Gerry’s Insights: Conventional Consolation

Like many of you, I’m sure, over the years I’ve developed various coping mechanisms to keep myself on an even keel through life’s little challenges and indignities. (Just to be clear: I don’t have any mechanisms for the big challenges and massive indignities, besides sitting in my armchair, opening a beer and sobbing. ) So when we get a scorching, humid summer day in New York, I just remind myself of how much I hate February, and suddenly the weather doesn’t seem so oppressive.

When I find myself embarrassed to find myself rooting for such perennially hapless teams as the Brooklyn Nets and Tottenham Hotspur, I turn on the TV and see the Giants down 40-0 to the Cowboys on opening day. Glad I’m not a Giants fan! It’s the same as I look ahead to the daunting challenge of covering the essentially unmanageable, back-to-back Natural Products Expo East and NACS expos, with their hundreds of beverage exhibitors whose staffers will take it as a personal affront if I don’t get to their booth while they’re on the premises. My coping mechanism here is simply to remind myself how grateful we all were to have those shows resume after their pandemic cancellations.

Remember how glad you were? Well, me too. So bring them on! What will I be looking for as I explore the innovation on display and engage with company leaders and sales execs? For starters, I expect to see plenty of it, after the rigors of the pandemic, with its supply chain disruptions, retailers who moved into triage mode in overweighting staples and the inflationary burst that came just as consumers were cutting back. So I suspect we’ll see the pent-up release of more innovation that may have been sitting on the shelf since 2019 waiting for the right launch time.

We saw some of that in the past year or so but I suspect innovation to really be unleashed this fall. A lot of what we see, though, will be informed by this new fiscal austerity that’s emerged over the past year or so. It’s not receding, and it’s compelling beverage marketers to target segments of meaningful approachability and scale, and in a judicious way that doesn’t squander precious resources at a time that it’s not so easy to stoke the engine with another capital round.

As I write this, some of the new stuff is trickling out. Venerable Waiakea Hawaiian Volcanic Water, for example, which has never been promiscuous with innovation, just unveiled the first details of a move into canned cold-brew coffee. True, coffee can’t be regarded as a close-in adjacency to packaged sourced water, but like the core line this one benefits from the state’s rich volcanic soil, which both filters and enriches the water and supports an admired coffee industry.

So on the surface, at least, it strikes me as judicious in concept. We’ll also witness key pivots undertaken to accommodate this austere new reality. Take Odyssey Wellness, which initially launched a mushroom-infused coffee line that I personally admired.

At this time, at least, that’s a niche segment, and the company’s founder Scott Frohman has heeded the feedback he received from the market and shelved the coffee line in favor of an easier-drinking elixir that nevertheless contains a potent mushroom ingredient bill. Investors seem to have bought in and he’s ready to hit the gas. Or take energy.

There’s no quibbling with the category’s continued growth, premium pricing and great margin, not to mention the voids that Celsius, C4 and Bang have created in the beer networks with their exit to soft drink partners. So expect to see a continued flocking of new entrants, including raw startups, supplement marketers edging into RTDs as did VPX and Nutrabolt before them, and incumbents in other categories hoping to get some relevance, shelf velocity and topline growth from extensions there. Super Coffee, grappling with a Bulletproof-like product whose taste is polarizing and which occupies what is still a niche, has made a more overt move into the energy space, offering the Anheuser-Busch network a sucralose-sweetened energy play that could sit neatly alongside another A-B partner brand, Ghost Energy.

(In fact, the two are sharing a booth at NACS, I presume so as not to get lost in the crowd of beer swilling visitors to A-B’s pavilion. ) For that matter, Odyssey has just ventured a line called 222 that’s overtly positioned as an energy drink, too. Of course, that tactic can’t be a panacea for everyone’s growth dilemmas.

There will only be so many winners and losers, even in such a growing category, one in which even struggling entries like A Shoc and Zoa have been able to bring in substantial new resources to try to get on track. I’m also curious to see whether we start seeing more lower-caffeine entries from major energy players now that criticism has begun to heat up again over the possible health compromises of heavily caffeinated brands, some of them employing licensing partners that could lure younger drinkers into the mix. Of course, just in tilting from 16-oz.

cans to 12-oz. cans, some incumbent players are cutting their caffeine by 25% right there. Still, maybe the time is right for more “sessionable” energy drinks, just as some brewers have moved away from high-ABV IPAs all the time.

Other trends to track? With fewer and fewer exceptions – GT’s Kombucha and Olipop come to mind – cold-stage players increasingly are hedging their bets with shelf-stable extensions, in the case of kombucha players those canned gut pops. Rowdy Kombucha was the latest, offering a line of ashwagandha-powered Good Mood Sodas that I’m certainly eager to try for the first time. Entries from established entrepreneurs, with their deep reservoirs of credibility and goodwill and broad access to capital, always are worth a gander, since they possess the ability to keep tweaking the proposition until it resonates.

One thinks of Lance Collins, of course, with brands like Zen WTR, My Muse and A Shoc, but also more newly minted second-timers like the Essentia Water team of Ken Uptain and Scott Miller with their flavored vitamin-infused Yesly line. One also should keep a fresh mind about who the strategics are. That doesn’t just mean the beer and beverage giants, with their sprawling booths full of often late-to-the-game innovation (Gatorade IV anyone?) but the burgeoning array of newer platforms like Splash Beverage and Clear Cut.

Splash, run by Red Bull vet Robert Nistico, just landed a credit line it says can support a series of acquisitions of brands doing $20 million and up in sales, even as it builds its own Tapout and Copa di Vino brands. Clear Cut, operated by Coke and Bang Energy vet Joey Nickell, acquired control of energy brand Phocus while launching a shot line called Levo and a sports drink called Hero. Finally, there’s the matter of DSD.

Several brands that had eased away from that distribution mode seem back in the hunt, such as Hint Water and Guayaki Yerba Mate. Others are making their initial foray into DSD, including Spindrift seltzers (prompted by the brand’s push into hard seltzer, where DSD is mandated) and Zevia stevia sodas. These are all well-established brands with DSD-conversant executives on their senior teams these days.

Beer wholesalers and other distributors might find it worthwhile to sniff around those exhibitors’ booths while at the shows. Their heavy lifting already has been accomplished and they have a plethora of retailer authorizations. Of course, though Expo East and NACS are the biggies on my fall calendar, there are lots of other events on the slate, including the National Beer Wholesalers’ Association conference and expo in Las Vegas and various retailer- and distributor-hosted shows.

Whichever you choose to “indulge” in, happy hunting! Receive your free magazine! Join thousands of other food and beverage professionals who utilize BevNET Magazine to stay up-to-date on current trends and news within the food and beverage world. Receive your free copy of the magazine 6x per year in digital or print and utilize insights on consumer behavior, brand growth, category volume, and trend forecasting. Subscribe.