Mary-Ann Somers on Coca-Cola’s New Ventures
What happens when a 125 year old $35BB company wants to get entrepreneurial? When the company is Coca-Cola, it starts a new business unit, Venturing and Emerging Brands whose mission is to discover “the next big thing.” It’s the force behind the company’s recent acquisitions of Honest Tea and a new product at Whole Foods, Cascal an all natural fermented soda.
Here to brief us on the group’s efforts is Mary-Ann Somers, VP, Strategic & Operational Marketing, who’s been a dear friend of mine for many years. Prior to Coke, Mary-Ann held various leadership positions at Colgate-Palmolive, Unilever, Merck and General Mills, as well as being a founding member of an internet health and wellness start-up, so she contributes a unique perspective to her role as an intrapreneur.
In this behind-the-scenes interview, Mary-Ann tells us about:
- why Coke prefers to take positions with brands that are narrow and deep (vs. wide and broad)
- how her team works with user-entrepreneurs
- what “boom-splat” means (!!)
- Justin Mccarthy on Crossing the Chasm at Garmin
- Tiffany Vandemark on Chobani Fit
- John Costello on Behind the Scenes at Dunkin’ Donuts
Denise: Welcome, today’s interview is about what happens when a 125 year-old, 35 billion dollar company gets on entrepreneurial. My guest is Mary Ann Somers, vice president with Coca Cola, in the companies venturing and emerging brands business unit. Mary Ann is responsible for developing the “next big thing” by defining the consumer sweet spots, integrating with the entrepreneurial community, identifying overseas brands with US potential, and building new internal brands from scratch. Now I want to let Mary Ann tell you more about the specific work she’s doing, so let’s get right to it. Welcome Mary Ann.
Mary Ann: Hi Denise, thanks for having me.
Denise: I’m so excited to have you share about what you’re doing. So please tell us more about the charter for the group and some of your recent successes.
Mary Ann: Sure. Overall we’re really looking to build brands with billion dollar potential. Obviously we are a global company with big brands and we’re looking to see in the small space what’s starting out and what has the ability and potential to grow into something larger and mainstream for a scaled business. What we do is we have two strategies against that mission and one of them is investment and one of them is internal innovation. On the investments side of it, what we do is we look at white spaces that we’re interested in and we look at entrepreneurs who are launching products and building brands in those white spaces. The group is about 5 years old and one of the early things that we did was that we acquired the Fuse and Nose brands, and those brands we acquired and integrated into the system and they’ve hit their goals and have done very well and have been an important part of our overall portfolio at Coke, so that’s been a great thing. And then we also made some minority investments over time, over the last 3 years. About 2007 we invested in Honest Tea and we had a minority stake in that. We had a path to ownership and we did acquire the brand last year. That’s been one that’s been a really rewarding investment. Also, we have invested in Zico Coconut Water, we have a minority stake in Zico with a path to ownership in that brand as well. With things like Honest, it’s doing really well. It’s growing 40% in supermarkets, we’ve brought it into the system, it’s nationally distributed. So that’s something that’s very important to us as a brand and as a company to get into the organics and all natural space and Ziko, this segment is just growing so rapidly over all coconut water.
Mary Ann: It’s growing by more than double, and the Zico brand itself has tripled in the last few years, and is really on par when we look at it from a size stand point. It’s about the same size, just a little bit smaller than vitamin water was at the same point in time, so we’re really optimistic about what Zico can do in the future.
Denise: Right, right. Now what about the internal innovation part?
Mary Ann: Yeah, yeah exactly. That’s the part I realize I was talking about investment, not getting to the internal innovation. There’s three brands that we’re focused on there. The first one is joint venture with the Illy Company, and so we have a ready to drink coffee called Illy Issimo and what we did is we launched that in New York and California and seeded the brand there and built it out and it’s been doing very well. It’s also been in the natural channel in places like Whole Foods, where it’s turning exceptionally well. People are looking for something genuine, high-quality coffee that is on the go, so that’s going pretty well.
