How New Brands Can Win in the Beverage Sector: 3 Things to Keep in Mind

In today’s market, brands need to come up with ways to satisfy what their consumers crave to grow. And the beverage sector seems to be doing that well, considering its predicted growth trend. By 2021, it’s estimated that the beverage market worldwide will be worth close to $2 trillion.

Recent trends have seen independent brands rising to this universal challenge. By offering healthier beverages with unique ingredients, the market for craft beer as well as organic fresh juices and drinks are accomplishing consistent growth. Small craft beer brewers have doubled their overall market share from 2011 to 2016, and the fresh juice market has seen similar results, becoming the fastest-growing organic category.

With these trends in mind, it might be interesting to take a closer look at where the beverage sector is going, as well as how brands who want to grow might take advantage of the predicted trends. These are the three things to keep in mind when it comes to how new brands can win in the beverage sector:

Giving Consumers What They Crave — More Unique Ingredients

If the growth as mentioned above of fresh juice and craft beer markets can teach us anything, it’s that consumers are shifting towards new, natural ingredients. The influence of Millennials on the market is, likely at least, partially responsible for this shift. According to Cambridge Consultants research, Millennials are more health-aware and environmentally concerned than the previous generations of consumers. They’re twice as likely to buy organic products, and they appreciate recyclable packaging and renewable materials.

A typical Millennial beverage consumer is also likely to be bored with standard ingredient profiles and flavors. They favor unique blends that provide a new and different drinking experience. This appetite for novelty has undoubtedly made an impact, especially on the juice market which offers an excellent opportunity to satisfy those cravings. Big brands are taking notice and starting to provide cold-pressed HPP (high pressure processed) juices to target Millennial consumers. It presents an opportunity for smaller brands as well — proper labels tend to attract Millennials, and they are generally willing to pay more for a beverage they perceive to be healthier than the competition.

Hitting the Sweet SKU Spot

The number of SKUs (stock keeping unit — identifier for a single product) can be a significant factor in determining the success of a new beverage brand. It makes sense that this is one of the most difficult things to navigate in the beverage business. A new brand will naturally launch with their most reliable product, and start offering different things as it grows. Whether those end up being hits or misses, the number of SKUs can still affect how appealing the brand is to the consumers.

There will be some growing pains to address. According to Xian Wan’s research on the impact of product variety on operations and sales performance, there’s a delicate balance to accomplish when it comes to SKU proliferation. You can have too much of a good thing. When you segment demand by offering more different products, you match the needs of customers better, and sales can increase as a result. However, managing more products also increases costs, and the more products there are, the higher the chance of them cannibalizing the demand for existing products.

In other words, if a consumer wants to buy cider and you offer three different flavors, your overall sales won’t increase but rather be spread over different SKUs. As for the optimal number of SKUs, it’s 84 according to Wan’s study, but it will be significantly lower for smaller brands. Other research shows that beverage companies have good consumer ratings with either more than 20 SKUs or fewer than 10 SKUs.

Emphasizing Team Rather Than Brand Strength

For a new beverage company, building a strong brand is important — but perhaps it should be secondary to making a strong team. This observation comes from relevant factors: the future of any new company is inextricably linked to the strength of its founding team. In the early days, brand founders will be responsible for every aspect of the business, even those that they will later delegate to other team members as they hire them. Once the beverage brand becomes more established; the executive team may move on to making higher level decisions. At this point, they can leave the day-to-day operation of the company to the employees. From there, a company’s success will depend more on a well-developed brand.

Today’s technologies and social media prevalence make the mission of building brands easier. Advertising and brand-building costs used to be higher, so the more established beverage brands dominated the market. With the help of social media, new brands can become contenders. However, they have to have a team capable of building a brand strong enough to rival the most prominent companies. That’s what makes a difference and ensures good results for a new brand that wants to win in the beverage sector.

Key Takeaways

To summarize, these are the three key things new beverage companies should keep in mind for maximum impact on the market:

Millennial consumers reward companies that offer unique products, so don’t be afraid of offering new things and mixing it up with natural ingredients;
Don’t overdo the SKUs — start with a smaller number of products, and push through the rough patch in the middle of the process when your overall popularity is expected to drop slightly;
Bring together a strong team that can carry your company out of its fragile early days and turn it into a well-established, evolved brand.

