With a portfolio of more than 500 beverage brands that offer more than 3,500 beverages, The Coca-Cola Co., Atlanta, has expanded greatly since its first product 125 years ago. But even with this vast portfolio, The Coca-Cola Co. continues to search for what new trends are taking place in the beverage industry and the company stays on top of it with its Venturing and Emerging Brands (VEB) business unit.
“In the four years since the VEB team was formed, we have created an exciting portfolio of brands developed by external entrepreneurs, imported to the U.S. and crafted from scratch,” says Deryck van Rensburg, president and general manager of VEB for Coca-Cola North America.
Van Rensburg was appointed in 2007 to his position with VEB and since then The Coca-Cola Co. has fully acquired Fuze and NOS, which were incubated to scale, he says, and then graduated the brands to the core business units. Most recently, Honest Tea was fully acquired and the company also has invested in Zico, an all-natural coconut water company.
VEB also has been part of the internal innovation side with a joint venture with an Italian company to create Illy Issimo, a high-quality, authentic espresso in a can. And the North America unit has borrowed ideas from other operations, such as from its French operations with Cascal, which is a natural fermented soda that uses flavors such as black currant and cherries, as well as Sokenbicha, the company’s largest tea brand in Japan. The unit repurposed Sokenbicha’s communication, product and packaging to appeal to United States consumers, he says.
“The VEB team identifies emerging beverage trends and incubates new brands for our North America business, looking for products and brand categories with potential to develop into large volume and profit generators,” van Rensburg says. “This is extremely important to the company’s overall vision and strategy as we seek to identify and develop the next series of brands with billion dollar potential via importation of successful brands developed in other Coca-Cola markets, incubating internal innovation and sourcing external growth through acquisition, entrepreneurial partnering and equity investment.”
The mission of VEB is to make sure that The Coca-Cola Co. is not surprised by trends in the beverage marketplace and to boost innovation efforts and find new brand opportunities for consumers, van Rensburg adds. The company stays on top of these trends with research that involves its team members being in the marketplace and absorbing consumer demands.
“It starts with a research-based understanding of what the consumer is looking for, as well as a point-of-view about where consumers are likely to be in the future,” van Rensburg says. “The most important part of the process is being in the market and networking with cultural leaders, wellness experts and early adopter consumers. We have to be real-time in the market, staying close to the consumer level, watching what they do, where they shop and what trends they are following.”
In addition to looking at the consumer, VEB also gets inspiration from new entries in retail channels.
“We have a group that each month visits an urban environment, goes to stores, engages retailers and collects all of the products that have been launched in that city,” van Rensburg says. “We research each brand — no matter how small — because every brand starts small before it becomes big.”
The company also attends trade shows, particularly for natural products. The Coca-Cola Co.’s recent acquisition of Honest Tea fits into the growing natural channel.
“The consistently strong growth of Honest Tea, as well as its leadership in the natural foods channel, was among the many elements that attracted The Coca-Cola Co.,” he says. “When we made the investment in Honest Tea, we did so because we saw that it had great potential to be a significant brand of the future.”
Seth Goldman, co-founder, president and TeaEO of Honest Tea, says that the company has seen its ability to grow with The Coca-Cola Co. He says for the distribution segment when Honest Tea first began its deal with The Coca-Cola Co. its products were available in 15,000 accounts, now it is in 75,000, on its way to 100,000.
“I think the reason that Coke invested is we’re really at the center where a lot of the trends are with healthier products toward environmentally friendly products,” Goldman says. “So we expect to continue to grow aggressively in the years ahead.”
But the value of being part of The Coca-Cola Co.’s VEB business unit expands beyond its distribution.
“We as a team bring a great deal of passion, entrepreneurial energy, a great deal of knowledge on a natural foods industry, but for a lot of our team there’s so many new dimensions that we don’t have expertise in,” Goldman says.
He says Honest Tea can benefit from evolving its marketing knowledge with The Coca-Cola Co. and with packaging, such as its PlantBottle technology.
“We’re very excited to have access to that kind of technology and that’s something we never would get on our own operating out of our little office in Bethesda, Md.,” Goldman says.
But what stands out for Goldman with being a part of The Coca-Cola Co. is its commitment to the brand, quality and authenticity of Honest Tea.
“I appreciate that Coke saw value in our team and our leadership and what we were doing so they really have continued to invest in us and our management,” he says.
VEB also appreciates the lessons learned from its investments and acquisitions, such as the natural sales channel force that accompanies Honest Tea.
“When Honest Tea was first created, the management team knew they needed to get their product to the natural channel as their core consumers shopped here when they were looking for brands like Honest Tea that capitalized on the messages of health and sustainability,” van Rensburg says. “VEB is now able to leverage this industry leading sales team to sell current VEB brands as well. All of these efforts reflect why VEB has chosen to invest in entrepreneurs like the team at Honest Tea. They provide a source of innovative ideas and energy that enhance our own efforts.” BI