Company Description and SWOT Analysis

CLASS: Strategic Management

BOOK:

Successful business plan: Secrets & Strategies, 6th edition

Rhonda, Abrams

Please list all references.

Cover page is not needed.

Number of pages needed: 7

Please see attached word document for more instructions

This is part one of a business plan project. The project consists of developing a business plan. I am attaching a non-alcoholic company portfolio (NAB) as an example, also attaching book pages for references, my business idea/company and the format/sections of the paper MUST contain information to be followed for creating this assignment-PLEASE SEE BELOW. I have created a company name. The non-alcoholic beverage will be an organic energy drink. I have also attached a couple of videos and book pages indicated to follow.  Please research this industry.

Company name: Orgaenergy

Mission statement: ” To Energize, refresh and quench your thirst in a healthy pure natural organic way” -Please feel free to elaborate more on this or to make any corrections.

This course brings together concepts and learning from other courses you have taken, and you culminate your graduate degree journey with a final project: a Business Plan. With the focus on the creation of major sections of a successful Business Plan, you are provided a portfolio that contains data from which you will analyze and synthesize information that will be used in a step-by-step process to enable your learning of strategic management concepts. During each week of this course, you will be introduced to another section of the Business Plan to work with, receive meaningful feedback, and, by the final weeks, compile these assignments into your capstone Business Plan.

You will be creating a new business in the non-alcoholic beverage industry, and you do not have to be an expert in this specific industry! In fact, we expect that once you complete this course your newly learned knowledge and skills in putting together a successful Business Plan can be used to create or update Business Plans in almost any industry. The capstone project will be a reflection of your capabilities to think critically, strategically and creatively!

In this assignment, you will conduct a SWOT (Strength, Weakness, Opportunity, and Threat) analysis for the type of beverage you have selected, and for your company overall. As you work on the assignment, consider why you have chosen one type of non-alcoholic beverage over another and the reasons for that choice. As you complete your SWOT analysis, be sure to include external factors such as industry / market trends and competition, and internal factors such as your capabilities or abilities to reach certain market segments.

    1. Create your revised NAB company name and explain its significance.

    2. Develop your revised company’s Mission Statement and provide a rationale for its components.

        ◦ Hints: Use the Statement of Mission template on pp. 72-73 on the course textbook: Successful Business Plan to aid your development. Click here for help accessing a specific page number in your eBook.

        ◦ Extracting appropriate information from the NAB company portfolio, where applicable. You should fill in other required items in the template using your personal preferences.

    3. Describe the trends in the non-alcoholic beverage industry, especially the specific type of beverage category you have chosen. Justify at least three (3) reasons why you have chosen this type of non-alcoholic beverage.

        ◦ Hints: Research and outline beverage industry trends. Consider the size and growth rate of the industry overall and the specific beverage type you have chosen. Use the worksheet in the course text (p. 88 | Past and Future Growth of Your Industry) to help you project the future growth rate. Consider the use of industry associations and search engines to find reliable, recent data.

    4. Choose one (1) strategic position from the course text (pp. 142–143) that you believe is the best strategic position for your company. Explain the approach you will use to implement this strategic position in order to distinguish your beverage from other non-alcoholic beverages.

    5. Provide an overview of your company’s distribution channels. Explain the manner in which your product will reach end users. Provide a rationale for your chosen method.

        ◦ Hints: For example, will you sell your beverage in grocery stores, restaurants, or sports venues? If so, describe the types of resellers and distributors who will sell to resellers and fulfill their orders. If you are attempting to sell direct-to-consumers, such as online via a monthly subscription, how will you manage warehousing / fulfillment / shipping?

    6. Outline at least three (3) types of risks (including any regulatory risks) that your business faces. Describe your company’s plan to mitigate such risk.

        ◦ Hints: You may refer to the types of risk listed in the course text (pp. 148–149) as well as any risks not listed in the text. Regulation weighs more heavily on beverage and food businesses than many other types of companies, so be certain to consider any regulatory risks your type of beverage faces. For example, what kind of regulation and / or risks are you likely to face if you make health claims about your beverage?

    7. Develop a SWOT analysis for your NAB company using the SWOT matrix worksheet in the course text (p. 153 | SWOT: Strengths / Weaknesses / Opportunities / Threats)

        ◦ Hints: What are your company’s likely strengths? Have you chosen a beverage segment that is growing and lacks an entrenched competitor? Are you in a niche market that has great potential? What are the strengths that you and other team members bring to your company? Do you or other team members have previous experience in the food and beverage industry?

        ◦ Hints: What are your company’s likely weaknesses? Is the competition in your industry segment entrenched? Is your own management team inexperienced? Will it be challenging to actually produce your product and maintain quality?

        ◦ Hints: What are your company’s opportunities? Does your segment have more demand than supply? Have larger corporations stopped serving smaller or niche markets that you could enter? Is a new market emerging because of demographics, immigration, changing tastes?

        ◦ Hints: What are your company’s threats? Is there a clear market leader that will be hard and expensive to displace? Are downward-pricing pressures in the segment making profit margins slim? Are there little or no barriers-to-entry for new competitors; if you have a novel idea that succeeds, can the competition easily enter your market? If you have a global aspect to your company, do factors such as currency fluctuations, political instability, offshoring or outsourcing pose threats?

    8. Format your assignment according to these formatting requirements:

        a. Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; references must follow APA or school-specific format. Check with your professor for any additional instructions.

        b. Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required page length.

        c. Cite the resources you have used to complete the exercise. Note: There is no minimum requirement for the number of resources used in the exercise.

The specific course learning outcomes associated with this assignment are:

    • Analyze the role of a company mission, vision, and objectives and the impact to business strategy.

    • Describe strategic planning techniques used to formulate alternative strategies designed to achieve stated business goals.

    • Analyze the external and internal environment for opportunities, threats, strengths, and weaknesses that impact the firm’s competitiveness.

    • Use technology and information resources to research issues in strategic management.

    • Write clearly and concisely about strategic management using proper writing mechanics.

https://youtu.be/O_L0BqPWBLo

FORMAT TO BE FOLLOWED SPECIFICALLY-EACH SECTION OF THE PAPER MUST CONTAIN INFORMATION REQUESTED BELOW.

Title or Topic of Your Paper

Introduction

In this section you will start with a brief discussion of the non-alcoholic beverage (NAB) industry.  You will also you this opportunity to explain its role in the overall beverage industry. Make sure that there is a minimum of three sentences in your paragraph. Also, make sure that the first sentence of each new paragraph is indented a ½ inch. You are to use at least one (1) academic reference in your paper, which will be cited throughout the paper and then included on the reference page. The last sentence should be a transition into the next paragraph.

Company Name

Start this section by stating the name of the company that you have designed.  You will also need to explain the significance of the name, i.e. its importance and why you chose that specific name.  The last sentence should be a transition for the next paragraph. Ensure that your paragraph has a minimum of three to five sentences.

Mission Statement

In this section you are to develop your company’s mission statement and provide a rationale for its components.  For example, Eagle Beverage Company’s mission statement is “Our mission is to build profitable market share through growth in every category in all retail segments.”  A close examination of this mission statement would suggest that the company intends to achieve its mission by focusing on the following components, quality, customer service, and growth.  Therefore, if this were your company’s mission statement you would state it and then explain that the rationale for this mission statement is based on the company’s desire to focus on quality, customer satisfaction, and expanding into various segments of the market.  You should also use the statement of mission template on pages 72-73 of your textbook.  Ensure that your paragraph has a minimum of three sentences. Also, you need to be sure that you have observed the correct grammar and sentence mechanics procedures. The last sentence should be a transition for the next paragraph.

Trend Analysis

Start this paragraph with an introductory sentence that reiterates the importance of trend analysis for any organization. Following the introductory sentence provide a sentence that indicates that you will be describing the trends of your specific non-alcoholic beverage industry.  You will be describing the industry in terms of its size, rate of expansion, its growth rate in relation to the country’s (GDP) gross domestic product, and potential for continued growth (refer to pages 87 and 88 of your text book).  In this section you will also provide three (3) reasons why you have chosen this type of non-alcoholic beverage.  These three (3) reasons should be listed as level two (2) headings as below.

Reason 1

Add content that is a minimum of three to five sentences.

Reason 2

Add content that is a minimum of three to five sentences.

Reason 3

Add content that is a minimum of three to five sentences.

As before, use clear and concise language.  Ensure that the first word of your paragraphs are indented a ½ inch, and that you have a minimum of three to five sentences.

Strategic Position

This section will describe your strategic position or simply put, your intended place in the market.  Start this paragraph with a brief explanation of the importance of strategic position to a company.  There are several strategic positions that are listed in your course textbook on pages 142 and 143.  Choose one and then explain the approach you will use to implement this strategic position in order to distinguish your beverage from other non-alcoholic beverages.  Please ensure that your paragraphs contain a minimum of three to five sentences.

Distribution Channel

Start this section with a brief definition of a distribution channel.  You will then build upon this definition by indicating your company’s distribution channels.  Stated differently, you will be answering the question, “how will your product reach the final customer?”  Be sure to provide a rationale for your chosen distribution channel.

Risks

For this section you are to outline at least three (3) types of risks (including any regulatory risks) that you business might face.  Describe your company’s plan to mitigate such risks.  The textbook has a comprehensive list of possible risks on pages 148 and 149.  You may refer to these risks or others that may not be listed on those pages.  Be sure to cite such risks.

SWOT Analysis

Develop a SWOT analysis for your NAB Company using the SWOT matrix worksheet in the course text on page 153.  Remember that SWOT refers to the company’s strengths, weaknesses, opportunities, and threats.  The company (managers and staff) have control over its strengths and weaknesses, however, that is not so when considering the opportunities and threats.  The latter are considered to be external factors and as such the company (managers and staff) are only able to manipulate them to a certain degree.

