Archive for the ‘Common Misconceptions’ Category

Hype vs Substance

June 5, 2014

Hype Vs Substance
It has to be real

A good friend of mine who works for one of the larger beverage companies called me the other day to catch up. He said that our group continued to put ‘points on the board’ in our work and congratulated us. The ‘points’ reference is a sports term – scoring points meant making progress to him.

It felt good to be recognized by an outsider. We have been making great progress lately without making a lot of fanfare. It made me reflect on our work and life in general. In general today it seems that there are groups/people that are making a lot of noise….from working with Hollywood agents, to establishing investment funds, to launching brands and doing other exciting things. All of these can be great ideas abd they can even lead to helping brands become successful by lowering risk or shortening the time necessary to critical mass, etc. But, in the end, we all have to ‘put points on the board’ as my friend would say.

We have been doing this long enough to know that it takes an incredible amount of time and hard work to be successful in today’s environment. Granted, if you know what you are doing and you are really committed, you can improve the odds of success. But, there are no short cuts, no way you can do this on a part-time basis. Winning is a 24/7 job. We have long said it is like climbing Mt Everest – it is not for the faint of heart.

Let me use a sports analogy. In less than two weeks we are going to see someone hold up the Larry O’Brien trophy. They will be NBA champs. Some outsiders will only see the ceremony for all the hype, glamor and glory. I’ll bet that the players holding up that trophy see it a different way. Sure they are ecstatic. But, I bet they will be thinking of the immense amount of work they committed to get to this point, the long hours, the endless conditioning, film study, team meetings, late nights, losses, problems they encountered during the season to get to this point. They know that the pursuit of excellence is relentless and all consuming.

Why am I saying all of this? Don’t be fooled by the hype. In the end, it still takes putting ‘points on the board’. You can’t manufacture getting people to bond with your brand. It has to be done for real. As our friend Roy Spence loves to say: “We ride at dawn!”

You Don’t Need To Be Everywhere

March 13, 2012

I just left a great trade show….tons of people walking the floor…..retailers, distributors, consumers.  You would think this would be a great place to be for your brand.  For most companies and brands out there though, it isn’t.  Oh, you’ll see plenty of store owners who like your product.  The problem is that it is all random.  A man with 3 stores in Michigan, a woman with 5 stores from Georgia….and on and on.  It will feel good when you leave the show with a pocketful of business cards and leads.  But, after a few days back in the office, you come to realize that you can’t deal with this shotgun approach.

We’ve always found that it is more productive to list who your target customers are and go after them directly.  Why wait for someone to randomly come by your booth at a show?  Pick up the phone and call them.  With a little networking you can even find their contact info.  In the end, you’ll get the customers your really want, and save a lot of time and trouble in the process.

Good Selling!

Taste Is Overated

May 9, 2011

I don’t know how many business plans I have read, how many meetings I have sat through with new beverage companies, or booths I have visited at trade shows….but there is one common thing that I hear almost all the time…. ‘my product tastes better’ than anyone else on the market.  I think you know where I am going with this……it is impossible for every product to be the best tasting.  I realize that it is easy for me to say this.  I understand that anyone who has poured his heart into a new venture thinks that their creation is special….but the reality is that some of the hottest products on the market don’t necessarily taste good – try a kombucha and see what I mean. 

My message here is that taste is personal and I don’t think it is the primary reason people choose to drink what they do.  If you want to be successful, focus on the brand you are creating and why it is relevant to your target consumer.  People want to bond with brands…think of it as a badge.  Why would I carry your brand in my hand….what does it say about me?  Think in those terms and you have a good chance of connecting with your target.

Chasing Rainbows

February 25, 2011

I just left a meeting with the founder of a new beverage business and I am wondering what some of these people think.  He wants something that I am hearing a lot of these days……if you are in this business you have probably heard it too.  He is looking for someone to fill a key position and he wants – let me use a phrase my mentor once used – the ‘ultimate nacho’.  “I want someone who has the complete Roladex, someone who has all the connections, who knows everyone in the retail and distribution world, who can ‘push the buttons’ and take my company to the top!

I hate to tell anyone this  (you know what I am going to say next) but, this person doesn’t exist.  I know this from years of experience.  My partners and I have as deep a collection of contacts in the industry – all across the spectrum.  More than this, if we don’t know someone, we probably know someone who knows anyone we don’t have a good connection with, and can get in front of anyone we need to in this business. 

What I do know is that anyone can build the same contacts…..it just takes time and effort.  There is no secret here, just hard work. 

You have to understand that there are so many new brands coming on line – we estimate that 5 new brands are introduced every day – that the system is overloaded.  Retailers and distributors are overwhelmed by new companies that are all making the same claim – we are different, we have traction, we are the best.  After a while of hearing this you become jaded.  You know that +90% of all new brands fail within the first 2 years. 

There are groups coming on line today that are making these kinds of claims – they can get a brand into 30,000 doors.  They tout that they have the connections with ditributors and retailers to help a company get mass availability.  Trust me, these systems will fail.  If you build a business on committing availability for a company, in the long run this business model will fail.  You can only push a button so many times.  If my failure rate is 90% with the brands I bring to a distributor or retailer, in the long run I will lose my credibility.  It won’t take long for those buttons to go away.

You see, it isn’t about how many doors you get into…..it is the wrong dashboard measure.  In the beverage business, it is about daily drinkers.  Here’s a dirty little secret…..if you want to double you number of consumers, doubling the number of doors you are in is not the way to do it.  But, more on that in another blog!