Then the other two that we’re doing, we’re incubating. We developed two brands with Whole Foods, getting their input along the way. One is a natural soda called Cascal, where we use a fermentation process to bring out complex flavors and that’s a product where other than the fruit juice in it, we don’t add any extra sugar in the product itself, or even in the fermentation process itself. We have a bunch of different flavors and that’s in Whole Foods across the country. The third one is we’ve imported our brand Sokenbicha, which is one of our leading teas from Japan, and it’s a lightly brewed tea with natural botanicals in it. It has zero calories, no sweetener in it, so it’s got the purity and the drinkability of water, but the goodness of teas and botanicals. Actually Sokenbicha, the name itself means healthy, refreshing tea. So we’ve brought that out and we’re incubating that in the Whole Foods as well.
Denise: Wow, so you’ve got a lot going on there.
Mary Ann: We do. I have to say it’s one of the most fun jobs I’ve had. I’ve had a lot of different jobs at different companies, and the range of what we’re doing is really exciting. So to be able to work externally with entrepreneurs who are out in the market place building these brands up and to also be living that life as entrepreneurs in developing brands from the ground up both from a conceptual standpoint, to a route to market, to an activate is really fun. It’s just something different than I’ve ever done before.
Denise: Wow, wow. Well I want to ask you about some of the things that you mentioned. One of them is, you talked about existing brands that you are making investments in and I noticed when I was looking at the criteria that you use for determining whether you want to invest in a brand and to include in your portfolio, one of the criteria is an authentic brand story. So I wonder if you could tell me, how do you determine this, why is this important and maybe if you have an example of how you viewed one of the brands that has met this criteria?
Mary Ann: I’m glad you picked up on that because it’s such an important thing. There’s so much talk these days about authenticity and transparency and all these kinds of things, but what does it really mean to us. There’s kind of two parts to it, one is quantitative and one is qualitative, both equally important. When we look at it, one of the key things, for external brands in particular is the entrepreneur, him or herself. So many times we find that brands that are really successful are brands that were created for the founders needs. So you have a need and you find that there’s not a product out there that’s filling it. So you kind of go to yourself, well what can I do? You can create the product and fulfill that need yourself. An example of that would be Seth Goldman who started Honest Tea, he did not like really high sugar drinks. He’s a runner and he’d come back from his runs and he’d want something more than water and he didn’t want a lot of sugar and he just found that there wasn’t a product that served his needs or what he wanted. So he started creating it out of his own kitchen, and brewing a tea that was just a tad sweet, and that was something that he wanted. We find that a lot of times, they’re called user entrepreneurs, where they’re creating something for themselves and their family and they’re living that. So it’s not like they need to go out and do focus groups because they are the focus group.
Denise: That’s right.
Mary Ann: So that’s a big part of it. And then through that, they’re also developing an overall mission. It’s to bring this product to the marketplace for a specific reason. In Seth’s case, what happened is as he got into it, he’s personally very committed and lives a very sustainable live, so he started really integrating that into his business, and that became the mission of his business, to be socially responsible and sustainable. Over time he’s been able to transition all his products to USDA certified organic and also Fair Trade. So those were the things that were very important to him and you see that kind of mission driven business through the entrepreneurs. When we think of authentic brand stories, that’s the entrepreneur really living the brand, and bringing the brand to life. So that’s a big part of the overall softer side that we’re looking at, but importantly it’s how the brand itself is growing.
If you think about it, a brand could try to go very broad and shallow or narrow and deep, and our preference is always the narrow and deep. Because that really reflects a more authentic brand and a more sustainable brand. We look at brands that have started in a specific region, have gotten distribution in that region or city or area, and built a deep, committed, involved consumer group. If you will, advocates or super fans or whatever you want to call them, but really connected with a group of people in some way that is emotionally about the brand, as well as what the brand has to offer from a product standpoint. If we see that brand has connected in there and they’ve gotten into certain kinds of classes of trade or retail channels to help build that brand, that helps create the story as well.
