Three tips for optimizing your flavor / beer / product portfolio

frappuccino-fanflavors-today-vr-150609_96ce2d3c488733c10de6c65edb16c568.today-inline-large.jpg

Everybody loves a new flavor. Whether it’s beer, ice cream, wine, protein bars or Kombucha, new flavors drive buzz, get you in front of retailers and create a new reason for customers to try your brand. Here are three basic ideas we discuss when helping a client select a new flavor to launch or optimize their portfolio:

1) What is your strategic imperative and brand POV? It is wildly helpful to understand your Brand Point of View and Strategic Imperative when picking a flavor mix. This helps you sort through a myriad of options that can either dilute or strengthen your brand. 

Examples:

  • When developing new flavors for Starbucks Frappuccino our strategic imperative was to fit within the premium coffeehouse. That meant yes to caramel and mocha, no to Snickers. The Brand POV seems to have pivoted towards discovery, earned media and millennial relevance. Thus the Unicorn Frappuccino.  

  • At Golazo, our Brand POV was Latin-inspired, so we created organic functional drink flavors that were popular in Latin-American cultures: Mango Limon, Limonada, Hibiscus and Mandarina.  

  • At In-N-Out Burger, operational excellence is the Strategic Imperative, so they offer only three flavors: Chocolate, Vanilla and Strawberry. By the way: how many consultants do you think have advised In-N-Out to launch a chicken sandwich? I have so much respect for their ability to say "no."  

2) What are the low hanging fruit and what are the deal-breakers? If you are a craft beer retailer, of course you are going to offer a few IPAs because that’s what people are drinking. These are the low-hanging fruit. But what about the deal-breakers-- those flavors that would turn people away from your business if you didn’t offer them. At Starbucks we used TURF analysis (Total Unduplicated Reach & Frequency) to find the best flavor combination that delivered the biggest sales opportunity. 

Examples:

  • Back to the Milkshake example, if you could only have three flavors, would they be raspberry/cherry/blackberry, or chocolate/strawberry/vanilla? Unless your Brand POV is centered around fresh berries, you'd choose the chocolate/strawberry/vanilla combo because you are appealing to distinct, popular flavor preferences versus nuanced preferences within the berry category.
     
    • For the craft beer retailer, I often see too many iterations of IPA. That’s great but what about the light, sour, wheat, Belgium styles and good old fashioned Rainier? By not offering these styles you may be turning people away.
       
    • At Starbucks, we realized that food was drawing people away from Starbucks and over to McDonalds. There were a number of reasons, but one of them was a pastry-loaded food case without many healthy or savory options. Now, Starbucks’ strategic context has always been coffee-first, so they aren’t going to start making omelettes, but they had to diversify the food offering, for example with breakfast sandwiches, to keep the breakfast crowd from turning away. P.S. solving food at Starbucks is like solving peace in the Middle East.

3) What’s your opportunity cost? Every business has a constraint to their portfolio, whether it’s menu space, operational bandwidth or number of tap-handles. For this purpose, I define opportunity cost (OC) as the average daily revenue (or profit) per distribution point. So if you were to divide daily sales by number of tap handles, you would get your opportunity cost per handle. Each handle should then be evaluated against the OC. Is the beer you are evaluating lower than the OC? Then it had better have a good reason for being there-- either it’s a deal-breaker item, or it is important to the strategic imperative or Brand POV. If not, consider removing it altogether and creating a little white space.

Examples:

  • Zeeks Pizza in Seattle offers a diverse selection of Northwest craft beers-- customers expect to discover new and unique offerings they can't get anywhere else. So Zeeks carries a wider range of offerings, even if some of them are below the OC. They also have a few wine tap handles which are lower than their beer OC, but remember it’s a pizza joint and some people just want a glass of wine with their pizza.
  •  
  • When we launched a new Frappuccino at Starbucks, we often charged a premium for it. So even if it didn’t generate as much volume as its Mocha / Caramel counterparts, the average price per beverage was much higher, thus it met the opportunity cost goal.

There are a ton of variables that go into flavor selection and portfolio management, but the above tips might get you started in optimizing your flavor portfolio.

Want to talk more? Let's have coffee!
todd@olympicrangecreation.com
www.olympicrangecreation.com

Todd OlsenComment