Upon considering the predicted growth for the beverage sector, it’s likely a good time to get involved with the industry. Stay on the lookout for fresh industry insights that can help you in your entrepreneurial efforts, follow the trends and use them to the benefit of your business. Lastly, don’t be afraid of a little experimentation with the offer and ways of brand building. After all, there is no pushing the envelope without innovation.

May 24, 2018May 23, 2018

F&B Industry Branding

How Branding is Evolving In F&B post by Bill Sipper

How Branding is Evolving in the Food and Beverage Industry

In today’s food and beverage industry, consumers want brands to be authentic. Branding is evolving in this industry. They are quick to pick up when they aren’t authentic and to tell others on social media.

Brands have to keep customers fully informed about the products they buy. They also need to be smart and strategic to grab market share in a very competitive market.

Brands must first identify their target audience and then create value for them. Once they’ve attracted customers, they have to build trust to turn them into brand advocates. If consumers are happy, they are more likely to continue to buy products and recommend them to others.

Branding and Social Media Interaction

Brands need to listen to what their customers say, and today this is much easier because they can interact with them on social media. Brands are receiving feedback from customers and understanding more about them helps them to cater to their needs.

Social media offers brands opportunities to create emotional connections with their customers and explain more about what their products offer them. In turn, consumers are better informed than ever before.

They have strong opinions about the quality of ingredients, nutritional value, and health. If brands provide this information to those who are interested, they create an opportunity to build loyalty.

More than ever before, people want the brands they choose to reflect who they are as people. Food packaging is one area where this is seen. The designs must reflect environmental and social responsibility and make people feel they are making the best choices for their health and their identities as a whole.

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May 22, 2018May 22, 2018

Food and Beverage Company Faults

A Food and Beverage Company that doesn’t make Good Use of Social Media is Shooting itself in the Foot

The intense competition that exists in the food and beverage industry can make it difficult for smaller brands to gain the attention of consumers. Using social media marketing effectively can make a difference. People tend to try out new foods and beverages based on personal opinions, recommendations, and reviews. This shows how important it is for brands to interact with consumers on social media.

Influencers

Just one post by an influential food blogger about a specific product can generate countless impressions with high conversion rates. A social media presence gives brands the opportunity to connect with such influencers.

Brand personality

The personality of a brand is becoming more and more crucial when it comes to marketing. Relating to consumers on social media helps to build that personality and create loyal followers. Companies are seeking out creative ways to relate to their customers and get feedback their feedback.

Social media interactions

Millennials love sharing dining experiences and will post about interesting beverages they have tasted. They want multi-sensory experiences and food and drink play a big part in this. Well-presented or well-packaged food is likely to be shared on Instagram or Facebook. Social media interactions provide a way for brands to be recognized and to create a loyal customer base without having to resort to more direct forms of advertising.

Companies that do not use social media to their benefit are definitely shooting themselves in the foot. A strong social media presence is no longer an option for food and beverage brands –it’s an absolute necessity.

May 4, 2018May 1, 2018

Mobile Apps Influencing F&B Industry

How mobile apps are influencing the food and beverage industry

We live in the age of mobile phones, and the majority of smartphone owners use their phones to engage in multiple activities. The impact of mobile apps on the food and beverage industry is continuing to create change.

Consumers love to share culinary experiences and give recommendations on social networks with photos as evidence. This takes customer influence to the next level. Restaurants are also using mobile apps to help streamline customer service.

On-demand food delivery apps

These apps are extremely popular with consumers who are very busy or prefer not to cook. Fewer customers may be attracted to a physical location, but the ease of online ordering usually makes up the difference in more orders. Discounts for new customers and specials can attract more customers.

This change is difficult for less tech-savvy restaurant owners not listed on apps but listing a restaurant, or even placing adverts on these apps can significantly increase traffic to an establishment and they need to explore this to remain competitive.

