Enliven Beverage Deal Podcast Episode #12
The major beverage companies have often been named as primary culprits in “the obesity epidemic”. Does forging a partnership with one or more of these companies mean you are promoting unhealthy products to your customers and employees?
Join us this week as Heather Neisen, Healthcare Practice Leader at Enliven pushes back on this common misconception and shares 3 ways that beverage deals – if structured the right way – can promote health and wellness in your organization.
Listen on Your Favorite Podcast Player:
Related Resources:
Most Common Healthcare Beverage Deal Myths: #1 – The Savings Estimate Is Too Good to Be True
Won’t My Patients and Nurses Revolt if I Sign a Beverage Deal?
8 Ways COVID-19 Will Impact Future Beverage Deals
Transcript:
Tim Harms:
Welcome to the Enliven Beverage Deal Podcast, where we’re all about saving and making you money by taking both the guesswork and the legwork out of your beverage partnership and by leveling the playing field when it comes to negotiating your beverage contracts. I’m your host, Tim Harms. We’ve got a great show for you today, stay tuned.
Tim Harms:
Welcome back, everyone. I’m excited to welcome Heather Neisen from our team, this week. Heather, welcome.
Heather Neisen:
Thanks, Tim, good to be back, as always.
Tim Harms:
Yes, yes. Now a lot of people probably don’t know this about you, but you are an avid runner. Right?
Heather Neisen:
Yes, yes, absolutely.
Tim Harms:
How many full marathons has it been now that you’ve run?
Heather Neisen:
Yeah, I’ve run two full marathons, and I’m tempted to never do one again. It’s a nice accomplishment to have on your record, but they are brutal. And I think they take … Anyone who’s run that kind of distance knows that just the training, it takes so much time. So proud to be a finisher. I’ve done a lot of half marathons, probably a dozen.
Tim Harms:
A dozen half marathons. So you’ve really done eight full marathons.
Heather Neisen:
I like … Yeah, okay. I’ll start telling people that. I love it. I love it. But if we have anybody listening from Chicago, one of the marathons I ran was the Chicago Marathon, and I haven’t run all of the marathons out there, but it’s beautiful.
Heather Neisen:
You get to go through every little neighborhood in Chicago and across the bridges, and it’s in October. It’s beautiful, so highly recommend, if we’ve got any runners out there.
Tim Harms:
Amazing. Well, we thought we’d have you on and have a conversation about health and wellness and beverage deals. And I know a lot of times, as we’re talking to, really, lots of folks in lots of different industries, but you certainly hear it with your healthcare clients. We present the idea of partnering with Coca-Cola, PepsiCo, Keurig Dr. Pepper, the beverage companies in a beverage agreement, a strategic partnership.
Tim Harms:
And that sometimes the initial reaction is, “As a hospital, I can’t do that. We’re supposed to stand for health and wellness, and we can’t partner with big, sugar-water soda companies.” So I thought we would just kick it off, just thought you could share a little bit. I mean, are Coke and Pepsi just big sugar-water companies?
Heather Neisen:
Yeah, absolutely. No, it’s a great question. And you’re right, inevitably every time we start an engagement with anybody, the first question, especially in healthcare, is Coke, Pepsi, Dr. Pepper, they think of classic, full sugar, really unhealthy beverage. That is the first thing you should do if you want to be healthy.
Heather Neisen:
So it really, you get people scratching their head about, why would I do a beverage deal with the enemy of what I’m trying to do in healthcare? But yeah, you’re right. The reality is these big beverage companies, they know that. This is not news to them. They know they’ve been in the headlines in a non-positive way. And they’ve really shifted their strategies over the last several decades, with products that they have acquired or launched.
Heather Neisen:
And with just the push in where they’re putting their funding and where they’re investing in the communities. So, yeah, I mean, I think a great question just to hit home is … I mean, Tim thinking about your own life, I mean, would you say in the past five years, have you drank more sodas, less sodas, any sodas? Where do you stand or your family stand on that?
Tim Harms:
Oh, turning the tables, asking me the questions. Yeah, I mean, my wife is primarily responsible for stocking the pantry, and I see an awful lot of sparkling water in the pantry is these days. No sodas for me at home.
Tim Harms:
I mean, when I’m out, maybe at a restaurant or at a fun experience, I’ll grab that classic soda, root beer, whatever it is. But most of the time, yeah, it’s sparkling waters or it’s teas or it’s juices.
