Aseppak is steadily evolving into one of the premier innovation boutique shops for the food and beverage world by solving three important industry dichotomies:

1. Creating products in a lab is one thing. Successfully launching a product to the public is another.
2. The market demands fast innovation. Investors need optimal and efficient innovation.
3. Consumers want new ingredients. Brands need to catch up while staying compliant.

In such a pursuit, Aseppak has joined forces with St. Croix ABF, a company dedicated to providing aseptic beverage co-packing services to brands who understand what it takes to innovate in today’s market.

The collective of companies has implemented a streamlined process that will pave the road for brands looking to innovate new beverages by the highest food safety standards. Current capabilities include a high acid pilot plant and testing facility and opening for low acid aseptic processing and packaging by first quarter 2021.

In an era where innovation is a requirement to survive, professionals need to develop plans that minimize risk and increase the chances of meeting the desired objectives. For decades, professionals in the product innovation universe have seen tons of value destroyed for the purpose of creating new value.

This is normal in most industries, yet the tech revolution has had an important impact in innovation in general for a variety of reasons. One of them being its ability to innovate with the consumer, in real time through the use of methods and concepts like Minimum Viable Products, open innovation and soft-launches.

Leading food and beverage companies have the opportunity to implement these concepts as well. Part of the answer is mindset, part of the answer is access to technology.

The reason why Aseppak continues to develop resources that will allow companies to prove concepts and validate product hypothesis at different levels: formula optimization, scalability, functionality, safety, flavor and health amongst the most important ones.

Some of these resources include bench top validation, aseptic testing, proof of formula scalability, packaging format exploration and rapid consumer and retailer feedback. There is a true sweet spot to be found in terms of the optimization of innovation projects that allows for more products to be successfully launched in less time.

Source: Aseppak

As the year winds down to a close, we’re taking a look back at some of the best advice beverage experts and entrepreneurs have shared with BevReview readers in 2020.

Using Qualitative Research to Support Your Brand

When change and uncertainty increase, it’s easy to get caught in a spiral of indecision. Dan Read, Beverage Strategy, Innovation, and Design Partner at Root & Branch Global, shared how strategically gathering the right data can give beverage brands the actionable insights they need to move forward faster, with clarity and measurable evidence.

“A well planned and executed study will shine a light on how a proposed proposition is performing against the key dimensions that determine the real-world success of new beverages hoping to break into a market.” -Dan Read, Root and Branch Global

Building Relationships

A common theme emerged when industry leaders shared advice for persisting during uncertain times: creating connections. Relationships and collaboration came up over and over again as essential tools to build a resilient beverage brand.

For Andy Stallone, CEO of SAS Sales and Marketing, it’s about leveraging the connections he’s fostered to gather the information he needs to keep moving forward.

“I know I can call on any of the people in my network, even the ones I compete with directly, and find out what they’re seeing,” says Stallone. “We’ve built relationships and trust, and we help each other out.” -Andy Stallone, CEO, SAS Sales and Marketing

Mike Schneider, CMO of BevNET, notes that open communication is a two-way street where sharing information is just as important as listening.

“Brands and suppliers have the opportunity to talk openly about where they are and what they’re doing during this time,” says Schneider, “It’s not just the scientific and technical information people are looking for right now. We need people to state the basics because they’re shifting, and we all need to know what they are as they change so rapidly.” -Mike Schneider, CMO, BevNET

Practicing Patience

Innovation is an essential part of the beverage industry, but it doesn’t outweigh the importance of strategic, organic growth. Industry veteran, Vanessa Walker, reminded us that taking a long-term view and maintaining sustained focus on a category before creating a new one can benefit consumers and the industry.

