In today’s environment, many entrepreneurs are looking to invent the next big thing. The same is true at Coca-Cola, where the Venturing & Emerging Brands unit, or VEB, focuses on a huge goal: developing the next series of $1 billion brands for the company. In a recent exclusive interview, Jay Block CEO of the Small Business Journal spoke to Scott Uzzell, president and general manager of VEB, about the goals of his organization and how his people work with entrepreneurs from outside the company.
Q: How do you measure the success of a potential partner?
A: There are many variables that go into our assessment. In general, there are four main stages that we look at. Without going into the intricate details, suffice it to say there are thousands of brands that get into stage one. However, 98 percent of brands don’t make it into stage two, which leaves only a couple hundred to analyze.
The most important issue, which really is the seed for any company’s success, is understanding the real needs of consumers. Many companies are so eager to expand into new markets and multiple channels without first getting a crystal-clear understanding of the consumer. When companies come to Coca-Cola to build a partnership, they are already bringing in $20 million to $50 million in revenue. The ones that we take interest in are the ones that spent the time, money and effort getting to know and understand their target audience.
If your product needs moms and kids, get to know the mothers and children of the city you are selling in and make sure your product fits exactly what they need. Instead of trying to push your product into the big chain stores, nail 15 local markets and get consumers excited about your product.
Q: How important is patience?
A: It’s a critical component of our work. Venture capitalists have come to me and said, “Scott, if I had the big Coca-Cola trucks going around with my brand on the truck, I would be an instant success.” The reality is, a world-class distribution system is not what establishes a brand. The big trucks come after you’ve established the brand.
Seth Goldman, who founded the brand Honest Tea in 1998, is a perfect example. In 2008, Honest Tea first took in an investment from Coca-Cola. Prior to that, Honest Tea was a strong, winning brand within a fairly limited footprint.
After Coca-Cola stepped in, Honest Tea’s distribution was expanded to Wendy’s, Chick-fil-A, CVS and other mainstream outlets. After they joined with Coca-Cola through VEB and spent several years with that great team, they moved into Coca-Cola North America’s water, tea and coffee portfolio. And that’s a good thing, because it meant the Honest brand was large and stable enough to sit within a larger portfolio of brands, and that the broader organization has a shared ownership stake in the success of our brand and mission.
And all this growth happened because of the DNA they planted at Honest.
There was a long-term plan from the beginning with Honest and Coca-Cola: lots of conversations and slow-but-steady change to match the growth of the brand and the capabilities it needed to succeed. Building a brand is like planting a garden. You need to water it, nourish it and wait. If you immediately throw all the seeds everywhere, it won’t work.
Q: What is the role of emotion in building a brand?
A: You need to have the discipline to let your brand take roots before moving into bigger markets. Many times, people approach Coca-Cola and they want to utilize everything we have, but they’re not big enough yet.
In many cases, more is less. The most desirable products we look for are those that are not hot today but will be hot in a few years. The reason we have become beverage leaders is because we work with our clients to help them look down the road and plan ahead.
A great demonstration of this is a company called ZICO, which we acquired in November of 2013. When Coca-Cola made an investment in ZICO, it was because we saw it a burgeoning, premium coconut-water brand with the potential to be a significant leader in a high-growth category.
The coconut-water category had seen impressive sales growth since its inception, nearly doubling in revenue every year since 2004. In the period since Coca-Cola’s initial investment in ZICO, the brand has expanded its distribution footprint from six markets to a national presence, adding such influential customers as Kroger, Target and Walmart.
ZICO was started by Mark Rampolla, and he ran the company from his garage and sold his product out of a rented truck. The brilliance of coconut water was no one knew about it. Rather than attempting to blast their message on social media all over the world, ZICO created almost an exclusive group that enjoyed natural hydration. Their customers bought into the fact that they had a product no one else knew about. It created an emotional brand.
When people feel an emotional attachment to a brand, it builds a tremendous foundation. Today, everyone knows about coconut water, but the fuel for the fire was keeping it under wraps.
Many startup companies also spend too much money on big ads and lose focus on creating that emotional element for their brand. Make it unique, make it special so your consumers are emotionally invested in your brand. In most cases, and in branding especially, less is more.