small convenience stores in which Snapple drinks were mostly sold. Quaker Oats wanted to change that mostly because they already had a great and working relationship with big grocery stores that sold their products. They thought that they could do the same for Snapple drinks, but they were vastly mistaken.

They tried to push this new method for no real reason besides the fact that it was easier for them. The strategy didn’t work out as Snapple sales plummeted instead of starting to increase as Quaker Oats management was hopping.

  1. A misguided advertising campaign

Remember the Snapple Lady line of commercials Snapple had? It was one of the main appealing points of the brand. Snapple fans loved the commercials and how unique and quirky they were. However, Quaker Oats decided to discontinue them and replace them with ones where Snapple boasts about how it would be happy to be right behind Coca Cola and Pepsi on the market. The new advertising idea completely made the Snapple brand normal and ruined the previously created quirky image it had. Suffice it to say, most old-time fans were not pleased.

After realizing the mistake they made, they tried to return to the original advertising style, but it was already too late.

  1. No adequate plans for the competition

Quaker Oats failed to make plans to fight the competition before they purchased Snapple. Before they did, Snapple wasn’t a major competitor to the big fish brands of Coca Cola and Pepsi, but once it was bought by a large company that was on par with the giants, they didn’t wait too long to prepare their countermeasures. They created their own Snapple competitors, which, combined with the fact that Quaker Oats did next to nothing, caused Snapple sales to go down.

Getting Rid of a Failing Brand

As it was already stated, Quaker Oats completely failed with the new brand, and they ended up selling it with major loss only three years after they bought it. This happened in 1997 when Triarc bought Snapple from Quaker Oats.

The CEO of Triarc, Michael Weinstein, attempted to undo everything Quaker Oats did to the Snapple brand, and in time, he succeeded. The original, quirky image was brought back and nurtured for a long time until most of the original customers were back. Even the Snapple Lady was brought back!

Beyond that, Triarc managed to increase the value of the brand and reach some of the success that could have happened much earlier had it not been for the devastating decisions and moves Quaker Oats had made.

Unfortunately, not a lot was accomplished except for the returned image and some further increase in sales. In 2000, Triarc decided to sell Snapple by bundling it together with Mistic and Stewart’s. The three brands were sold to Cadbury Schweppes for $1.45 billion, which was considered as a win by Triarc as they purchased Snapple for only $300 million.

Later on, in 2008, the brand was moved to its current owner Keurig Dr. Pepper, which was, at the time, under a different name and management. As of May 2009, the original Snapple drink was completely altered, and they began to make it with sugar instead of high fructose corn syrup. Today, the original formula is still being sold in some places, but it’s becoming very rare and likely to disappear from stores entirely.

Lessons We Can Learn from Snapple’s Failure

All the mistakes Quaker Oats made with Snapple can be boiled down to a single thing – a failure to understand the brand.

Quaker Oats never went in with the intention to understand their new brand and improve it in the way that the brand allowed. They went in thinking that their success with Gatorade can be transferred to Snapple. Yet the only thing that connected the two was the fact that both brands were beverages. Outside of that, the two couldn’t have been further apart.

At the time, Snapple was a quirky soft-drink brand marketed as a New Age soft drink while Gatorade was a sports drink with a massive athletic image. Comparing the two at the time was akin to comparing jocks to nerds in classical high school settings of the past.

As many have stated as early as back then – Quaker Oats failed to understand what Snapple was all about. Maybe they didn’t try to understand it, or perhaps they just weren’t aware that they didn’t understand that. Whatever the case may be, the fact remains the same – that failure to grasp what the brand was about cost Quaker Oats $1.3 billion and a tarnished brand image for Snapple that was never truly recovered.

As we’ve seen in the previous section, Snapple never truly found success after this debacle, and the entire brand remains a weak one that could have been much stronger.

In essence, this whole story shows how much the failure to understand a brand can be devastating for the brand itself, as well as its owner. Yes, it could be argued that later owners managed to reach success with Snapple, but as you’ve also seen, they were very limited and seemingly all in an effort to sell the brand again to someone and gain any profits.

Key Takeaways

Snapple could have been on par with the giants like Coca Cola and Pepsi, but they ended up being just another beverage brand among the many its current owners (Dr Pepper) have.

All in all, Snapple remains a good lesson for all brands and companies, not just the ones in the beverage industry, but beyond. It would be good for you to know what the lessons are of this failure and how important it is to truly understand the brand you have if you want to improve it and increase profits. As for deep dives like these, you should continue following my blog as I will be making many more in the coming months!

The Great Recycling Con Job?

We are all today brought up with the belief that recycling is important. Experts, people of power, and organizations constantly tell us that recycling is vital if we want to ‘save the planet.’ However, the reality is far more complex, and there’s a lot more to it than you might think.

First of all, when we’re environmentally conscious, we are not only saving the planet, we are saving ourselves. It’s presumptuous to think that any of our individual actions can destroy or save the planet on a global level. We are just one living organism among a whole host of living organisms on Earth that has occupied it for millions of years. They all came and went, and the planet is still here. We are a mere second in the entire existence of the world. 

In essence, all the bad we do to the planet will only lead to our own extinction, and the Earth will continue to exist long after our demise.

But besides the fact that we are not saving the planet when we recycle, we are also not really recycling. At least not in the way we are told. You want to know why? It’s a long story, but by the end of this post, you’ll know the real truth about recycling – the one no one will tell you.