“To keep the beverage industry a viable place for great new beverage ideas to grow, we have to stop swiping left and moving on so fast. We need to look for richer stories and trends. We must be realistic about what the journey looks like for most beverage brands and encourage strategy and patience over unreasonable risk and unrealistic speed.” -Vanessa Walker, CPG Executive

Securing Your Supply Chain

At the beginning of the pandemic, many companies realized just how vital and volatile their supply chains are. In the beverage industry, supply chain stability is critical and affected by everything from product perishability to commodity pricing and inventory quality and safety requirements. Steve McCullough, Vice President of Business Development at BevSource, shared how beverage companies can take straightforward steps to secure their supply chains, preparing them for whatever lies ahead.

“An optimized and resilient supply chain can serve as a source of stability during a crisis, becoming a source of competitive advantage that will strengthen your beverage business in the long run.” -Steve McCullough, Vice President of Business Development, BevSource

Embracing E-Commerce

COVID-19 has increased online beverage sales faster than anyone predicted. Before the pandemic, early-stage beverage companies might have built out other channels first, expecting to add an e-commerce strategy later. Delaying online is no longer an option, but as Florent Hacq, Founder of Acwire, shared, getting online doesn’t have to be complicated, especially when you focus on your customer.

“At the end of the day, you want to offer customers different options,” says Hacq. “They may buy directly from your website if you offer specific incentives, or they might want to add your product to their shopping cart when they’re buying other groceries from an e-commerce platform. The idea is to be where the customer is.” -Florent Hacq, Founder, Acwire

Choosing a Mindset for Success

This year brought new challenges to life and business. Janet Johanson, CEO of BevSource, reminded us, it’s not adversity that defines us, but rather how we respond to it. We may not have control over the circumstances, but we can adjust our perspective and approach to stay resilient and proactive even during the most difficult times.

“By choosing the best of the options in front of you and keeping things in perspective, you can turn your short-term losses into gains that will help you build a stronger and more sustainable beverage business.” -Janet Johanson, CEO, BevSource

While 2020 may not have played out how we predicted, this year brought opportunities to learn and come together in new ways. We are thankful for the opportunity to grow with you and look forward to continuing to provide fresh insights, ideas, and inspiration to fuel your beverage journey.

The original article was published in Beverage Industry Blog.

So how do you scale up without losing momentum?

In an industry dominated by giants like Coca-Cola, Starbucks, and now GT’s Kombucha, how can your startup hope to not just survive but thrive in this highly competitive market?

Choose your co-packer wisely

Your startup’s initial deal with your co-packer or the company that handles the packaging of your products is arguably the most important business relationship for scaling up. This business agreement will determine the safety and quality of your product, the protection of your intellectual property, and ultimately, how efficiently your startup can grow.

Indeed, Food Dive’s guide to choosing a co-packer suggests not only ensuring that your co-packer has state-of-the-art facilities and health practices, but also that your agreement has ample room for growth. Make sure that you appropriately limit your co-packer’s access to your brand’s copyrighted formula, and that both parties are mutually agreeable to scaling operations up or down as necessary. The key to choosing the right co-packer and drafting the right agreement is to aim for not just mutual profit but operational flexibility.

Prioritize e-commerce

While traditional business models consider e-commerce or online selling as an ‘alternative’ channel, e-commerce is taking a larger and larger share of the revenue pie. This is particularly true for food and beverage companies who have been largely affected by new health and safety protocols due to the global pandemic. In fact, CNBC reports that while Americans did 3% of their grocery shopping online prior to COVID-19, the new normal saw that number jump to 15% during the peak of the worst economic event of the century. “E-commerce has democratized the opportunity for customers to find brands,” says Elliot Begoun of TIG, a customized accelerator company that helps natural-product brands to scale properly. “They want to know about the companies behind products, and are more active in the purchase process than ever. We advise all the brands we work with to be e-commerce enabled.”

Consider forming an LLC

In a nutshell, a limited liability company (LLC) is generally the most conducive business structure for small businesses looking to scale up. The LLC structure combines the flexibility and quick decision-making powers of sole proprietorship and partnerships with the liability protection of corporations. Not every state allows for LLC formation, but Michigan does, and investors in the beverage industry have already taken advantage of this fact.

