Big Soda's xXx-treme advantage
Big Soda's xXx-treme advantage
Can Coke's data-harvesting "holy grail" boost its boozeward march?
Editor’s note: This is the final regular edition of Fingers for 2022! Over the next couple weeks I’ll be sending out some exclusives for paying Friends of Fingers. There’s also a fun little bonus at the bottom of this email, so now’s a great time to buy a subscription if you haven’t yet! Beyond that, I’m going to take a little break rest up for whatever fresh hell emerges in 2023. Hope you’re able to do the same. Happy holidays, Fingers Fam.—Dave.
There’s a scene in the 2002 special-operations documentary xXx where Xander Cage’s Russian-ish arch-nemesis Yorgi gets a call from a tipster peddling dirt on the skateboard miscreant-turned-undercover state operative. “Information? Yes, I can always use informatske,” he says. I think. I actually haven’t seen it in awhile. Did you know they made four of these movies and they’ve grossed like $700 million? That seems like a lot, right? Anyway, my point is, Yorgi understood that information is vital to the smooth function of any organization. Whether it’s Anarchy 99, his nefarious death-cult of Eastern European supersoldiers that somehow only Vin Diesel is qualified to bring down, or one of the largest beverage firms in the entire world (same diff minus Vin Diesel and the super-soldiers, amirite?!), reliable, actionable data and insights are the lifeblood of operational success.
Which brings us to the incredible strategic potential of Freestyle, a type of Rollerblading that Xander Cage probably enjoyed before the Deep State shanghai’d him into skulduggery in the former Soviet bloc Coca-Cola’s touch-screen beverage dispenser. As Christopher Doering reports for Grocery Dive (emphasis mine):
There are more than 50,000 Coca-Cola Freestyle dispensers in use today that pour more than 11 million drinks daily, according to Coca-Cola. Each pour from the 32 different brands available generates a treasure trove of valuable data that the Atlanta-based company combs through each day.
Talk about informatsiya, boy! “We’re able to use that data to help inform some of our innovation strategies in our bottle and can line of business,” a Coke exec told Doering, which is a cubiclese for “we see what people combine the most, and then we make those combinations to sell to more people in more places.” cApItAlIsM bReEdS iNnOvAtIoN, as they say, and the best innovations are the ones where thirsty rubes volunteer to be taken advantage of by your WiFi-enabled hypertension dispenser. As beverage copacking vet Mark Gallo put it, “Freestyle is a better consumer facing name, but internally Coke probably refers to the machine as ‘Sodata.’”
Of course, signals and noise can be hard to separate. That, plus the plodding cadence of CPG megacorps generally, may be why Coke has only managed to squeeze four packaged product launches out of all those sweet sweet Freestyle data for the past 13 years. But still: it’s a powerful tool for figuring out what people want to drink when they want to drink it, and there’s not a drinks firm in the world that doesn’t want that intel.
Despite its Sports Authority private-label wakeboard brand-ass name, Coke’s success with Freestyle is genuinely interesting on its own terms.1 But I want to make two points about the machine’s relevance to the beverage-alcohol industry, both of which are not-great news for incumbent booze. First of all, Coke is already making alcoholic beverages, and they’re all but certain to make more of them soon. Doering describes Freestyle (rightly, I think) as a “holy grail” for Coke because of how much visibility it offers into the drink decision-making process of its customers through an information stream it controls. Big consumer packaged goods firms like Coke or Molson Coors or Diageo can pay for market research, focus groups, and trend forecasts until the cows come home—and make no mistake, they do—but having a data-based, owned-and-operated guardrail they can rely on when gut-checking those insights against customer behavior is powerful stuff. Given they’re actively alco-fying their soft beverage portfolio, those Freestyle data can shed light, albeit indirectly, on where Coke’s booze ambitions need to go.
That could be a big deal, if—if!—the company can execute. (IF!) What makes it potentially bigger is that there really isn’t anything like this in the American booze business. None of Coke’s rivals with roots in hard drinks have 50,000 P.O.S. placements in retail locations feeding reliable, real-time data back to their motherships about what its customers want to drink. Given this country’s three-tier system for establishing provincial sinecures regulating the distribution and sale of alcohol, a Freestyle-type unit operated by, say, Molson Coors would be at least a few different kinds of illegal in pretty much any U.S. state. It also wouldn’t comport with actual drinker behavior: compared to soda, there are precious few opportunities2 for mixing and matching malt-based beverages.
Even cocktails wouldn’t really work here! The beauty of soda is that it’s all just shelf-stable syrups and carbonated water. Good cocktails are made with alcohol produced, shipped, and stored as heavy liquids, some of which need to be refrigerated after opening, and many of which benefit from fresh garnishes at presentation. (These are just a few of the reasons automated cocktail makers like Bartesian and Bev by Black & Decker have not put home mixology out to pasture.)
None of this is to say Big Beer hasn’t barked up a tree like this before. Quite the opposite, in fact. Both directly, and through its venture arm ZX Ventures, ABI last decade acquired stakes or outright control two Keurig-style countertop appliances meant to replicate the bar experience at home—Drinkworks, and PicoBrew. The explicit goal of all this action was building out direct, trustworthy new pipeline for drinker data. ABI wasn’t happy with the results. 3 the company later wound down its involvement in both companies, which entered bankruptcy apace. (NB: Its joint-venture partner in the now-defunct Drinkworks project was Keurig Dr. Pepper, a non-alc heavyweight that just made a $50M beer-ish investment in the Allbirds of abstaining, Athletic Brewing Company. Make of that what you will.)
Meanwhile, Coke’s Freestyle fleet keeps growing, and the data keep flowing. Right now, the device is still, as one consumer staples researcher told Doering, a “slightly underappreciated asset” in the firm’s trend-detection and flavor R&D arsenal. Whether it takes on a more significant role in Coke’s alcoholic ambitions in the future, like also underappreciated asset Xander Cage did in U.S. counterterrorism under the wizened tutelage of enigmatic spymaster Augustus Gibbons remains to be seen, of course. But consider me xXx-tremely curious to find out.
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🤝 Bonus: The past year in Twitter trending topics about drinks
As you may have heard, The Most Divorced Guy On Earth™️ is currently remaking Twitter in his sallow image, turning it from a chaotic-but-vital communications platform into an insolvent-and-capricious bootlicker repository. As such, people are trying to save what bits of digital history they can from the site before it makes like a Tesla and explodes in a fiery ball of hubris and labor exploitation. One effort I found interesting was Brian Feldman’s: the writer and author created a nifty little site, WhatsHappening.online, to catalog Twitter trending topics and descriptions from 2022.
It’s really fun to poke around in! I scrubbed through the database (which is deliberately subjective and incomplete, per Feldman’s mission statement) to see what wisdom it held for anyone trying to figure out what the past year was like for beverage firms. Here’s what I found (all sic):