A decade ago, Coca-Cola’s Venturing & Emerging Brand unit went on the hunt for the next big-time brands. Now, as changes continue to reshape the U.S. beverage business, VEB is using 10 years of lessons to think about how to continue to thrive in the future.
“With so much innovation happening in this space, how do you even begin to pick the winners?” Scott Uzzell, president of Coca-Cola’s Venturing & Emerging Brands unit, asked the crowd at the annual BevNET Live Conference in New York in June. “The consumer is the boss. Where the consumer goes, we follow.”
Uzzell spent nearly a decade at Coca-Cola before transitioning to lead ZICO Coconut Water, one of the successes in the VEB portfolio. Uzzell then shifted to VEB, where he serves as president and general manager.
In a rapidly evolving industry, navigating the journey is more complex and challenging than ever. At BevNET Live 2017, Uzzell described the current beverage innovation frontier, sharing a few insights into how small companies can compete and how big companies like Coca-Cola can parlay investments into brands that grow the company’s portfolio.
Here’s what we learned:
1. Be a Futurist
VEB doesn’t just look at current trends to figure out what consumers want. The team investigates where they think consumers will be in 2025, in part, by keeping tabs on the entrepreneurial community. While half of those insights may not pan out, Uzzell said maintaining a forward-looking point of view is critical.
“Having a good pulse on where the entrepreneur is going helps us really figure out where the future will be,” Uzzell said.
In today’s market, that’s vital. Uzzell said that beverage categories valued under $1 billion, which often aren’t captured thoroughly in industry data, are growing at eight times the rate of big categories. “Probiotics, health… new takes on water,” Uzzell said. “Every time I think I’ve seen it all, another exciting category emerges.”
Coca-Cola is well-known for its soft drink portfolio, but the company has been investing in new categories for years. In 2011, VEB acquired Honest Tea after buying a 40 percent stake in the company in 2008. Coca-Cola has continued to wade into new categories, such as its joint venture in fairlife, a premium milk brand; ZICO coconut water; and cold-pressed juice brand Suja.
“We know we’re just scratching the surface,” Uzzell said.
2. Don’t Kill the Magic
Uzzell said the sweet spot is “just enough to help support the growth of the brand, but not so much that it kills the magic of the small company.”
Properly nurturing brands also means building capability, Uzzell said. What makes Coca-Cola attractive to companies looking to take their business to the next level includes access to marketing and brand-building expertise, unparalleled global scale and distribution resources. Before Coca-Cola acquired Honest Tea, co-founder Seth Goldman’s brainchild was in 15,000 locations in the United States. By 2014, that number had ballooned to 100,000.
Boosting startup brands also means reaching consumers in channels where healthy engaged consumers (HEC) shop, such as e-commerce, natural channels and farmers’ markets.
“What we’re seeing is that it’s no longer one channel that’s driving that innovation… customers across the U.S. are getting in the game of what’s next,” Uzzell said. “We’ve got to figure out also how to play in these emerging channels—all these different ways innovation happening in the room.”
3. Know what you want to achieve
Many beverage brands that have exploded in popularity in recent years had a clear identity and mission from the start. For example, fairlife’s success can be attributed largely to its founders’ sustainable farming values and drive to disrupt the sleepy dairy category with an innovative and delicious line of ultra-filtered milk products.
Goldman, meanwhile, made Honest Tea a household name by starting with an authentic, enduring mission of quality, health and sustainability. And ZICO was hyper-focused on yoga fanatics and endurance athletes until it became a recognizable brand in a category that many Americans had never tried before.
New, exciting brands continue to emerge. As growth continues in the industry, said Uzzell, VEB will continue doing one of the things it does best: making great brands even greater.
“We also are in awe of the founders and entrepreneurs...that all have a vision and can change the world,” Uzzell said. “Who knows what the big idea is? As long as markets follow the consumer and partner with the right people, and learn as much as we can along the way.”