Conclusion

The conclusion sums up what you have discussed in your assignment. The first sentence, as with other new paragraph should be indented a ½ inch. Ensure that you use the grammarly.com tool so that you will be able to detect any grammatical or sentence structure issues. Ensure that you justify your arguments or points with properly cited sources throughout the paper. Failure to do that could result in plagiarism. All references cited in the paper MUST be listed on the reference page. Finally, once the paper is submitted for grading it will go through the safeassign tool.  You will be notified immediately of the percentage of matches to other individuals’ work.  The percentage is to be no more than 25%.  Should it be any higher you will then have to review, edit, and re-submit the paper.  I therefore encourage you to start working on your paper early so as to account for the possibility of such circumstances.  However, if you follow this template and also the grading rubric you will be to accomplish this assignment without any difficulties. Remember the page length requirement for this assignment is three (3) to five (5) pages without the cover and reference page NOT 10 pages. Also, adhere to the APA 6th edition requirements.

References

Author’s last name, First initial. (Year of article). Title of the article. Title of the magazine or journal (italicized(. Volume (italicized), issue (not italicized), page # – page # (not italicized).

Reference #2

Reference #3

Reference #4

Reference #5

Pages 87 and 88 of the book

Size and Growth Rate of Your Industry Pay particular attention to the rate at which your industry is expanding; this gives you insight into the opportunities available for your business. How does the growth rate for your industry compare with the growth of the gross domestic product (GDP), which measures the national economy? This comparison will give you an idea of the current health of your industry. For example, if your industry is growing at 2% a year, and the GDP at 5% a year, your industry is losing ground, and opportunities will be few. However, if your industry is growing at 15% a year, while the GDP is at 5%, you are in an industry with far greater potential. If information for your overall industry is difficult to find, you may be able to estimate its approximate size and growth by evaluating the largest companies in your field. Get copies of their annual reports or analyses from stock brokerages and read articles about them in trade and business publications. Image After obtaining these basic facts about your industry, fill in the worksheet on page 88, indicating the industry’s past and projected future growth. Of course, your own company’s development may differ greatly from industry averages — statistics may show that on a national scale, fewer people are dining out, yet your restaurant could be booming. Past and Future Growth of Your Industry Image Image If your business plan’s figures are far out of line with industry averages, you need to explain in your plan how you account for the variation. Industry Maturity Industries don’t remain static; they may change dramatically over time. Generally, the life cycle of an industry comprises four phases: 1) new, 2) expanding, 3) stable, and 4) declining. The last phase, decline, is not inevitable; many long-standing, stable industries show no sign of decline. Industries have distinct attributes in different stages of maturity. Even industries that seem closely related are quite dissimilar based on their development stage. For instance, the soft drink industry is relatively stable, and a few major companies dominate the field. Little room exists for newcomers, and it would be extremely expensive to try to compete. On the other hand, the newer bottled water industry has lots of competition and variation. Image The Industry Maturity Chart on page 90 describes characteristics of industries in the four different stages. Examine the chart and the descriptions of the growth stages, then list the maturity characteristics of your industry and the opportunities and risks they represent on the worksheet on page 89. Maturity Characteristics of Your Industry and Associated Opportunities/Risks Image Image

Pages 142 and 143 of the book

A Strategic Position Defines What You Do One of the great advantages of outlining a strategic position is it gives you a touchstone when making business decisions. Just as a well-written mission statement guides your company’s values and long-term vision, a well-delineated strategic position influences almost every aspect of your business, such as the development of your products or services, marketing, operations, and choice of location. You can differentiate your company from its competitors in many ways. You have probably started a company with a sense of vision or purpose. You may have felt a lack in the market or wanted to pursue a particular passion. The key is to find the strategy that best aligns your strengths and interests to real opportunities in the competitive environment. Your strategic position should be where you find the following coming together: ■ Your strengths and interests ■ Industry trends and developments ■ Market changes and opportunities ■ Competitive changes and opportunities ■ Changes and opportunities brought through new technologies If you’re now in business, you may have already evolved a strategic position, whether or not you realized it. You may have innately understood that you needed to carve out a distinct identity for your business to separate you from the competition and to help focus your activities. Take the example of a flower shop in a large city. Two partners opened their store in a middle-class neighborhood, beginning as just a “bucket shop” — a place where people picked up a dozen flowers on their way home from work or sent a birthday bouquet. Over time, however, their talents and interests led them to start designing floral decorations for high-society events and weddings. While that market was being served by others, demand for high-end florists was growing in their city. Because of their talents, they were able to compete effectively for this business. To reinforce their new position, the two partners changed their operations and marketing. To gain visibility with their target market, they donated floral arrangements to charity benefits, created new brochures, and worked with different, more exotic and expensive flowers. Eventually, only a small percent of their income and profits came from the local neighborhood. As a result, when the nearby supermarket began selling cut flowers, it had little impact on this florist’s business. Instead of pursuing the obvious business strategy — serving their neighborhood — they instead found an opening in the overall competitive market that fit their abilities. They found their strategic position. A Strategic Position Also Defines What You Don’t Do Defining a strategic position is particularly important for new companies that must quickly distinguish themselves from the competition. Since your resources are always limited (especially in younger companies), having a clear strategic position assists you in figuring out how to allocate those resources. As important as helping you determine what to do, a well-defined strategic position is a boon in helping you decide what not to do. This not only saves you a lot of time and money, but also makes you more confident of your business decisions, some of which may not be understood by others. In the case of the florist, for instance, on any given day, a shopper might have walked into their store and not been able to find so much as a dozen roses or daisies. The partners stopped advertising in local media outlets. When their lease was up, they moved to a less-convenient, second-story location, which could hardly be seen from the street. These all seem like foolish moves if you think of this florist as a typical retail flower shop, but they were all decisions consistent with the partners’ strategy: to target the upscale event market. With minimal desire for walk-in traffic, location was less critical, and they had little need to keep flowers on hand. They had carefully chosen their position, which helped them understand what activities were of lower priority. They didn’t try to be all things to all people. Success key terms Business Model Describes what a company does and the structure it puts into place to make money. Examples of business models include designing and manufacturing a product that is sold to other businesses (B2B); or providing access to a software application online and selling it on a subscription basis. Mind Share A relative sense of the awareness level a company has achieved in its target market versus the recognition and awareness of its competition. Minimal Viable Product A product that has been created quickly in order to get it to market as soon as possible. Over time, and based on the experience of actual customers, the product is improved on and refined. Strategic Position Is More than Advertising Don’t be confused: A true strategic position is not the same as an advertising campaign or slogan. Advertising and marketing are means to achieving your strategic position — they help you create the image consistent with your position and get your message to potential customers. Defining a strategic position is about creating a meaningful place for yourself — a position — in the market. How does Coca-Cola differentiate itself from Pepsi? Very little of the difference is based on the qualities of the products or the market segment they are targeting. The two companies may have incorporated some operational differences, but they differentiate themselves primarily on the basis of advertising — not strategic positioning. When Snapple came along, it created a totally different position for itself in the market. Snapple didn’t try to compete head-to-head with Coke and Pepsi; instead, it looked for a different segment of the soft drink market: the non-cola, non-carbonated soft drink. “With the consolidation of department stores, we knew our margins were going to be squeezed. They’re doing a lot of their own products, putting their products in the best display spaces. We knew we had to change our strategic direction.” Kay Koplovitz Chair, Kate Spade If a luxury car company that has sold primarily to older consumers decides to market to younger drivers, it won’t be enough to take the same kind of car they’ve been making and devise a clever advertising campaign. The product itself — in this case a car — has to be redesigned to fit the tastes of their target market. It may have to be smaller, sportier, faster, with more electronic gadgets. Not only will the marketing materials need to be geared toward a younger audience, but the salespeople will have to be trained to learn that the 20-something kid in the rock band T-shirt may not be just killing time with a test drive but may actually be a techie millionaire ready to buy. What Kinds of Strategic Positions Are There? What makes a company different? Is it the nature of its products or services? The quality or cost? The geographic area or type of customers served? Perhaps the company has proprietary products customers can’t find elsewhere. There are many ways to distinguish yourself from your competitors, including: ■ Customer Perception Factors ■ Market Segment ■ Market Share ■ Operational and/or Technological Advantages ■ Proprietary Products, Technology, Abilities, or Relationships ■ Sales Channels ■ Business Model ■ First-Mover Advantage ■ Lean Start-Up ■ Branding Each of these strategic approaches offers opportunities but also poses pitfalls. And they may be related: If you are positioning your company on the basis of low price, you’ll also need operational efficiencies to reduce costs or else you won’t be able to survive against competitors with higher profit margins. Customer Perception Factors This is the “better, faster, cheaper” approach, based on how customers distinguish your company and its products and services from the competition. Some key customer perception factors are below: WHAT SETS YOU APART? Image Concentrating on customer perception factors is the most typical method of attempting to differentiate yourself from the competition. They seem the simplest, most straightforward way to compete. Surprisingly, they may be the most difficult to achieve and maintain. For instance, competing on the basis of price is often perilous. While it is easy — in the short run — to attract customers on the basis of low price, highly price-sensitive customers are the most fickle, quickly tempted away by the next company offering a lower price. Once you appear to be attracting a significant portion of the market, well-funded established competitors can lower prices (even if they have to take a loss) to compete temporarily until you are no longer able to sustain your losses. Other perception factors may be harder to “prove” to the market. You may have to spend a lot of money on marketing and advertising to get customers to realize that you offer additional features, more convenience, or higher quality. Once you do, however, you may be able to build a loyal and committed customer base that appreciates the differences between you and your competition. “You have to understand the consumers’ need. What’s their pain? Why do they need to change? Solve that pain, and then get that message out.” Andrew Anker Venture Capitalist Market Segment This strategy is based on targeting a specific portion of the total market. Some possible ways of segmenting the market are: ■ Geographic location ■ Age, income, interests, family size, and so on, of consumer served (in business-to-consumer companies) ■ Age, size, and/or industry of business served (in business-to-business companies) ■ Customers’ specialized need Deciding to aim at a particular market segment or “niche” offers many competitive advantages, especially for newer or smaller companies. While you trade having a larger total market from which to attract customers, you can more easily (and often less expensively) gain visibility and credibility with a smaller, more focused market. Targeting a small market also gives you the opportunity to develop special expertise and experience, giving you an edge when competing head-to-head with others. For instance, a human resources consultant who specializes in serving hospitals will have a far easier time attracting additional hospitals as clients than a general human resources consultant. The pitfalls in targeting a market segment are that the market size may not be big enough to sustain or grow your company, the target market may already be saturated with specialists, or, once you’ve proven that the target market is big enough and rich enough, larger companies will come in and compete with you. Thinking globally, you may want to target a specific region, perhaps one that is underserved, and in which you can become a market leader. For instance, you may be in a highly competitive environment in the United States, but even though Australia and New Zealand are far smaller markets, there may be far fewer competitors and greater potential to be a market share leader, at far lower cost. Market Share This strategy is based on establishing and commanding such a dominant portion of the total customer base that it becomes difficult for others to compete. The goal is to become the “800-pound gorilla” of a market. It’s almost impossible — and very expensive — to displace entrenched market leaders in established market segments. In the soft drink market, for instance, it’s forbidding to try to compete against Coke and Pepsi. Even well-funded competitors have difficulty gaining a few percentage points of market share. Newcomers in mature markets typically must pursue niche market strategies (or even create new market categories, such as Red Bull did with energy drinks, or VitaminWater did with flavored and fortified water products). But when factors allow new markets to open — as has happened with the Internet or with falling trade barriers that let foreign competitors enter a nation’s market — tremendous opportunities become available. Then, there’s a rush to capture customers’ awareness — or mind share by companies hoping to translate that to market share. In such instances, entrepreneurs try to get their companies, products, or services established before the competition. In technology, there’s typically a particular urgency to gain a “first-mover advantage” (see below).

