By Bill Anderson
I was sitting in a beverage conference last month listening to speakers talk about how non-alcoholic brands can tell “authentic” brand stories to their consumers, and it struck me that NA brands clearly have unique hurdles when it comes to authenticity. For one, NA brands are often produced by co-packers, and NA brand founders frequently don’t have much of a tangible connection to how the liquid is made. And with many NA brands there’s no “there there”. It’s not a like a craft brewery or distillery whose consumers know the liquid has a source and a home.
The authenticity of NA brands is also severely tested because of the amount of outside money that is raised for these brands; outside money often dilutes the vision of the original founders. More importantly, too many NA brand founders focus on quick exits rather than on long-term engagement with the consumer, and this makes true brand integrity nearly impossible.
Out of almost every beverage segment, craft brewers seem to have written the best roadmap for authenticity. Many have engaging stories of how the brand was conceived, the formulation of the first style, and the arrival of the first keg. But what also makes these brewers (and their companies) so authentic is that they are truly in the business for the long haul. They’re passionate about making great beers and living business lives in sync with their personal values. Importantly, they don’t care about making a quick exit through a sale to a large strategic acquirer and they don’t have much desire to partner with traditional private equity firms.
Because craft brewers are not in it for the short term, and because they often start their businesses with relatively little outside capital (Jim Koch raised $240,000 — $100,000 of it his own – to start the Boston Beer Company), they are more frugal on their initial spending choices, and they are more dedicated to establishing durable cash flows. They really have no other choice, since they know it takes a long time to build an iconic brand and they are not keen to take on outside dollars or traditional debt.
This focus on positive cash flow is in some ways the best form of brand authenticity. A long-term bottom-line focus (rather than an exit strategy) is the best way to build an enduring business and at the same time develop an authentic brand.