Build Your Beverage Empire
My name is Jorge Olson, and I used to run a full-service beverage consulting company in the USA, working on beverage development, consulting, strategy, sales, and distribution. I started in the industry as a distributor of consumer goods and beverages and then beverage development, sales, and distribution.
My aim for you in the book is to teach you everything there is to know about taking a new beverage from concept and strategy to production and on to marketing, sales, and distribution. Along the way, we serve as an expert resource and support service, working together with you to realize your dream of making it big with your new-age beverage of choice.
Why Write a Third Edition of This Book?
I am writing the third edition of this book post-Covid because there is a need for it. If you read the previous version of this book, you may remember that Amazon and eCommerce sales were mentioned briefly in the book, as sales were driven by wholesale distribution. After COVID, Amazon and eCommerce can be the difference between your brand surviving or crashing and burning.
What changed? Well, COVID changed everything.
The beverage industry has been changing for a while; there’s significant consolidation in convenience stores. It feels like an oligopoly in the hands of Coca-Cola, Pepsi-Cola, Dr. Pepper Snapple, and Nestle controlling the refrigerators. On the other hand, natural stores are more open to allowing new products on the shelves and fridges.
The Ready to Drink alcoholic channel is the opposite, with stores and restaurants receiving open arms.
Hundreds of microbreweries are emerging, and some of them have been acquired. Here in San Diego, we have one of the most active microbrewery towns in the nation, giving beer lovers great options with on-premises and even retail sales. In my last count, I saw one hundred and fifty-two breweries in San Diego; these are not home operations; they’re businesses open to the public.
Placing these new beers in retail and on-premise accounts is not as tricky as their non-alcoholic cousins. Bars and restaurants accept them, retailers love them, and consumers like me are willing to give them all a chance.
Artisan beer is not the only rediscovered beverage to hit the market. We can learn plenty from White Claw, leading the hard seltzer category that exploded into the scene. Budweiser already responded with their Bud Light hard seltzer, which gives you an eye as to why large companies struggle to innovate. It isn’t easy to strive away from the name brands they already own.
The newest addition to the microbrewing movement in San Diego is hard kombucha.
You would think that the beer giants like Miller, AB InBev, or Heineken would completely dominate the beer refrigerator. It was factual until discerning and knowledgeable consumers welcomed the new Artisan beer brands. Will this trend one day extend to the RTD non-alcoholic sector? Soda has seen a steady decline over the years. The opposite is true for the new functional brands showing positive growth. However, most brands’ wholesale distribution channel was still off-limits until COVID hit and changed it forever.
Because We’ve Seen People Fail
More important than consumer requests and our desire to write this book is the need for beverage entrepreneurs to have a resource such as this. As we watch countless Beverage entrepreneurs try and fail, my team and I see day in and day out that the reasons for failure are not that many of these products aren’t great; they are not adequately managed. And so we decided that the time was right to author a book to guide developers through the entire process of developing a beverage company from scratch so that any man, woman, or company can enjoy the fruits of their labor.
What has become eminently clear to us in our work as Beverage Incubators is that largely people are going into this business misinformed and misguided.
The vast majority of Beverage entrepreneurs go into the industry believing that if they develop a great tasting product, it will sell itself. But as the success of substandard drinks and the failure of great-tasting refreshments have proven, making money in the beverage market is about much more than just having a great product. Many people have lost great investments by thinking that they could succeed based on taste alone.
“There is no reason to fail, but most new entrepreneurs do”
This is sad not just because of the failure itself but because the causes for failure are so preventable. It’s as simple as managing your expectations of the business. If you start by saying to me, “I’m going to sell more than Red Bull in three years,” I’ll ask you how much they sell, when they started, and their investment. You’re in for a hard ride if you don’t even know that. I don’t condemn the “go-get-them” attitude, but I do the ignorance. As you can probably guess, I’ve gotten more than two dozen of these calls only in the last year. All of them never even started their drinks. By the way, Red Bull sold $6.5 billion in 2012, according to Forbes, and it took them 25 years to get there with an initial investment of $1 million. This exercise is part of managing expectations, and selling more than Red Bull in three years without knowing how much they sell is not the best way to start.
“Building your beverage empire is all about following a formula”
Most people I see failing ignore the formula, or they think their idea or drink is so spectacular they can change or ignore the formula altogether. First of all, you have to define success, set goals, and define failure. If your goal is to sell $10 million the second year, and you sold $8 million, is that a failure? How about if you sold $6 million? How about $2 million? Well, it probably depends on how much money you spent, right? If you spent $10 million you’re probably not incredibly happy, but is it a failure if you’re still in business and growing?
You have to learn what it takes to open a retail store and how much it costs before deciding you want 10,000 convenience stores. You also need to know how to maintain the product in those stores and reach the consumer repeatedly. These are a few of the “formulas” you need to understand to create a beverage company, not just a beverage product.
Why Do Great Drinks Fail?
It takes a lot more than having a great-tasting product to succeed in the Beverage market; to be successful, you do not even have to have a great-tasting beverage—many do not. Think about your purchases; how often have you purchased drinks that you didn’t like and would never buy again? How frequently have you purchased beverages you didn’t care for, but you would or do buy again because of some benefit, promise, or promotion? How many hundreds or thousands of people buy those same products every day? How many people go out of their way to buy a trendy drink?
“Great drinks fail because entrepreneurs were not prepared with the proper knowledge and strategy”
All of this stands as proof that knowing how to market and promote a product is more important than the actual product itself. Sure, having a great-tasting product really helps and can mean the difference between breaking in and making it big. There’s no question that taste and quality will matter at some stage of the game, but you need to first know how to get your new beverage noticed and draw crowds to your product. If people don’t buy your product in the first place, how will they know it tastes great?
What We Give and What You Get
This book is a complete blueprint for developing a Beverage Company, not just a beverage consumer good. You can use this resource at any stage of your business. It works for those with just an inkling of an idea and those ready for product launch. It also works for companies that would like to expand their line of products or explore new channels of distribution. Or even for beverage distributors or retailers deciding if launching a private label beverage is right for them. You are getting the culmination of years of experience and knowledge of the beverage industry.
This invaluable resource will shave a minimum of one to two years off your learning curve in your beverage development path and put you ahead at least five years in terms of sales and distribution.
There is an adage, which we’re sure you’re aware of, that says “time is money.”
We thoroughly believe this, and we’ve made it our goal to trump your business by saving you both time and money through the publication of this book.