When large and established companies are deciding whether to invest in an emerging brand, what do they want to see?
For a smaller company, working with a strategic partner can mean greater resources, knowledge and growth that it otherwise would not have. In our recent interview segments with innovation and marketing consultant Vivian Rhoads, the focus has been on developing a cost-effective and well-planned marketing strategy. This week, we speak with Rhoads, a former PepsiCo executive, about how large companies go about identifying new investment opportunities.
Prior to starting her own consulting company, Verge Strategy Inc., Rhoads was the marketing director in charge of venture and category innovation at Naked Juice (which is owned by PepsiCo). Based on her work and experience, Rhoads identifies common traits of successful emerging brands, explains why an emerging brand might want to be acquired and the assistance it can receive once under a bigger umbrella.
Not one for speaking in generalities, Rhoads also detailed specific points on just what larger companies focus on when considering and evaluating investment in small and early-stage brands.
“When a strategic investor looks at a small company, they’re mainly looking for what’s the strategic fit that they could see the company if they were to acquire it,” Rhoads said. “They’ll be looking for the sales levels, the velocity, is there a loyal consumer and can that consumer really articulate what the brand benefit is. Do they have the right cost structure, meaning, with scale are they able to make money and make more money? Very often, some brands are not able to scale, meaning there’s not the manufacturing capability or even the supply of products if the brand goes bigger.”
Hear much more from Rhoads on strategic investment by watching this interview in its entirety. Also, be sure to catch an additional segment filmed with Rhoads on identifying innovation, in which we discuss brand and line extensions and how to define what categories a brand can and should be extending its resources.