Heather Neisen:
Yeah, limited use, maybe more of, like you said, a treat or a celebration. Yeah, and there’s some interesting stats out there. I mean, we saw in 2015, soda, classic soda that we’re talking about, hit a 30 year low. So it’s definitely not just a specific, more health-conscious person, it’s a really, it’s a big trend.
Heather Neisen:
We saw that private consultancy just released a study this year that said over 80% of consumers are focused on what they consume as part of taking care of themselves. So food, beverage, but they’re starting to think about adding functional ingredients into their food and their drink. And so it would be crazy for large global brands who are at the cutting edge of marketing to not be noticing these trends and adapting to them.
Heather Neisen:
So that’s really what we’re seeing in the beverage world. In fact, three years ago, PepsiCo released a statement saying that half their revenue comes from healthier foods and drinks. So talking about waters, unsweetened tea. PepsiCo owns Frito-Lay, and so that’s also snacks. But even Coca-Cola earlier this year, Financial Times said Coke is seeing profits rise from healthier products that they’re putting into the marketplace, no sugar products, better for you products.
Heather Neisen:
So we’re seeing both of these companies and all beverage companies, honestly, putting products out there that are better for you, healthier for you. And so, yeah, just want to dispel that myth. Like I mentioned, all of everyone we talk to is really asking, why would I do deal with a big beverage company?
Heather Neisen:
And a simple answer is simply just that the portfolios these companies have are so much more than that classic soda. It’s everything you could probably think of in the grocery store, from water to smoothies, to energy drinks, to unsweet tea. And so we’re seeing some really cool innovations coming out.
Tim Harms:
That’s fascinating that you point out at least one of the companies said half their revenue comes from healthier foods. I mean, that’s shocking because it’s not just a marketing play. It’s not just adding enough to the portfolio to check off a few boxes. It seems like these categories are the ones that are really fueling the growth and are, in some ways, the future for these companies.
Heather Neisen:
Yeah. It’s actually a great point because there is absolutely understandable skepticism from “big soda companies” touting healthier products. I think you hit the nail on the head with it’s not just a marketing play. It’s not just to say we do it, but truly consumers are responding and purchasing those healthier products.
Tim Harms:
Do you find that the beverage companies these days are leading with those healthier products in their partnership proposals, or does the customer really need to guide the conversation here?
Heather Neisen:
That’s a great question. And the proposals that we’ve seen most recently, I mean these products, I mean, waters, juices, and teas are center stage. I think like I mentioned, I think the beverage companies understand that there’s scrutiny around their classic, full sugar, seen as unhealthy products.
Heather Neisen:
And so really, I mean, you wouldn’t even know, I think, sometimes which beverage company is presenting, if you’re not beverage nerds like us. But yeah, we’re seeing they like to highlight their full portfolio. All the companies that we see love to say they’re total beverage companies, so they’re not just looking to be your soda provider.
Heather Neisen:
But yeah, I think obviously, if somebody is particularly interested in water or reducing a certain sugar, they’re going to lead with that more. But yeah, if you ask or you don’t ask, you’re going to see the full, healthier portfolio these days.
Tim Harms:
Well, let’s get into some specific products. And if you could just speak a little bit about how the beverage companies are approaching the health category with specific products or some of the history. Could you explore that a bit for us?
Heather Neisen:
Yeah, absolutely. I mean, we were looking through, I mean, honestly, we see beverage companies doing new and innovative things all the time. So we’ll see press releases probably monthly, even during 2020, of releasing new products. And I mean, I was thinking about this, Tim, and I realized there’s a couple of categories that we’re seeing the most innovation in.
Heather Neisen:
One, you’ve already mentioned that your cabinet’s stocked with sparkling water, but that has been such a boom of a category. We’ve seen it, not only from the major beverage companies, but we’ve also seen small, local companies popping up with sparkling waters. And a lot of the brands are really fun and playful. They appeal to people who are looking for flavors, but literally no sugar, no artificial flavoring, just carbon dioxide into water and sold.
Heather Neisen:
Another is bottled water or waters with enhancements, so sometimes that looks like added caffeine, added electrolytes, antioxidants. We mentioned sparkling waters, just sometimes that’s just a sparkling addition to the water and then flavors. So we all know we should stay hydrated. It’s another way to stay hydrated, but get some extra enhancements into your beverage.
