The Consumer Calls And The Beverage Industry Answers, Once Again

In the crowded beverage world, there is always room for new products. I would always tell my customers who would say they don't have the space for a new item, "bottled water was once a 'new item' and now look, you have an entire door of water." 

Some retailers have to wait to see how a brand does before they jump on the bandwagon. But, there are others who will always find a way to make room. Regardless of the space issue, the brand has to have an identifiable trait, something that will make the consumer want to grab it versus their usual preference. Nowadays, the "healthy alternative" is getting more attention and it's impact on the market is changing things.

Look at the bottled water market I mentioned. It was once thought to be a crazy idea that anyone would buy something they could get for free from their taps at home. Well, Pepsi and Coke decided it wasn't crazy, and ventured into the bottled water business with their entries Aquafina and Dasani, respectively. Two of the top selling "purified" waters available. They weren't the first to put it in a bottle, but they were the first to make it mainstream. What happened after that was an economic tidal wave of gross profit that swept across the beverage industry because it was so easy to produce. Year after year saw double digit increases in volume, but, eventually, as most good things do, it slowed, primarily due to immense competition from others who saw how cheap it was to get in on the action. 

But, competition wasn't the only reason for slowing sales; consumers had their fill of bottled water's "healthy offerings". Yes, it is still healthier than any CSD on the market, but people were wanting to take the next step. So, as a result, the industry evolved toward other choices. Natural pure spring water became more popular and brands such as Fiji and Evian increased their stature as a premium, healthy choice. And, the category continued to evolve seeing brands like SmartWater emerge as a viable option. Now, you have choices such as flavored or regular, imported or domestic, still or sparkling and even caffeinated, as in the brand Avitae.

What all this means is the consumer will want more from a category and industry has always answered the challenge. Now, more than ever, consumers are well versed in what it means to live healthy, not only in what they consume, but how the products they consume are made. Could you imagine just twenty years ago asking yourself these questions while at the supermarket; Is it Certified Organic? Are the raw materials sourced in a sustainable manner? What is the environmental impact of the packaging? What is the company's carbon footprint? 

These are exactly what consumers are asking themselves and the industry, once again, is listening. Honest Tea, co-founded in 1998 by Seth Goldman and Barry Nalebuff, has led the charge. Instead of using powders and concentrates found in almost all mass produced teas, Honest Tea makes it's tea the "old fashioned" way (as in 2730 B.C. China), brewing the entire tea leaf. In 2011, the company switched to 100% Fair Trade Certified tea leaves, helping to ensure the workers who pick the tea leaves are properly compensated. Honest Tea has also been named one of the 10 Best Companies On The Planet by The Better World Shopping Guide because of their environmental and social records. In addition, they were named one PlanetGreen.com's Top 7 Green Corporations and recognized by Huffington Post as a Revolutionary Socially Responsible Company. In 2004, all of Honest Tea's products became fully USDA Organic Certified, making them the only tea company to have an entire line of certified bottled and bagged tea. 

In 2011, The Coca-Cola Company acquired Honest Tea, although the brand still functions as an independent operating unit. If a global company such as Coca-Cola recognizes the impact a small company has on an entire category, there must be something to it. And isn't that a good thing? 

Nanny Nanny, Poo Poo

The recent debate over banning sugary drinks in New York City has predictably turned into name-calling on both sides. I was sucked in to this tactic in a recent article in which a reader replied by calling me an idiot and so on. No big deal, I've been called worse, as they say. I always remain civil during debate until the other side fires their salvo, leaving me with no option but to unleash a fierce, fact-based assault. I'm like the Hulk. Don't make me angry. You won't like me when I'm angry. Actually, I have fun at their expense and I enjoy reading their insults. At least their fingers are getting exercise, if nothing else.