Pages 148 and 149 of the book

Risk Every business involves risk. Only the most naive and inexperienced entrepreneurs believe their business “just can’t fail.” Use this section to sit down and think through the various risks facing your new endeavor. This task might seem daunting. So why shake your enthusiasm? Because risk assessment helps you prepare for and prevent threats to your success. If, for instance, you identify a major risk as the possibility that a well-funded competitor will enter the market, you will want to take steps to quickly secure key customer contracts or line up significant funding yourself. “When I started out, there were only three broadcast networks, and I thought, that can’t be all. I thought, I’ll start my own network! I have to figure out how to do this. I like being on the edge; I’m a risk taker.” Kay Koplovitz Chair, Kate Spade Evaluating your risks isn’t meant to be an exercise in fear (although if you are intimidated by the risks involved, then perhaps you are not yet ready to start your business). Many entrepreneurs think that if they describe the risks they’re likely to encounter, they’ll scare off potential investors. Quite the contrary is true. For all but the least sophisticated investors, an evaluation of risks shows them you’re willing to take a cool, hard look at the situation facing you, and you understand the scope of the threats to your success. It reassures investors that, because you understand the risks involved, you’re more likely to take steps to counter those threats. What Kinds of Risk? It’s not just a matter of high risk or low risk. It’s also what kinds of risk. Some risks are more tolerable or more important to different investors — and to you. The key types of risk facing companies include: ■ Market Risk: that the market will not respond to your products or services, because either there is no real market need or the market isn’t yet ready. Market risks are very difficult to overcome. ■ Competitive Risk: that the competitive situation will change dramatically, and new competitors will enter the market and/or established competitors will reposition their products or services to more effectively take you on. You should carefully think through how other competitors might respond to your entering the market and not assume that the competitive environment will remain the same. ■ Technology Risk: that the technology or product design and engineering won’t work, or won’t work as well as you envision. This may be critically important to your company’s success, or it may be totally unimportant, depending on the nature of your company, its products/services, customers, and the like. If your business faces substantial technology risks, what is your ability to quickly and effectively improve the technology? “The apparel business is a tough operational business. Manufacturing, shipping, delivering, making sure everything’s on time. There’s a tremendous amount of competition, and things get hot and then get cool.” Kay Koplovitz Chair, Kate Spade ■ Product Risk: that the product won’t materialize, won’t be finished in time, or won’t work as promised. This is very similar to the above, only with nontechnology products or services. ■ Execution Risk: that you won’t be able to effectively manage the roll-out and growth of the company because management isn’t sufficiently capable, the time allowed isn’t adequate, operations aren’t in place, and other reasons. You should be able to demonstrate specific steps you are taking to reduce or eliminate such risks. ■ Capitalization Risk: that you’ve badly underestimated costs or over-estimated income, and you will run out of money. The best way to avoid this risk is to budget realistically and get enough funding so you do not run out of cash prematurely. Look for investors who have the ability and inclination to offer additional funds as your company progresses. ■ Global Risk: that, when doing business internationally, you may encounter unanticipated situations that will interrupt or stop your ability to do business, reach your market, or receive supplies. Image Use the Risk Evaluation worksheets on pages 151–152 to assess the risks your business faces domestically and internationally. Balancing Risks & Opportunities Once you’ve outlined your risks, you may feel overwhelmed. But while there are many risks, there are also substantial rewards — otherwise why are you bothering to start this endeavor? A typical method to illustrate the balance between risks and opportunities is to develop a “SWOT” chart, delineating your company’s strengths, weaknesses, opportunities, and threats (thus “S.W.O.T.”) This is a good exercise for quickly sizing up your company’s position. Image Complete the “SWOT” grid on page 153. Be sure to include both internal and external factors as well as current and potential ones. Preparing the Strategic Position & Risk Assessment Section of Your Business Plan In preparing the Strategic Position segment of your plan, focus on the following: ■ Strategies that align with your strengths, your interests, and the opportunities available ■ The factors that differentiate you from the competition ■ Risks facing your company ■ Your SWOT analysis Image Use the Plan Preparation Form on page 154 to help you develop the Strategic Position & Risk Assessment section of your business plan. Chapter Summary A well-delineated strategic position influences almost every aspect of your business, such as the development of your products or services, marketing, operations, and choice of location. In today’s business environment, it is critical for every company to understand the ways it is meaningfully different from its competitors. Defining your strategic position enables you to more clearly and thoroughly answer the question, “What business are you in?” Answering this question is especially important for new companies. When you find excellent opportunities in the market that fit with your strengths and interests, you can carve out a strategic position to distinguish your company from others. There is no one “correct” strategy, and your strategic position will evolve over time. Honestly assessing your risks enables you to better reduce potential threats to your success. It also reassures potential investors that you have a clear-eyed view of what you’re getting into. Risk Evaluation Image Specify the major risk(s) facing your company in each area, rate the approximate extent of that risk (high-, medium-, or low-risk), and note steps you can take, or have taken, to lessen that risk: Image Globalization: Global Risks Image Specify the major risk(s) facing your company in each area, rate the approximate extent of that risk (high-, medium-, or low-risk), and note steps you can take, or have taken, to lessen that risk: Image

NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO

(The NAB Company Portfolio will have lists of things that the BUS599 students would be able to sort through to conduct a SWOT Analysis and to apply to appropriate sections of the NAB Business Plan. )

Note #1:

This is the compilation of Data, Notes, and Information that have been put together to create a Business Plan for a start-up company in the non-alcoholic beverage industry.

The goal of my business plan is twofold:

    1. To help identify and outline all the issues I will need to address in starting this company.

    2. To present to funders to help raise money to finance this company.

NAB Background:

Melinda Cates has been selling her NAB at County Fairs for the past 7 years for $2 a bottle. She sells an average of 10 Cardboard cartons each weekend a County Fair is open. From her calculations, it takes $.56 to make a bottle of NAB when she calculates all the NAB ingredients and the cost of the bottle and cap. Her rich uncle, Bill, just died and left her a small monetary inheritance. However, since he so enjoyed her home-made NAB, he also left her equipment to start a small NAB business.

Melinda and I have been close, trusted friends for years. She found out that I just earned my MBA from Strayer University, and she asked me to help her get her NAB business up and running.

I have agreed to put together a NAB Business Plan, and I have agreed to be the CEO/President of the company for at least the next five years.

NAB Today:

Parameters for New Company

Here are the parameters in which I must work.

    • The business is a start-up: We are not yet in operation. We already have a “recipe” for a beverage, but we are not yet making sales at any significant level.

    • Product: the only barrier is that it must be a non-alcoholic beverage (NAB). It is up to me to decide upon what type of non-alcoholic beverage I intend to make and market. It can be sold in individual sizes or wholesale.

    • Market size. I will start marketing and selling the NAB in my geographical area within a 100 mile radius from my home address.

    • Business size. I can grow the NAB business to any size in excess of one million dollars in revenue by year two. In other words, this cannot be intended to be a one- or two-person micro-business.

    • I intend to raise money. I will be looking for funding, and I have already started with friends and family money. But at some point I will need funds from outside investors, either angels or venture capitalists, depending on how much I project I need to raise or receive from a group of individual investors on kickstarter.

    • I intend to have employees and develop my own organizational hierarchy.

    • I do not need to raise money for my personal financial support for the first six months. In other words, I do not need to take a salary/draw for myself for six months of projections. I am assuming I can live off my personal savings.

Note #2: The NAB Financial Worksheets will have the value of this equipment and inventory included.

Some of the items we currently own:

Owned Equipment:

Two (2) NAB Mixers (mixes up to 200 gallons each) – $28,500 each (value in current $)

This Beverage Filling machine is combined with rinsing, filling and capping 3 in 1 monobloc machine, imported from Italy. Because it is equipped with constant temperature controlling system, it can be applied to fill hot or cold fruit juice, tea and other beverage into 16 oz bottles. It is suitable for normal temperature filling or hot filling 16 oz. bottles. It is one of the most

advance Filling machine at present .

Two Bottling machi ery (for filling and capping bottles) – $9,600 each (value in current $)

See Auto AccuSnap Capper, below.

Four Vehicles (used panel vans) – $10,000 each (value in current $)

Three Computers (Apple Macintosh) – $1,200 each (value in current $)

Graphic Software – $750 (value in current $)

Leased Equipment:

Labeling machinery – $450/month in current $ Printers – $550/month in current $

Inventory:

Glass Bottles, 16 oz.: 24,000 – $3,000 (value in current $) Metal caps: 24,000 – $300 (value in current $)

Cardboard Cartons (holds 48 bottles): 500 – $500 (value in current $)

NAB-ingredients: enough to make 24,000 bottles – $600 (value in current $)

NOTES on EQUIPMENT

Auto AccuSnap Capper.