Heather Neisen:
And then the third is two different product types, but we’re seeing innovation in both. One is sports drinks, so you think something to refuel you after a big workout, but also doesn’t have artificial colors or odd ingredients. That’s a big push, and then energy drinks too. So energy drinks also had that bad rap, full sugar, tons of caffeine, but you’ll see more and more energy drinks come out with natural, organic flavors.
Heather Neisen:
And we’ve seen a mix between beverage companies acquiring smaller brands that have had a really big splash in the marketplace, but also big beverage companies developing these products and these brands in house and then launching them. So we’ve probably seen an equal mix of both, but not nothing new with soda, the classics that you think of.
Heather Neisen:
All of this is probably … To most people we talk to, it’s pretty surprising to think that a Coke, a Pepsi, a Dr. Pepper is launching or dabbling in the sparkling water world, for instance.
Tim Harms:
I mean, that was a great summary and overview, Heather and I thank you. I mean, sparkling water, bottled water, sports drinks, even functional energy drinks, we’re seeing a lot of talk about immunity in drinks or that functional category.
Tim Harms:
Could you walk us through maybe just one or two specific product categories, maybe that have even recently hit the market or even just been announced to be hitting the market, from these companies? Just to give us a little flavor of, when we walk in the grocery store, and we’re going down the beverage aisle, which ones are which company, just to allow us to see that?
Heather Neisen:
So yeah, I’ll walk through a couple of new products. And something you said too, immunity building, so people are looking for antioxidants, vitamin C, in their products.
Heather Neisen:
And that’s actually been cited all over the beverage industry as something that will probably not change post-pandemic. People are now aware that they should be adding immunity building elements into their diets. And so I think a lot of these new product launches are timely. They’re probably going to withstand the foreseeable future.
Heather Neisen:
So one that’s a little old, not older, but came out a couple of years ago, but Keurig Dr. Pepper owns Bai. It’s B-A-I. And it’s a drink that, like I mentioned, vitamin C, antioxidant-infused, got all kinds of flavors infused with the coffee fruit, they have tea extract. And their selling point piece here is there’s less than a gram of sugar in Bai, and there’s 10 calories per bottle. So if you’re looking for that immunity building, hydrating beverage, you might’ve seen that.
Tim Harms:
And that became a popular product just, I mean, it came out of nowhere. It just, it was everywhere. Yeah, no, that’s a great example.
Heather Neisen:
Yeah, absolutely, and then as far as sparkling waters go, you have, I mean, every major beverage company has their spin on this now and really, more recently. So a couple of years ago, back in 2017, PepsiCo launched Bubly. They’ve got 15 flavors of sparkling water at that time, and they’ve innovated since. And has, like I mentioned, that fun, poppy brand, and we’ve seen that there’s plans to add caffeine or to just change up the flavor portfolio. And they do a lot of fun things with that brand.
Heather Neisen:
Coca-Cola launched their AHA sparkling water this year, 2020. And they’ve had Dasani sparkling water since 2014, but this is fun flavors. Again, fun, spunky personality, and it’s Coca-Cola’s take on the sparkling water category. And then, Keurig Dr. Pepper actually just announced their distribution rights to Polar seltzer.
Heather Neisen:
Which is a sparkling water, it’s a staple brand in the Northeast. So if you’re in the Northeast listening, you probably have seen a Polar seltzer, and that’s probably your introduction to seltzer. But because they have this partnership now, Dr. Pepper will be able to distribute it across the nation. So all of these have been propped up.
Heather Neisen:
I guess I should mention to you that Coca-Cola had purchased a Mexican sparkling water brand you might be familiar with, a couple of years ago, called Topo Chico. Oftentimes you can get it in a glass bottle. It’s a mineral sparkling water that Coca-Cola owns.
Heather Neisen:
So all of these are new. I mean, and the predecessor to all this innovation was just how much of a hit LaCroix was in the marketplace, that retro design, but it just took off. And LaCroix is not owned by any of the major beverage companies, but you can see how the consumers love that product. And all of these companies have now, again, created their own or have purchased, or now distribute an equivalent of a sparkling water.
