Beverage Market Buzz – May 2021: The Role of Small Brands in Beverage Innovation

Over the past ten years, beverage companies have attempted to respond to changing consumer preferences by adding more small brands (often through acquisitions or investments) and dramatically expanding their portfolios. More recently, though, beverage companies have lost their appetite for investing in innumerable small brands. They are raising expectations on potential acquisitions, culling their portfolios, and bringing more of the innovation activity in-house. We view this as generally positive, but it raises important questions for the industry to explore in terms of how large companies should effectively partner with innovative small brands, and how to effectively bring innovation in-house. And while small, innovative brands were the unforeseen competitors of the past decade, ongoing innovation from retailers’ private label brands may become more disruptive moving forward.