Reservation apps

These apps make it easier to find reservations at restaurants where you want to eat. OpenTable is one of these apps. One of the problems of such apps is no-shows at restaurants after bookings have been made. This means restaurant owners miss out and it reflects on the app too. Apps and restaurants both need to continue to explore and improve these new ways of doing business. In turn, customers who use them need to play the game too.

BonApp is a popular app used in China. It lists all the restaurants in the largest Chinese cities and can also be used in Singapore, Bangkok, Taipei, and Tokyo. It is simple to use, and restaurants are classified by cuisine style, price, location proximity, customer rating and the possibility of delivery.

Users can use photos of meals with their comments. Users are even linked to maps to find out how to get to the restaurant and can book a table via the app. On the homepage, a Top 10 of best restaurants in various categories appears on a daily basis.

Review apps

Review apps, such as Yelp, have served to increase attention on customer service. They have also forced restaurant owners to be aware of more than just the need to serve good food. They have to embrace new technologies to remain competitive.

One way they can use social media to their advantage is by using it to create a buzz and amplify audiences for special events such as a special Valentine’s day menu or a St Patrick’s Day Celebration.

Discount apps

An app like DealNews works with restaurants to bring in new customers by offering special deals. Apps like this have influenced how restaurants price menus because they have to take into account that customers may use coupons or discounts.

Individual restaurant app

These can be gamechanger but are usually only used by big companies. Starbucks, for example, gives users the opportunity to order and pay for drinks from their app. Members earn loyalty points by making purchases with the app.

The food and beverage industry is changing rapidly, partly due to the widespread use of mobile apps to streamline processes.

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May 2, 2018May 1, 2018

Electric Cars Could Have An Impact On Beverages

Electric Cars and Convenience Stores post by William Sipper

Will beverage sales drop as more electric cars take to the road?

When electric cars hit the road and drivers don’t have to fill up tanks at gas stations, could impulse purchases at convenience stores drop? Morgan Stanley analysts have concluded that this could take place.

Convenience stores could take a hit

In a report published recently, they noted that only a small fraction of vehicles on the road are electronic, but this could change in the future. Electric vehicles could account for 94% of car sales by 2040.

The analysts believe that convenience stores and beverage companies could suffer losses as a result. Particularly companies like Monster Beverages, as 63% of its sales in the U.S. are made in convenience stores. The analysts did not see alcoholic drinks or tobacco products taking the same hit because beverages are often bought impulsively, and people drink them on the spot.

The Convenience store industry is more concerned about other factors

Those in the convenience store industry are more concerned about their competitors such as other retailers and online stores than about the effect of electric vehicles. They see this threat as being decades away.

Electric cars will not present a challenge unless they are adopted en masse. They are more concerned about the fact that everyone is selling convenience today. With online outlets offering food delivery and grocery services and even hardware stores and clothing shops are selling beverages at checkout counters. New laws that impose taxes on sugary beverages are another current concern that pre-empts any worries about electric cars.

Current sales of electric vehicles

Sales of electric vehicles in 2017 reached nearly 200,000. This was a significant increase in sales in 2016 and happened despite the fact that new car sales overall were down. Still, to stay in context, over 17 million new cars were sold in 2017.

This may fuel the belief that widespread adoption of electric vehicles is still far in the future. In turn, changes in consumer behavior and technological advances always tend to happen faster than we anticipate.

Ways convenience stores could respond

Fuel appears to account for less than half of the profit for gas stations. Much of their money is made from drinks and other items bought inside the store.

People usually make plenty of ‘pit stops’ at gas stations on long journeys, and they don’t just buy gas. Humans need to rest and refuel their bodies, and this need will not go away. Just because electric vehicle owners could charge their cars at home doesn’t mean they wouldn’t want places to stop on a journey.

One way in which convenience stores could respond to the wide adoption of electric cars would be to install the types of charging stations people would enjoy. Those who currently spend money on gas could pay for a super-charge, a safety inspection, a beverage and a bite to eat. Charging stations could also be popular with those who may not have charging ability where they live.

Selling merchandise during the electric car era is not likely to be a problem to those who are tuned in to providing convenience.