Tim Harms:
That’s a great summary. I think maybe one of the next things that you’ll see or we’re already seeing really is, I mean, you got not just energy drinks, but energy management, with BODYARMOR and Bolt24, and the performance, energy side.
Tim Harms:
You also have BING, which is more natural, functional energy, I guess. You see, a product that was just introduced called Driftwell to actually reverse that, to help you go to sleep with added ingredients that promote rest.
Heather Neisen:
Yeah, that’s actually a really great, that Driftwell piece is a great one. It’s one of the first products we’re seeing yeah, to put you to sleep, to help calm you down. Almost like a tea, but a canned beverage that, just again, another market, and you’re right, energy management. That’s a great way to put it.
Tim Harms:
So that’s fascinating. I don’t think we’re near the end of where we’re going to see these categories going. I think it’s just, we’re just at the beginning. You’re going to see more and more products, to your point, that are focused on health and wellness, or at least that functional benefit.
Tim Harms:
Let’s switch gears a little bit, and let’s talk … I mean, obviously, beverage partnerships are more than just the products. It also comes with lots of different service. It comes with marketing activations, it comes with equipment is one of the things. How does the equipment play into this health and wellness idea in these beverage partnerships?
Heather Neisen:
No, it’s a great point, Tim. So yes, beverage partnerships include equipment, and that’s actually, once we get past the inevitable question of, is partnering with a major brand, a soda brand, seen as unhealthy? We can get past that because the product portfolios speak for themselves. But the next question is, am I going to have a bright red or a bright blue piece of equipment, a fountain machine, or a cooler in my hospital?
Heather Neisen:
In my experience, that’s a big concern to have a big soda vending machine right in the ER. And so again, this is a place where Pepsi and Coke and other beverage companies have really taken the charge and designed new equipment that is branded but is focusing on different brands.
Heather Neisen:
So if you’re in the ER, instead of seeing a machine that has soda advertisements, you’re probably going to see one that has a water advertisement, or it has a refreshing look. It’s co-branded with the hospital or the airport or the restaurant. And so you’re going to have either, a clean wrapper around the machines, or you’re going to have messaging that’s guiding you to select healthier better products.
Heather Neisen:
We’ve also seen that the beverage companies have done a single play vending machine, is what they call it. So if there’s a particular brand that you would like to make sure that your consumers have access to all the time, they’ll put a machine in. One example is at an airport that we work with. They know that when people are coming off of their flights and grabbing their baggage, they’re going to want a bottle of water or a drink just in general, but to increase the healthy choices, they have vending machines with just water in them.
Heather Neisen:
So you’re encouraged to purchase a water and it’s a better for you option. So there’s some focus there. There are also programs within the vending environment where the beverage companies have made a commitment to reduce the sugary content in their beverage products. And so certain vending machines will actually have only products that fall below a certain amount of caffeine or sugar in them.
Heather Neisen:
And again, all the companies are doing this, and back to our product conversation, a great way to encourage people to find products that are better for them is to have more choice. So the equipment that they’ve put out there allows for a number of facings of products. And when you have a beverage deal, you’re able to access just one portfolio, which allows you to see a little bit of everything instead of any kind of duplicate of product.
Heather Neisen:
So these machines, a lot of times the vending machines will be glass front, you can see all your options. So you may not like the main soda choice. You may not even like the tea choice, but you’ve got now eight, nine, 10 other drinks. Maybe you like tea, or you like juice, that’s all better for you. So this equipment’s really good about showcasing the diverse portfolio and hoping to get something healthier for every kind of taste.
Tim Harms:
That’s fantastic. I’ve seen some headlines recently too, about both companies innovating on their equipment, not just their products. But they’re innovating on some of the more “healthy” or better for you brand lineups. I’m thinking specifically about the sparkling water equipment, et cetera. Can you dive into that a bit?
Heather Neisen:
Yeah, absolutely. I mean, that’s the newest innovation that we’ve seen from the major beverage companies, is understanding that the consumers not only want better for your products but also are really focused on hydration. And so we’ve seen Coca-Cola and PepsiCo both, within the past year, have launched water equipment, for lack of better term.
Heather Neisen:
For Coca-Cola, that’s Dasani PureFill platform, and it was announced last year, 2019, but offers chilled filtered water. You can add sparkling water or CO2 to it to make your water sparkling and also add flavors. And then SodaStream Professional was announced by PepsiCo earlier this year, 2020. Again, a way for customers to personalize their hydration. So again, adding the level of CO2 they want, adding the level of flavor they want.