Accutek A

to AccuCa

pers

are continuous motion

machines t at replace the

tedious work of manually pressing and/or placing snap caps. Accutek Snap Cappers prevent costly spills by removing human error from this process. This machine can also help prevent repetitious motion injuries and strains to your work force that can result when manually placing snap caps.

Accutek A

to AccuCa

pers

systems are available i three different styles, Belt,

Roller, and Plunger in to offer solutions to a variety of snap cap typ

rder

s.

Milk jugs, dropper inserts, lip balm caps, over caps, “top hat” seals, twist cap with ratcheted rip seal, bar top caps, and a

variety of other cap pplications are all within the capabilities of Accutek Snap Cappers.

Each machine is designed to accommodate a wide variety of container types. A variety of gripper

belt options are available to stabilize differe t types of containers.

The Auto AccuCapper feature a

Accutek c

ntrifugal bowl or cap elevator orientator. With an

automated delivery device the Accutek Snap Capper can reach spee

SnapCap007 Dimensions

s up to 120 CPM.

Height: 4” (238 cm)*

Width: 24” (61 cm)*

Length: 32” (91.4 c )*

Weight

800 lbs. (363 kg)

Speed

Up to 120 CPM**

Cap Siz :

Min: 10mm / Max: 60mm

Electrical:

110 VA 20 Amp (220 available)

Air Requirements:

120 PSI @ 2 CFM

Current Value: $9,600.00 new

Note #3

Personnel:

Myself: I have collected $20,000 from friends and relatives who would like to either have their seed money returned by the end of this calendar year at no interest or by the end of the second year of operation with 5% interest.

Stephen Job: Part Time (20 hrs/week) Computer Expert/Assistant: $10/hr

Melinda Cates: NAB Creator & Master Mixer (owns the patent on the NAB): has $40,000 inheritance

Other colleagues with specific skills and talents:

Ian Glass: retired PepsiCo plant production line foreman. Ian recently retired with 35 years of loyal PepsiCo service in every position from janitor to production line foreman, and he and his wife moved into your neighborhood. He is tickled that you have asked him to help develop a plan to get the NAB Company’s production line going. He said he can help organize and sit on the planning committee as a non-paid member until the NAB company can hire its own Production Line Foreman. He hinted that he retired from PepsiCo with an annual salary of

$55,000, but he says that’s just the starting salary that large companies pay their foremen who are in an apprenticeship program. He doesn’t think the NAB Company will have to pay top dollar for someone who has the willingness to join the NAB company as a start up!

Mary Cates, JD: Melinda’s sister who was a senior executive with the Federal Trade Commission from 2001-2012. She left the FTC after a significant 30 year career with the federal government in which she lead the research and support of numerous federal court findings against companies that violated consumer deception and unfair practices laws. She would enjoy serving on the initial company planning group to make sure her sister’s recipe is successfully shared within the state!

Note #4: Here are some interesting articles I pulled off the internet about other Non-Alcoholic Company issues:

    A. In 2014, The Coca-Cola Company (KO) announced a long-term partnership with Keurig Green Mountain, Inc. (GMCR). The deal will allow people to enjoy ice-cold CocaCola beverages at home with the soon-to-be-released Keurig Cold machine.

http://marketrealist.com/2014/11/strategic-deals-soft-drink-industry/

    B. Soci l pressures forcing change

The carbonated soft drinks (or CSD) category of the soft drink industry has witnessed declining volumes in the past few years. Mainly, this is due to challenging conditions in developed markets and increased health awareness among consumers about the side-effects of sugar and other

ingredie ts present in carbonated drinks.

Soft drink makers are facing severe pressure from civil society groups and governments to

reduce the calories in soft drinks. In the September 2014 Clinton Global Initiative, the three largest US soda companies—The Coca-Cola Company (KO), PepsiCo, Inc. (PEP), and the Dr

Pepper Snapple Gro p, Inc. (DPS)—pledged to reduce the number of sugary drink calories that

Americans consume by 20% over the next decade. To achieve this target, the three big players

plan to expand low-calorie product portfolios, introduce smaller portion containers, and educate consumers about healthier alternatives.

The change in consumer preferences has provided a new opportunity for CSD manufacturers to grow into the still beverages, or the non-carbonated category of the ready-to-drink market.

Ready-to-drink beverages

The non-alcoholic, ready-to-drink (or NARTD) market is projected to grow at a compounded annual growth rate of 5% between 2014 and 2017. A large proportion of this growth will come from emerging economies. Since 2010, NARTD retail value has increased by $135 billion and Euromonitor International estimates this category will grow by more than $200 billion by 2020.

In the first half of 2014, ready-to-drink tea and coffee, sports and energy drinks, and bottled water recorded strong growth. Coca-Cola and PepsiCo have a strong presence across these categories and are investing heavily for further portfolio expansion. Other companies

includin Dr Pepper Snapple and Monster Beverage Corporation (MNST) are also investing in

product development in these categories in an attempt to cater to changing consumer tastes.

This new focus on healthier and nutritious products based on changing consumer preferences and increasing health consciousness will be a key growth driver for the non-alcoholic beverage industry.

The Consumer Staples Select Sector SPDR ETF (XLP) provides an attractive avenue to invest in soft drink companies.

    C. Why growth is sluggish in the non-alcoholic beverage industry

By Sharon Bailey • Nov 20, 2014 12:09 pm EST

Falling demand

The non-alcoholic beverage industry is facing challenges. Carbonated beverage volumes are falling, primarily in developed markets. Beverage Digest indicates a 3% fall in 2013 overall carbonated soft drink (or CSD) volumes in the US, making it the ninth straight year in which demand has declined. Previously, US CSD volumes declined by 1.2% and 1% in 2012 and 2011, respectively.

Key indicator—per capita consumption

The per capita CSD consumption in the US fell to about 675 8-ounce servings per person in 2013, from 701 8-ounce servings in 2012. Reduced consumption reflects the declining volumes and a slower rate of US population growth.

One of t

e reasons f

r the continued decline in soft drink volumes over the past few years

is weak consumer spending, caused by adverse macroeconomic conditions, especially in the

US and urope.

Note #5

Health concerns

Another major reason is the shift in consumer preferences toward healthier products. Carbonated soft drink makers have faced severe criticism from health officials, governments, and communities alike for the ill-effects of high sugar content, artificial sweeteners, and other harmful ingredients in their products, including those in diet soda variants. Consumers are

also more conscious of the health risks associated with soft drinks such as obesity and nutritional deficiencies, especially in youth. As a result, they’re opting for other beverages that are non- carbonated and have fewer calories.

The World Health Organization suggests that sugar should account for only 5% of total energy intake per day. That’s around 25 grams of sugar per day for an adult of normal body mass index. Health officials feel that this percentage should be even lower for a better quality of life. A single soda can contains around 40 grams of sugar.

The soda tax

Mexico, which has the highest rates of obesity in the world, has imposed a 10% tax on sugary beverages to discourage the consumption of these drinks. There is a strong possibility that many other countries will introduce a soda tax to reduce sugar consumption through carbonated drinks.

In the next part of this series, we’ll discuss how soft drink makers including The Coca-Cola Company (KO), PepsiCo, Inc. (PEP), Dr Pepper Snapple Group, Inc. (DPS), and Monster Beverage Corporation (MNST) are sustaining business under such challenging conditions. Coca- Cola and PepsiCo are part of the Consumer Staples Select Sector SPDR ETF (XLP).

    D. Key indicators of the non-alcoholic beverage industry

By Sharon Bailey • Nov 20, 2014 12:09 pm EST

Factors influencing sector growth

The non-alcoholic beverage industry falls under the consumer staples category (XLP), which is non-cyclical in nature compared to the consumer discretionary sector. In this part of the series, we’ll look at the factors that impact the growth of the non-alcoholic beverage industry.

Consumption expenditure

The Bureau of Economic Analysis (or BEA) releases the personal income and outlays monthly reports that indicate changes in individuals’ personal incomes, savings, and expenditures.

US consumption spending accounts for over two-thirds of the country’s gross domestic product (or GDP). The US real personal consumption expenditure for non-durable goods measures

consumer spending on non-durable goods, such as food and beverages, on an inflation-adjusted basis.

Disposable income and consumer confidence

Consumption expenditure depends on disposable income, which is measured as personal income less personal current taxes. People tend to spend more with a rise in their disposable income.

Increase in consumer confidence also increases consumption expenditure. In the US, the Conference Board and the University of Michigan each provide monthly reports on the consumer confidence index, which indicates the degree of optimism about the state of the economy

as reflected in consumer spending and saving activities.

According to market-intelligence firm Euromonitor International, consumer-expenditure growth in emerging markets has surpassed that in developed markets every year since 2000, and is expected to continue doing so.

A favorable trend in consumer spending on non-durable goods is a positive indicator for the non-

alcoholic beverage i ETFs) that invest in

dustry. It’s also good for the performance of exchange-traded funds (or

he consumer staple sector. The Consumer Staples Select Sector SPDR ETF

(XLP) h s holdings in the major soft drink companies like The Coca-Cola Company (KO),

PepsiCo, Inc. (PEP), Dr. Pepper Snapple Group, Inc. (DPS), and Monster Beverage Corporation (MNST).

    E. Understanding the value chain of the soft drink industry

By Sharon Bailey • Nov 20, 2014 12:08 pm EST

Industry Partners

Soft drinks constitute a major part of the US food and beverage industry. Syrup or concentrate producers and bottlers play a vital role in the value chain of the soft drink industry.

Bottling and distribution network

Compan es in the soft drink industry reach the end market in two ways. One way is by selling finished products, made at company-owned bottling facilities, to distributors and retailers.

Another, is by selling beverage concentrates and syrups to authorized bottling partners, who then make the final product by combining the concentrates with still or carbonated water, sweeteners, and other ingredients. The bottlers then package the product in containers and sell these beverages to distributors or directly to retailers.

Also, bo h bottling partners and companies manufacture fountain syrups and sell them to fountain retailers. Fountain retailers include restaurants and convenience stores, which produce beverages for immediate consumption.

