A Behind the Scenes Look at Beverage Investing During COVID-19
An Interview with industry veteran, Bob Nakasone, Managing Director at First Beverage Group
Managing one beverage brand during this time of accelerated change and uncertainty is challenging, but what is it like to manage a portfolio of brands in different categories and stages of growth? We caught up with Bob Nakasone at First Beverage Group to learn about what investors are doing right now to help beverage brands succeed and move the industry forward.
Q: How has your work at First Beverage Group changed since COVID-19?
We’ve been monitoring the shifts and conducting sensitivity analyses and scenario planning with our portfolio over the past few months. Our founders and portfolio leadership teams have put a lot of effort into staying vigilant on both the global macroeconomic changes as well as the microeconomic implications facing the industry.
We’re very involved with the companies we invest in, so we’ve spent a lot of time helping them shift and recalibrate based on the new constraints and opportunities in this environment. Our connectivity to every part of our industry helping us stay on top of what’s happening out there.
Q: What types of changes are you helping your portfolio companies implement during this time?
It’s times like these when our operator-friendly model is leaned on even more. We’re generally involved in the day-to-day operations of our portfolio companies, but the current crisis has given us even more opportunites to support our portfolio companies.
Right now, we’re focused on helping them monitor the rapid changes and pivot when necessary to mitigate risk, seize opportunities, and conserve cash. That might mean helping them negotiate new agreement terms, find alternate suppliers, or reconfigure their research and development plans. Retail is challenging to navigate right now, so brands have to make tough decisions about what products and channels of distribution they are going to prioritize.
We have some companies who self-manufacture and one that has as many as 100 team members coming into their facility every day. They’ve had to make some significant adjustments but have managed to implement changes and continue to produce safely.
Q: Are there any changes or trends that you think will have a long-term impact on the beverage industry?
There are a lot of consumer behavior shifts that we think will have a long-term impact on how beverage companies operate. Three that immediately come to mind are:
- The role Amazon and e-commerce will play in growth for beverages. Amazon’s share of food and beverage has accelerated in a big way, and we don’t see that reversing in the long-run.
- Food as medicine has been a big trend for a while now. This will only accelerate as people have a heightened concern for their well-being and generally are looking for new ways to say out of the doctor’s office.
- We anticipate that the physical workplace of the future will look different. There are a lot of unanswered questions here, but the world of commercial real estate and what workplaces look like are undergoing profound and lasting changes.
Q: Will COVID-19 change how you evaluate investment opportunities for First Beverage Group?
Our fundamental lens on opportunities and how we invest hasn’t changed. There has always been an element of risk and uncertainty in what we do. We are evaluating against a different set of macro and micro conditions, so some great brands that may have looked promising a few months ago may not be a match anymore, depending on the product, market, and timing.
We remain committed to finding and identifying transformational beverage brands and concepts and helping founders accelerate their growth.
Q: What advice would you give to an early-stage founder seeking funding right now?
The opportunity is still out there. Take time to think through all of the implications the current environment has on your business. While you need to have a clear vision for your brand, focus on building both flexibility and responsiveness into your business model and your approach.
Effective leadership is one of the most important criteria investors are evaluating. Showcase your ability to plan and prepare for the unexpected, to step up during times of crisis, and to delegate and accept help. Extend your cash runway as much as possible and prepare to be patient and vigilant as the industry adapts to the rapid and far-reaching changes we’re all experiencing.
About Bob Nakasone
Bob has spent nearly 20 years in the beverage industry. In 2010 he helped PepsiCo form an emerging brands team where he worked on products like Naked Juice and Izzy. He developed an eye for outside trends and the space they create for beverage innovation. From there he went on to join KeVita, where he helped accelerate the company’s already steep growth trajectory, culminating in the successful sale of the company to PepsiCo at a significant premium to revenue and over $100MM in retail sales. Prior to KeVita, he spent 17 years at PepsiCo in leadership positions across business development, customer development, strategic planning and product commercialization and developed a strong track record for architecting and staffing teams for growth as well as leading them to above-plan results. Bob joined First Beverage Group in 2017.