Heather Neisen:
And for both cases, you can bring your own bottle. So also a sustainability play in addition to just what you’re putting in your body, it’s also reducing the waste or the recycling need on the backend. These are really innovative pieces. We’ve seen these in the consumer market.
Heather Neisen:
SodaStream has a personal, in your kitchen experience. And obviously like we’ve mentioned, both companies, all these companies are doing sparkling water. But this is an idea that as we want to be more hydrated and more health-conscious, what’s a great platform to be able to do that and source the water locally and be able to have a fun, refreshing water to encourage you to continue that healthy journey?
Tim Harms:
No, totally. That’s amazing. I mean, when you look at, from the products to the equipment, to the innovation, where things are going, I mean, it’s clear that this is the focus of the main beverage companies.
Tim Harms:
I guess my final question would be, someone is listening, and they’re thinking, this isn’t just a token, I don’t want to make this just a token effort. I want to really lean into health and wellness. I want to move the needle. I want to even measure the improvement that we’re able to make in guiding consumers to choose healthier products.
Tim Harms:
Are Coke and Pepsi and Dr. Pepper and Nestle and those, are they ready to have those conversations in a really genuine, bonafide way? And if they are, what would you tell that person? How do they go about that?
Heather Neisen:
Absolutely. Great question. So I mean, we mentioned a bit earlier, but it’s understandable that there is skepticism around companies that produced soda products and full-sugar beverages. Could they really be a partner with you in a wellness journey at your properties at your locations? And the answer is yes.
Heather Neisen:
I think what we have seen is, again, big beverage companies have invested heavily, and they’re putting a really big bet in that consumers are heading towards, and like you mentioned, already there as far as health consciousness. And so what their goal now is to make sure they get those brands and those innovations in every hand possible.
Heather Neisen:
So what we know is that these major beverage companies want to get their products, their new brands they’ve put out there, in as many hands as possible. And the best way they can do that is to partner with a like-minded company. So if you are out there and thinking, “Wow, that really aligns with my company’s organizational goals. We want our employees to be healthier.” Maybe the business that you’re in, healthcare, for example, really benefits from consumers focusing on their own health.
Heather Neisen:
There are so many meaningful ways that we can work to build a partnership that is measurable as far as targets like you mentioned. Maybe it’s how many bottles of water versus how many traditional sodas you sell, but maybe it’s just availability or promotions that are around healthy goals.
Heather Neisen:
But major beverage companies want to be seen in this total beverage landscape. They want to be seen as a partner in your health. They definitely love to have classic moments with classic products. Like you mentioned, Tim, you said, “Every now and again, I’ll have a classic soda because it brings back good memories.” It’s a treat, in the same way, going out to get ice cream is a treat, and they want to be in those moments still.
Heather Neisen:
But they really want to be, as they look to the future, where the consumer is. And so if your goals are towards health and wellness, this would be a great opportunity for you to partner with a global brand who’s smart, savvy, and wants to get their brands that are healthier for you in your hands.
Tim Harms:
Well said, well said. Yeah, no, we love working on these types of projects. And it’s candidly, I hope that we can help play a part in helping guide consumers, guide customers, guide people to make better decisions for their bodies.
Tim Harms:
Well, thanks, Heather, so much for coming on. Always a pleasure to have you on. And thanks, in particular, I love always when we’re able to take on a misconception or a myth about the industry and partnerships, and I feel like you did that beautifully today. Thanks and we will see you next time.
Tim Harms:
Thanks, everyone, for listening in. I hope you found that informative. If you have a burning question about your beverage negotiation or partnership, we’d love to hear from you and answer it on this podcast. Reach out to us by emailing podcast@enlivenpartnership.com.
Tim Harms:
And hey, before we sign off, I want to remind you that you can take both the guesswork and the legwork out of your beverage partnership. You can level the playing field in your beverage negotiations, and you can save or make your company millions through a new or an improved beverage agreement.
Tim Harms:
The first step is a free beverage opportunity analysis, which will tell you just how much you can save or you can make. Sign up for your free beverage opportunity analysis at enlivenpartnership.com and by clicking, free savings estimate. On behalf of everyone here at Enliven, thanks for listening in.
