[00:00:03] Ray Latif: Hey, you're listening to the BetMed Podcast. I'm Ray Latif. I'm here with Jon Landis. We are at the NACS 2016 show here in Atlanta. We're at the Georgia World Commerce Center, and we are joined by the one and only Scott Uzzell, the president of Venturing and Emerging Brands, a unit of Coca-Cola Co are you, Scott?
[00:00:18] Scott Uzzell: Doing outstanding.
[00:00:19] Ray Latif: Thanks so much for joining us. This is your first day at NACS, and what are you expecting to see out of this show?
[00:00:25] Scott Uzzell: I did get to walk around shortly this morning on the way here and just a lot of new innovation happening across, whether it be food, beverage, experiential, because I actually walked through both C and B hall where I saw what people think of a convenience store 10 years ago and what they're doing today. It's night and day. So it's very, very exciting for the consumer in the marketplace.
[00:00:45] Emerging Brands: This is a crazy show. We have like food and beverage and then we have gas pumps and security systems, literally like everything inside a convenience store.
[00:00:53] Ray Latif: Well, yeah, when you're buying gasoline, you know, you got to get your Jolly Ranchers with those, right?
[00:00:57] Emerging Brands: Even Coca-Cola, didn't you guys, you had an little gasoline thing, like, at your booth. It's pretty neat. You know, you're doing more promotion.
[00:01:03] Scott Uzzell: Yeah, convenience retail is really, really important to our company. And we've partnered with so many customers for many years that helping them grow their business is what we're all about. What I find exciting from my vantage point is just that the consumer experience of the future in convenience retail is going to continue to improve. It's going to be a place that you can Like you said, put gas in your car, buy innovative food and beverage, have great food, which is just very, very exciting.
[00:01:27] Ray Latif: Yeah. So let's back up for a second and talk Venturing and Emerging Brands, VEB for short. Not every one of our listeners, I'm sure, is familiar with VEB. So can you give us a brief synopsis about what you guys do and what your unit is all about?
[00:01:39] Scott Uzzell: Yeah. When I think about Venturing and Emerging Brands Group, what comes to mind is really first, we're trying to, our mission is to identify the next billion dollar brand for Coca-Cola's company. And we do it really in three buckets. We've got a small group of people that focus on where the consumer's going to be in 10 years. They're kind of futurists. Half of what they share with me, half of what they meet with me on, I know they're wrong. I just don't know what half. The other piece is they make me very, very uncomfortable because they're constantly putting food and beverage products in front of me that I always say, there's just no way this is going to be the next big idea. But that's their job. Their job is not only to identify the consumer of the future in 10 years, but also how do we market to them? How do we touch them in a unique way? Because modern marketing practices are critical. The second part of our group is really focused on what's our participation strategy. Do we build it? Do we buy it? Do we invest? Do we launch it on our own? And it's about five people and they focus on if that's the future trend, this is how we should play, Scott. This is how we should enter that space. And then lastly, where we have lots of people and the numbers are significant is really once we place the bet. So once we know where the consumer is going to be, and then we decide our participation strategy, we put a lot of resources around that particular bet to make it successful. It's sales, marketing, operations, supply chain to make sure it's successful, because we know that 80% of these things that are done in American business, whether it's in our industry or in fashion or technology, they don't work out. And we've learned that the way that you make it successful is put the right capabilities around it. So that's what we do.
[00:03:08] Ray Latif: Now, you said that half of something might be wrong. You just don't necessarily know which half. And you guys navigate and compete for a myriad of investment opportunities. Is it getting tougher to sort of determine, define what's quote-unquote next?
