Dive Brief:
- Coca-Cola's experiences with the products and management involved in its Venturing and Emerging Brands (VEB) segment demonstrate the learning opportunities smaller brands offer major manufacturers.
- When Coca-Cola launched VEB in 2007, it and the rest of the soda industry were facing widespread concerns about products' high sugar content. Since, Coca-Cola has acquired brands in a variety of growing, on-trend categories, such as Honest Tea, Suja Juice, Zico coconut water, and Fairlife milk.
- Seth Goldman, co-founder of Honest Tea, said during a panel discussion at Natural Products Expo West, "When we did the deal, Muhtar Kent, the CEO of Coke, said, 'At the end of the deal, if Honest Tea becomes more like Coca-Cola and we don’t become more like Honest Tea, then we failed.'"
Dive Insight:
Coca-Cola's strategy and experiences mirror what other major manufacturers could expect from the impact of their smaller brand acquisitions besides additional sales. Sales from these acquisitions are remain critical, especially when they offset other struggling products or categories in the company's portfolio.
But smaller companies can offer major manufacturers transformative lessons on innovation, agility in adaptation to trends, speed of product to market, and entrepreneurial spirit. Larger companies also have the potential to participate in major industry shifts, such as natural ingredients, non-GMO, and gluten-free, by providing smaller brands the resources and business support they need to become larger players themselves and effect changes in the market.