Earlier this year, Charter Capital Partners LLC which is a Grand Rapids-based investment bank created Charter’s Papa Fund LLC to fund a craft rum distiller in Florida. Through this special purpose LLC, 18 Michigan investors raised $1.33 million for Papa’s Pillar Rum in less than a year – a feat that would be more challenging for a corporation or a sole proprietorship. Indeed, a guide to forming an LLC in Michigan details how a new company’s articles of organization and operating agreement can be used to determine any special purpose for that new entity. Whether it’s creating an LLC for investments or turning your partnership into an LLC to prepare for scaling, it’s attainable in Michigan. Either way, it’s best to consult with a business law attorney to determine your next best step.

These are just some of the key steps you can take to ensure that your beverage startup can scale efficiently. Find your ideal co-packer, focus on e-commerce, and learn the ins and outs of restructuring your business for growth. Keep these tips in mind and you’ll be on the way to becoming a big player in the beverage industry.

Written by Robert E. Garza

The refreshing and lightly boozy beverages boast only 90 Funkin’ calories, one gram of carbohydrate, and zero grams of sugar. All four flavors bring out the true essence of Florida’s beaches and tropical climate in each 12oz slim can. Funky Buddha’s master brewers included natural flavors synonymous with the Sunshine State like key lime, mango, grapefruit, guava, and blood orange.

Funky Buddha is known for being a trusted and authentic brewery with a pedigree for award-winning liquid using the highest-quality ingredients. When making the Premium Hard Seltzer, Funky Buddha used superior sources of alcohol like cane sugar and blue agave syrup which gets completely fermented during the brewing process. This results in a crisper cleaner taste. These positively funky crafted thirst quenchers are filled with only quality and natural ingredients, making them a true premium hard seltzer.

“When we were making a seltzer, we knew we had to make it funky the way we know how using flavorful quality ingredients, and we had fun creating flavor combinations that went bolder than any other seltzer brand in the market,” said Ryan Sentz, Director of Brewing Operations and Co-Founder of Funky Buddha Brewery. “The flavor profiles of each seltzer resulted in a cooler refreshing experience that we think will appeal to our loyal funky fans and new drinkers once they take their first sip.”

A variety pack of twelve 12oz cans retails for $18.99. Each 12-pack has three cans of each of the four funky flavors.  Funky Buddha Premium Hard Seltzers are now available throughout Florida at retailers such as Publix Grocery Stores, Walmart, Winn Dixie, Whole Foods, Total Wine & Spirits and ABC Fine Wine. Consumers can also enjoy the Funky Buddha Premium Hard Seltzers at the Funky Buddha Brewery Tap Room in Oakland Park, Florida. Plans to expand product availability and the development of additional flavors will be announced in the future.

Source: Funky Buddha

Let’s start at the very beginning. How did the whole story of Weller begin? Who inspired you to launch Weller?

Weller is built on the mission for delivering the positive benefits of functional ingredients through delicious, trusted and ready-when-you-are products that aid consumers in actively pursuing their best lives. In 2017, we launched the brand with our functional and flavorful broad-spectrum CBD Coconut Bites. Our focus was to create a snack with simple, high-quality ingredients that didn’t just taste good but made our consumers feel good too. In 2019, we used those same superior standards to introduce our CBD Sparkling Water line and CBD Drink Mix. Our latest product addition is our first non-CBD product, Sparkling Immunity, which is the only sparkling elderberry product to deliver essential vitamins and minerals with refreshing flavor while providing core, daily immunity support for people on the go.

We were inspired by our immediate community and peers here in Boulder to create Weller. There’s an incredible amount of passion and natural resources to create anything you can dream of in this little town.

Weller is a sparkling water infused with CBD. The line consists of three different flavors. Can you tell us more about each? Which one is your favorite?