NYC has proved to be an intense battle ground over the quintessential right of choice. The choice, being able to purchase a sugary drink in excess of 16 oz, is being taken away by Mayor Bloomberg in a far-reaching, autocratic move based on the notion that government knows best. Bloomberg said last week on CBS This Morning "if government's purpose isn't to improve the health and longevity of its citizens, I don't know what its purpose is." That sentiment, right there, is what has long concerned people that government has lost it's sense of purpose. And that has led to average citizens voicing their opinions on things such as the soda ban, because they fear the slippery slope effect. And, it is those opinions that have brought out the other side, convinced it is in fact the government's role to protect us, cradle to grave.

There have been many comparisons made to the restrictions on the sale and use of tobacco. My rebuttal to that argument is tobacco will harm the user, but some science suggests that it can also harm non-users through second-hand smoke. I don't know all the science about second-hand smoke, but, if smoking is proven to cause cancer, then I don't think it's a good idea to blow your smoke in my child's face. If science has already said is toxic to you, then it could potentially be harmful to others? Irrational, self-proclaimed subject matter experts, however, will get nasty and personal when data disproves or shoots holes in their defense. It's simple; my contention is the act of me drinking soda can not physically harm a child sitting in the same room. It's not the same as cigarettes, so don't go there. For that belief, I have been accused of being fat, lazy, an idiot, a moron, stupid, not caring about fat people and, last but not least, racist.

I was wondering about that last tag until I read a comment by someone about how "poor people" and "low-income" folks are basically forced to purchase large unhealthy drinks such as soda because they can't afford the "more expensive, healthier" drinks. That idea is just one step away from turning the debate on it's ear by claiming a higher percentage of blacks are poorer than whites, therefore, being against a large soda ban makes you likely to be "against" blacks. That is where the debate has shifted, unfortunately.

There are groups that are trying to defeat the soda ban because of it's broad and not very well thought out approach. Mayor Bloomberg has adamantly laid out his case citing his desire to curb the obesity rate, with clear goals laid out over the next 10-20 years. But, merely being passionate about obesity isn't enough to slap a ban on those who aren't obese or for those who exercise restraint when it comes to sugary drinks. The unintended consequences of the ban are merely collateral damage, as they always are, for the feel-gooders in our society who claim to know better than we do about what to put into our bodies. One group, New Yorkers for Beverage Choice, has taken up the fight against the ban. They claim to lay out what the ban will and will not do. They also place an emphasis on moderation, diet and exercise. How about that? Three seemingly forgotten pillars of personal responsibility when it comes to health. Other groups, such as The American Beverage Association (ABA), have also spoken out against the ban. Groups like this will be demonized for having companies such as Coke and Pepsi show their support. What would you expect Coke and Pepsi to do? Apparently, there are those who feel an industry under attack should just sit back and take it. A recent tweet by @MicheleRSimon warned her followers by tweeting "Big Bev astro-turf alert" seeming to infer that Coke and Pepsi's support for New Yorkers for Beverage Choice somehow makes the group a non-organic effort. Michele has an affinity for the use of the term "big" on her blog. That's a code word meant to identify a company as "greedy polluters". You know, big sugar, big tobacco, big oil, big agriculture. Pretty much any big industry that prefers to make a big profit. Michele, who holds a JD, says on her Twitter profile "I am a public health lawyer, writer, and advocate for food justice. My book, Appetite for Profit, exposes food industry marketing and lobbying." Bam! What catches my attention are "advocate", "justice", "profit" and "exposes". That's all I need to hear to understand Michele's position. Call me short-sided, but I just read a book by it's cover. And you know what, I don't have a problem with her. She is using her experiences, education, knowledge and, presumably her money (I don't know for sure), to advance her agenda. I see nothing wrong with that. But, don't demonize corporations for defending their industry. In the spirit of full disclosure, Michele and I are now dating on Twitter.

However, the efforts of groups like New Yorkers for Beverage Choice and the ABA need to go beyond the ban's current theater of operations and fight an urban, house to house assault. We are fighting a much larger scale effort, brought on by those interested in simply penalizing a specific group at the behest of another by using class warfare as part of the debate. I ask the Bloomberg supporters this; Rather than making sure I can't buy a 32oz ice cold soda at a movie, why not focus on making sure the morbidly obese person in front of me gets a little exercise once in a while? Wouldn't that do more to combat obesity? Or, is that too mean of me to ask?

