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BevNet conference offered coupla sessions in which brand marketers in different bev segments enthused about virtues of do-it-yourself approach to distribution. In wake of move to exit Dr Pepper Snapple DSD network and go mainly direct to retail, Fiji Waters prexy Elizabeth Stephenson made case for completely controlling the customer experience yourself. Then, in separate session, Guayaki cofounder David Karr and mgg ptnr Peter Lee shed light on efforts to recruit team of thousands of Chevy Volt-driving "hacedors" (doers) to get the word - and product - out. Here are details. 'Superlative Customer Experience' Not Possible via Conventional DSD, argues Fiji Water's Stephenson Wonderful Co roiled the bev world this past fall when it opted to pull its Fiji Water brand from longstanding Dr Pepper Snapple Group distribution agreement in favor of scheme that calls mainly for going direct to chains (BBI, Jul 10). Tho alliance had put Fiji Water on enviable growth trajectory, in BevNet interview at NACS c-store show at time, prexy Elizabeth Stephenson didn't mince words in saying DSD had outlived its usefulness (BBI, Oct 31). She was invited to BevNet Live to flesh out vision for brand, in front of audience that included wholesalers and quite a few longtime bev hands who're deeply skeptical of decision's prospects for brand that plays in so many channels, including dog-eat-dog impulse channels where it's crucial to have defenders at the store shelves. Some were wondering whether she'd soften tone of critique in Santa Monica. The answer: not in the least.By way of credentials, Stephenson noted that she currently runs the luxury bev group comprised of Fiji and the wineries Justin and Landmark after having run POM Wonderful, meaning she's had direct hand in all 4 bev brands. And she offered this teaser: starting in winter, "we're going to take that number to 5, so keep your eyes peeled." Hmmm.Being part of Lynda and Stewart Resnick's The Wonderful Co, alongside brands like Wonderful pistachios and Halo, is "extraordinary gift." At $5 bil in annual revenue, co contributed more than 5% of growth to entire CPG category, and is only $1B+ CPG co that's growing by double-digits. And she showed how it's right in synch with current trends. "Every single product we sell is healthy and comes from nature," making Wonderful the only big CPG that can say that. Further, almost every product has 1 core ingredient. Production isn't outsourced, but derives from seedlings Wonderful plants on its nearly 150K acres. "No copackers" either. Marketing/advertising is all virtually done in-house. That total degree of vertical integration "hasn't been in fashion since the 1980s." In her inaugural role at co running M&A, Elizabeth got to "see every deal out there . . . There were great opportunities we walked away from because they didn't meet our definition of what it means to be Wonderful."As for Fiji Water itself, it comprises 25% of entire premium water category and drove 20% of category's growth last year, with relatively low sku count - not even a sparkling entry. That's function of providing "earth's finest water" with complement of naturally occurring minerals and electrolytes, in contrast to rivals like Coke's Smartwater, Pepsi's Life WTR and KDP's Core that are "basically filtered tap water from basically anywhere." As #1 water on Amazon it's e-commerce leader. To position co's innovation bent, she heralded strong-performing sports-cap bottled intro'd last summer (to amusement of some we chatted with, who cited it as no-brainer that could have been in mix a decade earlier).So it's been growth engine. Yet in Oct, co changed entire route to retail from "outsourced distribution system that most people would say is the gold standard. We didn't think so." Co concluded that Keurig acquisition of DPS "would in no way be good for Fiji Water" but "would take us further from our goal of delivering a superlative customer experience to our consumers." So in 90 days, co switched entire distribution network, "completely blew up our supply chain," converting a 20 mil case biz to "primarily insourced model." When co went to its customers, "they were as excited as we are" given Wonderful's ability to "work much more closely to drive the in-store experience." After all, similar approach with Halos and POM had "completely transformed the produce section" to point where Wonderful Co last year drove 50%+ of growth in produce aisle. Recent moves will "bring the same thing to Fiji Water." With a DSD distributor in the middle, as one among 100 or 200 brands, "we couldn't make that happen." So she "couldn't be more excited."In Q&A, questioner guessed that Wonderful had to know it would take a hit in sales with distribution move. "I feel like we have a tremendous luxury being part of the Wonderful Co and having the support of Stewart and Lynda Resnick," Stephenson responded. Co will "take the long view." She said "changeover went better than we expected . . . Retailers been supportive, see the vision. Obviously, as we went through the transition, sales were down, partly because we pulled promotion during that time. You'll see after the first of the year a real push and set of things we're doing into the summer selling season."It was forceful presentation, and one, that some in room later noted, that would complicate any rapprochement with indie wholesalers aligned with DKP if approach doesn't work out. Many, as we've reported, already are deep in quest to recruit replacement brands. That said, if it does come to that, coveted brand like Fiji is likely to see doors open somewhere, perhaps within Pepsi, MillerCoors or even Red Bull systems. This grand post-DSD experiment is likely to be one of gripping plotlines of 2019.Guayaki Recruits 'Doers,' Some Just Out of Jail, to Build Comprehensive Self-Distribution System; 'Follow Your Route' Now 23 years in market, yerba mate pioneer Guayaki took uncommonly patient approach to building scale, carefully cultivating campus presence, not overspending or