Weller’s new Sparkling Immunity line doesn’t have any CBD. It is our first non-CBD product that we offer. When we designed the flavor profiles of each variety, we wanted to create a beverage that’s refreshing and pairs well with elderberry because that is the star of this drink. The secondary fruit flavors of peach, strawberry, and lemon-lime round out the palate with multi-dimensional, crave-able flavors that will pique the interest of existing sparkling water consumers. The simple, all-natural ingredient list offers a core nutrient profile of vitamin C, vitamin D3, zinc, and magnesium for an immune boost in every sip.

John’s favorite is Lemon-Lime, Matt’s is Strawberry.

Besides RTD line, there are CBD Drink Mix and Stick Pack options. Can you tell us more about them? How consumers can choose between RTD and other lines?

Both the CBD Drink Mix and Stick Pack have 10mg Broad Spectrum CBD per serving. The main difference is that the CBD Drink Mix is not pre-portioned for individual use. Just take ¼ teaspoon of the powdered mix and stir it into any liquid. The Stick Pack is convenient and great for those who may need an extra boost of mindfulness. The canisters have 14 sticks in each package.

Compared to our RTD line, the CBD Drink Mix and Stick Packs are ideal for the consumers who are always moving and are interested in a variety of beverages to mix it into included smoothies, coffee, juices, kombuchas, etc.

It seems the CBD trend is here to stay. In your opinion, is there still fully space for new brands? What does it take to be successful in this category?

CBD is absolutely here to stay; however, it will be a reduced field of brands moving forward. There’s a shakeout taking place across the country as SKU assortments decrease, and consumers become loyal to existing brands. As a first-mover in the category, we’ve been able to capture trial, repeat purchase, and overall customer retention at a surprisingly high level.

What is the biggest achievement Weller has reached so far?

Our biggest achievement, as a team, has been adapting and thriving in this evolving market. We’ve taken a very tactical and regional approach to growing our brand. We’ve also achieved the #1 Best Selling CBD Carbonated Brand in SPINS for 2019, and continue to be #1 for 2020, YTD.

2020 is a very hard year for the whole industry. What measures have you taken to decrease the impact of the COVID-19 outbreak?

Weller provided PPE, free meals, and communicated with our audiences about staying home and getting groceries delivered. Weller donated beverages to frontline workers and organizations since the pandemic began. These partners include Community Food Share, Conscious Alliance, Frontline Friends, Metro Caring, North Colorado Medical Center, Saint Joseph Hospital in Denver, UC Health Hospital in Colorado, and Waterfall Beverages.

Did you have any experience before starting a beverage company? What challenges have you faced so far?

(John) I spent 20 years in the beverage business as a first-time entrepreneur out of college, building a national chai brand, Third Street Chai, before chai was widely recognized.  Those years provided the experience needed to avoid the perils and missteps that are very common with beverages. It’s an extremely tough category.

One challenge that we’ve faced is that mainstream retailers are hesitant with selling CBD ingestible. While this is par for the course right now, we have anticipated that the launch of Sparkling Immunity, we will be able to get our foot in the door at new stores. We can sell non-CBD, Immunity line to retailers who have not, or cannot sell those ingredients.

What advice would you have given yourself before you started out in the beverage business?

Building a successful beverage brand is all about the brand, gross margin, and velocities. If one of those is deficient, go back to the drawing board;)

For more information visit Weller’s website.

Launched in 2017, Partake Brewing is a non-alcoholic craft beer brand that focuses on flavor, health, socializing and inclusivity for people who choose not to drink alcohol whether as a need or increasingly as a lifestyle choice. Partake Brewing was founded by Ted Fleming after a diagnosis of Crohn’s Disease led him to give up alcohol. Ted turned to drinking non-alcoholic beer to maintain the connection and interaction that comes with social drinking. He found that variety and taste were missing from current offerings, inspiring him to brew his own. Partake Brewing now brews a variety of craft non-alcoholic beers that consumers love for their exceptional taste and category-leading calorie profiles (10 calories per can). The company has been the recipient of numerous international awards for product quality and innovation including a Gold Medal at the World Beer Awards for Best Non-Alcoholic Beer.