Before we begin, you have to understand how recycling works in this day and age. Let’s begin:

How Recycling Works

Recycling has been around for long enough that the very word has come to symbolize one thing – turning something that is no longer useful anymore into something new instead of throwing it away. But how does the recycling process work exactly?

We, regular citizens, throw our recyclable waste into the eponymous blue bin instead of the regular garbage can. A recycling truck comes and picks up the recyclable waste we throw away. The truck then takes the garbage to the recycling plant. There, a very complicated process happens through which all of that garbage is turned into raw materials that can then be turned into something completely new.

Naturally, the process is not endless. Every recyclable product is usually down-cycled, which means that the new product can never be the same as the original. For example, when old newspapers are recycled, the paper will still contain residue ink, and the fibers within the paper will be much shorter and weaker. For that reason, the recycled material won’t be as desirable for the same product, but it can still be used for something else. The same thing happens with most other products. And after a couple of rounds through the recycling processes, the material will reach a point where it will no longer be usable. So, returning to our example of paper, after it’s been recycled repeatedly, the paper will no longer be usable and can only be discarded.

However, that doesn’t mean that some products can’t be up-cycled, because they can. By being smart, we can turn certain products into even better ones. For example, one could make a whole furniture piece out of old plastic or aluminum cans and a bunch of newspapers. Even old wood can be reused to create something new and equally beautiful. However, in the majority of cases, products are only down-cycled and eventually become unusable.

So, is that the truth about recycling? Well, yes, but there is still more to it. This is just a lesser-known fact about recycling, but there is still the big truth that will completely alter your opinion on recycling.

What the Companies Don’t Want You to Know About Recycling

Recycling Left To Rot (Austrailia)

As it turns out, there is a lot that companies aren’t saying. It’s as if they are covering up the big truth, or several of them. The biggest one is the fact that not all plastic is recyclable. This is important because the biggest polluter among the waste we create is plastic. The main reason for this is the amount of plastic we create and how long it takes for it to decompose.

For example, it takes only two weeks for paper to decompose, which is why paper garbage is not a big problem in the world. The real problem is the amount of trees we chop down to make it. But I digress. Organic waste decomposes fairly quickly as well, from a few weeks to a couple of months. The real problem is the materials that take very long to decompose. For instance, nylon fabric takes up to 40 years to decompose, while rubber takes as much as 80 years.

But all of these relatively common products are nothing in comparison to plastic. It takes plastic a whopping 450 years to decompose! Once you take into account that plastic was invented in 1907, you quickly realize that none of the plastic that has ever been produced has decomposed by now. All of it is still here. And do you know how much of it? The latest study from 2017 states that 91% of all plastic never gets recycled. That’s around 8.3 billion metric tons of plastic, and all of it is now waste. What’s more, only 12% of all the plastic that has ever been made has been incinerated. The rest of it is polluting our land and the world’s oceans.

According to National Geographic, A whopping 91% of plastic isn’t recycled, even though we put them in those blue bins! Many mixed plastic and paper cartons (Tetra Pak for example) do not get recycled, contributing to 78 million tons of packaging waste in U.S. landfills as of 2015.

To an extent, this is our fault. But mostly, it is the fault of the brands that create plastic products. For example, Coca Cola has recently been named as the world’s biggest plastic polluter for 2019 – again. An audit that was conducted by Break Free From Plastic, an environmental justice group, has shown that Coca Cola makes 43% of all plastic waste. Nestle and then Pepsi follow Coca Cola as the world’s biggest plastic polluters.

The problem with all of this is that not even the previously mentioned 450-year mark is certain. We don’t know for sure how long it takes for plastic to decompose as none of it has existed long enough to decompose. Therefore, 450 years is just an estimate.

Now, most of us believe that we are doing good when we recycle plastic. So, in essence, if all of us were to start recycling, there will be no plastic waste in the world, right? Well, that’s very wrong. Remember what we said before? The part that mentioned that not all plastic is recyclable? We were talking about the plastic that’s put in the blue bins – the one that’s recyclable according to their label. As it turns out, out of the seven types of plastic that are ‘recyclable’, five of them hardly get recycled at all. According to the Environmental Protection Agency (EPA), out of all the plastic that was put up for recycling in 2017, only 8.4% of it was ultimately recycled. The other 91.6% went to the many landfills and into the ocean. The same report from the EPA states that, on average, 50% of all other waste is usually recycled. So yes, the biggest issue is plastic.

If you think this is already very bad, you will be surprised to know that it used to be better, at least for the United States. It seems that the US used to send about 20 million tons of garbage to China, and they were the ones who were supposed to deal with it. But in the end, they decided that they were not going to do our recycling for us. The same happened in the Philippines and Malaysia. As it turns out, these countries began to have their own environmental issues when it comes to waste. Now, many states or counties in the US don’t even have good recycling programs anymore because of this.

This brings us to the second big truth.

What the FTC Doesn’t Want You to Know About Recycling

The second big truth about recycling involves the FTC or the Federal Trade Commission. As you are probably already aware, most products we buy have that small green triangle symbol that denotes that the packaging is recyclable.

The FTC is the one that allows companies to put this symbol on their packaging. With that in mind, you would expect the commission to have some specific and strict rules which force the companies to create fully recyclable packaging. But alas, that’s as far from the truth as one could get.

The rules and guidelines set by the FTC are very complicated, so I won’t get into them as I don’t even understand them entirely. But what I do get and what it all boils down to is that companies can find many loopholes and vague rules that allow them to put the little triangular symbol on almost anything. And what ends up happening is that a significant portion of the products that boast that symbol still don’t get recycled in the end.