Distribution: Third-party products

The extensive reach of The Coca-Cola Com

any (KO) and PepsiCo, Inc. (PEP) allows them to

produce or distribute third-party brands. For instance, Coca-Cola is licensed to produce and distribute certain brands of Dr Pepper Snapple Group, Inc. (DPS) and Monster Beverage Corporation (MNST). PepsiCo sells Lipton and Starbucks brands under partnerships with Unilever and Starbucks, respectively.

Pricing power

Coca-Cola and PepsiCo’s wide distribution network gives them significant pricing power. Carbona ed soft drinks have similar prices due to the intense competition in the industry. Often, soft drink companies extend lower prices under promotional offers. In recent times, such

promotional offers have been used to boost volumes of the carbonated soft drinks. That’s because they’re under pressure due to rising health concerns and competition from healthy substitutes such as tea, energy drinks, and water.

The non-alcoholic beverage industry is part of the consumer staples sector. You can invest in this sector through the Consumer Staples Select Sector SPDR ETF (XLP), which has notable holdings in Coca-Cola and PepsiCo.

    F. A guide to the no -alcoholic beverage industry

By Sharon Bailey • Nov 20, 2014 12:08 pm EST

Industry overview

The non-alcoholic beverage industry broadly includes soft drinks and hot drinks. Soft drinks contain carbonated or non-carbonated water, a sweetener, and a flavor, and hot drinks include coffee and tea. The soft drink category dominates the industry and includes carbonates, juice, bottled water, ready-to-drink tea and coffee, and sports and energy drinks. Soft drinks are sometimes referred to as liquid refreshment beverages (or LRBs). In the US, LRBs lead food and beverage retail sales. In this series, we’ll focus on the soft drink or LRB market.

Dominant carbonates category

The global soft drink market is led by carbonated soft drinks (or CSDs), which had a market size of $337.8 billion in 2013. In the same year, CSDs were followed by bottled water, with a market size of $189.1 billion, and juice, with a market size of $146.2 billion. In a later part of this series,

we’ll discuss why CSDs have been losing popularity, and why sales of other beverages, including juices and ready-to-drink tea, are increasing.

Major companies

The non-alcoholic beverage market is a highly competitive industry that includes two behemoths

—The Coca-Cola Company (KO) and PepsiCo, Inc. (PEP). Collectively, these companies hold about 70% of the US CSD market. Dr Pepper Snapple Group, Inc. (DPS), Monster Beverage Corporation (MNST), and Cott Corporation (COT) are some other key players in the CSD market.

Many international markets are also dominated by Coca-Cola and PepsiCo, but include other companies such as Groupe Danone, Nestle SA, and Suntory Holdings Limited.

Non-alcoholic beverage manufacturers, like Coca-Cola and PepsiCo, are part of the consumer staple sector. You can invest in these companies through the Consumer Staples Select Sector SPDR ETF (XLP).

    G. Statistics and facts on non-alcoholic beverages and soft drinks

The non-alcoholic beverages industry encompasses liquid refreshment beverages (LRB) such as bottled water, carbonated soft drinks, energy drinks, fruit beverages, ready-to-drink coffee and tea, sports beverages and value-added water.

This is a great site to find statistics:

http://www.statista.com/topics/1662/non-alcoholic-beverages-and-soft-drinks-in-the-us/

    H. NY Times Article, February 2015

BEVERAGES – NON-ALCOHOLIC TODAY 5 DAY 1 MONTH 1 YEAR MKT CAP

+0.16% –0.37% +0.67% +20.48% 136.1B

The Beverages – Non-Alcoholic industry group consists of companies engaged in manufacturing non-alcoholic beverages, such as water, fruit drinks, soft drinks, iced coffee and tea, as well as other flavored beverages. The Beverages – Non-Alcoholic industry excludes tea bags and instant coffee manufacturing, fruit juices and concentrates, classified in Food Processing.

Beverages – Non-Alcoholic

Defined by Thomson Reuters

Market

cap.

1-day

%

change

1-month

%

change

YTD

%

change

Low High 52- week

Page: 1 | 2 | Next »

NASDAQ

NASDAQ

NASDAQ

OTC

OTHER OTC

OTC

OTC

OTC

Beverages – Non-Alcoholic

1-day

1-month

YTD

Defined by Thomson Reuters Market cap. % change % change % change Low High 52-week

Puresafe Water Sys… PSWS: OTHER OTC

383.3K

0.00

0.00

0.00

Reed’s, Inc. REED: AMEX

71.1M

0.00

+0.37

–7.95

Uplift Nutrition I… UPNT: OTCBB

555.7K

0.00

–50.00

+28.62

Crystal Rock Holdi… CRVP: AMEX

15.8M

0.00

+1.37

–2.95

Global Future City… FTCY: OTHER OTC

19.1M

0.00

+131.82

+100.00

MOJO Organics Inc MOJO: OTHER OTC

3.4M

0.00

–4.81

0.00

New Leaf Brands In… NLEF: OTHER OTC

505.6K

0.00

–16.67

+36.36

Note #5:

I. History of American Beverage Association

The non-alcoholic beverage industry plays an important role in the U.S. economy. Our industry has a direct economic impact of $141.22 billion, provides more than 233,000 jobs and helps to support hundreds of thousands more that depend, in part, on beverage sales for their livelihoods. Beverage companies and their employees, and the firms and employees indirectly employed by the industry, provide significant tax revenues – more than $14 billion at the state level and $22.7 billion at the federal level – and contribute more than $765 million to charitable causes in

communities across he nation.

The Am rican Beverage Association (ABA) is the trade association that represents America’s

non-alcoholic beverage industry. ABA was founded in 1919 as the American Bottlers of

Carbona ed Beverages, and renamed the National Soft Drink Association in 1966. Today the ABA represents hundreds of beverage producers, distributors, franchise companies and support industries. Together, they bring to market hundreds of brands, flavors and packages, including regular and diet soft drinks, bottled water and water beverages, 100 percent juice and juice drinks, sports drinks, energy drinks and ready-to-drink teas.

ABA provides a neutral forum in which members convene to discuss common issues while maintaining their tradition of spirited competition in the American marketplace. The Association also serves as liaison between the industry, government and the public, and provides a unified voice in legislative and regulatory matters. As the national voice for the non-alcoholic refreshment beverage industry, the American Beverage Association staff of legislative, scientific, technical, regulatory, legal and communications experts effectively represent members’ interests.

J.

In-depth articles on research and development trends, new products and formulation advancements.

1.) Cognitive health appeals to all demographics

Omega- s popular ingredient for brain health

By Jami Popp

An estimated 5.2 million Americans suffer from Alzheimer’s disease, and although the majority are older than 65, younger-onset Alzheimer’s impacted 200,000 people last year, according to the Alzheimer’s Association, Chicago. Furthermore, total payments in 2014 for all individuals with Alzheimer’s disease and other dementias were estimated at $214 billion, the association adds.

Increasingly, attention is being put on brain health and preventative measures such as diet and exercise in line with consumers, particularly baby boomers, expressing concerns about memory loss and dementia. However, ingredients that help consumers maintain their cognitive abilities are emerging to help all age groups to support brain development, focus and more.

“Cognitive health applies to all ages, as newborns and children develop cognition early, [middle-aged people] count on it for their careers, and the older generation strives for maintenance for as long as possible,” says Volker Berl, founder and chief executive officer at Oceans Omega, Montvale, N.J. “Consumers are naturally interested in maximizing intake of the right ingredients to maintain cognition for a lifetime, supporting memory, alertness, attention, mood and focus.”

Many ingredients are associated with cognitive health, but omega-3 DHA has the strongest body of scientific support, according to Berl. But vitamin D; coenzyme Q10; phosphatidylserine; magnesium; resveratrol; pycnogenol; vitamin E; and botanicals such as ashwagandha, ginkgo biloba, vinpocetine, ginseng and curcumin also are considerations, he adds.

ingredie

Oceans Omega offers a range of stable omega-3 ts that are water soluble and clear because of its stabilization technology and

sustainable sources of omega-3s from ingredient partners such as DSM Nutritional Products, Kaiseraugst, Switzerland, and Nutegrity, Irvine, Calif. OTEC 300LDHA delivers life’sDHA from DSM, a fish free, vegetarian and sustainable source of DHA from algae, the company says. OTEC 250CL-K delivers OmegaActiv from Nutegrity, a pure, sustainable, vertically integrated source of omega-3s from menhaden that contains a balanced level of omega-3s DHA, EPA and DPA, according to the company.

Used in clear beverages and liquid nutritionals, OTEC ingredients increase shelf life for finished products at ambient temperatures, the company says. They also are compatible with most beverage processing conditions such as hot fill, cold fill, carbonation and pasteurization, according to the company.

Mental energy

Nutegrity closely follows the advent of brain health and the focus of today’s consumers on products that provide a memory boost or afternoon edge.

“The [brain health] category is interesting to us because of aging baby boomers and challenges from cognitive function, but millennials and their brains are hardwired to go fast, and they are looking for some type of edge,” says Matt Phillips, chief commercial officer at Nutegrity.

The focus is not only on memory and improved cognitive function, but also on general brain health as well as antioxidants and anti-inflammation specific to brain inflammation in relation to diseases, he says.

Nutegrity, a division of Omega Protein Corp., Houston, focuses its primary business in fishing and omega-3s, Phillips says. From a beverage standpoint, milk companies can use omega-3s in their formulations, but the company also produces dairy protein as well as a line of nutraceuticals.

“Most of the work we’re doing is focused on antioxidants and higher concentrations of omega- 3s,” Phillips says. ”At one time, most companies were doing product development and spending time on ingredients, and now they are looking to ingredient suppliers to … come to the table with a turnkey solution.”

Focus formulas and energy drinks openly tout the cognitive benefits of the ingredients to appeal to a wide audience, but the claims have to be backed by scientific evidence or beverages risk being pulled from store shelves. As a result, many companies dedicate considerable time substantiating new and existing claims and discovering ways to use their ingredients based on findings in clinical trials.