“We are thrilled to be joined on our mission to transform the non-alcoholic beer category by such an accomplished team of investors, board members, and advisors,” said Ted Fleming, Founder and CEO of Partake Brewing. “With their support, guidance, and insights, Partake Brewing is in a fantastic position to expand our category leadership position in North America with our trailblazing products.”

The new funds will accelerate Partake Brewing’s growth specifically in the US market by allowing the brand to secure key hires, grow its distribution and retail network, and build consumer brand awareness to support Partake Brewing’s expanding coverage with retailers such as Total Wine & More and Whole Foods Market.

“We’re on a mission to help entrepreneurs thrive by giving them the capital and resources they need,” said Pat Robinson, Managing Director, CircleUp Growth Partners and Member of the Board for Partake Brewing. “Ted has built an amazing capital-efficient business and we’re excited to partner with him to accelerate growth.”

“Helio, our proprietary technology platform, flagged that Partake excels on taste, variety and nutritionals – the top three purchase criteria in the non-alcoholic beer category,” said Trevor Rechnitz, Partner,

CircleUp Growth Partners. “Partake’s five varieties, 10 calories and 2 grams of carbs per can, and award-winning taste combine to differentiate it from the other emerging players.”

Source: Partake Brewing

While not all consumers will continue to buy online, analysts predict online sales will make up a much more significant portion of grocery sales than previously thought. What does this mean for early-stage beverage companies? There are some essential steps new beverage companies can take to prepare for success online.

Prioritize E-commerce Early 

Beverage entrepreneurs have a lot to think about and can dismiss the importance of incorporating e-commerce in their strategy early-on. They may plan to add channels once they are further along and have established traditional retail sales. According to Florent Hacq, Founder of Acwire, a UK-based consulting agency that helps consumer brands with Amazon and e-commerce, waiting to include an online strategy is a mistake.

“E-commerce has a lot of potential for early-stage beverage brands,“ Hacq says. “You can communicate directly with customers and get data to inform future iterations of your products.”

Elliot Begoun, Founder of TIG, a 1:1 customized accelerator helping natural product brands grow and become nimble, capital-efficient, and resilient, agrees that beverage startups should prioritize being online.

“E-commerce has democratized the opportunity for customers to find brands,” says Begoun. “They want to know about the companies behind products, and are more active in the purchase process than ever. We advise all the brands we work with to be e-commerce enabled.”

One of the biggest factors in determining your beverage’s success online is how quickly you make it a priority in your business planning.

Design for Online  

To win online, your product, packaging, and logistics should match the opportunities and constraints of e-commerce channels. That means designing a product that can be packaged, stored, shipped, and marketed in different ways than those required by traditional retail channels.

“One of the biggest constraints for beverages is their weight,” says Hacq. “While it may be cost-prohibitive to ship individual products, it is possible to design a beverage product and strategy that make sense for e-commerce. It’s all about packsize and multiples. ”

From different pack-sizes and configurations to new formulations like powders or tablets, there are models that work, depending on how and where you want to drive your business.

How you design your network of third-party logistics providers (3PL) also plays a role in your beverage’s ability to succeed online.

“One successful strategy is to move a majority of your freight when it’s the densest,” says Begoun. “If you can geo-target and push your logistics closer to the customer, that will drive down your costs to serve.”

There is no one right way to design a beverage that will sell online, but knowing what additional factors to consider in the planning process will increase your probability of success.

Choose Channels That Fit Your Customer

The online channels you choose should align with your customer’s journey from awareness to consideration and purchase. When asked if a company should choose Amazon or their own e-commerce site, Hacq says both, and maybe more.

“At the end of the day, you want to offer customers different options,” says Hacq. “They may buy directly from your website if you offer specific incentives, or they might want to add your product to their shopping cart when they’re buying other groceries from an e-commerce platform. The idea is to be where the customer is.”

