Who is Losing in the Race for the Next Big Beverage?

Who is Losing in the Race for the Next Big Beverage?

By Vanessa Walker

If you look at the topics and trends at beverage industry events, from BevNET to Beverage Digest, and the major trend shows, Natural Products Expo-East/West, and Fancy Foods over the past few years, you’ll notice an accelerated speed which we move through trends. It’s become a rarity to see a trend maintain the top spot beyond one year’s show circuit. In 2017, we talked about sparkling water. By 2018, we had moved on to ready-to-drink cold brew coffees, as nitro was emerging, and plant-based protein drinks were the rage. Last year was all about ionized alkaline water, kombucha, and the emergence of CBD.

While it’s exciting to ride the wave of new concepts, there are downsides to the speed at which we, industry professionals, are shifting our attention and cycling through ideas. 

First:  Consumers Don’t Get a Chance to Vote on Brands 

We know that change is too rapid when we don’t leave time for the consumer to review, select, and vote on brands with their wallet. I’ve seen some excellent beverage concepts with key elements for success never make it to shelves because they were entering a category which, only eighteen months in, is seemingly passé, or no longer deemed newsworthy by industry executives, media and investors. 

Consumers need time to explore a new category and the brands within it. They need repeated exposure, and multiple opportunities to find their preferences, adopting the new beverage concept beyond trial into their daily lives. When we force a shift in categories too soon, we don’t see the full cycle of demand-driven innovation, which helps to grow a category overall or introduce an entirely new one. We’re not hanging on to the story long enough to let the consumer decide if they want those benefits, that concept or idea, or even more flavors of the same drink, before we’re on to the next beverage segment entirely.

2. We’re Dumbing Down the Data  

The speed of change also impacts how we’re gathering and reviewing data. You used to be able to break into retail with a solid proposition and brand position. Buyers were looking for examples of white space, or even better, some consumer sampling feedback showing the brand’s potential. Retailers are now asking for syndicated data on new beverages before agreeing to try them on or off shelves. Showing up on syndicated data and being able to purchase that data is a tall feat for a new brand just starting to gain initial appointments.  Established brands win out over new entrants, and a skewed view of the market potential emerges.  The same big brands with fact-based sales expand or hold shelf space, with retail buyers less interested in taking chances on new brands or segments altogether.  Some major retailers are far behind the trends with once-a-year category reviews. New, emerging brands and trends are appearing on social media overnight, garnering attention and momentum while remaining largely unavailable at retail.

Instead of following beverages over a year or two, we’re hyper-focused on data in arrears. As a result, we’re missing out on stories of today’s emerging growth trends and tomorrow’s possibilities. More recently, some category concepts, or brands that are just hitting their stride with consumers, are already on the back burner, seen as yesterday’s news. With new data coming at us faster than ever, it’s easy to miss the significance of the trends and stories within different cross-sections of the industry over extended periods. If we don’t slow down and look creatively and subjectively at all of the information, we run the risk of missing the underlying insights that feed strategic decision-making.  

3. We’re Creating End-User Decision Fatigue 

Too much choice has been shown to overload and demotivate customers. According to research by Mintel, one in five consumers (21%) say there are too many beverage choices. As categories multiply, the complexity of the decision-making process for consumers increases. Rapid growth and extension mean retailers are less likely to be able to help consumers through the purchasing process by identifying intent and preferences, curating and organizing assortments, and highlighting key product differences. Overwhelmed customers don’t make a purchase and are more likely to be dissatisfied if they do make a purchase.  New, innovative brands or segments should be provided “NEW” areas piquing consumer’s interest, allowing for retailers to move them into the set to create a better, curated destination or category down any aisle.  

4. Little Guys Lose Out 

When the cycle for beverage trends shorten, smaller brands have less of an opportunity to prove themselves before the market is on to the next thing. Bigger companies who may take longer to notice a trend and innovate against it, perform tactical shelf space maneuvers with current products, blocking new upstarts from gaining shelf space.  With their competitive advantages, they leverage dollars to occupy shelf space nationwide.  We saw examples of this in both sparkling and energy, as Pepsi’s Bubly and Monster’s Reign rolled out nationwide with lightning speed vs. innovative challenger brands in both growing segments. 

It takes at least three years, or selling and set cycles, to have enough national all-commodity volume (ACV) to gain momentum with the masses and prove the concept with syndicated data. While beverage industry insiders chase the next shiny object, smaller beverage brands can’t get the traction and backing they need to sustain themselves long enough to prove concept, let alone win. The beverage industry will always attract new ideas and new entrants, but if the deck is stacked against startups, there will be fewer people who are willing and able to take the risk. 

What We Can Do

To keep the beverage industry a viable place for great new beverage ideas to grow, we have to stop swiping left and moving on so fast.  We need to look for the richer stories and trends. We must be realistic about what the journey looks like for most beverage brands and encourage strategy and patience over unreasonable risk and unrealistic speed. Starting smart and achieving organic growth should be rewarded and encouraged as much, or more, than quickly jumping into developing the newest idea or closing the next big deal.  Beverage entrepreneurs will need to expect the first category review season may not yield any placements at key regional or bigger chains.  Brands need to be aware that it will take a second or third try to nail down the volume to put them on the map and gain the syndicated data, which then starts the cycle of greater opportunities at the shelf.

Balancing speed and innovation with discipline and patience will serve the long-term interests of beverage entrepreneurs and ensure our industry welcomes and supports creativity from a wide range of talented contributors. 
Finally, as industry professionals, we need to ensure we are engaging with categories and giving innovation time to take hold. We can’t abandon the storyline as consumers are getting their first taste.Vanessa Walker CPG Executive Beverage Retail

Vanessa Walker has more than 25 years of beverage and retail experience, with expertise in both corporate and entrepreneurial environments. Walker served as Executive Vice President of Sales and Marketing at Celsius Holdings, Inc. from 2016 to 2018. Before joining Celsius, she served as Executive Vice President, Sales and Marketing of LaCroix Sparkling Water for National Beverage Corp. Prior to her time at National Beverage Corp., Walker served as Director of Marketing for Big Red, working primarily to re-launch the Red JAK energy drink. Previously, she held the position of Vice President, National Accounts for IN ZONE Brands, makers of the then BellyWashers and TummyTicker brands (now Good2Grow), where she successfully positioned the lines at national retailers, growing sales from $850,000 in 1999 to $90 million by 2003. She began her career in retail management and buying for Target stores in the food and beverage category.