We're Too Stupid, NYC Knows Best

As is the case with most over-regulation, the proposed Soft Drink Size Ban in NYC is far-reaching and not logically thought through. The list of unintended consequences grows as more and more businesses find out how badly they will be affected by the ban.

For consumers, the ban ultimately means the city of New York has the final say on how much soda you can purchase in a single container throughout the city at places such as hot dog carts, theaters, restaurants and stadiums. The law says no more than 16 oz is to be sold per container. So, if you want a 20 oz PET from the Nathan's Hot Dog guy, you have to cross the river to get it. The ban won't affect diet sodas, fruit juices, dairy or alcohol based drinks. Also, it wont affect c-store purchases, for now. But, that could change as the city gets more and more involved in raising us like the irresponsible children we are. Thank God for NYC.

NYC Mayor Bloomberg (photo foxnews.com)

NYC Mayor Michael Bloomberg is quoted as saying he "thinks it's what the public wants the mayor to do." Really, Mr. Mayor? You actually think people are that stupid? Oh, what's that, they are? "Sodas are really unhealthy and I don't see any reason you need to drink 20 ounces of soda." O.k. everyone, that wasn't the mayor, that was John Q Public agreeing with Bloomberg in an interview on Fox NYC. But, for every person in NYC that agrees with these two morons, I can find a thousand more who don't.

This proposed ban is so ridiculous, I would laugh if it didn't have such a great chance at going into effect. Bloomberg's own appointees at the NYC Department of Health are the one's who will vote to move the measure to reality. 

New York is a typical city where pompous zealots in power think they know what's better for you than you do. And they're going to make the decision for you by passing a law. There was once a time when the city installed cross walks to help you get across the street. But then the bureaucrats decided to give the police the power to fine you for not using them. It never ends. Restaurants can't use salt or trans-fat and they have to list the calories on the menu. You can't smoke inside a public building, or outside in a city park. You can't carry a hand gun in the city for self-defense and you get charged an extra fee (tax) on bottles and cans just in case they don't get recycled. With the proposed size ban on soft drinks, say you want to go to the Knicks game and you want to buy the 32 oz souvenir cup for $9.95. They could sell it to you, but would only be allowed to fill it with 16 oz of soda or face a $200 fine. Wasn't there a moron quoted as saying he doesn't see any reason you need 20 oz of soda. Well, here's a reason, you freaking idiot!

Why infringe on my right to drink what I want? It's not soda's fault people are obese. That reminds me of a cliche; If guns kill people, then pencils misspell words, cars drive drunk, and spoons make people fat. Of course, in NYC, that may very well be the case. But, if you really want that 20 oz Mountain Dew, Vito Marsala knows a guy who knows a guy who has a cousin who knows a guy in NJ that sells them out of his trunk for $5. But, fuggedaboutit! You didn't hear from me.

Who To Blame When Your Kid Is Fat

Summer is almost here and parents all around will be bringing their kids to the pediatrician for their yearly physicals before next school year. And your little 11 year old isn't so little anymore. He's 5'0" and weighs 165 pounds.

Source: Newsweek cover July 3, 2000

Last year, he was 140 pounds and the doctor told you back then you need to control his dieting. He also said he needs to get "more" exercise. This was the doctor's way of being nice. He knows your kid doesn't exercise, but he can't say it like that. He tells you to make sure he eats "more" vegetables and less sweets, but, he really knows your kid doesn't eat any vegetables at all, unless you count the lettuce on his two Wendy's burgers.