Begoun tells his clients to think about touchpoints on the customer continuum and how their brand can show up at each stage.

“Whether a customer sees your product on retail shelves, on a corporate campus, at an event venue, or when they’re scrolling social media, they should have a similar experience with your brand,” says Begoun.

Finding the right mix of online and offline opportunities means matching your strategy with your customer, product, and brand.

Dig In and Generate Demand

No matter what channels or strategy you choose, you have to work at building demand. Being present online isn’t enough; you are responsible for the content and ad campaigns that drive sales.

“I tell clients that when they first list a product on Amazon, it doesn’t appear high in the search rankings, which is like having your product at the back of the store on the lowest shelf, where nobody can see it,” says Hacq. “Being successful on Amazon requires a real focus on search engine optimization the same way you would do with Google. E-commerce is different that way.”

Part of success online is understanding things like keywords and how to get your product on the first page of search results. Brands also need to invest in content and images to drive conversions.

Driving product trials online is another challenge. “Generally, e-commerce price points are higher because you have to ship more,” says Begoun. “Asking consumers to spend $30-$40 before trying the product can be scary for them.”

Begoun suggests considering a hybrid approach, allowing people to try the product in a yoga studio or other local venue.

The bottom line is that your brand’s online success will depend on the attention and resources you dedicate to optimizing the channels you choose.

Focus and Find Help 

While there is a temptation to try everything, quality and commitment are more important than quantity when it comes to showing up online.

“The most successful brands tend to focus on a few things and do them very well,” says Hacq. “You have to prioritize.”

It’s also important not to go it alone. Begoun brings in e-commerce experts to work with brands as part of his accelerator program.

“Focusing too much on something outside of your wheelhouse can pull you away from being effective at the rest of your business,” says Begoun. “Surround yourself with people who know it and live it.”

Another benefit of working with specialists is the insights they bring from a variety of companies and categories.

There’s never been a better time for beverage brands to dive into the world of e-commerce. While planning is critical, the most crucial step is getting started.

Original article was published in Beverage Industry Blog.

Take Two Barleymilk raises the bar for what plant-based milk can and should bring to the table, adhering to the highest standards when it comes to taste, nutrition, and sustainability. The Barleymilk boasts flavor and performance comparable to dairy milk and is crafted with the highest-quality ingredients. It contains complete protein, fiber, calcium, and good fats, and it has 50% less sugar than other flavored plant-based milks.

Why barley? Barley is an ancient grain and a superfood with countless health benefits. Rejuvenated barley comes from spent grain, the byproduct of the beer brewing process. Billions of pounds of spent grain are produced each year by the global beer industry. Instead of going to waste or being used to feed livestock, this grain can be upcycled into a powerhouse, nutrient-rich plant-based protein: rejuvenated barley. Take Two uses the rejuvenated barley in their Barleymilk, for less waste and a healthier planet.

“Our commitment is to craft the world’s most remarkable plant-based foods made with the highest-quality ingredients, while championing the planet’s resources. Food that tastes amazing and truly nourishes, without the environmental impact,” says Co-Founder & CEO Sarah Pool.

Take Two Barleymilk’s creamy, smooth, and rich finish is perfect for crafting barista-quality beverages, using in savory and sweet recipes, and drinking by the glassful. Says Co-Founder & COO Matt Olsofsky: “We wanted to bring back the joy and nostalgia of drinking a glass of milk. Our Barleymilk does just that.”

Source: Take Two Foods

Prepare Your Vision and Your Formula

You will need to be able to properly articulate the vision for your beverage including who it will serve, how it fits in the market, and what it will look and taste like. Think about the certifications you want for your beverage (e.g. organic, non-GMO, kosher, gluten-free, etc.) and understand your beverage’s requirements in terms of things like preservation method and shelf life. You will need to have a commercial formula that provides the contract manufacturer with the details required to scale, batch, and produce your beverage in a consistent, efficient, and safe manner.