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May 1, 2018May 1, 2018

Drink Consumption in Philadelphia Drops

Drink Consumption in Philadelphia post by Bill Sipper

Sugary Drink Consumption in Philadelphia Drops

A Drexel University study has found that the tax of 1.5 cents per ounce on soda and sweetened beverages in Philadelphia has meant that residents are about 40% less likely to drink soda every day. The researchers surveyed 900 Philadelphia residents before and after the tax took effect.

They also compared responses with those from residents in places near Philadelphia without such a tax. The findings of the study were published in the American Journal of Preventative Medicine.

A co-author of the study, Amy Auchincloss, said the tax was in the interest of public health. She believes that sugary drinks have been under-priced in comparison with healthy beverages. This tax has helped to level the playing field.

The study only reflected drinking patterns for two months after the tax took effect. Whether consumption of sugary drinks will continue to remain lower is yet to be seen. When Mexico imposed such a tax, soda consumption declined for at least two years.

Effects of the tax

The health costs of drinking sugary drinks are undeniable. Weight gain, heart disease, higher risks of developing type 11 diabetes, tooth decay and other ills.

Whether a tax can change human behavior is questionable. Despite the fact that unhealthy drinks have become less competitive, 30% of Philadelphians continue to drink one sugary beverage a day.

The surveys for the study also showed that consumption of sugary fruit drinks like Koolaid did not go down, even though they are also taxed. Auchincloss believes that this could be due to the false perception of these drinks. The thought is that these drinks are healthy, even though they contain very little fruit and about the same amount of added sugar as soda.

Reduced Projected Revenue

Philadelphia was the first major city to impose such a tax, and the revenue was to be used for public projects such as libraries, schools, recreation centers, and parks. Projected revenues have not been as expected. No one was surprised when Mayor Jim Kenney’s budget proposal reduced projected revenues from the tax by about 15%.

After Philadelphia passed its 1.5 cent-per-ounce tax on the supply of sweetened beverages in January 2017. Other jurisdictions like Seattle, San Francisco, and Cook County did the same.

The Cook County tax was quickly repealed. Also, none of the others have worked out as expected. It has been found that consumers shift to other beverages or buy the higher-priced items in other jurisdictions.

One of the main reasons the beverage tax passed was it was tied to popular programs. These programs are now facing serious shortfalls.

Some pending legal challenges from retailers and the American Beverage Association as to the legality of the tax, add further uncertainty. One thing seems sure – beverage taxes are not a reliable way to fund public programs.

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April 11, 2018April 9, 2018

Philly’s Soda Tax Falls Flat

Philly's soda tax post by William Sipper

Other cities are watching as Philly’s soda tax falls flat

All eyes are on Philadelphia as the results of 1.5 cents per ounce excise tax being imposed on beverages sweetened with sugar start becoming apparent. Philly’s soda tax was the first tax of this nature to be introduced in a major city.

The idea was to use the revenue to fund prekindergarten programs, libraries, parks, recreation centers and community schools. This seemed like a very good reason for imposing such a tax to some Philadelphians. However, it appears that the fears of many of those in the beverage industry are coming to pass.

Driving Far For Soda

Firstly, the revenues collected since the tax was introduced in January 2017 have fallen short of what was expected. City officials are quick to point out that there may be many reasons for this such as retailers stocking up on products before it came into existence and the fact that figures relate only to the first half of the year when soda sales are seasonal.

A study by market research firm, Catalina, who analyzed millions of transactions at grocery and drug stores, showed that customers were driving outside of the city to buy their sugary drinks. The study showed that sales of fizzy soft drinks fell inside the city limits and increased outside of it. A city spokesman reacted to this by saying that it was expected that this would happen initially.

Employee Lay Offs

Stories have also been coming out about the harm being caused by the tax to those in the beverage industry. Manufacturers like PepsiCo and Canada Dry are blaming the tax for big falls in sales and they have had to lay off employees. Retailers have also felt the pinch, and have had to lay off staff.

Cook County followed Philadelphia’s example and introduced an excise tax on sugary beverages in August. In turn, barely two months after it came into effect, public outcry has caused commissioners to revise their views. There are enough commissioners that are now are backing its repeal and it is likely to fall away in December.

