“If I sign an exclusive beverage deal, won’t staff revolt? Everyone knows that some battles in life are just not worth fighting.”
Some healthcare executives, upon first hearing about the lucrative opportunity a beverage deal can represent, are initially fearful that such a deal could become a source of frustration for their employees and a distraction for their organization.
“Why would I risk upsetting my employees, physicians, or patients by removing their beloved soft drink brands?” they ask. “Don’t hospitals have bigger fish to fry than to fight the age-old soda wars?”
While it may seem like a reasonable concern, in over a decade of negotiating exclusive beverage deals for our hospital system clients who own or operate over 825 hospitals coast-to-coast, we’ve never once encountered a “beverage revolt.” And your organization will not either.
Our experience isn’t simply based on good fortune or happenstance. It’s just the way it is. Beverage revolts due to pouring rights deals simply don’t occur.
How can we be so confident in this? We know that there are four realities of the beverage industry landscape that will guarantee that your organization will not encounter any meaningful resistance to entering into a strategic beverage partnership with a major beverage brand. Let me explain…
1) The Choices You Offer Will Actually Increase with an Exclusive Beverage Deal
Coke and Pepsi are no longer your parent’s beverage company. It was not long ago that Coke and Pepsi were primarily focused on their core soft drink portfolio, and were successful largely because they had developed “raving fans” that were deeply loyal to their soft drink brands (Coca-Cola, Pepsi, Mountain Dew, etc.).
The beverage company of today is different. Today, Coke and Pepsi both offer hundreds of different brands and packages, including bottled waters, teas, juices, coffees, protein drinks, smoothies, dairy products, energy drinks, probiotic beverages, enhanced waters, etc. In fact, Coca-Cola released 500 new products in 2016 alone and Pepsi now boasts of over 22 different $1 billion dollar brands.
By not having a beverage deal with just one parent beverage company, ironically, you are making the decision to offer less choice. Why? You are likely stocking duplicative products. These duplicative products take up shelf space and storage space that could otherwise be utilized to offer a more comprehensive variety of beverages – beverages, which today’s consumers both desire and have come to expect.
Instead of offering both Diet Coke and Diet Pepsi, you could be offering Diet Coke and ZICO Coconut Water (which are both Coke products). Instead of offering both Aquafina (Pepsi) and Dasani (Coke) waters, you could be offering Aquafina and Starbucks Cold Brew (which are both Pepsi products). But by making the choice to not enter into an exclusive beverage deal, no space exists for the new, higher-margin beverage options that consumers crave.
Our clients are often surprised to hear that their employees and patients are celebrating the new variety of options available once a beverage deal has been secured.
With exclusive beverage deals, choices abound.
This leads to the second reason why beverage revolts never materialize.
2) Consumer Tastes Have Shifted Away from Brand Loyal Products
Why are Coke and Pepsi developing so many new products? The simple answer is because consumers are demanding it. And why are consumers demanding new options? Because we’re drinking less and less sugary soda.
In fact, as of 2017, traditional sodas have faced the 12th consecutive year of volume decline. Last year, beverage companies shipped 1.6 billion less cases of product than they did in 2004. (Yes, that’s billion with a “B.”)
As consumers are increasingly making the choice to purchase a bottled water or tea in an effort to cut back on calories and live a healthier lifestyle, sodas are becoming significantly less important to a total beverage portfolio.
The truth is that there simply isn’t nearly the brand loyalty to Aquafina and Dasani as there was to Coke and Pepsi. It’s the same story for Gold Peak Tea and Pure Life tea, Minute Maid juice and Tropicana juice, Naked and Odwalla smoothies, etc. Consumers are not brand loyal to these products, and therefore, they may not even notice the parent beverage company change.
3) Consumers No Longer Expect Both Coke and Pepsi
The third reason that you will not experience meaningful complaints after implementing an exclusive beverage deal is that today’s consumers have been conditioned to expect properties to only offer one beverage company’s product portfolio.
Think about the last restaurant at which you dined. Now think about the last time you were at a sports stadium. Have you walked on a college campus recently? Vacationed at a theme park? Stayed at a hotel?
Do you know what do all of these properties all have in common? You guessed it. They all have exclusive beverage deals.
On each of these properties, consumers are only offered one brand’s portfolio of products. And consumers just “get it.” They have been conditioned to accept the reality that in today’s economy, businesses choose to partner with either Coke or Pepsi – but never both. Consumers never revolt, and they never stop doing business simply because a company has made this decision. In fact, most consumers never even bat an eye.
In reality, there are only two places left in our economy where you can choose between a Coke and a Pepsi: a convenience store and a grocery store. Every other major institution and major property are already enjoying the benefits of an exclusive partnership with a beverage supplier.
There’s a reason that exclusive beverage deals have become a best practice across all industries. Why shouldn’t your organization enjoy the same benefits?
4) Beverage Deals Offer Customers Engaging Experiences
Finally, your employees and guests will not revolt because the winning beverage partner is inherently incentivized to ensure the partnership is an overwhelming success. The winning beverage partner will be making a significant investment in your business. They are motivated to realize a return on their investment by selling more of their products at your facilities (which, in turn, generates more profits at your retail locations).
Many times, our clients are surprised to see their beverage volume increase by 10% or more in the first year of engaging in a beverage deal. In every beverage deal that we have negotiated for a hospital or hospital system, the beverage volume sold or distributed actually increases in the year after the deal is signed.
Why is this? With a dedicated account service team in place and the license to properly merchandize your retail spaces, upgrade equipment, and execute periodic promotions and sampling opportunities, the winning beverage partner has tools at their disposal to focus on your business like they never had before.
Your guests and employees will notice that that there’s more beverage variety (including more of the kinds of healthier and innovative products that they want), less out-of-stocks, and more promotions around beverage items – all of which lead to a more engaging and improved customer experience.
No Revolt Necessary
Will your employees and guests revolt if you sign a beverage deal with one of the major beverage companies? The answer is a resounding “no”.
In fact, with the new product categories and increased investment from the beverage company, they just might cheer.
Contact us today to discover how much savings you could generate with a beverage deal for your system.