If you think about an example that would be Zico Coconut Water where they went into New York and California and one of the first things they did is went to yoga studios, because it was really a need for doing hot yoga, getting dehydrated and selling the product in those outlets. They created a really deep and committed, highly involved consumer group. Then as they showed success and they were in retail environments where the products turning and doing well, then you can say okay that’s deep and narrow and that’s scalable, I can see how I can expand that to other cities and it would work. So that’s something that’s really important to us. We think about proof of concept, have you shown that these are really good high-quality sales. Where you’re not going to broad from a retail standpoint and too broad from a consumer standpoint, where you haven’t really connected to people. We talk about this phenomenon called boom splat, you know, getting distribution is not really an issue for Coca Cola. Arguably it’s distribution system is out there.
Mary Ann: We can get products on the shelf. They can get out there, but are they going to turn, are they connected deeply, do we have a brand that means something to people. So you can go boom, splat, you can get the distribution, but if you don’t have the pull and the authenticity with consumers, you just fall on your face. So really, our goal when you think about it is to get those brands and to invest in those kinds of brands that have high quality sales, have deep connects. And they can be small; they can be very limited in where they’re offered because expanding them is the easy part. The harder part is really just finding a brand that means something to people and in order to do that that authentic brand story is such an important part of that. Does that make sense?
Denise: Yes, absolutely. But I think that maybe one of the risks of you taking on a brand like that, that has this very committed following and customers who feel like they own the brand as much as the company does in some ways, I can see how Coke coming in and buying that company might be an issue. I know there was a lot of buzz when Coke ultimately purchased Honest Tea. That there we some concerns that, oh, is this going to be another situation where a big, bad corporation comes and squashes a small brand, like the whole Ben and Jerry story. I’m just curious, how do you address those concerns and how do you think about them?
Mary Ann: I think that those are great questions and that’s something that we’re sensitive to because we do see the magic in these entrepreneurs and in these brands and as they grow they meet different challenges that you want to maintain what the brands all about. A couple things from our standpoint that we’ve done. First of all, one of the main things is the existence of our group. Rather than kind of just going out and making acquisitions and then that acquisition gets absorbed in some shape or form into the main organization, we’ve created this separate group, venturing and merging brands, where we really are the bridge from the big company to the small company and the entrepreneurs and we live in that middle space. We’re all a group of people who have a lot of different experiences, most of whom have had small brand and entrepreneurial experiences as well as big company experiences. So, we get it, we get what it’s about building these brands from the ground up and I think that that’s an important part. And we spend a lot of time with the entrepreneurs.
The other part is that we build these deals with a path to ownership. We don’t go in right from the get-go from an acquisition. We make a minority investment and we grow with the brand together. We learn how to work together, we learn how to partner and use each other’s strengths to accelerate the brand growth in an authentic way. So for example, as these brands get bigger and get more into our Coca Cola system, things like data and analysis and that kind of stuff becomes more and more important as you go broader and broader. And those are things that we can help the entrepreneur with, we can enable him or her in that way. So, there’s kind of a mutual collaboration and partnership that you have to develop early on in and a trust that you have to develop early on to nurture and accelerate the brand at the right time.
I also that what we’ve done with Honest is that Seth continues to run the business and he continues to run it from Bethesda and there hasn’t been a lot of change, a lot of personnel change in his group. If you see the way the brand is functioning, there hasn’t been a lot of change in the way the brand is functioning. We’re sensitive to it and we want to maintain it as much as possible. I think we’ve got some good things built in and the infrastructure like our group itself, you know, long term partnership, some experiences ourselves on the entrepreneurial side that help us bridge that gap and help the transition into the overall Coke business, the Coke system itself.
Denise: Right, right. That makes a lot of sense. Mary Ann, I want to thank you so much for being with us today and sharing about all the work that you’re doing and the thought process behind it. It’s just very fascinating. I really appreciate you being here. For my listeners, I really want to let you know that you can learn more about Mary Ann’s group, the Venturing and Emerging Brands business unit at Coke two ways. One you can check out their website which is www.vebatcoke.com. So that’s V as in Victor, E as in Ellen, B as in boy at Coke.com or on Twitter and their Twitter handle is vebatcoke as well. So again, Mary Ann thank you so much, I’ve learned a lot and again I really appreciate you sharing everything with my listeners.
(transcript by Speechpad)