Philly’s Soda Tax Remains Firm

However, city officials of Philly remain firm in support of the tax, despite the shortfall in revenue collection and apparent harm to manufacturers and retailers. Opponents of the tax will be keeping a close watch over the next while to see how it the battle plays out. If many other cities levy such a tax, it could have serious economic consequences.

April 10, 2018April 9, 2018

Generation Z Most Connected Generation Ever

Generation Z Connected post by William Sipper

Generation Z – Marketing to The Most Connected Generation Ever

Generation Z, or Gen Zers, are born after 1995, and they grew up with internet access and mobile technology. This makes them harder to market to than other generations in that they have developed very selective filters. They have a very short attention span! But it also offers marketers plenty of new and interesting opportunities.

Gen Zers are called digital natives – they are used to using five different digital devices. In turn, if you want to market to them, you need to have a strategy. This strategy should utilize these devices and unified across all platforms.

Entrepreneurs From The Start

They are often entrepreneurial because they start building up their online presence from a young age. If they find they have attracted an audience, they are likely to want to leverage it to create their own income.

As such they are not just consumers and they cannot be treated as such. Companies need to think about ways to collaborate with them rather than simply marketing to them.

An example of this is the collaboration of Wat-Ahh! With Ariana Grande. She is a Gen Zer who is living out her dreams and wants to have an influence on other young people.

Ariana Becomes A Face to a Product

Ariana was signed up as a spokesperson but also as an equity partner. She was happy to do so because she could put her heart behind the product. She loves drinking water, enjoys a healthy lifestyle and would like to get other young people to do so too. Humanizing your brand by giving it a face is important to Gen Zers.

Thoughtful Marketing Pays

Gen Zers want to make a difference in the world and are prepared to work with brands in order to facilitate such change. They are also more open-minded and inclusive than previous generations. This being a point that marketers need to remember as they are likely to respond to inclusive, thoughtful marketing.

Engaging with Gen Zers on social platforms is very important. If you can establish a conversation with them that’s beneficial to you and them, they will listen. If you can initiate a two-way conversation online, and address trends and issues that interest them, you will be more successful than if you continue to use more traditional marketing methods.

April 9, 2018April 9, 2018

Amazon’s Strategy Changed the Marketplace

Strategy And Your Brand

Amazon has been a game changer in the digital marketplace where it has redefined the customer experience. Traditional brands are fighting to stay relevant as they compete with new, digitally experienced companies.Your brand needs to understand Amazon’s strategy.

Prime, Amazon’s membership program, is helping to accelerate its forward momentum. Over 40 million people in the US have a Prime membership. Customers want to know ‘Do you have what I want and how quickly can you get it to me?’ Amazon has been working hard giving a positive answer to these questions.

They want users to keep renewing their membership and buying more products. The more products they purchase, the more data Amazon can use to establish what they want to buy next.

Understand Its Use

Alexa, Amazon’s virtual assistant, has created an on-demand, personalized experience for users. They can simply give Alexa a voice command, such as for toothpaste to be reordered, and it happens.

Your brand, no matter how big or small, can’t afford to ignore the extraordinary growth of Amazon. You can learn from them to understand more about how customers are using the platform. Work at creating a more customer-centric experience for your own customers.

You need to know more than just what they are buying. In turn, you also need to be aware of the other ways in which they are using the platform, such as using Alexa or Prime Video. You should also be familiar with Amazon’s different selling models to find out what may work for your products.

Connecting with Customers

Amazon has accumulated large amounts of data that can be used to gauge more about customer behavior. Amazon Marketing Services (AMS) and Amazon Retail Analytics (ARA) offer enlightening reports.

Some brands are using third-party apps and other skills to find new methods of connecting with customers. Companies like Uber and Domino’s are enhancing their existing services this way.

Technology can be game changing. It shouldn’t be used just for the sake of using it. Should be used where it can make an improvement to the customer experience.

All brands need to think about making whatever changes are necessary to their marketing strategies in order to thrive in a world that is digitally driven.