As carbonated soft drink sales decline and new taxes on sugary drinks emerge, beverage companies are investing big dollars in the alternative beverage category. Investments in the past year have included bottled water, energy drinks, ready-to-drink teas and coffee, and new emerging categories for health and wellness or functional beverages.
As an example of this, last month Dr. Pepper Snapple Group (NYSE:DPS), announced an agreement with Bai Brands LLC to acquire the premium antioxidant infused beverage company and its entire line for $1.7 billion. Also last month, PepsiCo (NYSE:PEP) made a strategic acquisition of KeVita Inc., a maker of fermented probiotic and kombucha beverages, for an estimated $200 million. Last year, The Coca-Cola Company (NYSE:KO) extended their partnership with the energy drink company, Monster Beverage Company (NASDAQ:MNST) with a $2 billion investment. Looking ahead, Clarkston Consulting sees this trend continuing as large beverage companies make a play to grow their alterative beverage portfolio through acquisition.
Considering the overwhelming consumer trend away from carbonated soft drinks, beverage companies need to look at existing processes and understand how the alternative drink category and changing consumer preferences impact the way they do business.
- Trade Promotion Strategy
- Does your trade promotion strategy appeal to the convenience-driven consumer? Does your sales team leverage an adaptive and responsive customer relationship management process?
- Supply Chain Strategy
- With consumer products eCommerce sales rising 42% in 2015, how effective are your supply chain and distribution models? Do your internal planning processes support integrated customer and consumer business planning and execution?
- Analytics & Insights Strategy
- Are you leveraging your existing investments in data and technology to glean insights into the growing alternative drink category? Particularly if your company is focused on growth through acquisition, are you regularly evaluating how resources are performing, before and after transactions?
Considering how consumer preferences have paved the way for growth in the alternative energy category, beverage companies must assess if their internal processes have evolved to meet the needs of their changing portfolio.
Contributors: Steven Lubel
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DPS to acquire Bai Brands LLC for $1.7 billion, Beverage Industry Magazine
Dr Pepper, Pepsi Snap Up Alternative Beverage Makers, Wall Street Journal,
Coca-Cola CEO Muhtar Kent Stepping Down In 2017, Forbes