The best example of this is the famous Tetra Pak packaging that’s widely used across the globe, not just in America. As it turns out, Tetra Pak is not as recyclable as we are led to believe. According to the regulations set by the FTC, it is recyclable, but according to common sense, it’s not. That’s because the process used to recycle Tetra Pak is overly complicated and rarely used. Plus, parts of the Tetra Pak don’t get recycled. The result is that a lot of the Tetra Pak packages end up in landfills or the ocean as not all of it is recycled.

Paper, plastic, and aluminum are layered together to make cartons: A typical shelf-stable carton averages 74 percent paper, 22 percent plastic, and 4 percent aluminum. A familiar form of this packaging is unrefrigerated soup or wine cartons.

Refrigerated cartons skip the aluminum and usually contain an 80 percent paper and 20 percent plastic combination to hold in the liquid. The Carton Council of Canada provides extensive information about the composition of different types of cartons and their recyclability.

Aseptic

Source:  Carton Council

Tetra Pak is just one example. Many other products are allowed to have recyclable labels on them, and yet they rarely end up being recycled. Even though that’s the case, the companies that create these products want us to believe that recycling is good and vital for us. By doing that, they keep us wanting to buy their products. Because for as long as we are incredibly eco-friendly, we will continue to purchase their products, knowing that what we throw them in the big blue bin will that will send them to the recycling plants. It’s a win-win situation, the companies make money, and we are all eco-friendly in the end. But, as you can see, we aren’t, not really.

So, if so much of the garbage we make ends up in a landfill or the ocean, is there even a point to recycling? Yes, there is.

Key Takeaways

Even though the big truth is that so little of what’s supposed to be recycled ends up being recycled, it’s still vital for us to keep recycling our waste. None of this changes the fact that a lot of the garbage we create ends up in the recycling plant. And even though a large portion of it doesn’t, that shouldn’t mean we should stop trying altogether. The little effort we make still means something. And it’s not like we can stop buying everything just because we know it might not get recycled.

What we really need is for the FTC to start making better rules. We need those guidelines to be stricter so that companies are forced to create products that will always end up recycled. We also need them to enforce real penalties and impose massive fees for those that don’t follow the guidelines.

However, we also need companies to start finding ways to deal with the plastic and other waste they create that ends up in the landfills and oceans. They are the ones causing the biggest problem with the waste crisis we have today.

We also need consumers to buy less plastic.  Switch to cans and glass whenever you can. Almost everything you can buy in plastic is available in glass or cans.  Ask your retailer to purchase more can and glass beverages.  You have responsibility too.

I feel that the first step towards real change is for all of us to learn the whole truth. Once we do, we can start spreading it. The more people who know the truth and react to it, the more the government and the companies can work towards fixing the mess they created.

In the meantime, you should keep following my blog because more stories like this one are going to follow!

The History of the Beverage Industry (Part 7): The Brands and Concepts That Failed (Part 1)

New Coke Don Keough and Robert Goizueta

In our previous articles (that’s a lot actually, never thought it would go so far!), I discussed a lot. I talked about many brands and many beverage types that found success across the globe.

I discussed the small beginnings of the energy drink industry, for example, and how several energy drink brands reached high levels of success. I also talked about bottled water and how carbonated drinks were invented.

That’s just a small part, and you should go back and take a good look at all those previous blogs that discussed the massive expansion of the beverage industry and the rise of popular brands we know and love today.

However, not everything is excellent in this industry. Plenty of beverages, brands, and concepts ended up being massive failures, and in today’s piece, I wanted to shine a light on these as well. So, with that in mind, let’s take a look at the most notable failures of the beverage industry.

The New Coke That Failed Tremendously

As you already know, Coca-Cola is a massive brand, not just in the beverage industry but overall. It mostly has to do with the unique formula they developed more than a hundred years ago.

That formula was a success, and it’s bizarre when you think about the time when they tried to change it. That happened back in 1985 when the great war between Coca-Cola and Pepsi was at its height.

Coca-Cola needed a change as their bitter rival Pepsi rose in popularity in the 80s, and their market share was reaching Coke’s. The change they decided to make was in the very formula itself. The company created the New Coke with an entirely new formula, which was a first in almost a century of Coca-Cola’s existence.

As soon as the drink was created and shipped to stores, the fans went crazy. Coca-Cola wanted to bring about a great, positive change, but the result was the very opposite. The backlash was tremendously bad, with only 13% of people liking the new taste. People started petitions, launched campaigns, and even called the company, all to get Coca-Cola to bring back the old flavor everyone loved.

The company went all-in with the marketing. The campaign was terrible in hindsight, or at least the Bill Cosby commercial, which certainly didn’t age well!

However, only two and a half months later, the old familiar taste was back, and the fans calmed down. The failure was still big, and Pepsi benefited greatly from their chief rival’s disaster. Unfortunately for them, once the old Coke formula was back, so was the success of Coca-Cola. Fast forward to several decades in the future, and Coca-Cola is a much bigger brand compared to Pepsi, despite the failure from 1985.

The Quick Failure of Crystal Pepsi

Crystal Pepsi

Coca-Cola is not the only one with majors fails; Pepsi has also had their own mishaps, especially when you consider their Crystal Pepsi debacle.

The early 1990s saw the rise of the clear-soda popularity, and Pepsi wanted to get in the game. They did it by creating Crystal Pepsi – a caffeine-free drink that was supposed to get people to associate it with health and purity. The beverage was also quite similar to the regular Pepsi, as the taste was almost identical. The only significant difference was the absence of the caramel color, which should have made the drink less acidic in its taste.