Oceans Omega closely follows studies related to adolescents and brain health. For example, to determine the effects of algal DHA supplementation on reading and behavior in healthy school- aged children, researchers conducted the Docosahexaenoic Acid Oxford Learning and Behavior (DOLAB) Trial and reported that supplementation with 600 mg each day with algal DHA for 16 weeks improved reading and behavior in healthy school-aged children, aged 7 to 9 years old, with low reading scores.

“We work on educating the end producer,” says Karen Todd, director of global brand marketing at New York City-based Kyowa Hakko U.S.A. Inc. The company’s Cognizin product features citicoline, which increases cellular synthesis and energy, she says. Ingredients such as Cognizin are associated with boosting brain energy, supporting mitochondrial health, and boosting levels of ATP, according to the company’s research. This ingredient also is associated with increased focus and concentration as well as memory storage and recall.

“We do clinical studies on raw materials [with healthy subjects], and results of that help us identify what levels are appropriate to make claims,” Todd says. “The producer and finished product company do their pre-market test, but they’re looking at the science behind it to support their claims from the start.”

Kyowa Hakko is replicating clinical trials done with millennials, pre-menopausal women and baby boomers with more targeted groups including adolescents and athletes.

Futureceuticals, Momence, Ill., also sees the value of clinical trials and is in the midst of several that involve its ingredients including CoffeeBerry coffee fruit, a line of powders and concentrates of the fruit of the coffee plant, including the bean.

“We consider demographics when we’re choosing outcomes to focus on for our claims,” says Brad Evers, vice president of business development. “In the case of CoffeeBerry coffee fruit extract, we discovered that it has a unique capacity to increase serum levels of brain-derived neurotropic factor (BDNF), which is a key neuro-protein involved in cognition, mood and other key neuro-processes. We chose to focus on cognition and mood, given the enormous public interest in cognitive and mental health at all age levels. Baby boomers frequently cite cognitive health as their No. 1 concern, and younger people are motivated to take action now to help ensure a higher quality of life as they age.”

Major research facilities around the globe are focusing on BDNF, and Futureceuticals has two studies that indicate that coffee fruit stimulates the body to produce BDNF, which is something brewed coffee does not do, according to the company.

“Our research on our coffee fruit products is at the forefront of new discoveries for cognitive health,” Evers says. “CoffeeBerry meets the demand for functional beverage ingredients that are natural and offer a value proposition.”

Focus on claims

Regulations as well as the flavor of the ingredients in their natural state can have an impact on beverages designed to improve memory and focus or reduce the impact of aging on the brain.

“The biggest trend with cognitive ingredients is really attention given to caffeine and energy drinks by the Food and Drug Administration (FDA) and [the decision to] crack down on amounts,” Kyowa Hakko’s Todd says. “Cognizin is a non-stimulant without negative side effects. Energy drinks use Cognizin [as a replacement for caffeine], and many companies are looking to reformulate and include it at the efficacious dose.”

But special treatment is required for cognitive ingredients to be beverage compatible, shelf stable, soluble and taste free. “Antioxidant beverages, focus beverages, and general brain-health and protein beverage ingredients are bitter, and [beverage-makers] have to figure out a way to mask [them],” Nutegrity’s Phillips says. “Another big challenge is solubility, and we’re finding ways through agglomeration or other techniques to make them suspend in a liquid.”

Oceans Omega is able to counteract the instability and protect them from oxidizing with new technologies, but aftertaste still is a challenge.

“Polyunsaturated fatty acids have the propensity to oxidize quickly and develop very repugnant odor and taste offnotes,” Berl says. “Many [omega-3] products still have a fishy or marine aftertaste, and their manufacturing requires an increased complexity in processing and handling these sensitive ingredients in the production processes.”

Certain nutrients also just don’t mix well, according to Russ Hazen, North American premix innovation manager for Fortitech Inc., Schenectady, N.Y.

“Certain iron compounds can have unfavorable effects on product quality and consumer acceptance by increasing the oxidation of polyunsaturated fatty acids,” Hazen says. “On the other hand, inclusion of suitable amounts of antioxidants, like vitamin E, is important to protect polyunsaturated fatty acids from oxidation. In liquid beverages, adverse interactions between calcium and phosphorus can be tricky and can result in unsightly mineral precipitation products under certain conditions”

When bitterness is a factor, masking agents can address this issue as well, according to Kyowa Hakko’s Todd. Futureceuticals, however, will provide its bitter CoffeeBerry products and extracts as-is because the more natural state is preferred by its customers, Evers says.

2.) 2015 New Product Development Outlook Survey-takers report using nearly 12 flavors in 2014 By Jessica Jacobsen

January 12, 2015

If the groundhog’s ability to predict the end of winter held true on an annual basis, it would make planning the last six weeks of winter much easier for many people. Although not as temperamental as the weather, many beverage-makers probably wish they had an ability to see

into the everage market future to predict the latest trends. However, the database of marketplace

analytics, company sales information and more have helped beverage manufacturers gain a deeper insight into what to expect for the coming year.

According to respondents of Beverage Industry’s annual New Product Development Outlook survey, “high protein” and “natural” are most likely to be the latest trends for 2015. Last year, “healthy” was the leader of consumer need/interest in specific product attributes and fell only two spots this year. However, “high protein” made significant strides in this year’s survey,

moving up from the No. 10 spot to the No. 1 spot, with 42 percent of survey-takers listing the product attribute as a latest trend.

One area that saw si nificant contraction was “organic.” With 27 percent of respondents naming

this attribute as a latest trend last year, only 18 percent listed it as such this year, dropping it from No. 3 to No. 8. This year’s survey also saw “low glycemic” (No. 7 last year) and “low fat” (No. 9 last year) drop out of the Top 10, being replaced with “probiotic/prebiotic” (No. 6) and “vitamin, mineral fortified” (No. 10).

Althoug “low glycemic” was not in the Top 10 for latest trends, it still was recognized by many

survey-takers as a high need/interest for consumers. Other attributes also receiving this designation were “beauty enhancing,” “cognitive health,” “country of labeling,” “ethnic,” “Fair Trade,” “low salt,” “indulgent” and “portion controlled.”

Attributes that ranked as having a low need/interest were “bone health” and “relaxation benefits.”

The right flavor mix

With all of the flavors that are out there, beverage-makers are not at a loss for options from which to choose. According to Beverage Industry’s survey, each respondent reported using on average 11.5 flavors in 2014.

When selecting which flavors they wanted to utilize, survey-takers opted for more traditional options in 2014, with orange, vanilla, lemon, strawberry and peach rounding out the Top 5. This is slightly different from last year’s survey in which the top flavors were vanilla, lemon, strawberry, mango and peach. Orange’s usage jumped up eight percentage points this year to 49 percent, compared with last year’s 41 percent. Tied with orange at 49 percent, vanilla’s usage remains fairly consistent with last year’s survey, seeing an increase of one percentage point.

Other flavors that also saw modest growth were lemon (up one percentage point), strawberry (up two percentage points), peach (up one percentage point) and chocolate (up four percentage points). Flavors from last year’s Top 10 that saw contractions in 2014 were mango (down three percentage points), raspberry (down eight percentage points), apple (down four percentage points) and fruit punch (down 17 percentage points).

Making up for some of these drop offs were lime (up seven percentage points), berry (up eight percentage points) and coffee (up six percentage points).

Although orange was the most-used flavor in 2014, it did not come in as the top-selling flavor for the year. Taking the top spot was chocolate at 29 percent. Although chocolate moved up only one spot from No. 2 to No. 1 compared with last year’s survey, its percentage point increase was

15. Taking a hit, however, was strawberry. Last year’s No. 1 top-selling flavor dropped out of the Top 10 as the percentage of respondents listing it as a top-selling flavor dropped from 25 percent to 7 percent.

However, not all flavors saw such a strong drop off in 2014. Vanilla moved up one spot to the No. 2 top-selling flavor after seeing its percent usage increase from 14 percent to 24 percent. Mango also had a positive year, jumping from No. 10 to No. 3. The tropical flavor saw its reported sales status increase from 10 percent to 22 percent.

This year’s survey also saw a handful of new flavors make the Top 10 list. Raspberry, coffee, black tea, orange and peach all made the top-selling flavors in 2014 list, knocking out apple, berry, fruit punch, lime and, as previously mentioned, strawberry.

As beverage-makers prepare for 2015, the top sellers for 2014 are expected to carry over into the next calendar year. Chocolate is listed as the No. 1 anticipated top-selling flavor for 2015, with 29 percent of respondents naming the indulgent variety. This is a strong increase from last year’s survey results in which only 17 percent of respondents listed it as a top-selling flavor. Also making significant gains is coffee, which entered the Top 10 in the No. 2 spot after being left off last year’s list. Making a more modest increase, vanilla’s anticipated selling performance increased one percentage point from 19 to 20 percent to round out the Top 3.

Developing for the masses

As beverage-makers prepare for 2015, many Beverage Industry survey-takers indicated that dairy-ba ed and dairy-alternative drinks will be a category of focus.

Forty-two percent named the category as an area of new product development. This is up from the 35 percent that listed the category last year. Sports and energy drinks declined six percentage points to take the No. 2 position, while coffee and tea declined nine percentage points to round out the Top 3. Seeing double-digit declines in new product development were the water and juice categories, with only 24 percent of respondents listing the categories compared with 41 percent last year.

When it comes to deciding what areas of influence drive the development of new product ideas, more than three-quarters of respondents said they use consumer trends. Sixty-four percent noted customers/customer demand, while 62 percent listed research and development (R&D) departments. Marketing and sales and consumer research/testing filled out the Top 5 with 60 and 58 percent, respectively.

Natural attributes are of interest for many beverage-makers in 2015. Approximately 70 percent of survey-takers stated they will incorporate natural flavors into their new products. Of those respondents, nearly half indicated that this is an increase from last year’s portfolio. Respondents were allowed to leave an open-ended response for their reason for this increase, and many listed cleaner labels and consumer demand as the influences.

Colors usage also shows an affinity for natural sources, with more than two-thirds of respondents planning to use natural colors in their new product development this year. Of those who plan to use natural colors, 43 percent named this as an increase from the previous year. Consumer demand and clean labels also were the Top 2 reasons for this increase.

