Coke’s Venturing and Emerging Brands team scans the globe for brands with the potential to become the ‘next big thing’

By Jessica Jacobsen

With a portfolio of more than 500 brands offering more than 3,500 beverages, The Coca-Cola Co. has expanded greatly since it poured its first Coke 125 years ago. But even with this vast portfolio, Coca-Cola continues to search for the next ‘big thing,’ charging its Venturing and Emerging Brands team to do just that.

The goal is to make sure that Coca-Cola isn’t surprised by trends in the beverage marketplace, and to boost innovation efforts and find high-potential growth brands, says Deryck van Rensburg, president and general manager of VEB, which is a dedicated operating unit of Coca-Cola North America.

“This is extremely important to the company’s overall vision and strategy,” he says. “In the four years since the VEB team was formed, we have created a portfolio of brands developed by external entrepreneurs, imported to the US and crafted from scratch.”

Coca-Cola's VEB unit partnered with Italian coffee company illycafe to launch illy issimo, a line of ready-to-drink coffee beverages.

For instance, VEB has entered into a global joint venture with an Italian company to create illy issimo, a high-end espresso in a can. It has also borrowed from its operations in France to sponsor Cascal, a naturally fermented soda in flavors like black currant and cherry; and Japan, where it repurposed the Japanese Sokenbicha tea brand, along with its marketing and packaging, to appeal to the US consumer.  It also has an equity stake in ZICO coconut water and has fully acquired Fuze and NOS, which were incubated to scale and then graduated to the company’s core business units. In March, Coca-Cola fully acquired Honest Tea, which completes a transaction that began three years ago, led by the VEB unit, when the company purchased a minority stake in the company.

Spotting brands like these involves research. VEB team members are active in the marketplace and in absorbing consumer needs and demands.

Led by its VEB unit, Coca-Cola purchased a minority stake in ZICO coconut water in 2007.

“The most important part of the process is being in the market and networking with cultural leaders, wellness experts and early adopter consumers,” says van Rensburg. “We have to be real-time in the market, staying close to the consumer, watching what they do, where they shop and what trends they are following.”

VEB also gets inspiration from new entries in retail channels. “We have a group that, each month, visits an urban environment, goes to stores, engages retailers and collects all of the products that have been launched in that city,” van Rensburg says. “We research each brand-because every brand starts small before it becomes big.”

Coca-Cola's Venturing and Emerging Brands team fully acquired Honest Tea in March. The unit seeks out niche brands with high-growth potential.

The company also attends trade shows, particularly for natural products, which is what drove the company’s interest in Honest Tea.

“The consistently strong growth of Honest Tea, as well as its leadership in the natural foods channel, was among the many elements that attracted The Coca-Cola Company,” van Rensburg says. “When we made the investment in Honest Tea, we did so because we saw that it had great potential to be a significant brand of the future.”

Seth Goldman, co-founder, president and “TeaEO” of Honest Tea, says that the company has already realized tremendous growth with the support of Coca-Cola. He says that, when Honest Tea first began its deal with Coca-Cola, its products were available in 15,000 accounts, but, now, its accounts have grown to 75,000 and the brand is on its way to 100,000.

“I think the reason that Coke invested [in Honest Tea] is we’re really at the center where a lot of the trends are, with healthier products [and] environmentally friendly products,” Goldman says. “We expect to continue to grow aggressively in the years ahead.”

But the value of being part of Coca-Cola’s VEB business unit expands beyond distribution.

“We bring a great deal of passion, entrepreneurial energy, [and]a great deal of knowledge on a natural foods industry,” says Goldman, “but for a lot of our team there [are] so many new dimensions that we don’t have expertise in.”

Goldman says he expects that Honest Tea will benefit from Coca-Cola’s depth in marketing and with packaging, such as the company’s bio-based PlantBottle.

“We’re very excited to have access to that kind of technology,” says Goldman. “That’s something we never would get on our own operating out of our little office in Bethesda, Maryland.”

But, what stands out most for Goldman, now that his company is fully part of Coca-Cola? He says it’s the company’s commitment to Honest Tea’s brand, quality and authenticity.

“I appreciate that Coke saw value in our team and our leadership and what we were doing,” he says. “They really have continued to invest in us and our management.”

VEB also appreciates lessons learned from its investments and acquisitions, such as the natural sales channel force that accompanies Honest Tea.

“When Honest Tea was first created, the management team knew they needed to get their product to the natural channel,” van Rensburg says. “VEB is now able to leverage this industry-leading sales team to sell current VEB brands as well.”

Van Rensburg says all of these efforts reflect why VEB has chosen to invest in entrepreneurs like the team at Honest Tea. “They provide a source of innovative ideas and energy that enhance our own,” he says. 

Jessica Jacobsen is managing editor of Beverage Industry, www.bevindustry.com. Follow Beverage Industry on Twitter at www.twitter.com/beverageind.

This feature was adapted from Beverage Industry's Coca-Cola 125th Anniversary coverage in June 2011.