The initial response was very positive, and the fans were happy with the drink. The success even prompted Coca-Cola to release its own clear-soda drink – the Tab Clear. However, Tab Clear was specifically designed to sabotage Pepsi by destroying both itself and Crystal Pepsi. The strategy was this: Tab Clear was a low-selling product designed to fail. It was marketed as a sugar-free drink and associated with Crystal Pepsi to make Pepsi’s drink appear sugar-free as well, even though it wasn’t. The strategy was largely successful, and both drinks were mostly dead within half a year.

Orbitz – One of the Biggest Failures in the Beverage Industry

Orbitz

In 1996, the Clearly Canadian Beverage Corporation, a popular Canadian flavored sparkling water producer, introduced its lava-lamp beverage called Orbitz. The drink had floating edible balls that were essentially suspended in the liquid, prompting the lava-lamp association. In earnest, I was involved with this one and I thought it was going to be bigger than Coke! Ooops!

Orbitz was marketed as something unique, a drink that was supposed to be a Big Bang in the industry. However, consumers were not thrilled, and the drink was discontinued in only one year’s time.

Why? Well, it seems that the taste was the biggest issue. Orbitz wasn’t tasty at all. Many people compared it to cough syrup and ‘old water from a flower vase.’ If that weren’t enough, the branding was a bit confusing to people as well. Several flavors didn’t make much sense to consumers, so very few people were actually able to imagine what the taste would be like once they tried it.

Orbitz went all-in with the novelty and uniqueness factor, but without anything else. That’s the main reason why there was an initial interest that quickly died off once enough people tasted the drink and realized it wasn’t good.

The Short Life of Sprite Remix

Sprite Remix

Sprite Remix was an initially popular variant of Sprite, released by Coca-Cola in 2002. It was a colorless, caffeine-free, Sprite-based drink that eventually came in several different flavors that were remixes of Sprite, and each of them tasted significantly different from the original.

The taste was good to many fans, and the sales went well for a while. However, only three years later, in 2005, the Coca-Cola Company decided to discontinue the drink. The main reason was poor sales.

However, the drink got a revival in 2015 in the form of its Tropical Sprite Remix flavor that was soon renamed Sprite Tropical Mix.

Pepsi Blue – Blue Isn’t Always Great

Pepsi Blue

It seems that the biggest brands fail the most, which is no wonder, as they are the ones releasing the most beverages and conducting the most experiments.

One such experiment was Pepsi Blue, a soft drink that was supposed to compete with Coca-Cola’s Vanilla Coke. It was released in 2002 with a completely blue color that was its discerning characteristic. However, it was also the reason why the drink failed.

In 2004, it came to light that the drink was colored with something called Blue 1 – a food-coloring agent that’s very controversial in many countries around the world. It was banned in several countries as well because it causes allergic reactions in certain people.

Blue Pepsi was very popular because of its blue color that attracted many. But it also gained momentum because of a unique taste that was described by many as something like blueberries, raspberries, and even cotton candy.

The drink is no longer produced, but it can still be found in the Philippines.

Why Hubba Bubba Soda?

A lot of people love bubble gum, but I doubt that they like bubble gum flavor in their sodas. However, that wasn’t the thought behind the Hubba Bubba Soda that came to be in 1988. It was made by a movie producer named Steve Roeder, who made it by using bubble gum snow cone syrup.

It might have been a good idea at the time, and it was an exciting novelty to many people. But it still died relatively quickly. It was discontinued in 1990 due to poor sales, most likely because no one wants to drink bubble gum!

The Infamous Non-Alcoholic Coors Drink

Coors Rocky Mountain Sparkling Water

The famous Molson Coors Company creates beer, as many of you probably already know. Their main differentiator is the fact that they use pure Rocky Mountain spring water to make their beers, as the company has been saying since 1873.

It seems that they wanted to use that differentiator to enter an entirely different market – the sparkling water market. Thus, the Coors Rocky Mountain Sparkling Water was introduced in 1990. It was regular sparkling water with no alcohol in it. However, as the Coors fans knew the company to be an alcohol manufacturer, they were entirely confused with this product.

The bottled water market was booming at the time, and it stands to reason why Coors wanted a piece of the pie. However, it’s entirely baffling why they mainly targeted their existing consumers who were interested in the company for its beers and nothing else. Their fans simply didn’t care for Coors sparkling water, which is the main reason why the drink failed tremendously, despite the heavy marketing. So, two years after the drink was launched, it was abandoned entirely.

McCain’s Boku – the Beverage for Children Goes to Adults

Boku

Until McCain Citrus Inc made the Boku juice in 1990, the entire U.S. juice box market was oriented towards children. However, Boku was made to target adults, and it was packaged in a way to appeal to adults without making them look childish while drinking the juice.

The marketing was well designed, and the drink became popular once the company hired the famous comedian Richard Lewis. He became their spokesperson and appeared in several commercials that were often more popular than the drink itself!

The beverage was popular nevertheless, but once the initial craze settled down, it went into obscurity. That happened some five years after it was introduced, and the company attempted to bring it back to popularity by targeting children with their new ads. Unfortunately, the strategy was unsuccessful, and the drink only remained in stores due to nostalgia. However, that wasn’t enough, and Boku was discontinued in 2003.

And this ad starring Richard Lewis is always fun to watch https://www.youtube.com/watch?v=1JEbnWl8iz0

An Energy Drink Soda Hybrid

Vault Soda

Coca-Cola Company envisioned and made Vault as a hybrid of energy drinks and regular sodas in 2005. They also made it to compete with Pepsi’s massively popular Mountain Dew.

