Can Big Ever Go Small?

I was sitting at the BevNET Forum earlier this week, listening to an excellent presentation by Karin Rotem, Senior Director, Global R+D Strategy for Pepsico. In response to a question about how big beverage companies can develop authentic, small brands, she admitted that entrepreneurs have an advantage on authenticity claims over big suppliers, in part because many consumers don’t trust big companies and their claims about a new beverage segment. She also said that small companies are simply more nimble in developing new brands.

In a presentation filled with good insights into the future of the industry, her comment on authenticity was one of the more honest assessments facing big beverage suppliers today.

And then at yesterday’s BevNET session, Mike Ohmstede from Coke’s Venturing and Emerging Brands unit, went through the Ten Lessons that VEB has learned as they’ve evaluated and invested in start-ups. His Lesson #10 was, “Our track record in new brand innovation is spotty.”

So it’s clear the big suppliers are aware that, in the face of waves of new consumer demand for innovative, truly functional, authentic brands, they will somehow need to develop a more nimble approach to corporate strategy and product development.

But their comments made me wonder if big beverage companies can ever go small successfully.

One of the better descriptions of a big company trying to steer  itself in a smaller (and healthier) direction was in an article by John Seabrook in the May 16th New Yorker, titled “Snacks for a Fat Planet,” which detailed the efforts by PepsiCo CEO Indra Nooyi to develop healthier product lines for the food and beverage giant.  As Nooyi says in the article, “It’s not a question of selling less. It’s a question of selling the right stuff.”

As big companies try to go small – and healthy, artisanal, organic or local – their attempts to develop, market and sell “the right stuff” will be one of the more interesting developments to watch in the next few years.