PepsiCo today joined rival Coca-Cola in navigating tuff economic environment with seeming aplomb in 4th qtr, scoring solid results despite foreign exchange hit. Chmn/ceo Indra Nooyi termed herself "very pleased with our results for the quarter and the full year" in light of volatility in macro-environment, noting that co met or exceeded targets in range of areas including revenue growth, margin expansion, productivity gains, free cash flow and $$ returned to shareholders. That followed KO performance yesterday that sent its shares up, tho they've since subsided. Dr Pepper Snapple Group reports its #s tomorrow morning.

PEP's organic revenue grew 5% in Q4 but was negated by 6% foreign exchange hit, leaving net revenues down a point to $19.95 bil. Operating profit dropped 15% to $2.03 bil. For full year, net rev was flat at $66.68 bil, and operating profit eased off 1% to $9.58 bil. PepsiCo Americas Beverages (PAB) segment in Q4 surpassed Street's expectations, with organic revenues up 3% and net revenues edging up 1% to $6.06 bil, even before PEP brass claim to have detected signs that lower gas prices and more robust wage growth are unlocking consumers' pocketbooks. Operating profit rose 4% to $691 mil despite higher marketing spend behind biggest brands. Latin American biz suffered from effects of soda tax in Mexico and currency turmoil in Venezuela tho region still was net contributor. In North America, noncarb volume rose 4% and CSDs decreased 2%.

Performance drew largely sanguine comments from analysts. "We would characterize this quarter as solid, particularly on margins and in PAB where like other consumer staples players an improving US consumer and accelerating c-store trends have been a key tailwind to growth," figures RBC Capital Markets' Nik Modi. From Stifel's Mark Swartzberg: "We continue to see an attractive risk/reward, based on multiples, positive earnings revision risk, and an improved long-term outlook from Trian's influence on the board." Tho activist investor Nelson Peltz's Trian recently installed PEP board member, call this morning contained no discussion of that seeming detente, tho Nooyi pointedly noted that co this year is celebrating 50th anniversary of uniting of Pepsi with Frito-Lay, generating rich returns for shareholders over the decades and providing "formula for success that our current team will continue to apply." Peltz, of course, is among those who've argued for breakup.

Nooyi continued to tout progress of "innovation engine" that she believes may be strongest in co's history, ranging from debut of Gatorade whey protein bars to expansion of Aspire foodservice system to 30+ markets. She also argued that successful entries aren't of boom-splat variety but are proving sustainable, with brands like Mountain Dew Kickstart and Lipton PureLeaf enjoying double-digit growth last year atop first-year base that already exceeded $100 mil in sales. She heralded co's diversified portfolio as being biggest contributor to US retail sales growth of all food/bev mfrs - nearly $1 bil in scanned sales, more than next 27 largest mfrs. That portfolio, of course, includes likes of Frito-Lay and Quaker on food side and Pepsi, Gatorade and Tropicana brands on bev side, tho no texture was offered by Pepsi brass on performance of any of those brands today. As KO did yesterday, PEP claims to be winning share in lotsa categories.  

Nutrition retailer GNC offered fuller rebuttal to charges from NY atty genl that range of its supplements sold in state lacked core ingredients. Pittsburgh-based chain said its review of affected items, which remain off shelves, indicated they'd all been tested during and after production using rigorous and generally accepted processes that, unlike DNA barcoding employed by NY State, are able to identify ingredients that have been stripped of their DNA during manufacturing. Co said it will keep affected items off shelves until it receives response from NY AG. Recall, AG caused furor with allegations that major retailers, including Walmart, Target and Walgreens, were selling supplements that were completely lacking in core ingredient (BBI, Feb 5) . . . Essence water marketer Hint said it's become first consumer packaged goods firm to be awarded use REAL Certified mark accredited by US Healthful Food Council. To win accreditation, brands must accumulate points awarded by registered dietitians who assess such criteria grouped as Responsible (nutrition), Epicurean (preparation), Agricultural (sourcing) and Leadership (going above and beyond).  

