CHICAGO -- Michael Bellas, chairman and CEO of Beverage Marketing Corp. (BMC), delivered mostly good news during his opening address at BMC’s Beverage Forum in Chicago this past month.
U.S. beverage market volume was up 2.4% in 2015 as most major categories—bottled water, energy drinks, ready-to-drink iced tea and sports drinks—all grew volume nicely. Only carbonated soft drinks stood out for volume loss, with sales down 1.5% in 2015.
“Looking ahead, 2016 is en route to extending 2015’s good news, maybe doing even better,” Bellas said. “First-quarter results were aided by easier prior-year comparisons and unseasonably warm weather, benefiting all beverage segments.”
With a full slate of c-suite-level beverage executives speaking at this year’s forum, cosponsored by Beverage Industry magazine, here are some highlights from the conference.
All SKU’d Up
Al Carey, the new CEO of PepsiCo North America, openly admits most retailers have too many SKUs in their cold vault. And he’d like to help them do something about it through open and honest discussion of which products need to be there and which don’t.
He plans to launch a SKU-optimization initiative soon to make the process as painless as possible.
“There are far too many SKUs. They’re slowing the sale of the fast-movers,” he said. “If you took out 20% of the SKUs [in the cold vault], you’d sell 70% more [beverages]” by improving turns and reducing inventory.
Lighten Up
MillerCoors CEO Gavin Hattersley feels the current pressure on light beer—sales have declined steadily in recent years, which is generally a marketing problem.
“Light beers have alienated a good number of our target market,” he said. “Women largely have been ignored.”
With more and more women turning to beer as new styles and flavors proliferate, now seems to be the right time to correct that.
For MillerCoors’, the move has been toward promoting Miller Lite as “the original” light beer, underscoring the lower-calorie content. And for Coors Light, its Climb On campaign features the beer as a refreshing drink for active men and women.
Prepriced Proposition
When Don Vultaggio, the chairman and cofounder of AriZona Beverages USA, created the company in 1992, sure, he wanted to sell a delicious iced tea. But the former beer distributor also went in with the realization that consumers’ “decisions are made at retail shelves.”
The result was the colorful cans and bottles in stores today and the often-maligned 99-cent prepriced product.
“That’s bringing a great deal of value to consumers,” Vultaggio said. “It’s been a struggle to maintain that price … but through hard work and efficiencies, we can do it.”
420 Seconds From Irrelevance
Craft beer, craft soda, craft spirits: It’s not just an annoying fad, and it will expand into other categories, within and outside of beverages, according to Bellas of BMC. He calls it: the craft mindset.
“There is much to be said for delivering to the consumer exactly what he or she wants, how he or she wants it, when he or she wants it,” Bellas said. “That is at the core of the craft proposition, and it’s something beverage producers and marketers are ever more capable of achieving regularly.”
The mindset also creates a challenge for established beverage makers.
“Consider the span of seven minutes: 420 seconds,” Bellas said. “That’s how long it takes financial technology startup Kabbage to approve a small business loan. … It’s no wonder customer experiences with technology have both altered consumers’ behavior and raised expectations about how interactions with all products, including beverages, should work.”
The moral: Stay on your toes or risk being passed by an innovative startup.
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