Beverage World - May 2008 - (Page 24) [BEVBEAT] WORLDVIEW Growing Your New Brand BY MICHAEL C. BELLAS O nce the world became industrialized, it became a rarity for anyone to create at home the goods that could be had more easily via purchase. You’ll notice we no longer stitch our own clothes, churn our own butter or grow our own vegetables. But do we create our own beverages anymore via traditional product development processes? More and more, it seems, the CocaColas, Pepsi-Colas, Anheuser-Busches and Diageos— those who can do it—are just as likely to look past their proverbial drawing boards and outside their labs for new beverages. Why go through all of the inventing when you can just write a check? We shouldn’t oversimplify here. Acquisition is ideally a complement to internal new product development. Some of the best minds in beverage creation are employed gainfully at those companies and they keep busy trying to create the next big hits in the drinks business, often with success. Yet purchasing your way to participation in a given category is a legitimate option and one that deserves deeper consideration as a discipline than it has probably received. The overriding challenge of how exactly to handle your new beverage acquisition is job one—and there is no single template to follow. Sometimes you may want to pay for your new [[ The CHALLENGE of how exactly to handle your new drinks acquisition is truly job one. property and then let it continue to do what it does best under the management that built it. A “best of both worlds” strategy may be in order: access to your resources, but a delicate hand when it comes to your involvement. Based on recent history, you have several options for how you go about it. • Leave It Alone: You buy an interest in a beverage company to get the most out of it, and sometimes that means letting it be. We’ve seen that tact work with the likes of Gatorade and Quaker Oats, which is still run out of Chicago nearly eight years since PepsiCo bought it and the erstwhile Perrier Group of America, which remains independently operated long after it became Nestlé Waters of North America. Smaller examples would include those brands whose uniqueness almost demands a different road: Coke with Odwalla and Honest Tea (in which Atlanta recently bought a 40 percent stake for US$43 million) and Pepsi with Izze and Naked Juice. • Take Your Time: Pepsi didn’t rush SoBe from standalone status. Instead, it took time to get to know the New Age lizard’s tendencies before incorporating it into Pepsi-Cola North America. Coke has likewise taken it step by step in terms of making Fuze and glacéau part of its overall portfolio. The key is not to let a former “bou- tique” brand lose the integrity nor diminish the culture that made it appeal to discerning drinkers in the first place even as you endeavor to build scale. We saw what happened when the old Quaker Oats company bought the thriving Snapple and tried to shoehorn (or “Quakerize”) it into a big brand playbook. Both the buyer and the brand suffered. • Fully Incorporate: Look no further than SoBe, which also received Super Bowl treatment this February, and how its trademark lizard evolved into a fullfledged member of the Pepsi menagerie. Likewise, once Snapple was fully reSnappleized, Cadbury was able to absorb it into its North American operations far more comfortably had it tried to squeeze it between Dr Pepper and 7UP from the get-go. • Distribute Only: A-B gave Hansen’s Monster Energy a great leg up by arranging a distribution deal, but has otherwise stayed out of the energy drinks business. There is something for everybody in this kind of deal, even if complete control of every facet of a brand’s fortunes isn’t one of them. When acquring brands, the largest marketers have to maintain the integrity of the culture that surrounds them, make sure there is a good fit all around and proceed with care when it comes to integrating operations. It’s not as easy as buying a stick of butter. BW Michael C. Bellas is chairman and CEO of Beverage Marketing Corporation (New York, N.Y., USA) Tel: 212.688.7640 Fax: 212.826.1255 E-mail: bevinfo2@ beveragemarketing.com www.beveragemarketing.com 24_BEVERAGE WORLD_MAY 2008 BEVERAGEWORLD.COM http://www.beveragemarketing.com http://BEVERAGEWORLD.COM
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