It was an interesting drink that was marketed well with the slogan ‘Drinks like a soda, kicks like an energy drink!’

Vault became popular-enough among fans, and Pepsi made a response with their Mountain Dew Code Red. Coca-Cola responded by making the Vault Red Blitz. The drink continued selling well and lasted for a total of six years until it was discontinued.

The interesting part is that Vault didn’t fail because of low sales or lack of popularity among consumers. It was discontinued primarily because of Monster Energy. Coca-Cola bought the majority share in the company and decided it wasn’t smart to compete against itself with Vault, which was also an energy drink. So, they soon discontinued the entire brand.

In all honesty, it was probably the right decision, as Monster Energy is one of the biggest energy drink brands today. However, the Vault brand, on its own, is still a failure.

The Complete Failure of Jolt Cola

Jolt Cola

Jolt Cola is most likely the biggest failure on this list, and yet, it’s the only one that still exists. However, there is a good reason for this strange statement.

The drink was introduced in 1985 during the most heated period of the Coca-Cola vs. Pepsi war. Jolt Cola was an outsider, but they did well at first. Their main appeal was the fact that they were a ‘maximum caffeine’ alternative to all other similar beverages. The primary target market was students and young professionals, as the drink was supposed to give them energy the same way energy drinks did.

This went on for quite a while, as many of you already know. However, the drink failed only when the entire company went under. The Jolt Cola company filed for Chapter 11 bankruptcy in 2011, but they came back into the world in 2017 when the entire company was restructured.

Key Takeaways

As you can see, just as much as the world of beverages is filled with some major successes many adore, it’s also filled with some major disasters. Many of them are forgotten, but it’s worth remembering them if you want to stay in the game.

That’s why it’s vital for you to follow posts like these and always be aware of what works and doesn’t work in the beverage industry.

The History of the Beverage Industry (Part 6): The Story of the Smoothie

Well, we’ve already reached the sixth article in the series. The beverage industry is big and has a lot of different products that deserve to have their own piece. After the bit on energy drinks, it’s time to cover other sweet beverages that so many people around the world adore, some maybe too much! I am, of course, talking about the smoothie, the delicious drink both kids and adults love.

We’ll cover the origins and the history of the beverage, its development, where the industry is today, and of course, the most popular brands. Let’s begin.

What Is a Smoothie?

We already talked about juices in general, but smoothies and other similar drinks didn’t get their fair share. You should take a look at that article if you want to learn more about juices, but for now, we’ll concentrate on smoothies now.

The smoothie is in many ways a juice, but it’s also very unique, as well. It’s always made from either pureed raw fruits, vegetables, or even dairy products. With so many different foods existing in these categories, the variants of smoothies are almost endless. People tend to make their own types as well, including other products and creating something new and unique by simply mixing it all in a blender.

The smoothies we see today have evolved a lot, and they tend to include additional ingredients like sweeteners (sugar, honey, stevia), fruit juices, water, crushed ice, different powders, seeds, nuts, and more.

One main thing that connects all smoothies is that they are supposedly very healthy. However, that all depends on the ingredients being used. We’ll cover the health benefits of smoothies later on in the article.

The Origin of the Smoothie

As you can expect, due to the simplicity of the drink, smoothies have been around for centuries. Many cultures across the globe have been making pureed fruit drinks for ages, like the people of South America, for example.

The Indian subcontinent has its own form of a smoothie and has had it for a long time. It’s called Lassi, a yogurt-based blend that also uses water, spices, and often fruit. The mango-based sweet lassis are more like fruit infused milkshakes, which brings us to one thing that must be mentioned – milkshakes and smoothies are two distinct beverages that shouldn’t be grouped into one category, despite their apparent similarities. The main difference is in the fact that smoothies can be meal-replacements, as they are rich in vitamins and minerals, while milkshakes are more like deserts. Smoothies are often fruit and vegetable based while milkshakes are often ice cream based.

But I digress. Smoothies, as we know them today, were first made in the 1930s. The name smoothie came to be a few years earlier, but it wasn’t first used to describe the drink we know today. The word was only used to describe a person who is self-assured and suave, especially when communicating with the opposing sex.

The very concept of the smoothie we know today was accidentally created by a man called Julius Freed in the 1920s. He suffered from a sensitive stomach, and he found that a fresh orange juice that’s more bubbly and less acidic was something that he could enjoy. So he created Orange Julius, which is today one of the longest-running fruit drink makers in the world. As of 1987, Orange Julius is a subsidiary of Dairy Queen, which is a subsidiary of Berkshire Hathaway.

The Influence Blenders Had (and Still Have) on Smoothies

The first smoothies that followed were fairly simple. They only had fruit, fruit juice, and ice, but they were still very obscure, especially in the United States. Until the blender was first made, making smoothies was virtually impossible in America. In fact, the origin of the smoothie is closely tied to the origin of the blender. People were not really interested in smoothies before the blender – it was this device that made smoothies widely available to the masses.

The first blender was made by a Polish-American chemist, Stephen Poplawski, with his Stevens Electric Company in 1919. However, it was a simple drink mixer, and Fred Waring made the first real blender in 1937. The Waring Blendor (and no, that is not a spelling error) popularized the smoothie in the United States during the 1940s. Other blenders quickly followed, and they further spread the popularity of the drink. It’s important to mention the fairly recent Vita-Mix, a blender that genuinely revolutionized the smoothie industry. It was made to be powerful enough to grind all the ingredients (even raw vegetables and nuts) into a smooth paste, making it perfect for making smoothies.