Living With Less

April 1, 2010

In the Beverage Business – as in life – Money is over-rated

It’s Friday afternoon, I am tired from this week’s beverage wars and feeling a little worn-out.  A few years ago I started a consulting business to help emerging beverage companies with a former colleague from Coca-Cola, Gordon Hill.  We had just finished 25+ year careers with one of the major beverage companies and were looking for something different to do that would be fun and could leverage our knowledge of the beverage business.  “Why not help some of the countless new beverage companies out there?” we thought.  With all of our previous years in the beverage business we thought we could help someone trying to make a name for themselves, maybe offer some insight here or there that would help – after all we introduced Diet Coke back in 1983 didn’t we?  That must surely count for something. 

While much of our previous experience and work skills were helpful to these companies, we were surprised by how much we had to learn as we moved from a large company with immense resources to an entrepreneurial environment where everything had to be created from scratch.  We had no idea what being entrepreneurial really meant.

Over the past 5 years we have had the chance to write numerous business plans for these companies, and I have read or assessed countless more.  We have also had a chance to observe hundreds of companies in the marketplace – good and bad – and learn from their experience.  I can’t tell you how many CEO’s or plans I have read that have echoed the same thing – “If I had $5 million more in seed capital, venture capital, strategic investors, etc. – you name the source – I could really scale this business and create a $500 million revenue business faster than Vitamin Water.” 

After observing the industry for the past ten years, what has worked and what hasn’t, I can tell you, unequivocally, that money is overrated! 

I was at a conference a few years ago where Clayton Christopher spoke.  He is the founder and CEO of Sweet Leaf Tea.  They had just received $18 million in funding from Catterton Partners, a venture capital firm.  Clayton remarked to the conference audience that, if they had received this funding in their early days, they would surely have failed.  He felt that working without significant resources over the years helped them immeasurably in their development.  It forced them to spend wisely along the way and to learn to do more with less.  It helps foster a culture within a company to conserve – one that always pays off down the road.   

One of the common mistakes we see companies make today is that they expand too quickly.  Gain a little success and suddenly CEO’s want to scale the business as quickly as possible.  This is a mistake, from our perspective.  I guess it is human nature in this uber-competitive society to want to be the fastest to $1 billion in revenues.  Or maybe it is because many CEO’s have the feeling that some competitor is breathing down their backs, looking to overtake them as if there will only be one success in each category.  ‘First mover advantage’ is a term that is way overused.  I don’t see Monster complaining that Red Bull has built an impregnable fortress, or that Honest Tea couldn’t be successful where Lipton, Snapple and Arizona had carved significant market presence before them. 

There is an attitude among many startups that ‘unless I cover the US that I will lose the race’.  What most of these companies don’t understand is that they are in the business of creating daily drinkers.  As such, we believe that if a company wants to grow its business, it is much more efficient to find new consumers in existing markets rather than open up new markets.  It is easier to ‘mine’ new drinkers where the product is already available rather than have to create awareness and trial in new markets.  There is plenty of time to expand – but do it when the time is right.  If you are going to err, do it on the side of conservatism.  It didn’t hurt Coors all of those years to only be sold in the western part of the US. 

Here are some tips we give to our clients – consider it our 9 rules for beverage entrepreneurs: 

1)  Know your target consumer – it will help you focus your resources.  Most companies write their business plans telling themselves – and their investors – that everyone will drink my product!  8 years olds will love this drink because ___ (fill in the blank), women 34-60 will love it because _____, men 65-80 will love it because ____, the morbidly obese will love it because ____…I think you get my point.  Even the most broadly consumed brands target their consumers with laser-like precision.

2) Focus your efforts – we call it a ‘footprint’ market.  You are better off with 250 customers in one market than 5,000 nationally.  You can build scale in one market.  Too many beverage companies we know take every call from every distributor and retailer.  No offense to Akron, but not all markets are important.

3) Find the early adopters – and get them to buy your product – demos and sampling are a part of every plan – but they are misunderstood.  The best sampling is when people buy your product.

4) Get some metrics – know what you are looking for and track it.  If convenience stores are important – then track your per store volume by month.  It will be the best indicator – to you and distributors, retailers and investors – that your brand has traction.

5) Mine deeply – it is easier to find new daily drinkers in existing markets than to expand.  There will be plenty of time to introduce in Akron.

6) Expand carefully – almost as a last resort.  What’s the rush?  Do you think you won’t be a candidate for acquisition by Coke or Pepsi if you aren’t available in 100% of the US?  Relax,

7) Replicate your model – we call it ‘colonization’.  Take what you have learned and repeat, repeat, repeat. 

8) Don’t be afraid to get your hands dirty.  You have to get out there and lead the charge.  I have met too many founders who think they need to outsource the CEO’s job – believe it or not.  You are the best salesperson for your company.  Lead the charge with consumers, distributors and retailers.   

9) Last, but most importantly, enjoy the ride!  It’s not the destination that makes all of this worthwhile, it’s the journey.  Remember, we don’t have yesterday anymore, we don’t have tomorrow yet, but we do own today.  Carpe Diem!

We don’t mean to trivialize the importance of capital.  You do need to produce product, it is very expensive to launch and sustain new brands, no question.  We just believe that learning at an early stage of your development to ‘live without’ will build skills that will serve you better in the long run.  And in the end, didn’t the turtle win the race anyway? 

Note: The author is Managing Partner of GBS Growth Partners, a group specializing in helping emerging beverage companies.  He admits he has been to Akron many times and has nothing against the city.