What’s hot (and cold) in beverage trends: Times Square DRINK bar
The pace of change in food and beverage culture is accelerating at near breakneck speed, driven by consumers’ desire for new, higher-quality and exciting taste experiences. While Big Food companies struggle to keep pace with desire and demand, there is a host of beverage makers popping up on the scene that are often out ahead of the taste and experience curve.
It is these emerging beverage brands that are the new disruptors in the industry. These brands not only showcase careful attention to production methods but also offer compelling narratives around quality ingredients and unique stories behind the origins of the brands.
The major hurdle for any young, innovative, emerging brand is one of exposure and distribution. They are often geographically limited in terms of retail shelf space and appearance on restaurant/bar menus. Without a significant infusion of capital, a great prospect beverage brand is too often confined to its own locale.
Ah, but change is afoot!
In December 2016, DRINK, a nonalcoholic beverage bar concept, was launched inside the Times Square flagship store of American Eagle Outfitters. DRINK is the brainchild of venture capital firm Cleveland Avenue, founded by former McDonald’s CEO Don Thompson, who developed the bar concept with American Eagle. The project was spearheaded by Cleveland Avenue Managing Partner Zoe Feldman, a former senior associate of business innovation with PepsiCo, who has been involved in the beverage industry for nearly ten years.
Hartbeat had the opportunity recently to catch up with the energetic Zoe to learn more about the drivers and the allure behind DRINK bar. Here are the highlights of our interview.
HB. There is a great variety of emerging alcoholic and nonalcoholic brands entering the market today; can you talk a little about why you're focused on nonalcoholic brands?
Well, we focused on nonalcoholic beverages because we're located inside a teen retailer, so obviously from that purview we couldn't have alcohol in the space. In addition, nonalcoholic beverages are finally going through such an exciting period of growth in the market and with consumers — it’s a period about ten years in the making — and there are tons of interesting brands with strong founders and amazing backstories to be told to a large audience.
With so many small, interesting brands appearing in the market (we saw in a Bevnet.com interview with you that you were focusing on 20 different local, regional brands), how did you decide on what to offer?
We wanted to be able to highlight a relatively small group because we only have so much space. Also, since it's a beverage bar concept for teens at a teen retailer, we really want to showcase small, interesting brands. A number of the brands build on my relationships with a lot of these entrepreneurs, some of whom I’ve known for years. As far as "local" goes, we're working to find the best, so I really don't think they're just local but rather more regionally relevant, from across the U.S.
You're offering a pretty wide range of beverage experiences, what seems to be popular right now?
Things are quite seasonal: it's been really cold in New York, so the coffee is doing really well. We have this beautiful, custom coffee machine from La Marzocco that we had designed specifically for the space by the woman who is the owner, operator and roaster of Supercrown Coffee in Brooklyn, who we partnered with for the coffee program. All hot beverages coming from the machine are doing well — the hot chocolate from Vermont is particularly popular, and we also have hot teas from Charleston and hot apple cider from Red Jacket Farms in upstate New York. Actually, though, aside from hot beverages (and I can't say I'm surprised by this) is the fact that people love our slushies.
Slushies — that's interesting.
Yes, slushies are fun. The slushy-concentrate company from Brooklyn (Kelvin Slush Company) is the only one that uses no artificial colors or flavors. They're all-natural and use cane sugar. Their product is delicious. They have five SKUs right now, and they're working with us to develop some more interesting flavor concepts for the space and the audience.
How do you introduce consumers to what's in the café? We noticed from the Bevnet piece that you had sampling and demos: what's the most common way for them to get introduced to what you have?
We have a brand book that we created, which we leave on the counter for any curious customers. We put the brand book out so we can educate customers about the brands they're trying and the makers behind the brands. People will pick it up, and they'll kind of look at it, and some will ask questions of the baristas and the staff. It brings engagement to the customers.
We also have a large map that's in the window as a static cling. It's a map of the U.S., and we darkened out where all of the entrepreneurial companies are from. It shows that we've got people and brands from all over the country. We thought that was important to show because it's challenging to merchandise this concept. We're limited by wall space. So we rely on the window clings, the counter and the staff of DRINK to talk customers through the products. People love sampling, and we do have a sampling program in place. When it gets warmer we'll probably have people stand outside, offer samples of the slushies, the sodas on tap and iced tea on trays.
We're going to have a large event in about three weeks with some of the entrepreneurs coming in, talking about their product and their platforms. Obviously, for us that will be a coup, and for them it's extremely exciting. American Eagle has really been a great partner: they really wanted to offer their customers a unique, differentiated experience from their competition. DRINK is certainly that experience.
Can you talk about some of the thinking about being located within an apparel retailer?
The concept of putting in a regionally relevant, nonalcoholic beverage bar, so to speak, was really exciting and a great opportunity for us. It's fun to put products in different platforms and see how they sell within a totally unexpected market. We have a captive audience from all over the world that want to try new things in an experimental setting, which is perfect for testing these small brands.
Right, we've been keeping track of food and beverage appearing everywhere: Nordstrom has its cafes. And we’ve seen food and beverage making their way back into all kinds of apparel stores. It was there forever and then it kind of went away, and now it's come back again. Do you think that DRINK and the concept of a store-within-a-store has opportunities in other directions?
Sure. I think traditional retailers are really looking for a way to differentiate, from my own experience as a consumer as well as from many conversations I’ve had with retailers in various verticals. Thankfully, in beverages, the margins are high, but in traditional markets you see them largely dominated by Coke and Pepsi portfolios. But then you have more modern, fast casual 2.0 restaurants that are experimenting with different smaller beverage companies, which is great. Whether it's Maine Root on fountain or whether it's having DRINK Maple in a bubbler, concepts that are tailored more to my personal demographic are really looking to differentiate their beverage offerings as much as their food. Also, some of the bigger, more established Starbucks of the world have brought in local beverages. They're putting them in their reach-in coolers in the front of the store because they are brick-and-mortar, so they obviously have the shelf space that they can control. Again, that’s a great opportunity that has largely been untapped until very recently.
I think other retailers want to differentiate and take the dollar away from e-commerce. They want people to be rewarded for actually doing brick-and-mortar shopping. It just makes a lot of sense to me that eventually there are going to be a couple leaders paving the way for bringing in regionally relevant products, especially in beverage. Beverage is much easier than food, for a wide variety of reasons. And it’s now finally time for nonalcoholic beverages to have their day in the sun! I’ve been seeing retail-within-retail grow in popularity in the last 18 months. Businessweek even did a trends piece on it in their year-end issue in December, predicting it would be huge in 2017. There are so many ways to approach those concepts creatively, and I hope we have the opportunity to do more of them.
Want to get ahead of the curve insights on the trends reshaping food & beverage culture? Dip your toes into a tailor-made subscription program with Hartman Retainer Services. Learn more.