Welcome to the first ever edition of supergoods.

The weekly newsletter for curious minds who geek out on grocery.

This week I’m bringing the heat and it’s alllll about beverages, in an episode I’m calling…

In just the space of a week, we’ve seen two challenger brands take the same approach of a big swipe at big soda.

Love it or hate it, comparative advertising is an effective shortcut to deliver a succinct message about brand positioning.

I mean, is there a clearer way to say “we’re the anti-coke” than literally rolling over them?

This revival of energy around the ‘better-for-you’ beverage category in Australia has me excited, so here’s an in-depth look at what's happening in this market segment.

A ruthless competitor with a target on it’s back

First up, let’s take a look at why these brands are going after the bubbly beverage giant.

Well, the answer is obvious - there’s a $45 billion prize.

Coca Cola turn over an insane amount of revenue so it makes sense for challenger brands to fish where the fish are, so to speak.

“Share of Throat”

A common biz term is “share of wallet” - how much of the customers spend in the category is your brand getting.

Well, at Coca Cola, they talk about “share of throat” - how much of what people consume is attributed to their products.

Not only does this term reflect Coca Cola’s aim to capture more of what people drink, but shows how ruthless they are in thinking about consumers.

By focusing on “share of throat”, Coca Cola ensure they have a full portfolio offer and can maximise their presence and influence in the beverage category.

An unmovable force

There are two basic marketing principles at play that give Coca Cola an insane competitive advantage

Physical availability

Coca Cola is more like a logistics company than a beverage brand.

They have one of the most extensive and sophisticated distribution networks in the world. How much capital is invested here and how can that ever be truly disrupted?

Mental availability

Coca Cola spend around $4 billion a year on advertising.

That’s a bigger ad spend than the GDP of Samoa, Tonga and Vanuatu combined.

This maintains their attachment with the consumer, ensuring people think of Coca Cola brands when they need a beverage.

But it’s not all doom in gloom - in some markets, startup brands have captured a foothold.

Winners in the US market

The two major challenger brands in the US are Olipop and Poppi.

I wrote about Poppi here, outlining their rebrand approach and how they’ve grown to 20,000 stores and tens of millions of shoppers.

Olipop are on a similar tear, with sales overtaking Coke Zero in one of the major retailers (as shared by the co-founder on linkedin, David Lester).

What are the shared characteristics of these successful brands?

Strategic repositioning

Both brands launched as ‘gut health champions’, pushing a message of functional benefits.

But both brands flopped until they pivoted.

They now offer the same flavour profiles of the big dogs.

If you want to steal share from Coca Cola, you need to be a reasonable substitute for the taste of Coca Cola.

Even if your new lemongrass sparkling water really is delicious, it can’t compete and you need the core flavours in your mix.

Modern branding

These brands are squarely targeted at younger generations.

They just ‘feel’ different - the very essence of these brands is simply less corporate, appealing to the idea of self-image that brands give us.

Community engagement

Both brands have focused on building strong communities around their products - both through social media and real world events.

This direct approach can really help drive trial and encourage adoption.

Distribution and availability

Being able to scale their retail footprint without the wheels falling off is the secret to success here. It’s one of the most easily overlooked parts of running a consumer packaged goods business.

Oh and one last thing.

Giant piles of money.

Both brands raised huge amounts of venture capital - like $40 to $50 million dollars.

If you want to take on billion dollar companies, you can’t bring a knife to a gunfight. You need resources and money to make it happen.

So where does that leave us ‘down under’?

Is this market gonna start fizzing here or go flat?

I think we’re still largely in the “functional” phase, with most brands taking the “prebiotic” health message approach (the one Olipop and Poppi pivoted away from prior to success).

Here’s a quick look at some of the market players here

The biggest challenge for all these brands is obscurity.

You can’t sell a secret, and for this market segment to develop to anywhere near the comparable size of other countries, it’s going to take some serious investment from brands and retailers.

oh and of course, consumer demand. 

The question I always have for these brands isn’t why are you better than Coca Cola, but why are you better than Coke No Sugar?

We all know sugary soft drinks are terrible for our health, but the reality is that all the major brands have sugar free alternatives.

So from that lens, what’s the “bleeding neck” problem these products are solving?

Do consumers desperately need their solution, or is it a nice to have?

The true threat to Coca Cola is not millennial branding, but a Chinese giant

Genki Forest is one of the world’s fastest growing beverage brands, valued at many billions of dollars already.

They take a unique position, focused on health and wellness but notably position against artificial sweeteners.

Here’s why they’re likely to win in this space

Giant piles of money

The founder Binsen Tang was originally in the mobile gaming industry, until he sold his company for a reported many hundreds of millions.

He has invested this capital into building a next-gen beverage company and is bringing the ‘disruptive tech startup’ methodology to consumer goods.

Rapid expansion

They’re dominating in China, but they have also been building out a product portfolio and distribution into Western countries.

This “global reach, local focus” approach is exactly how Coca Cola deliver their distribution strategy.

Obsessive perfectionism & risk

The founder is known for his meticulous attention to detail, combined with a very healthy appetite for risk-taking.

If a company is going to truly take on the giant that is Coca Cola, they’re gonna need a team of people who are a little unconventional.

My bold prediction

I think most of these companies either won’t survive or will plot along in obscurity, lacking the real funding to grow at the scale required.

But that there will be a few new winners that make a meaningful impact to the Coca Cola business - one of them being Genki Forest.

Either way, it’s gonna be interesting to see it play out and I’ll keep doing my bit by voting with my wallet and choosing the startup brands.

You should too.