[00:03:24] Scott Uzzell: Is it getting tougher? I don't know. I think the only thing that makes it challenging is that the advent of technology, technology not only within the beverage, but on how it's going to be built to the consumer. And what we're finding for entrepreneurs that continually take the big risk of identifying something in 10 years is going to be a big idea that today, you and I would find to be, are you really serious? That how they go to market is just so different. And so that makes it more complicated to identify if indeed that's going to be the next big idea. So for us, there's really three things we look at. One, first, founder and team. Is the story creditable? Is it something we can get excited behind? Will they have the passion in the dark days when the venture or the business isn't showing promise? Because early ventures, that's what happens. Second is the brand idea. Is the brand idea disruptive? Is it going to change the marketplace? Is it going to be something that can be sustainable over time? And then lastly, is it something that can fit within our portfolio and we can add value to? Those are our simple conversations as we think about what's in our pipeline for our next investment ideas.
[00:04:29] Ray Latif: What's a good example of what you were talking about, which is working with these entrepreneurs and sort of seeing what might fit or what might be able to fit into your portfolio? What's a good example of something that you're seeing right now that's not necessarily in VEB's portfolio?
[00:04:45] Scott Uzzell: Wow, you know, I'm not really in a position to talk about things that we're excited about, but that we're not in our portfolio. I thought where you're going is that, can you give us examples of where you've done that? And I have multiple examples I could give you quick stories on, but I can't talk about future investments right now.
[00:05:00] Emerging Brands: Well, let me say, talking to so many entrepreneurs and seeing so many of these new disruptive ideas, they're all very small. Is there a threshold that someone needs to kind of pass before they kind of hit your radar? Is that something that you can maybe talk about?
[00:05:14] Scott Uzzell: Yeah, so for our lens, we have a thesis on how we think about partnering of entrepreneurs. It's not right, it's just our thesis. And that is that we know that 98% of the brand ideas don't get to 10 million in sales. And so for us, we want to start learning and building relationships sub 10 million, but we really don't think we want to participate till we're about 10 to 20 million in that range where we want to figure out how we begin to partner. But our partnership is much more passive because we really need them to continue to run and lead that venture in a unique, independent way. But that's, yeah, $10 million is right around the place we like to play.
[00:05:47] Ray Latif: There's a lot of different investment opportunities out there. There's a lot of people competing and a lot of organizations competing for those investment opportunities. You touched on some of the things that are critical in terms of does it fit in your portfolio? Is the leadership actually worth investing in? Are these folks competent, you know, for lack of a better word? But the biggest question for me is how do you support and nurture some of these brands where they need that nurture and support.
[00:06:17] Scott Uzzell: Yeah, so first I want to make sure I clarify leadership because it's an important point. We think it's about 60% of our model. And it's not only leadership of professional leadership that has the right degrees and right background, but we really get into the mission and the passion. Why are they in this business? What was the impetus for starting it? So it's a little bit of science and art blended. It's not just science of they're just a great business leader. And I want to say that because sometimes we meet entrepreneurs that have phenomenal academic corporate backgrounds or business backgrounds, but the ones that we find the most interesting are the ones that started the business that was in a nonlinear way that we can really begin to get passion around. And the story, you know, envelops not only Coca-Cola, but the consumers, the bottlers, I mean, all of our partners and stakeholders. So I want to make sure that that comes out. And the second question is, what do we bring in terms of value? In addition to financial support, it's really everything from consumer insights to multiple ways of market. We touch so many customers around the world, as well as in the U.S. marketplace, that we believe we bring a lot of things to the party. beyond just capital or investment. And then I think what you can look at over the last 10 years is that we've embraced entrepreneurship, that if you talk to the entrepreneurs of Honest, Zico, Fairlife, Suja, I'm missing several others, Innocent, you're gonna find a story where they feel like that we really believed and we're excited about our brand, but our brand with the Coca-Cola Co, we've reached heights that we never thought was possible. So we think that's a part of our secret sauce.
[00:07:55] Emerging Brands: I'd say that it's a really special type of person that can run a company as an individual or like a very small team and then grow to lead a larger company and to evolve into that position. Is the personality characteristics the type of thing that you're looking into? I know you talk about education, you talk about their passion, but is somebody who has the ability to evolve and be dynamic and learn, is that something that you guys look at at all too?
