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The Only Constant

Beverage World:

By Bill Anderson

One of the most interesting but subtle debates in the beverage industry right now is about change and specifically whether the current amount of innovation, sku proliferation and small brand growth will continue into this year and beyond.

It’s not unusual these days to hear large corporate brand owners claim that consumers will soon return to their old buying habits and that retailers shouldn’t be devoting so much room to smaller brands.  On the other side, it’s not unusual to hear small brand owners remarking that this golden age of authentic, craft products is just beginning.

No matter what side you’re on, it’s hard to argue that the broader change trends we are seeing in the industry will suddenly stop.  I don’t think this wave of rapid innovation and small brand development will change any time soon.

Convergence, for example, will likely continue to occur in all corners of the industry.  Starbucks may be the best example.  For years since its establishment in 1971 it was simply a coffee business (and some would argue even more a milk company).  But now it’s clear they are in a position to become a prime supplier of juices, colas, snacks and baked goods.  And all of it can be provided quickly through Starbucks’ nearly 20,000 locations, without the cost of a heavy, slow-moving distribution system.

We will also see convergence in how beverages will be made and enjoyed in homes and offices.  We’ll start to see the roll-out of more and more machines that can make hot and cold beverages (colas, sparkling waters, hot coffees with milk, etc.) right on your kitchen counter.

We will also see continued changes in the distribution world. More and more small companies will look for ways to go direct to the consumer.  On-line commerce and home delivery services like Amazon Fresh will continue to take share from brick and mortar stores.  ABI will continue to study additional brewery-owned branches, and any possible alignment between ABI and Pepsi will completely shake up the DSD world as we know it.

Maybe most importantly, we will continue to see an influx of outside capital – from inside and outside the US – which will change how the beverage business is conducted.  Old standards of business will go by the wayside as new operators come into the business.

In the end, 2014 will be another great year for the industry, especially for those suppliers (big or small) who embrace change.