David v. Goliath

Reading the excellent new book by Malcolm Gladwell, David and Goliath, I couldn’t help but think about the state of the beverage industry and particularly the impact that small brands are having in every single segment, from craft beers to raw juices to hand-crafted mixers.

Gladwell aptly describes the ‘advantages of disadvantages,’ all the good things that come to those that are nimble and small. “We think of things as helpful that actually aren’t and think of other things as unhelpful that in reality leave us stronger and wiser,” Gladwell writes.

His book is in some ways an exact summary of the advantages that small brands have today over some of the big, established brands – brands that you would think have all of the advantages.  Small brands are the ones with all of the disadvantages, right?  Small brands have to fight for their very survival. Every single day, they raise capital, beg for distribution, find some new approach to gain shelf space, and use social media and any other guerrilla tactics to break out and reach the consumer.

Gladwell also emphasizes the importance of views from outside the Goliath mindset.  Gladwell tells the story of a small and untalented girls’ basketball team led by a coach with absolutely no basketball experience. Their key to success is setting a full-court press all game long. Not for two minutes at the end of the game, but for the entire game.  Gladwell writes, “You have to be outside the establishment…to have the audacity to play it that way.”  Needless to say the young girls’ team had outsized success.

Our firm sees close to 250 beverage business plans a year. Most are started by people with zero experience in the beverage industry. One could certainly look at these founders and be concerned with their lack of traditional beverage experience. Or you could look at them, as we do, and know that some of the best and most cutting edge ideas in this industry have come from those completely outside the industry.  Think about almost any of the founders of today’s leading craft breweries.

Small brands also have the ability to compete with big brands in new ways.  Like David “who refused to engage Goliath in close quarters, where he would surely lose,” small brands are using new distribution and retail platforms. They’re finding ways to build a brand in the produce aisle or in a cooler box in a yoga studio – places where the Goliaths of the world can’t reach them.

It’s David v. Goliath in the beverage industry today, and many of the Davids are finding a way to win.