[00:08:19] Scott Uzzell: First, it's a great point. It's really exciting, you know, about the Coca-Cola Co. Our chairman is having something called a founders dinner. And he's bringing in founders of many of the ventures that not only in North America, around the world, all for a learning evening. I mean, so my only point is that here we are a company of 130 plus years, multi billions of dollars. And many would say that we've got a lot of the beverage stuff figured out. we are always learning. So that's kind of one. Two, from a personality and fit standpoint, I've been in countless meeting where we love the brand, but we just said the culture of either the venture or the individual, we just didn't think it was cohesive. And they weren't bad people. It's just how we operate in terms of values around people, values around building brands, patience around investment. Our view of the world is that we're building brands forever. And so that we get it. I'm constantly in board discussions where They're trying to build it for next year and I'm pushing back to say, let's make sure we're building this forever. So those are all the kind of conversations that we have in the dating process before we get to a point that we ink a partnership.
[00:09:23] Emerging Brands: That's just really interesting because some of the advice that I always give entrepreneurs when I talk to them is, you have to be a little bit flexible, you have to listen, you're always got to be learning. And it's just kind of refreshing to kind of hear that from you guys. I always say that a brand can change, a product is going to evolve. It's the person that is not going to change. You have to understand that you're part of something larger than yourself, right? And so I think that's really interesting to get that kind of validated here. Absolutely.
[00:09:51] Ray Latif: You touched on some of the brands that VEB has worked on and worked with over the last 10 years. The biggest ones being Honesty and Zico at this point. Also partnered with Suja. Fair Life. You're also currently working with Illy Coffee, which has been part of the VEB portfolio for about four years? Yeah, about four and a half years. Four and a half years. It's interesting because a big debut at this show is the Dunkin' Donuts Coca-Cola partnership. And we tasted some of that yesterday and saw the bottles. And the first question that came to my mind, or one of them is, how does Coke make it all work? I mean, now that the company has three different coffee brands that they're marketing, and Dunkin' Donuts, Gold Peak with a new cold brew coming out, and Illy. as, you know, the buck stops here, right, for Illy with you, you know, what is your plan for Illy?
[00:10:37] Scott Uzzell: Yeah, first Illy, what an exciting brand. 80 plus year old company, still family run, family founded, multi-generational. It is the original espresso beverage, has a unique founding of beans and the whole processing, which delivers a really great tasting cup of coffee. But what we found in our research is that there's a consumer target that really identifies with the Illy brand. It's plus 30, high cultural from a consumer, I mean, from a food standpoint, so very food culture oriented. in places like Washington, D.C., New York, San Francisco, L.A., and I can name four or five other markets, really fits well, fits really well in certain office environments. I know it's doing phenomenally well in some of our largest law firms, investment banking firms, tech places, et cetera, that what you're going to find is a three-tiered coffee strategy is the right way to go. I'm so excited about Dunkin' Donuts and Gold Peak as well as Illy, but they're all going to play a unique role in our portfolio in 2017 going forward because they're all different consumer targets that we think are all very relevant for growth.
[00:11:37] Ray Latif: Are we going to see Illy positioned next to Dunkin' Donuts on a shelf ever?
[00:11:41] Scott Uzzell: First, it's a great question. The thing about it is each brand is going to play a role in different customers. I never thought about a scenario where they all be on the shelf at the same time. Maybe in a New York or a San Francisco, could you find all three? But I think what you're going to find is that each is going to find its own channels and customers that are very unique to its offering, because they're all very, very different.
[00:12:00] Emerging Brands: Do you find that the challenge with RTD Coffee is that everybody kind of makes their coffee. They order it at a coffee shop. They make it their own way. They customize it. And then you're selling a bottle of coffee that's like, this is how you're supposed to be drinking your coffee. And so maybe that's an opportunity for, like you said, three different tiers for different consumers, different consumption occasions.