Explore Your Packaging Possibilities

As you know, your packaging is a major opportunity to stand out from the crowd. This is why your packaging strategy is so important to layout before negotiating with a contract manufacture. The type of packaging you select can affect your costs, the number of qualified facilities, and how your product can be shipped and stored. It is crucial to understand the options available for your primary, secondary, and tertiary packaging along with the pros, cons, and costs associated with each. Creating a flexible packaging strategy with a few possible packaging combinations will help you when locating and negotiating with the contract manufacturer.

Think About Minimum Order Quantities

Having accurate market projections will help you understand how much product you’ll need to produce and when. The smallest order you’re allowed to place, or minimum order quantity (MOQ), varies from manufacturer to manufacturer. It’s essential to evaluate not only the MOQs required at each facility but also the ability to warehouse your beverage and the costs associated with that option.

Consider a Wide Range of Manufacturing Options

The more manufacturers you can compare, the more likely you are to find the best match for your beverage. Just as important as gathering the quotes and capabilities from different co-packers is comparing them in a way that helps you see all of your options. Sometimes, a quote that looks high may end up being the best value because of the additional services, options, or flexibility offered. Use the information you have from co-packers to project different scenarios and possibilities for things like logistics, labeling, and storage. You may find that a production path that looks a little different than expected also brings unanticipated advantages.

Evaluate Your Financial Situation

Before entering into negotiations, you must have an accurate picture of your financial model. A complete financial analysis will help you understand what you can afford in terms of co-packing fees and give you a solid starting point for negotiating. Preparing your estimated cost of good sold (COGS) and cash schedule empowers you to communicate confidently and accurately with potential contract manufacturers. A solid financial picture also helps you make smart long-term decisions that will set both you and your contract manufacturer up for long-term, sustainable success.

Prepare Your Plan

Finally, organize all of your information and options and reach out to your selected partners to discuss moving forward. Outline your goals and strategy, be transparent and ready for partnership. Remember, your contract manufacturer is an extension of your business – when you are successful, they are successful, and vice versa.

Armed with the information outlined above, you will be in an excellent place to find your ideal manufacturing solution and start your contract manufacturing relationships successfully. In addition to completing the preparation, remember best practices for successful negotiation. Try to make the first move, know when to be quiet and listen, and to always work towards a compromise instead of giving in to a concession. Happy negotiating!

Editor’s Note: This post was originally published by Adomas Pranevicius, founder of MyDrink Beverages, in 2012 and has been updated to provide more in-depth and accurate information.

Original article was published in Beverage Industry Blog.

Source: depositphotos.com (free to use and share)

Just five or so years ago, beverage startup failure rates were dismal, with as much as 90% of them going belly-up.

Skip forward to 2019: it’s still tough, but a lot better than just half a decade ago. According to research, 56% of small businesses started in 2014 made it past the first five years of operation, after which the failure rate drops significantly.

Small businesses and startups are being founded left and right, but not all of them are created equal. While it’s pretty normal for tech companies to experience a meteoric rise, since things move a lot faster in tech than anywhere else, beverage startups aren’t as lucky.

And it’s more of the same in other industries. We’ve all read about the Theranos scandal, which goes to show that you can’t treat a medical research company like an IT startup. Also, even though Tesla makes some pretty cool cars, the company still needed help from the US government because they couldn’t develop and/or make them fast enough. Does that mean you should give up on your dream of starting your own beverage company?

Not necessarily, but you do need to be more business-savvy than those that came before you. That’s why we’re going to look into why most beverage startups fail, and what you can do to avoid the same fate.

Source: freepik.com (free to use and share)

1. Failing to Do Market Research

Regardless of how passionate you are about your beverage startup and how great of a product you really have, it’s not going to amount to much if you’re adhering to the old “if you build it, they will come” approach.

In order for your business, brand, or product to succeed, you need to know the answers to a number of crucial questions, including:

• Who are my customers?
• Who are my competitors?
• How much can I charge for my beverages?
• What’s my marketing budget?