Team effort

Compared with last year’s survey, this year’s respondents represent the more entrepreneurial side of the business.

For instance, the mean and median of the number of employees for this year’s survey are 201 and 63 employees, respectively. However, last year’s survey-takers reported a mean 1,278 employees and a median of 180 employees.

This team size also affected the number of employees who are working on developing new products. Last year, the survey found a mean of 60 employees and a median of eight employees working on new product development. This year, the teams are much smaller, with the mean and median at 10 and four employees, respectively.

Although the company sizes and new product development teams of respondents are from a smaller base than last year, their outsourcing portions did not differ too much. Twenty-nine percent stated they outsource a portion of their new product development versus the 35 percent that said the same last year. However, the main difference was the areas of new product development that they outsourced.

Sixty-two percent of respondents reported outsourcing prototype development, followed by 46 percent for concept and product testing, and 38 percent for market research. Last year, market research and prototype development tied for first with

46 percent naming those as areas

of outsourcing. Concept and product testing rounded out last year’s Top 3, with 42 percent naming this as an area of new product development.

Holding steady with last year’s numbers, though, was the amount of respondents stating that a team approach is utilized in new product development. Ninety-three percent (the same number as last year) indicated using a team environment. Among those who use a team approach, 81 percent said sales and marketing are involved, while 79 percent listed R&D. This is slight flip from last year’s survey in which 80 percent of respondents named R&D, and 77 percent reported sales and marketing.

Upper management also remains a constant for survey-takers, with 62 percent listing their involvement compared with last year’s 61 percent.

Slightly higher than last year’s survey results, nearly nine out of 10 respondents whose upper management is regularly included on new product development projects have involvement from their chief executive officers. This is up from last year’s more than three-quarters of respondents. This variation could be reflective of the significant difference in the company size mean and medians between the two years.

Fifty-eight percent of survey-takers also indicated supplier involvement in new product development, compared with last year’s 61 percent.

The length of time to develop a new product also saw an uptick in this year’s survey, with mean time from inception to launch equating to 11 months. This is up from last year’s nine months; however, one-third of this year’s respondents noted that this is faster for them than in previous years.

Perhaps reflective of the company size decrease from last year’s survey-takers, the mean number of products developed in 2014 was 24, compared with 40 in 2013. Following suit, the mean number of those released decreased from 17 in 2013 to nine in 2014. The number of successful new product launches also experienced contraction, with the mean equating to five in 2014 versus 11 in 2013.

What the future holds

Looking ahead to 2015, respondents remained optimistic about their new product releases, with more than half indicating that they plan to launch more new products in the market in 2015 versus 2014.

Planning and assessments also will be staples with survey-takers, as 60 percent said they have a defin-itive new product development plan. Post-launch assessment was even higher, with 76 percent having that in place. This is an increase from last year’s results in which 62 percent indicated they had a definitive new product development plan, and 65 percent reported having a post-launch assessment.

Total cost to new product development also experienced some fluctuations between the two surveys. This year’s had a mean and median of $209,080 and $37,500, respectively. Last year’s respondents had a mean of $348,717 and a median of $20,000.

However, when it came to R&D budget comparisons, the numbers were fairly similar, with 44 percent listing an increase in their budget versus 41 percent last year.

Beverage Industry’s New Product Development Outlook survey was conducted by BNP Media’s Market Research Division. The online survey was conducted between Sept. 29 and Oct. 13, 2014, and included a systematic random sample of the domestic circulation of Beverage Industry and its sister publications Dairy Foods and Prepared Foods.

Of the respondents, 44 percent process juice and juice drinks, 40 percent process coffee and tea, 33 percent process dairy-based drinks, 29 percent process sports drinks, 24 percent process water, 22 percent process energy drinks, 18 percent process spirits, 13 percent process carbonated soft drinks, 13 percent process wine, and 9 percent process beer.

Thirty-one percent of respondents were from companies with less than $10 million in annual revenue. Another 31 percent of respondents were from companies with revenue between $10 million and $50 million. A total of 9 percent were from companies in the mid-size range of $50 million to less than $100 million. Thirteen percent were from companies with revenue between

$100 million to less than $500 million. In the $500 million to less than $1 billion range were 9 percent of respondents. Representing the large-size range of more than $1 billion in company revenue were 9 percent of respondents.

Males accounted for 67 percent of the respondents, and the average age equated to 43. For industry experience, 20 percent indicated one to three years; 18 percent reported four to 10 years; 33 percent said 11-20 years; 20 percent listed 21-30 years; and 9 percent had 31-40 years of experience.

Regionally, 33 percent said they currently live in the South, 27 percent indicated the Northeast, 24 percent listed the Midwest, and 16 percent reported living in the Western portion of the United States.

    K. Nielsen identifies consumer health concerns

ABA, brand owners proactive in offering solutions

By Jessica Jacobsen February 16, 2015

Aside from the Valentine’s Day candy and treats on the store shelves, the first quarter of a new year tends to be filled with diet- and exercise-related products to appeal to those consumers who resolved to lose weight or eat healthier in the new year.

For myself, my resolution to lose weight will likely come around mid- to late summer when I get the OK from the doctor to lose my baby weight. However, many other consumers have expressed the need to address their health and weight issues, which could become an opportunity for food and beverage manufacturers.

According to Nielsen’s Global Health & Wellness Survey, nearly half (49 percent) of the global respondents consider themselves overweight. Citing the 2013 Global Burden of Disease Study, the New York-based market research firm says that an estimated 2.1 billion people, or nearly 30 percent of the global population, are overweight or obese. However, Nielsen’s study shows that consumers are willing to take charge of their health and are willing to pay a premium to do so.

Because of the vast number of consumers who are concerned about obesity and other health- related issues, Nielsen suggests that brand owners should better align their offerings with these consumer need states in order to see growth benefits.

“There is a tremendous opportunity for food manufacturers and retailers to lead a healthy movement by providing the products and services that consumers want and need,” said Susan Dunn, executive vice president of global professional services with Nielsen, in a statement. “While diet fads come and go over time, innovative, back-to-basics foods that taste good, are easy to prepare, and provide healthful benefits will have staying power. The first step is knowing where to put your product development efforts.”

In the beverage space, we already are seeing brands and associations addressing this trend. This month’s Special Report article on health and wellness (page 18) details how leading advocacy groups including the American Beverage Association and brand owners such as The Coca-Cola Co., PepsiCo Inc. and Dr Pepper Snapple Group (DPS) have pledged to reduce the number of

calories that each American consumes on a national level by 20 percent by 2025.

Beyond this pledge from non-alcohol industry leaders, the beverage marketplace is seeing more low-calorie brands find a home with consumers as their products expand distribution. In this month’s cover story on Bai Brands LLC (page 24), Chief Executive Officer Ben Weiss details how the company’s national distribution agreement with DPS has allowed the enhanced-water brand to share its Bai5 and newest innovation, Bai Bubbles, with a broader audience that was looking for a healthy beverage solution.

As some consumers search for solutions to their health and wellness needs, it’s great to see so many in the beverage space being proactive in delivering products that address them.

http://www.bevindustry.com/articles/88194-nielsen-identifies-consumer-health-concerns

    L. Other ways to bottle our beverage. (NVE perhaps?) http://www.bevindustry.com/videos?bctid=946203236001

    M. Zico to send fan to Sochi 2014 Winter Olympic Games

Winner will meet gold medal skier Julia Mancuso

November 5, 2013

El Segundo, Calif.-based Zico Beverages LLC’s same-named coconut water brand announced a sweepstakes through which fans can enter to win a trip for them and a friend to attend the Sochi 2014 Winter Olympic Games and meet 2006 Olympic champion Julia Mancuso.

The winner will receive round-trip tickets to Russia, a four-night stay in a hotel overlooking the Black Sea, and tickets to some of the most popular Olympic events including snowboarding, speedskating and alpine skiing. The sweepstakes runs through Nov. 21, and fans can enter at zico.com/sochi2014.

Mancuso, who will compete in alpine skiing at the Winter Olympics, will represent Zico as a brand ambassador.

“Zico has already been an amazing partner hydrating me on and off the slopes,” Mancuso said in a statement. “Now, they’re giving two winners a chance to come to Sochi. How cool is that?”

Chief Executive Officer and Founder of Zico Beverages LLC Mark Rampolla added in a statement: “Zico has always supported athletes at every level by providing them with the naturally replenishing powers of coconut water. We’re honored to be part of the world’s most prestigious sporting event and to be hydrating the top athletes in the world.”

Additionally, from now through the Sochi Winter Games, Mancuso will share her training tips and favorite Zico recipes on the brand’s Facebook page.

Through its relationship with The Coca-Cola Co., Atlanta, Zico is the official coconut water of the Olympic Games.

http://www.bevindustry.com/articles/86916-zico-to-send-fan-to-sochi-2014-winter-olympic- games

    N. Bai Brands disrupts CPG space with low-calorie, all-natural solutions

Enhanced-water brand anticipates strong sales with support from expanded distribution, marketing efforts

By Jessica Jacobsen February 12, 2015

Usually when people think about a disruption, it comes with a negative connotation: the neighbors upstairs who sounds like they have a personal bowling alley, the fire alarm testing in the middle of the workday, or the road construction that takes a major roadway down to one lane. However, in the consumer packaged goods (CPG) space, a disruption can be the catalyst that creates the next iconic brand for a generation.

For Princeton, N.J., based Bai Brands, disruption is part of its DNA. “We innovate to disrupt,” says Ben Weiss, chief executive officer and founder of Bai Brands. “We believe being disruptive in a mature industry like beverages is critical to creating a competitive advantage.”

Bai has been disrupting the marketplace since August 2009 when it launched its Bai and Bai5 beverage lines. Since then, the company has seen its enhanced-water brand post strong year- over-year sales numbers, expanded its product lineups, and taken its distribution to a national level.

Delivering solutions

Emphasizing the widespread concerns related to obesity, diabetes and artificial ingredients, Weiss notes that the ideation behind Bai was to offer a healthy solution to these problems.