[00:12:19] Scott Uzzell: You know, it's a great question. I just had the benefit of the folks that run the Illy company out of Italy here a couple weeks ago with their barista. And what they talk about, when they talk about the coffee consumer from an Italy viewpoint, it's dark. It's a little bit in the shot. It's the most authentic coffee you could ever think of from an espresso standpoint. But then I've been in focus groups looking at what's happening here in the U.S. in some of the mainstream markets. And it's mixed with milk, and caramel, and chocolate. And huge, big cups. And big cups. And if I was in Italy, they might not consider that. So I'd say this, that there are just so many. The coffee segment, compared to 20 years ago, it's stratified. There's so many different opportunities for growth. And consumers have, to your point, many different ways they want it. We know what the Italy consumer is. We're very focused on that. But Dunkin' Donuts and Gold Peak all have unique consumers that are very excited about these new offerings.
[00:13:13] Ray Latif: So millennial marketing, critical to any beverage strategy at this point, business strategy for beverage companies, that is. And millennials are drinking less soda. Everyone knows it, everyone says it. In some ways, do you feel like you're competing with CSD, with some of these CSD marketing strategies to get people to drink more soda, while you guys are very much not on the CSD kind of track? I mean, most of what you market are these lower sugar, healthier, lower calorie beverages. what's the dynamic between what you're doing and what CSD marketers are doing at this point.
[00:13:46] Scott Uzzell: Yeah, first, Millennial, to get first to your first part of your question, Millennial, you know, we have many different panels that we constantly study. It's almost, we get to go in the refrigerators, watch their lives, learn what they're eating and drinking, and how they interact from marketing concepts to really inform how we think about our strategy. And Millennials are one of the panels that we spend a lot of time with, because for us to identify the next billion dollar brand, we've got to look at different cohorts, and that's an important cohort. What's interesting about Millennials, it's not only about what they're eating and drinking, But it's how you're going to market to them. And we're spending a lot of time. And I don't know if you've met Kim Paget, who leads our marketing team. But one of her pillars for her administration, just taking over in the last 90 days, is figuring out this idea of precision marketing in a unique way, which is very much targeted against millennials. So that's first. Second is the idea of competition. We look at ourselves as an and to the Coca-Cola beverage story. I think four or five hundred thousand customers in the United States, customers, so not consumers, every day. And what we want to do is offer them a range from a portfolio of brand offerings that meet all their consumer needs, from coffee to sparkling beverages to water. to sports drinks, etc. And VEB is the and in that story, it's not an or, and it's like we're the ying and the yang. And then as far as sparkling beverages, crafted beverages are a part of my portfolio, crafted sparkling beverages, which includes Coke from Mexico and Blue Sky. and Hanson's and many others, and they're growing and millennials love them. And then the last piece on, it's interesting about the, I think you had an question there around calories or sugar. There are beverages in my portfolio that are functional first, taste second, but calories could be plus three, 400, but you know, it's what that consumer wants in a limited gradient panel that they're looking for. So it's a complicated thing to isolate it either to calories or sweetener because I find in my portfolio we play against everything.
[00:15:45] Emerging Brands: Can I ask you, we're at the convenience store show. Is there anything that you're looking forward to looking at here? Is there any, you know?
[00:15:51] Scott Uzzell: Yeah, that's a great point. You know, convenience retail, first, it's an exciting channel with a lot of consumers. It's significant. It's 40% of the non-alcoholic ready-to-drink beverage sales. But it's one for a lot of Emerging Brands. It's kind of one of the last channels for us. So for us, typically, it's not the one that we're most focused on. It's going to be natural. It's going to be New York and Los Angeles, etc. But what we're finding is there's this kind of a collapse that we think basically there are convenience retail opportunities for our brands, but it's going to be very unique, especially as I walk the floor and see wooden floors and fresh food and crafted beverages. I'm saying to my entrepreneurs that maybe not today, but over the next five years, we're going to need to build capability to get you there. I think 10 years ago we probably would not find the next Emerging Brands, but today I think I will. And you guys, you've noted some earlier, but it's pretty exciting.
