Tesco’s top soft drinks buyer has warned entrepreneurs that the category graveyard is full of promising brands that failed because they ran out of cash, despite getting their concept ‘spot on’.
Speaking to an audience of aspiring beverage entrepreneurs at the inaugural DrinkPreneur Live event in London last week, David Beardmore (pictured) who is Tesco category buying manager, soft drinks and juices, offered them guidance on what the UK’s No.1 retailer wants to see from them.
His team runs a £2bn category and thus receives 300-400 emails a day from brands chasing listings, while Beardmore himself gets 10-15 phone calls a week on these lines.
Perfect your pitch - don't pitch!
Asked to talk at the event – organized by MyDrink Beverages and Zenith International – on ‘Perfecting your Pitch to the Retailer’, Beardmore said: “My first piece of advice would be – please don’t pitch! Seriously, it doesn’t work, and it looks like you’re overselling your brand.”
Many brands approach Tesco to fight in exactly the same space as existing big players, he said, which means their business model won’t work for the UK’s No.1 grocery chain, due to cost pressures.
Accepting that their business model could work, Beardmore said buying teams for Tesco and the other large retailers may not always be the best first point of call – Selfridges, Harvey Nichols and Harrods are great places to build brand credibility before approaching the major multiples.
But let’s say you are speaking to Tesco’s buyers and boldly proclaim your ambition to service all their 3,000+ stores. They should applaud your ambition, right? Wrong!
“It doesn’t work like that, because you’ll generally end up not selling in broadly 2,500 stores. Choose your area, market and understand your customer like no-one else,” Beardmore said.
How to do a Fever Tree: Know your USP
Name-checking premium adult mixer range Fever Tree as an “outstanding brand”, he said the founders rightly recognized it wasn’t in their interest to service all Tesco’s stores, and insisted instead on listings in more upmarket sections of the retailer’s estate and in London.
Central to this insight is knowledge of one’s customer base – as a fast-growing brand Fever Tree knows its USP and market well – but even when the stars align, Beardmore warned that 90% of the brands Tesco deal with that fail do so because they ran out of cash.
“There’s nothing soft about the soft drinks category. It’s littered with brands that have fallen by the wayside,” he said.
“For some the concept wasn’t right. For others, actually the concept was spot on – the problem they had was lack of funding and financing partners, and they ran out of cash,” he added.
'Be the authority on your brand - be different!'
Beardmore urged his audience to try and understand multi-channel retailing – encompassing everything from big box retailers like Tesco to online sales and foodservice (the likes of Harris +Hoole, the ‘artisanal’ coffee chain part-owned by Tesco) – insisting it will change the retail landscape for good, as will social media.
And with only 30 minutes before Tesco’s buying team, on average, Beardmore urged delegates to “be the authority on your brand – be different!”
As to the kind of consumer needs Tesco wants to fulfil, Beardmore said calorie reduction remained a “powerful way of engaging me, my team and any retailer” given the industry’s desire to take the lead, and its need to be seen as doing so, on public health.
The future...next-generation diet soft drinks?
Entrepreneurs should also attempt to create headroom in soft drinks via innovations that brought both them and retailers better margins, he said, noting positive trends in natural energy, premium mixers and health and wellness drinks, but warning about a saturated coconut water category.
“If you’re just going to fight against Vita Coco then broadly speaking, you’re going to lose. What’s your differentiated offer?” Beardmore said.
Future focus areas for Tesco include adult soft drinks, kids drinks, next generation waters and breakfast drinks, the Tesco executive said, as well as “next generation diet soft drinks” – perhaps products to suppress appetite or speed-up metabolism.