Beverage Industry Wrap
The criss cross tangle of relationships that impact marketing strategy can be overwhelming. In addition to the brand, the product, and the customer, the competition, the environment, the government, and cultural issues are all in the room. And we have not even gotten to that guy on the team, and it’s always a guy, that is reading The Art of War for the first time and wanting to talk about somebody’s enemy’s enemy.
In business software we are often heard saying our biggest competitor is the customer just not doing anything. There is a long list of other parties to consider when developing marketing strategies.
As we wrap up our series on the beverage industry, let’s think a bit about the other parties that are influencing how each company goes to market.
Dutch Bros Cool
Dutch Bros: With the wind at their back from their millionaire making IPO (billionaire in one case), their business strategy is centered on growing as fast as possible. Their marketing strategy is retaining the cool factor. And the key metric is job applicants. Now more than ever young people want to work for a company they think is in line with their values. And having grown up in front of their own cameras, they value cool.
Ambassador Starbucks
Starbucks: Wanting to get unstuck from a flat spot in their growth trajectory, Starbucks has put its money on China. Starbucks already knows how to deliver its brand in any corner of the earth, and the customer in China values western brands. The ever rising temperature between China and the west, will be a giant third party to consider. So for Starbucks, marketing is about government relationships. In the US, labor relationships are the big focus, which may in the end also be the government. Not getting kicked out of China and not getting called to testify in the US are pretty good key metrics for Starbucks.
Buying Exclusivity
Coke and Pepsi: Coke and Pepsi spend ten times more on pouring rights agreements than they do on advertising. And they each spend about $4 billion per year on advertising! These agreements, made with everywhere you could possibly want a soft drink, amount to between $20 - $30 per year per potential customer. By the time you show up, one or the other company has bought the exclusive right to sell you a soft drink. Meanwhile, the world is running out of clean water and filling up with plastic. So for Coke and Pepsi, marketing is about negotiating exclusive pouring rights agreements and mixing in some environmental stuff. The wins are tallied on a super secret ledger of exclusive rights deals.
Creating Experiences
Red Bull: Before anyone knew that experiences were a thing, Red Bull was building a brand about experiences. Thirty five years later, 11.5 billion cans of Red Bull are consumed each year by young, energetic, experience thirsty customers. Red Bull has such a strong relationship with this highly desirable demographic that other companies want to be a part of it. The Red Bull Racing team is fully subscribed for sponsors for the 2023 Formula 1 season. Red Bull marketing makes experiences a growth engine. They key measurement is how many other brands pay to be a part of it.
Growing Drinkers
Bud and Coors: With 10,000 beer breweries in the US alone, Bud and Coors have plenty of competition. Reaching customers is complicated by government regulations that differ from state to state and 3,000 independent distributors. And what about wine and craft cocktails? Despite all of this, Bud has 40% of the market and Coors has 20%. It may be simpler to just focus on growing the demand for all beers and continuing to get their share of a growing pie.
It has been a great tour through beverage country. I spend a lot of time there as a customer, but don’t do too much consumer work professionally, so it has been particularly fun for me, refreshing even!
As you may have guessed from some recent posts, next we will dig into sports promotions. Have fun watching Sail GP tonight.