Further Development of Smoothies

The first smoothies were, as we said, fairly simple. The leading marketing connected to them was simple, as well. Most smoothies were marketed as a tasty, refreshing beverage that can quench your thirst. They still had a ways to go before becoming the meal replacement beverage we know today.

Talking about healthy, the hippie culture had a significant influence on the evolution of the smoothie. In the 60s and 70s, the U.S. was witnessing a sort-of rebirth of vegetarianism and the rise of veganism. Hippies and others propagated healthy living and healthy diets. That made many turn to organic and natural products that would keep them healthy and fit.

That caused many businesses to start opening health food stores across the country, and these stores started selling blended fruit drinks.

Jack LaLanne, an American fitness and nutrition expert and motivational speaker, also had a significant influence in popularizing smoothies and other healthy juices. He is often dubbed as the Godfather of Fitness, which should help you understand how influential he was in the 50s, 60s, and 70s. He started promoting health and fitness before celebrities who are today well-known as the leading promoters. He was also the first person in the U.S. to open a gym and health food store. What’s more, he was the first to discover the weight loss meal replacement drink and created several smoothie recipes that many still use to this day.

The Smoothie King Franchise

When discussing the history and evolution of the smoothie, we cannot skip the Smoothie King franchise.

A man named Steve Kuhnau experimented with smoothie recipes for years, and in 1973 he finally made one that he could truly enjoy. You most likely think that he probably had a sensitive stomach like Julius Freed, but Steven was actually lactose intolerant. He wanted to drink something similar to milkshakes that many others around him were able to drink, so he invented his own drink. He mixed fruit, various nutrients and vitamins, and created a custom blend that is known to many today. The drink turned out to be very delicious, and it also regulated his blood sugar to an extent. He decided that his drink was a good business idea and that others should have a chance to enjoy it, so he created the Smoothie King company that still exists today.

He decided on the word smoothie, as his primary demographic were hippies, who already loved the health and fitness benefits these types of drinks provided. Plus, the term was already well-known among the hippie community and many others who loved similar health foods and drinks.

The first store was opened in 1989, and in 2003, the company went international. In 2012, it was acquired by a South Korean franchisee, who then popularized the drink in South Korea. As it was spreading across the United States, it eventually made the term smoothie a household word.

In 2018, the franchise opened its 1,001st store, and now it boasts revenues of almost half a billion dollars annually. 

Other Popular Smoothie Brands

  • Odwalla

The Odwalla company was established in 1980 as a seller of food bars, juices, and smoothies. The first Odwalla products were marketed as a way for people to break free from over-processed foods that exist everywhere.

The company expanded massively in the 1990s, but it suffered some losses when it was discovered that one of its batches was contaminated with E. coli. It took some time for the company to rehabilitate its brand. In 2000, they acquired Fresh Samantha, another juice and smoothie company. They soon shut down the Fresh Samantha brand and started selling everything under the Odwalla brand.

Odwalla was soon acquired by the Coca Cola company in its effort to move into the non-carbonated drinks industry. The Odwalla brand is still connected to its Superfood smoothie line of drinks.

  • Naked Juice

The Naked Juice brand was born in America in 1983 as a company that makes juices and smoothies.

The brand started small but quickly expanded. Jimmy Rosenberg and David Bleeden created the first fruit juices with the Naked Juice name and sold them from home. As they expanded, their company reached massive heights, and their main rival became the industry leader Odwalla.

As Coca Cola had purchased Odwalla, it didn’t take long for its rival Pepsi to buy Naked Juice. The acquisition enabled Naked Juice drinks to be sold across the United States, Canada, and the U.K.

The company today has more than 20 different drinks, some of which are in juice form, while others are smoothies. All drinks are 100% fruit and vegetable drinks.

Besides these two and the other brand names we mentioned, there are plenty of other smoothie makers:

  • Bolthouse Farms – known for carrot smoothies
  • Dr. Smoothie Brands – known for smoothie powder mixes without artificial ingredients
  • Jamba Juice Company – sells all sorts of fruit and vegetable smoothies, protein smoothies, and others
  • Tropical Smoothie Café – sells different smoothies in more than 700 cafes across the United States
  • Daily Harvest – one of the fastest-growing e-commerce brands that sells ready-to-drink smoothies

The smoothie industry today is quickly growing, mostly because of the growing popularity of healthy drinks and foods across the globe. The size of the industry is $150 billion and is expected to grow significantly in the following years.

I was lucky to serve as Vice President of Sales, Marketing, Distribution and Operations at Fresh Samantha/Odwalla and Vice President of Marketing at Naked Juice.

How Healthy Are Smoothies?

The supposed health benefits of the smoothie are directly related to what’s included in each specific smoothie.

Store-bought smoothies tend to have a lot of sugar and calories, as well. Many smoothies from popular brands we discussed here are so full of calories that they could be akin to a couple of chocolate bars.

The unfortunate truth is that these smoothies can be a substitute for meals only because they are large and contain a massive number of calories (often reaching the 1,000 mark).

All of that means that the best smoothies are the ones you make on your own. You need to try to stick to fruits and vegetables only, without adding sugars and fruits that have high sugar contents. However, don’t expect such smoothies to be completely satisfying. The very fact that they are liquids is enough to explain that they cannot be as fulfilling as solid foods. However, they will undoubtedly be very healthy, or as healthy as the ingredients in them are.

