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Industry experts ranging from long-time entrepreneurs to grocery buyers and beverage investors shared their optimism about the road ahead for emerging brands, while also emphasizing the importance of a strong focus on business fundamentals and managing growth within the bandwidth of your current balance sheet. Those themes manifested in main stage discussions throughout BevNET Live Summer 2023 with topics ranging from online channel strategy to managing changes within established brands.
Tricia Wallwork, chair and CEO of family-owned Milo’s, never thought she’d be leading her family’s business, but in 2011, the former corporate lawyer and vegetarian took the helm at Milo’s – an operation that included a chain of hamburger restaurants and a now lucrative CPG line of sweet tea.
On stage this morning, Wallwork spoke about the complexities of navigating growth and change within a 77-year-old, family-run business. She explained that creating economic prosperity for her family, and the families of Milo’s nearly 700 associates, has remained the company’s north star since her grandfather opened the first restaurant in 1946.
“You’ve got to run a great business,” she stated. “We have done that by [being] really obsessed with customer service… making sure [we] deliver on time and in full, being honest with [our] customer about what we can do and can’t do.”
“It is also having those brutal conversations and being willing to say no, that is not what’s right for your category, that’s not what’s right for our business, and it’s not what’s right for [our] shopper,” she continued. “When you do this, you unlock that honest relationship with your customers that, for us, has allowed us to be the category driver.”
Wallwork also credits that inward-looking nature and business success to its strategy employees. She highlighted that all Milo’s associates have roadmaps for growth within the organization, however, as the business has managed explosive growth that has also meant making difficult personnel decisions and shifting roles for individuals best suited to keep pace. She said the company aims to keep communication transparent across the entire business structure and that has allowed it to make those difficult decisions while retaining employees, and their trust.
Despite the headlines signaling an economic era of doom and gloom, not all investors are equally as pessimistic. Elliot Begoun, founder of TIG Brands, Michael Burgmaier, managing director of Whipstitch Capital and Erin Wall, partner and CRO at Lunr shared their impressions of the market, and what brands should be prioritizing on stage this morning and the outlook hinges on each entrepreneur’s ability to plan for profitability as soon as possible.
According to Burgmaier, though deal flow is down 50% compared to this time last year, over the past six weeks it has “improved dramatically.” He said the fears of an economic downturn, coupled with bank failures and rate hikes, hindered deal flow in the first half of the year, but has since brought the market back to “a sense of calm.”
“I find myself, at this moment, both terrified and optimistic,” added Begoun. “I’m terrified that the change that needs to happen isn’t going to happen fast enough for some of the brands who are on the edge and I’m optimistic that the things that we’re talking about now as an industry are things that we should have been talking about earlier – putting profit before growth and cash before everything and trying to think about better alignment between founders and funders…. [Brands] also have to be realistic about who they are right now. Are they a rocket ship? Or are they a Camry?”
However, all three panelists agreed that those lingering questions about the market don’t matter if the entrepreneur is not focused on building a good business with a path to profitability and plan to reduce cash burn. They agreed that while raising capital is tough right now, for early stage companies there are a lot of other methods to notch some wins like looking outside the banking sector to fintech or being aggressive within your operations to streamline and cut costs that could set you ahead down the line.
“For entrepreneurs, thinking of how you cannot dilute yourself over time is still incredibly important and a good strategy so that when you are ready to exit, you own the most of that company,” said Wall.
Why are many beverage companies starting to build out ready-to-drink cocktail brands within their portfolios? The easy answer, according to Matt Hughes, former president and GM at The Coca-Cola Company’s Venture and Emerging Brands, is that consumers are asking for it. Yet, for beverage makers like Spindrift and Boston Beer, which spoke alongside Hughes on a panel yesterday, creating a lane in this highly competitive and fast-moving category is harder than just launching a new product and requires patience and the ability to pivot.
Boston Beer Company had to relaunch Twisted Tea three different times before it got the right branding and marketing strategy for the product, said Lesya Lysyj, CMO at Boston Beer Company.
Being flexible and having patience to understand the target market was important to building Twisted Tea into the biggest brand in Boston Beer’s portfolio, Lysyj explained, adding “it’s twice as big as Truly [Hard Seltzer] and four times as big as Sam Adams beer.”
What is becoming apparent now is that the non-alcoholic beverage category (soda, seltzers, teas, etc.) is starting to lead the convergence into the mixed drink set. As consumer demand has grown for hard seltzers, canned cocktails and alcoholic RTDs, more non-alc brands are leaning into the category.
Hughes explained that Coke has been able to leverage its brand awareness and household penetration to jump into the RTD alcohol category. By utilizing partnerships with alcohol brands like a spirits-based RTD Jack and Coke, the company has been able to further diversify itself to its core consumers who have been using Coke as a mixer for years.
Yet, all three panelists emphasized that patience is really the key to this strategy.
In the case of Spindrift, it took 10 years to just get its core product line correct, said founder and CEO Bill Creelman, so to diversify itself into hard seltzers took careful planning, a desire to step outside of the brand’s comfort zone and a slow, deliberate launch to make sure the brand was “testing and learning” what its consumers wanted.
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