A few years back, when I pretended to go to college, I did a paper on childhood obesity. I wish my wife would have saved it like she saves all my two kids work, but, it's gone, so I'll have to just wing it from memory. I decided to research childhood obesity because that was right around the time when flunky lawyers started to pursue food and beverage manufacturers claiming they were contributing to an epidemic by creating and selling products which leads to fat kids, which, in turn, leads to fat adults, which in turn, leads to huge medical expenses later in life. This became the "new black" amongst tort lawyers who far exhausted the tobacco settlements and sought another revenue stream. (This is the full disclosure part; I make no bones about it, I think these types of lawyers are scum. At the time of my research, I also happened to work for one of the companies in the cross-hairs, Coca-Cola).

My paper was loaded with all kinds of quotes, statistics, data, parenthetical references, citations and footnotes. I had the usual list of MLA items I needed to include to get a passing grade in English 101. But, there is no need to bore you with something you already know; Fat+Carbohydrates+Calories-Exercise = Fatness. That was easy. I wonder what grade I would have gotten if that was my entire paper?

Beverage companies have been under attack for some while and have evolved as a result. The legal battle was picked up by state boards of education when they became influenced by the tort lobbyists. Soon, they began threatening to end contracts with beverage companies who supply their districts with products in campus vending machines, lunch lines and concession stands. Of course, that would have been huge. They went from a purely defensive posture at first to more of an "o.k., we can do a little better" posture later. And it's the later part that really shows how companies react to societal pressures. Coca-Cola, Pepsi and other beverage companies listened to the negative media, paid attention and worked to beat the tort lawyers rear ends. But not in a court of law, rather in the court of public opinion. They created healthier alternatives with less sugar or no sugar, shrunk package and serving sizes, made easy to read labels identifying calorie info, and, at the same time, pretty much took over the single serve bottled water market to boot. All while still offering their regular brands and continuing to innovate new ones.

You can read how many calories have been cut in school drink choices, something like 80%. Companies had to fight for their right to exist in the important school channel. And they had a lot of help along the way from unlikely sources; their competitors. While it is still entertaining to watch the old school trench warfare in the convenience stores and supermarkets, in this battle, they all wore the same uniform. Among other help were groups like the American Beverage Association www.ameribev.org , which consists of hundreds of companies in the entire beverage industry who employ over a quarter of a million people. A lot of people have a lot at stake.

Click here to watch the ABA's video

The fight isn't over though. There are special taxes being proposed which would do nothing to stop childhood obesity, but it makes a lot of liberal thinkers feel like they are making a difference. Right now, there is some creepy lawyer drawing up the next plan and the beverage companies are hard at work spending tens of millions of dollars a year trying to do the right thing.

None of the lawsuits or proposed legislation will do an ounce of good as long as little fat Johnny sits on the couch playing X-Box, eating Doritos, slamming Cokes and getting zero exercise. And there's a good chance mom and dad are porkers, too. One statistic that stood out during my research is if a kid's parents are obese, then there is a 64% chance the kid will become obese too. If the parents are not obese, the chance is reduced to 16%. And, it's not because of genetics. Kids eat what their parents eat. How many people have a secret snack cupboard for them but a fruit and vegetable cupboard for their kids? How many 300 pound parents make their kids go exercise? The answer is none and none. Speaking of exercise, another focus could also be the fact that P.E. programs have been eliminated in many schools in the past 20 years. Do you think that may have anything to do with keeping our kids physically active?

We have to watch and control what our kids eat. And we have to lead by example. Of course snacks are fine in moderation, but moderation often becomes the norm and parents act surprised when the doctor tells them their kid is fat and is going to have a lifetime of health problems unless they change. But, just because a kid is fat, I shouldn't have my choices affected.

Now, sure, the lawyers will say all they ever wanted was to force the beverage companies to make healthier products, but, we know better. I think it was Ronald Reagan who said it best about politicians, many of whom are lawyers: "The second oldest profession bears a striking resemblance to the first". Well said Ronnie, well said.

This blog is the opinion of the author. None of the companies mentioned here have any affiliation with this blog, nor do they endorse its contents...but they should. Gregg W Shore is a 23 year beverage veteran who writes his blog @DrinkPro, A View of the Beverage Industry, from the Inside Out. Connect on LinkedIn and follow on Twitter @DrinkPro