Key Takeaways

The history and evolution of the smoothie is a rich and interesting one. Pureed fruit mixes are as old as many cultures across the world, but the modern smoothie we know today is not.

However, as you’ve witnessed, in less than a hundred years, the smoothie industry has reached tremendous heights. From the humble beginnings of small house brands, the smoothies expanded as the blender was created. The hippie culture and health and fitness coaches popularized them, and the brands that followed made the smoothie a household name.

Today, the industry is continuing to grow at an extremely fast rate due to the renewed health and fitness craze we are witnessing. There’s no way to tell what will happen in the near or distant future, but we will be sure to continue following the trends. You should do the same, as that could help you create something of your own, maybe even as unique and popular as the brands we discussed here.

For further information about Cascadia Managing Brands, please go to www.cascadiafoodbev.com.

The History of the Beverage Industry (Part 5): Which Brands Furthered the Evolution?

Energy Drinks

In my previous take on the history of the beverage industry, I focused on sports drinks and how they came to be. I discussed their origin, their rise to popularity, and the most popular brands. I also covered the bottled water industry that has an even longer history and more players.

Today, it’s time to move to another interesting phenomenon that struck the U.S. and the entire world. I am talking about the phenomenon of energy drinks and, most notably, Red Bull. The history of the energy drink industry is a rich and interesting one, so let’s not delay!

The Pre-Origins of Energy Drinks

Those familiar with the history of beverages know that the energy drinks we know today started in Japan in the early 1960s. However, the phenomenon of boosting your energy levels with a drink began much earlier in the U.S.

In the late 19th century and the beginning of the 20th century, energy drinks were basically a subset of the soft drink industry. That’s mostly because major players like Pepsi and Coca Cola had plenty of drinks that had caffeine and sugar in them. Pepsi was initially marketed as an energy booster drink, which could make it the first energy drink in a way. Coca Cola, on the other hand, wasn’t marketed that way, but it had mostly the same ingredients.

The whole energy booster phase started subsiding in 1906 when the Coca Cola Company was sued for having too much caffeine in their products. Coca Cola won the United States v. Forty Barrels and Twenty Kegs of Coca-Cola federal lawsuit, but the effects weren’t favorable for the company. The pressure was high, so Coca Cola decided to reduce the amount of caffeine in its products.

Lucozade Energy

It took a while for energy-boosting drinks to become popular again in America, but Europe wasn’t lagging. In the U.K. in 1929, a new drink was made – Lucozade Energy. If you’ve read my previous article in the series, then you know that Lucozade was a big part of the sports drinks industry. If you haven’t, go back and read that piece to learn more. Lucozade Energy was introduced as a hospital drink that was supposed to replenish lost energy in patients.

Dr. Enuf

In the States, energy drinks came back in 1949 when Dr. Enuf, developed by a businessman named William Mark Swartz, was first introduced. The story goes that his coworkers urged him to create a soft drink that would be better and healthier than the ones that existed at the time, which were filled to the brim with empty calories. He took this task seriously and created a drink from caffeine, cane sugar, and B vitamins. He formed a partnership with Tri-City Beverage and started bottling and selling the drink. Seventy years later, his drink is still being manufactured in the original location in Johnson City, Tennessee, and shipped across the country, albeit sparsely.

The True Beginnings of the Energy Drink Industry

As I’ve already stated, the real beginning of the energy drink we know today is traced back to early 1960s Japan.

When the Second World War ended, amphetamines became very popular, and this went on for the majority of the postwar period and beyond. The law banned them in the 1950s, but then in 1962, a company called Taisho introduced Lipovitan. The drink was essentially a legal amphetamine – an energizing tonic sold in small bottles. Lipovitan was the first, but many similar drinks came later and became hugely popular among the white-collar working-class demographic, or the salarymen as they are known in Japan.

It’s worth noting that these energy drinks resembled nothing being sold in the west. In Europe and the U.S., these were soft drinks, while the Japanese ones were more like nutritional drinks of a sort. They were intentionally made to resemble something being sold in a pharmacy, with their small brown glass medicine bottles. However, these energy drinks were very similar to the ones we know and love today. Even their marketing was similar. In the 1980s, when they were the national norm and vastly popular, one television ad featured Arnold Schwarzenegger in his prime bursting out of a bottle like a juiced-up working man ready to conquer the world.

It didn’t take long for this energy drink craze to spread from Japan to other countries. In 1963, Bacchus-F was developed in South Korea, and it was primarily modeled on Lipovitan and made with the same target audience in mind.

The United States Felt the Craze Later on

The 1980s and 1990s were big for the energy drinks industry, not only in Japan, as the phenomena started catching on in Europe and the U.S.

In 1985, Jolt Cola was introduced to the U.S. Developed by the Jolt Company, the drink was marketed as an excellent drink for reducing sleepiness. It had a large amount of caffeine in it, and the first slogan of the drink was: “All the sugar and twice the caffeine.” The drink was marketed to students and young professionals, the same target audience of energy drinks today. Jolt Cola is still being sold today in several countries besides the U.S., and they claim to be America’s first carbonated energy drink.

Ten years later, Pepsi developed and launched Josta, which was the first energy drink made by a major U.S. drink company. However, the drink didn’t last long, and its production was canceled in 1999. However, that wasn’t the end for Pepsi, as they came back to the energy drink market in 2001 with their Amp Energy drink. Today, Amp Energy is the fourth largest energy drink brand in the U.S. when you look at the overall sales.