[00:16:44] Ray Latif: We only have a couple more minutes left, but I'd be remiss if I didn't ask about rumors about Bai. Bai is one of those companies that is reportedly for sale right now. And I don't want to talk about that. I want to talk about more specifically the opportunity that Bai presented, you know, when it launched in 2009 and, you know, seeing that kind of coffee fruit infused beverage and what they were offering, a sort of functional antioxidant kind of laden beverage. When that first launched, did you see the kind of success? Did you kind of anticipate that this would be as big a brand as it is today?
[00:17:16] Scott Uzzell: That's a great question. You know, it's funny in my spot. First, I wasn't the president at the time, but like just I live it today. The net is I walk the stores across the United States and I'm always wondering if this is the next big brand. 90% of the time, I'm not going to be right. So I don't know if I was in the job, could I have predicted, you know, buy or anything else. But I'd like to say that, you know, really, you know, a fun brand. It's got some great tasting products. You know, they seem to be really doing well from a retail execution standpoint. I was just in San Francisco. I tell you, I felt like I saw it everywhere. And just like many brands, I think it has a lot of upside opportunity.
[00:17:54] Ray Latif: Last question, you said that you hadn't been with VEB or the president of VEB in 2009. What's your journey been like? Well, since you've been with VEB and how have you kind of looked at challenges and day-to-day experiences and opportunity to grow in this company?
[00:18:10] Scott Uzzell: First, you know, I hope to never wake up from my dream. First dream was, and sincere, is that, you know, I dreamed one day when I worked at another great CPG and I wanted to work at the Coca-Cola Co and I got that opportunity. And then once at Coca-Cola Co few years ago to get the opportunity to work in this group, I'm just excited. My background, my parents, both my dad and my grandparents were entrepreneurs, not in the beverage space, but I always admired that they were volunteers in life. They got up and did what they wanted to do every day. And to work at the Coca-Cola Co, but work with people who are so inspired about changing the world every day is absolutely amazing. But to talk about my journey. First, the previous president who started VEB and took it to two years ago, had two big challenges. One was to make sure he had an organized strategy that the company could get behind for multiple years. Second was to put some points on the board so that it would become funded year after year. And he did both of those, did it very well. And we've studied corporate venture capital groups. Most don't make it more than two to three years and we're almost in year 10. And so job one, great strategy. Two, being able to articulate value. He did both. My administration has really been with 31 brands and multi-billion dollar of contribution to our business system, how do I make the portfolio all work? And when you're smaller, five or six years ago, as a leader, you could have a bigger impact on any one company. When you're touching 31 companies, you need to really figure out your role that you're no longer the player on the field. that you're the person in a football game up there with the headphones on and understand your role. And our role for myself and my seven-person team in Atlanta is really three things. One, do each one of the brands have solid long-range business plans? Two, do we have the right leaders leading those businesses so they can be successful? And lastly, are they putting short-term proof points on the board against the long-range plan? And then how do we move resources between them? And so when we get in discussions around marketing or the selling capability in a market, or how are we going to get the right manufacturing, I step back and say, that's kind of not my role here in Atlanta. My role is, is it the right long-range plan? Do we have the right leaders in place? And are they hitting the points in the short term that are reinforcing our investment against the long term? It is simple, but it's not quite as simple as that. But that's been my journey because my background before this role has been primarily running businesses. And so the first instinct was to get on the field, and it's just not very helpful.
[00:20:44] Ray Latif: Well, it sounds like you got a pretty good beat on what's going on here. It's a lot of fun, a lot of fun. Well, here's to another 10 years at VEB. Thanks so much for joining us, Scott. Really appreciate your time.
[00:20:52] Scott Uzzell: No problem. Thank you, guys. Have a good day. Thank you.
