Archive for January, 2013

Creating Value

January 31, 2013

One of the best newsletters in the beverage industry is Beverage Business Insights. Recently, Gerry Khermouch, BBI editor, did a quick update on BYB Brands, an incubation unit of Coke Consolidated. Back in 2006, Coke Consolidated asked us to help them develop a strategy to capitalize on the growth being generated in the industry by new brands. As a part of our recommendation, BYB was born and we spent the next few years helping them commercialize the company. Today, they have multiple brands and revenues in excess of $100 million. Gerry uses a very low multiple for determining the value they have created over the past few years….we think it should be valued at over $500 million. My point in sharing this is that BYB is a good example of how fast you can commercialize brands successfully if you have a solid strategy and plan. We have been doing it for years. The first few years were slow and hard work – much like they are for all start-ups. But, after a short time….18-24 months….things really start to escalate. It is a good model for other companies.

Coke Consolidated’s BYB Brand Unit Continues to Drive Tum-E Yummies; Gradually Expands Fuel in a Bottle, Bean & Body; Lizard Lick Tie for Fuel
Coca-Cola Consolidated’s BYB Brands incubation unit is motoring ahead with plans to continue strong growth of its kid-targeted Tum-E Yummies brand, even as it methodically builds Fuel in a Bottle shot line and Bean & Body canned coffee line. By now, tho, Bazza energy tea has dropped out of mix after failing to garner traction, and small Country Breeze tea line has also been discontinued after key retailer, Sam’s Club, opted to ditch regional entries in favor of national brand. Some in bev biz report being approached by Bean & Body about finding new home, but BYB chief Norm George said brand’s status hasn’t changed.

The big news at BYB continues to be now-colossal Tum-E Yummies brand. By now sports-capped line created internally by George and his BYB team in Raleigh, NC, has become significant player, growing at high double-digit rate in 2012 and vaulting to #1 in convenience channel (14-oz packs and smaller) about 4-5 months ago, amid tight pack that includes InZone’s Belly Washers/Tummy Ticklers, Bug Juice and Kool-Aid Bursts. (Pepsi Bottling Ventures has entered fray for blue system by bringing in Britvic’s Robinsons Fruit Shoots, tho that hasn’t cracked top 10 yet.) Tum-E Yummies holds just about one-fourth of $300 mil convenience channel, meaning brand almost certainly generates upward of $100 mil in sales all told for COKE. Even at 2X multiple, that would make brand worth 1/3 of COKE’s total market cap of $600 mil. Now that’s incubation! Brand moves thru Coke bottling system, tho, as Norm reminded, BYB never assumes that Coke system, or even Coke Consolidated itself, will pick up his new products.

After Walmart and Kroger authorizations fueled growth in 2012, more recent Family Dollar authorization should maintain momentum in 2013. Brand also will dial up last year’s under-the-label promo, Get Up n Go instant-win game, by offering more ways to win and label tweak that will clarify messaging. Those packs should be in market in Feb/Mar timeframe. After breaking first national ads last year, co will continue to target moms in books like Rachel Ray, while aiming for kids via 2 biggest gaming sites targeting 5- to 12-yr-olds along with Disney and Nickelodeon sites.

Meanwhile, Fuel in a Bottle, intro’d last March within Coke Consolidated’s footprint, has exceeded expectations and is expanding to Mid-Atlantic and Southwest regions, riding what Norm hopes will be powerful endorement duo of Ron and Amy Shirley of TruTV’s Lizard Lick Towing show. Tho it’s nice that couple, like BYB, are based in NC, key hook was their direct reach to 18-30 male target of brand. Media support and in-store activity should debut shortly. Recall that brand launched in energy and protein versions with ties to Nascar driver AJ Allmendinger and wrestle Ric Flair. Tho Consolidated carries brand in its Southeast footprint, so far that reps sole DSD connection, with brand relying on direct-to-retail, wholesalers and other options to reach retail. “Slow and wise,” is mantra for build brand’s reach.

As for Bean & Body, that “plugs along” after hitting Whole Foods in NY in late summer via Dora’s Naturals and also Whole Foods in Tex, where brand is showing good velocity increases. As to any conversations that may have happened with potential outside partners, George sees responsibility as being to “listen to anybody who would talk to you,” but it’s still “full-steam ahead” for brand.

Marketing is hard work!

January 31, 2013

Over the years we have done a lot of things….built distribution systems, gained retail availability, expanded into new markets, and, along the way, made brands successful. But, there is nothing harder than finding a way to make brands connect with consumers. It takes a lot of focus and hard work. Most importantly, you have to be able to learn…..and adapt as you go. I’d like to think we are getting good at it…..but, it isn’t guaranteed for everyone. I guess if it were that easy everyone would be successful.