Most people don’t remember, but before Darius Bikoff, the founder of Vitamin Water and SmartWater, was successful, he launched an energy drink based on Japanese anime characters called GoGo.

Red Bull

The True Beginnings of Energy Drinks Worldwide – Red Bull

The energy drink phenomena struck Japan first, and then the nearby East Asian countries. However, Europe entered the game soon after. Energy drinks started in Europe with the launch of Power Horse by the Lisa company.

Krating Daeng

However, it wasn’t long until an Austrian entrepreneur called Dietrich Mateschitz co-created Red Bull – the worldwide bestseller and the dominant force of the energy drinks market. What’s interesting here is that Mateschitz based Red Bull on a Thai energy drink called Krating Daeng, which was based on the Japanese Lipovitan – the original energy drink.

Mateschitz wasn’t ready to alter his drink too much when he based it on the Thai one. He first tasted the drink when he traveled to Thailand and was looking for something to help him with his jet lag. He tried Krating Daeng, and the idea for Red Bull was born. His own drink was essentially only modified to suit Western tastes, while the basic ingredients were mostly the same. Even the logo is the same, which is why the two drinks are often thought to be the same today. In markets where both are sold, there is a lot of confusion to this very day.

Krating Daeng means red gaur in English, and gaur is the Indian bison, one of the largest bovine in the world. The logo was thus suitable for Red Bull as well, which is why Mateschitz decided not to change it.

Red Bull was introduced to Europe in 1987, and it basically cemented the now-known formula of energy drinks – caffeine, taurine, sugar, and vitamins.

Naturally, all of these similarities between Krating Daeng and Red Bull were intentional and made with the permission of the Yoovidhya family. Mateschitz even gave part of the shares of the company to Yoovidhya, but the mutual agreement was that Mateschitz would be running Red Bull. The same is true today, with the majority of the shares belonging to the Yoovidhya family, while Mateschitz runs the company.

He was looking to essentially re-brand Krating Daeng and bring it closer to the Western audience. The marketing was altered entirely. Krating Daeng was usually marketed to blue-collar workers in Thailand, and the most significant consumers were truckers. However, Red Bull was re-positioned to be an upscale drink, a trendy one made for the rich. It was thus first introduced to Austrian ski resorts. The pricing followed this upscale marketing, and Red Bull quickly became a premium drink, while Krating Daeng remained a low-cost one.

Red Bull quickly conquered Austria and was then introduced to the neighboring Hungary and Slovenia in 1992. In 1994, it expanded to the U.K. and Germany. After Europe, the next market was the American one. Red Bull entered the U.S. in 1997. The craze quickly began there, and by 2005, the energy drink market share of Red Bull was 47%. In 2008, Forbes magazine listed Mateschitz as the 250th richest person in the world, with a net worth of $4 billion. He shared the spot with Chaleo Yoovidhya, the creator of Krating Daeng.

Today, the entire global energy drinks market size is valued at $53 billion, and it’s estimated to reach $86 billion by 2026. In large part, Red Bull is the one that brought the energy drinks industry to these heights. The unique branding of Red Bull is mainly responsible for its success. The company didn’t follow traditional marketing techniques but was aiming to generate awareness, and it managed to create a brand myth of sorts through extreme sports events and stand-out stunts.

Recent Developments in the Energy Drinks Industry

When the 2000s began, energy drinks started to change a bit. There was a growing trend for putting energy drinks in bigger cans, and most companies followed this. However, in countries like the U.S. and Canada, where a limitation is placed on the amount of caffeine in a single serving of an energy drink, producers decided to increase the amount of caffeine together with the size of the bottle. That’s why brands like Red Bull, Monster, and Hype Energy Drinks have subsequently increased their can size.

Those who wanted something smaller didn’t have to wait long, for in 2004, an offshoot of energy drinks was created – the energy shot. They are marketed to people who don’t have enough time to drink a whole can of energy drink but want to get their energy drink fix. Energy shots contain the same dose of caffeine in a smaller amount of liquid, usually 50ml. 5-Hour Energy was the first product to start the energy shot trend.

Later on, in 2007, energy drink tablets and powders were also introduced. They were made to be an even smaller version of energy shots, as they can be dissolved in water to create a standard energy drink.

Energy Drink Effects and Health Problems

Despite their marketing, most of the effects we get from energy drinks come from caffeine. There is little evidence that their other ingredients like vitamins have any significant impact on the human body. The drinks do give you more energy and improved cognitive performance, but that’s mostly due to the higher amounts of caffeine found in energy drinks.

As you’re probably already aware, energy drinks can create health problems, at least when they are consumed frequently in larger amounts. Studies have shown that excessive energy drink consumption can lead to disrupted sleep patterns, cardiac problems like arrhythmia and heart attack, and mental problems like phobias and anxiety.

The health issues don’t only come from caffeine, but from the mixture of ingredients most energy drinks have. It’s essential to limit energy drink consumption and respect the labels that exist on all energy drinks.

Key Takeaways

As you can see, the history of the energy drinks industry is a rich one. It might not be a long history, but in the 50 or so years it spans, a lot has happened in this market, resulting in many hugely popular brands.

Red Bull is the dominant force on the market, but other products have their fair share as well – brands like Monster, Rockstar, Bang, Eastroc Super Drink, NOS, Burn, and Hi-Tiger.

The industry continues to evolve, just like all other beverage industries, which is why it’s vital to follow the industry insights and learn from others to improve your own brand. Who knows, you might even create the next Red Bull in your own market.

For more information about Cascadia Managing Brands, please go to our website http://www.cascadiafoodbev.com