“For us, health and wellness is about delivering a truly flavorful experience but doing it in a very responsible way with ingredients that are pure and not artificial, delivering antioxidants as a functionality, and doing without the use of calories and sugar,” he says. “I think we’re doing our part to address an epidemic. The industry overall is looking for that solution.”

With 5 calories in each serving, Bai5 features a sweetener blend of what Weiss calls “smart sweeteners,” namely organic stevia and erythritol, but also offers fresh fruit flavor that is infused with antioxidant-rich coffee fruit.

Coffee fruit, the fruit that grows on the coffee plant and contains the coffee bean, is an attribute that helps Bai5 deliver on its health and wellness promises. The all-natural ingredient had not been widely used in beverages until recently, and the coffee fruit that Bai uses is rich in antioxidants, Weiss notes.

Until recently, this fruit commonly was discarded during the coffee-farming process, he adds. Understanding the antioxidant power within the fruit, Bai saw an opportunity to harness this into an edible commodity.

“Personal health benefits are only part of the mission,” Weiss says. “Eliminating waste wherever possible is the duty of every person on this planet; as is helping your neighbors achieve a better life. When traditional — wasteful — coffee-harvesting methods are used, the discarded fruit ends up in waterways by the coffee plantation. Massive amounts of rotting coffee fruit pollute surrounding streams with a buildup of ochratoxins, aflatoxins and caffeine. By turning this composted material into a consumable product, Bai is keeping the waterways clean and the ecosystem in balance, generating a new revenue stream for local farmers, and blazing the trail for a healthier environment.”

In finding what Weiss calls its “holy grail” with Bai5, the company also made a strategic decision in 2012 when it discontinued production of its mid-calorie product, Bai. Although the mid-calorie product contained some of the company’s strongest-performing flavors, Weiss decided to discontinue the line in order to avoid consumer confusion. “It was really an intent to not confuse our consumer, and it was a belief that what we had at that time [in Bai5] was becoming a bigger part of our portfolio,” he says.

Even though it was a difficult decision to discontinue the mid-calorie offering, the company has not looked back and has posted approximately 300 percent growth each year dating back to 2011, Weiss says.

The Bai5 lineup now features 10 SKUs: Brasilia Blueberry, Malawi Mango, Ipanema Pomegranate, Molokai Coconut, Costa Rica Clementine, Tanzania Lemonade Tea, Sumatra Dragonfruit, Congo Pear, Panama Peach and Limu Lemon. Molokai Coconut and Brasilia Blueberry are the brand’s Top 2 performers, followed by Tanzania Lemonade Tea, which has a more limited distribution model than the other SKUs, Weiss notes. However, the top performers are not runaway leaders, as the difference between the 10 SKUs is in the single digits.

“When you have a portfolio of 10 drinks that has single-digit variance, that says something,” Weiss adds. “Our shopper shops across the lineup.”

Although Weiss believes Bai5 offers the perfect balance between low calories, full flavor and all-natural ingredients in the still beverage market, the company took those same principles and applied them to the sparkling beverage segment.

In late 2014, the company put an effervescent spin on its Bai5 beverages with its new Bai Bubbles line. Originally available in the New York City metropolitan area, Bai Bubbles blends antioxidants from coffee fruit with exotic fruit flavors and natural sweeteners and contains 5 calories and 1 gram of sugar in each 11.5-ounce can. With nationwide distribution planned for early 2015, the new lineup is set to consist of seven flavors — Bolivia Black Cherry, Peru Pineapple, Gimbi Pink Grapefruit, Waikiki Coconut, Jamaica Blood Orange, Indonesia Nashi Pear and Guatemala Guava — each of which pays homage to popular coffee-growing regions.

Weiss notes that the inspiration for launching Bai Bubbles stemmed from his time exploring the market and looking at what consumer need states needed addressing. “I spend a lot of time in the market, and I tend to think like a consumer,” he says. “I just saw a marketplace that was moving away from artificial ingredients, and I knew that we were addressing that market with Bai5, but I didn’t see that solution out there in carbonated.”

Adding that the company is filled with innovators and disruptors to the marketplace, Weiss explains that the idea-to-shelf process for Bai Bubbles took only three months. “When we focus on what we want to do, and it’s the right time to do it, we can get it done pretty quickly,” he says.

Although it still is too early to call out any variety leaders for the sparkling line, Weiss says because of its planned national launch through its distribution network and an agreement with national retailers including Target Corp., Minneapolis, the company is anticipating Bai Bubbles to be a $25 million business in its first year.

With 17 total SKUs between its two lines, Weiss adds that the company still is no stranger to flavor innovations. Although he can’t share any specifics, Weiss notes that the company always is developing new flavors and new innovations.

National news

The announcement of Bai Bubbles wasn’t the only big news Bai was able to share in 2014. The company also signed a distribution agreement with Plano, Texas-based Dr Pepper Snapple Group (DPS). The companies had previously worked together in the two years prior to the agreement, but the new agreement allowed Bai Brands to further capitalize on DPS’ direct-to- store and warehouse delivery capabilities on a national level. New retailers that were added following the agreement included Kroger, Target, Sam’s Club, Walmart, Publix, Stop & Shop, Duane Reade and Safeway, plus more than 100 additional Costco stores throughout the country.

“We have tested the Bai brand in select markets with great success over the last several quarters,” said Jeff Conrad, vice president of market development for DPS, in a statement at the time of its announcement. “There is no question that Bai fits exceedingly well with our portfolio of leading brands, and we expect this new choice to be very well received by consumers from coast to coast.”

Weiss notes that the deal signed with DPS was finalized in late January/early February of 2014, which resulted in Bai Brands missing out on the 2014 planning meetings. However, that aspect didn’t hamper the expanded relationship with the companies.

“We still had this amazing year of growth; still very disciplined,” Weiss says. “It was highlighted by our emerging relationship at the time with Target, which was the first national retailer to really go aggressive with the brand. They’re coming off a great year with Bai, and we started 2015 in a very aggressive way with them as well. But this is where we’re taking all of our learnings, we’re in true scale-up mode, and we’re going to build out our [all-commodity volume] (ACV) across all channels. It’s an exciting year for Bai.”

He adds that to be able to have full national distribution is every beverage company’s goal, and to have that by year five is a feat he is very proud of. “Not many brands can say that,” Weiss says. “I’m very proud of the pace at which we did that now that it’s up and running. DPS will cover close to 70 percent of the country, so there are still distributors that we have engaged to provide full national distribution.

“When you are looking to activate chains, you’re going to need to prove to that chain that you have the ability to get to every one of their stores,” he continues. “If you can’t do that, you’re not going to get much support from that chain. To be able to check that box and say, ‘Yes, we have a route to market [and] we can deliver to every one of your locations, whether you’re Sam’s Club, Costco, Target [or] whomever,’ is critical.”

Because DPS does not cover all regions across the United States, Bai also has agreements with many other distribution networks including Hensley Beverage Co. for Arizona, John Lenore & Co. for the San Diego market, Polar Beverages for the New England area, The Honickman Group in the mid-Atlantic, and Admiral Beverage Corp. for the mountain regions.

Through this expanded distribution network, Bai has learned that the key to reaching this success is all about winning at retail.

“It’s all about developing a relationship with a consumer that’s stronger than any other relationship,” Weiss says. “If you and your consumer are aligned, then everybody else will fall into place, whether it is the retailer and ultimately the distributor.”

Weiss adds that in the competitive beverage market, Bai is able to stand out because of the promises it delivers on health and wellness. “The beverage category is extremely competitive with new brands emerging almost routinely,” he says. “However no one has delivered on consumers’ needs like Bai. In a world increasingly seeking healthier options, Bai provides consumers a variety of beverage options that not only have great flavor but [make] people feel good about drinking. Bai’s ability to uniquely satisfy customer’s desires is reaffirmed in its strong sales growth across all retail channels. Bai’s performance paints a compelling story that has enabled solid increases in distribution.”

Additionally, if a brand is able to be data driven and show through sales reports how it’s performing in the market, the distribution will follow, Weiss explains. Those on-paper numbers were crucial to Bai Brands achieving its distribution success.

“When you look at the numbers, you’d have to be foolish to not stand strong behind the brand, and that’s what’s happening,” he says. “The retailers see Bai’s strong momentum and say, ‘Wow I get it. You’re my salvation to enhanced water, and I’m going to now give you this,’ and then you take that to a distributor and say, ‘We’ve got to deliver,’ [and] it becomes a lot easier.”

The support tool

With so much in place for 2015, the company is expecting more great things to come this year, Weiss says. “You’re going to see the product become ubiquitous in all channels. I truly believe that this is the next iconic beverage in the making, and everyone else is going to get to hopefully share in that opinion this year.”

Beyond the expanded lineup, the increased distribution network and the industry accolades, Bai aspires to have a voice: a voice that addresses the dilemma.

“I founded Bai because I believed that building a great beverage experience would improve people’s lives,” Weiss says. “Over the past five years, I have marveled at the serendipitous timing of this idea and the way our customers have accepted what Bai stands for and responded to the way we go about bringing it into their lives. As a team, we have pushed hard to increase our sales velocity and improve our retail execution while focusing on the ‘big bets’ that will make a difference within the lives of our consumers.”

When it comes to innovation and Bai’s future, Weiss remains optimistic about what is to come. “Bai Bubbles is an example of how our continued innovation can play a very relevant role in providing a breadth of health and wellness with great flavor and unmatched purity to a beverage experience,” he says. “There is no doubt that a cultural shift is happening within the beverage industry. This shift is unprecedented in magnitude and will change the course of beverage for generations to come.

“Bai is at the precipice of this change and, in many ways, is defining the ‘smart-age’ of beverage,” Weiss continues. “What will we make of this moment? How will we engage with an emerging beverage culture, defined not by age or income but by the people determined to change the practices of the businesses that bring beverages into their lives? The answer is simple: We will disrupt. Today the opportunities are greater than ever, and Bai is innovating in an attempt to capture the potential of this moment. By doing so, we are reshaping our company, reshaping our industry, and along the way, finding our voice.”

http://www.bevindustry.com/articles/88184-bai-brands-disrupts-cpg-space-with-low-calorie-all- natural-solutions