It's another take on so-called plant water realm - brands that, taking a leaf from coconut water, are packaging other nutritionally dense plant-based ingredients like maple water. For True Nopal Cactus Water that means prickly pear cactus, touted as only known plant to contain all 24 identified betalain antioxidants, red and yellow pigments with anti-inflammatory properties. Line was launched by financial entrepreneur Tom Zummo and former Sprouts Farmers Market cofounder Kevin Easler, operating as True Me Brands LLC out of Scottsdale, Ariz. Also in mix has been Josh Lambert, health clinic operator who's expert on alternative therapies and was serving as operations prexy until he recently departed to launch another clinic. Easler's private equity shop, Zenfinity Capital LLC, which focuses on good-for-you businesses, is core investor in True Nopal.

Partners got in bev game with functional Organic Me entries like Energize Me and Focus Me, which are still going but operating in cluttered, competitive categories. By contrast, Zummo reasons, True Nopal offers RTD version of ingredient only available in pills and concentrates. Launch is occurring at time of elevated profile for cactus within culinary circles, tho chefs generally use green plant portion rather than red fruit as True Nopal does. Prickly pear boasts advantage of being naturally sweet and clocking in at just 5 g of sugar per serving, or half that of many coconut waters. All-natural liquid is processed aseptically with no added sugar and offered in Tetra Pak box with shelf life of 16 months. Use of aseptic box was necessary to shield light-sensitive liquid but has downside of obscuring appealing-looking pinkish-red liquid, putting greater priority on in-store sampling.

Partners launched last May in 1-liter box priced about $5.99, starting within Sprouts chain; imminent is half-liter pack at $2.99 that should pave way to broader availability in c-stores and delis. By now brand is in 4K retail doors, including other natural operators like Whole Foods and Fresh Market and conventional grocers like Kroger, Ralph's, Albertson's and Fry's. Shaw's and other East Coast retailers will come aboard soon, Zummo said, and co is in discussions with c-store chains now that it has single-serve size in mix. To date brand has relied on broadline distributors like Nature's Best and Kehe, but it's eyeing DSD distribution for its push into East Coast, Tom said.

Rather than being sourced halfway around world like coconut water, cactus is ubiquitous, growing wildly on highway medians in Scottsdale and harvested commercially from deserts in Southwest and Mexico. So brand is able to ride coattails of coconut water as foundation of plant-based water segment even as it sells against segment on basis of higher nutrient levels, lower sugar and North American sourcing. Brand info at TrueNopal.com.  

Looking to rev up activity in 2015, Aquahydrate has taken debt route for latest addition to working capital, enlisting Salus Capital Partners LLC for up to $10 mil senior-secured term loan. Boston-based Salus, 3 years old, specializes in making asset-based loans to middle market, and numbers among currently outstanding transactions such retailer brands as Delia's, Ashley Stewart, Hudson Trail Outfitters and RadioShack (which just filed for bankruptcy protection). It's not clear what assets Aquahydrate has offered to secure loan. AquaHydrate ceo Hal Kravitz, former Coke exec in process of relocating from Atlanta to LA, wasn't available to discuss financing, but said in statement, "We're very grateful to have Salus Capital in our corner. Salus carries with them a strong capability in structuring loans and a passion for seeing businesses thrive." AquaHydrate's advisor and placement agent in transaction was Intercontinental Beverage Capital, merchant bank launched by Kravitz and bev vet John Carson with focus on bevs and other CPG sectors . . . As anticipated, Suja Juice Co has duly closed latest round of financing, $20 mil that taps into LA entertainment community. In making announcement, co offered greater details on investor array that includes Evolution Media Partners, which is linked to Creative Artists Agency, and such Hollywood A-listers as Leonardo DiCaprio, Jared Leto and Sofia Vergara. Evolution Media Partners is joint venture with TPG Growth, Participant Media and Evolution Media Capital, a merchant bank formed in 08 in partnership with CAA. "Since Suja's launch in May 2012, the brand has been blessed with an authentic and loyal fan following," said Suja cofounder James Brennan, restaurateur occasionally dubbed "San Diego's King of Nightlife." "We are lucky enough that some of these fans happened to be Hollywood's most respected celebrities and wanted to do more than just enjoy the juice but actually be part of the Suja Juice movement." Cofounder Jeff Church had previously indicated that new investors would provide lift to branding via social media and other levers. He's said he hopes latest round will be last outside round, which some have interpreted as meaning he's hoping for exit in coming year.  