overextending at retail and weathering numerous challengers on way to durable leadership presence. In recent years it's been quietly embarked on exit from conventional DSD in favor of self-distribution model under banner The Yerba Mate Co. BBI has occasionally noted trend, partly in context of newer yerba mate plays trying to fill voids left at retail during transition period in SF and other markets, and within terminated DSD houses, but as far as we can tell BevNet Live was first time Guayaki execs publicly offered details on what they've been up to. Speaking at conference in q&a with BevNet editor-in-chief Jeff Klineman were cofounder and "cebador" David Karr and his managing partner "Pato" Patrick Lee, former Balance Bar and nSpired Natural Foods exec who joined co in 2005 as vp sales. We were still left with some uncertainty about how extensive a part of Guayaki's footprint is managed by hacedors currently but it's clear co is another that's betting on post-DSD way of building RTD bev brand. Approach bears some similarities to how Red Bull North America operates, with heavy reliance on self-distribution and in-house media, and of course to Fiji Water in questioning whether indie DSD system is right.Karr spoke of building force of "hacedors," doers, to work worldwide base of 23,729 colleges & universities across 200 countries over next decade, equipping them with not much more than a car and branded gear and turning them loose to get both sales and marketing jobs done. Wear the gear, load the car, aim to get full shelves at eye level of all 8 flavors. So far effort is confined to North America but S Amer enters mix soon. Pack out the packaging with you when you leave. Return car, clean it, restock it, "follow your route." (In follow-up email to us, Patrick said this approach extends beyond just campuses, tho co hasn't completely abandoned conventional DSD distributors, broadliners and other options, where they're right choice.)At time co's youthful exuberance was morphing into its teenage years, it concluded "what was missing was distribution," Lee recalled. So it started self-distributing items, then built out logistics, finance, production teams. "We found out it's not that hard" as repetitive, straightforward process, so "we decided to make it a little bit more challenging." Karr, Lee and 5 managing partners over past 24 months decided to make enterprise fossil-fuel-free, purchasing 100 Chevy Volts, with another 100 currently on order. Co anticipated being 100% fossil-free by year-end. Another challenge: co has been rapidly hiring from prison system with ultimate goal of bringing aboard 10,000 over next decade. (Obviously in anticipation of continued brisk growth across expanding global footprint.) In US, ACV still is only 7.5%, and co is "taking our time," Lee said. "It's just been organic growth," Karr said. "It's funny to say 23 years in, but it really feels like we're just beginning. We're now at a point where we actually spend some real marketing dollars."Strategy is to "take on as much as we can ourselves to create a living culture where people can be the best they are," including production, sourcing, distribution, even media, unless there's really good reason not to. On media side, it's established Come to Life as "good-news network for the regenerative movement" with focus on arts, activism and culture. Asked whether Red Bull was model, Karr described it as "more intuitive, we've learned as we've gone along," and media was simply the next obvious discipline to bring under tent.Over years, lack of retail or marketing support for Guayaki was frustration often expressed to BBI by outside DSD partners who claimed to be bullish on brand's prospects if co would only give brand more of a nudge. Judging by Lee's comments at BevNet Live, he shared similar frustration in earlier years. "For the first 5 to 10 years I would ride David, there's no marketing going on, you don't do anything," he recalled. "The reality is we've been sharing mate authentically for 23 years."Karr described "big global vision" being pursued by partners who've all recommitted for another 25 years. Tho co last year brought in significant investment from Sonoma Brands (BBI, Jan 12), Karr said Guayaki principals are in for long haul and have no exit strategy. "Of course you want liquidity in your life," Karr said, but partners haven't had any intention to sell, "though never say never." They've set up structure in which everyone has common stock, there are no board seats, no voting rights.That said, time was right for infusion of growth capital. "When we talk capital, it's a pretty basic conversation about sources and uses," David indicated. "Give us $100 million and we'll spend it. Chevy Volts aren't cheap, warehouses are not cheap, making high-quality media is not cheap." Risky bet? "If yerba mate crashes, we'll go on with life, drink out of gourd and go on with our life," is his view.Does Nobody Love DSD Any More? ABI Beyond Beer Chief Ornstein Offers Vigorous Defense Was nobody at BevNet Live showing any love for DSD? As counterbalance to the above, we'll cite Anheuser-Busch InBev's Beyond Beer sales chief Randy Ornstein, who's got challenging job of incenting ABI wholesalers with beer on their minds to offer focus to NAs, non-alc beers and all manner of hybrid entries like spiked seltzers, hard kombuchas and coconut waters. "I appreciate DSD better than warehouse," Randy told BevNet crowd during separate presentation. "With warehouse you might have success getting on the shelf but not get anything incremental, and displays will drive success." With brands like Teavana iced tea, "getting extra display been key to our success." True, the indie channel can be very challenging because retailers constantly bring in new items for which they've received a free fill. "But they can also be key to your success, so be sure you're investing behind that channel," Ornstein urged.

BEVNET LIVE: Living in a Post-DSD World: Fiji Water, Guayaki Yerba Mate Sing Praises of Brave New World

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