For example, GT’s Kombucha is probably the biggest success story when it comes to beverage startups, especially in a world dominated by Coca-Cola and Starbucks. How did GT Dave turn kombucha into a business worth over $600 million? Well, for starters, he did his research and realized that more and more people were opting into a healthy lifestyle. What better to offer them than the naturally fermented probiotic drink with zero artificial ingredients? Easy – offer it in a variety of exciting flavors, put it in attractive packaging, and the rest is history.

2. Not Having Enough Cash

This is something that all startups have in common.

A small percentage of them, such as Liquid Death, a brand of canned water aimed at punk rock-oriented consumers (as contradictory as that sounds), are lucky enough to receive almost $2 million in funding from high-profile angel investors. Others have to make do with bootstrapping or borrowing money from friends and acquaintances, which is something that GT Dave also did by borrowing $10,000 from his mother.

But, whereas IT startups have a product that can be distributed through digital means and easily scaled, beverages are actual physical products that you need to produce, package, and distribute to your customers, which requires a lot more funds. Even if you do have enough cash to start with, you’re going to need more of it if you decide to expand.

Getting a loan from the bank can be a lengthy process with slim chances of your startup getting approved, which is why you may want to look into financing from non-traditional lenders . Maintaining stable cash flow is essential in order to stay afloat.

3. Not Exploring Alternative Routes to the Market

Best case scenario: your drinks end up on the shelves of some of the biggest retailers. However, because the competition is so stiff, and because consumers tend to stick with already established brands, even if you manage to get your beverages there, they will pull it from the shelves if it doesn’t meet expectations. What many beverage startups fail to realize is that stores and supermarkets are not the only way to their target consumers.

For instance, 67% of millennials and 56% of Gen Xers prefer online shopping over traditional brick-and-mortar stores. You may also want to look into your local scene and partner up with bars, clubs, and restaurants, gyms, or even music and sports events, depending on what kind of beverage you’re making.

Even though it’s not a beverage, Gringo Bandito hot sauce is still an excellent example. Created by Dexter Holland, who is best known for being the lead singer and rhythm guitarist for the legendary punk rock band The Offspring, Gringo Bandito served as the official hot sauce for annual Sabroso Craft Beer & Taco Festival – even though it was being sold at over 5,000 stores nationwide.

4. Not Investing Enough into Branding and Design

Although many beverage startups fail because of poorly thought-out marketing, all of them still realize the importance of marketing in the first place. But an even bigger problem than bad marketing is bad branding and design. You’ll come across numerous beverage startups lumping all of their funds into perfecting their product and promoting it to the masses but spending only a fraction of that cash to come up with a strong visual identity for their beverage brand.

If potential customers happen to come across your drink on the shelf, they’ll quickly form their initial impression of it by looking at the visuals and the packaging. They don’t see how much effort you’ve put in creating it, but they will be able to see if you’ve treated the design of your product as an afterthought.

Spending more on design is never a bad idea, and not just when it comes to product packaging, but also your website and social media accounts. All of them should feature the same visual identity.

5. Poor Management

All startup owners are required to wear multiple hats, which means they need to be equally adept at managing finances, marketing, production, distribution, and hiring. Unfortunately, this is not always the case, even if they have a capable team to help them shoulder some of the burden. If you fail to expand your skill set and learn new things or at least accept help and constructive criticism from team members who are more qualified, your startup may end stagnating or going out of business.

Being able to delegate responsibilities to other members of your team, to plan and organize things, constantly research the market, and save yourself from burnout is just as vital as knowing your product inside and out.

Final Word

Even though the business climate is more favorable for beverage startups than it was just five years ago, getting one off the ground and making it past the first five years is still very difficult. So, in addition to avoiding all of the don’ts above, you will also need to work hard and toughen up. There will be plenty of challenges waiting for you on your road toward success, but with determination and strategy, you’ll be able to overcome them all. Good luck!