energy drink

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Sales of Coca-Cola’s flagship product, the carbonated sugary drink we know a Coke, dropped 3.5% last quarter; proof you can’t go against a cultural tide of healthier living and expect sales to hold forever. Coke’s parent has been doing a great job of diversifying its portfolio the last 10 years by adding juices, milk-based protein drinks, waters and energy drinks. Even with the tide receding for flagship Coke, earnings have been surprisingly okay. Looks like that is not the case anymore.

If you follow the tech sector as I do, you will know that product innovation can completely change markets is 3-5 years. The beverage sector has lots of innovations, according to Beverage Digest, but they are really incremental. Coconut water, craft beer, energy concoctions, and cold pressed juices are nice ways of redistributing marketing wealth, but haven’t fueled the big ass innovations we’ve seen in tech.

Coke needs to think differently. I’ve posted before about how they need to send R&D people into the jungles in search of the next cola nut…something with healthy properties. But Coke also needs to think about pricing and delivery. Why 12 oz. cans? Why cans and bottles? Why not explode the price point for a six pack? How about an annual subscription fee? Coke’s head is so tied up in its bottler arrangements, distribution networks, store detailers, fountain business it can’t think like an agile start-up. Sure they can buy 49% of the next Honest Tea, but can they be the next SnapChat.

My bet is they can. But not if they follow the innovation courses of GM or the financial industry. Follow the tech paradigm. Peace.  

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Fever.

IPO fever is back. SnapChat, Instagram, Chegg, and the soon to go off Twitter have once again contributed to the investment energy that is IPO fever. We are reading about the fever from all angles: the composition of investors, the inventors, the bankers, underwriters and VCs, until we all in a lather. It will “bubble out” but that’s not even the worst of it. The worst is when young  entrepreneurs start to think they can build a billion with a smart idea, some energy drinks and an all-yearer (like an all-nighter but longer). Some will, most won’t.

I’ve watched CTOs with the fever working for the big payday, scrimping on quality testing, usability testing and market research all with Sand Hill Road and Union Square dreams dancing in their heads. Some smart VCs see these guys coming an say no, so the “fevered” go looking for angels and second tier investors.

The fever can be market debilitating. It’s exciting and needs to happen in a growing innovation driven economy, it just can’t be so exuberant that the inventors lose sight of business fundamentals.  Let’s just breathe. Invent and breathe.  Peace!  

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I took a phone call from a friend yesterday asking for some research advice on marketing a new energy drink. A couple of investors came up with a new packaging twist that sounds like fun and they are willing to spend a million dollars for the launch. Not a lot of money. 
 
The energy drink category is certainly mature, (for a list of competitors click here http://www.screamingenergy.com ) so this venture needs a big, consumer-resonating “branding idea.”  Packaging, ingredient sourcing, bottling/canning, formulating are all exciting new product activities, but when you start thinking about spending real money, that’s when the knees get weak.
 
The fact that these entrepreneurs are just now starting to ask primary consumer research questions is a concern. Marketing is not about tagging along to trends, it’s about creating trends.  New trends start with consumers. Consumers are not the last mile, they are the first step. And every step. 
 
 
 

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