Inevitable rush of marijuana-based bevs is under way. CannaBrands Inc, based on W Palm Beach, Fla, intro'd 6 cannabis-infused sodas to Wash State last week and followed that up with 5 flavors in Ore this week. Both are aimed at medical marijuana market, initially via dispensary partner Central Coast ReLeaf, which is owned by publicly traded Med-Cannabis Pharma. CannaBrands argues that fledgling segment already is ripe for transition to more rigorous, standardized programs. "The merging of professionally run and properly funded companies to the cottage/craft industry roots of the sector is critical to its overall success," contended CannaBrands ceo Mark Schaftlein. Med-Cannabis Pharma prexy Graciela Moreno confirmed appeal of items like CannaBrands': "Access to consistent products over a geographic range has been a challenge," he said. CannaBrands bottled soda line is being offered in flavors like Silly Citrus, Cheer Root Beer, Orange Frost, Giggle Fruit Punch and Cheeba Cola. CannaBrands also markets coffee bevs and baked goods in states where herb has been legalized. Marketers are taking variety of approaches to market: as reported, some players are going with hemp-based items legal in all 50 states (such as canned Canna Energy line shown at Expo East last fall - BBI, Sep 26) while others like CannaBrands are going right into marijuana drinks. Execs at Seattle-based Jones Soda have acknowledged they're exploring pot-based drinks as in synch with brand image but are hesitant to risk alienating sizable base of moms who purchase core brand for their kids.  

Here we go again in New York, which has been hotbed of political action vs soft drink industry, tho efforts on added taxes and limits on drink size have failed so far. Assemblyman Jeff Dinowitz has intro'd "Sugar-Sweetened Beverage Safety Warning Act" to slap warnings on sodas, energy drinks, iced teas and other sweet bevs, reported NY Post. "This is not a ban. It's a warning label. I believe warning labels contributed to the decrease in smoking," explained Dinowitz. Proposed warning label would read: "SAFETY WARNING: Drinking beverages with added sugar contributes to obesity, diabetes and tooth decay."  

Dean Foods shares have suffered steep drop in trading this morning, off 12.5% as co revs and profits missed expectations. Dean reported revenues rose 4.3% to $2.40 bil in Q4, falling slightly short of analysts' expectations of $2.43 bil, per Thomson Reuters. Net income swung from $38 mil loss to $5 mil gain in qtr vs yr ago. EPS on adjusted basis came in at 8 cents per share, 2 cents short of expectations. DF reported volume decline of 2% in qtr, 0.6% for full yr, which co noted was "significantly better" than total milk category. "Fluid milk costs remained elevated during the quarter and continued to negatively impact the overall health of the category by causing volume declines beyond what we consider a normal trajectory for the category," said ceo Gregg Tanner.

For full year 2014, DF net income was down $20.3 mil, or $0.22 per share, on revs of $9.5 bil. Dean anticipates EPS gain in range of 12 to 22 cents per share in first qtr this year. "Given the structural costs we have removed from our system and the multiple inherent benefits that come with cheaper raw milk, we expect our 2015" results to be "substantially better," assured Gregg.  

They're not ready to crank the amplifier up to 11 yet, Spinal Tap-style, but the team at Reed's Inc is adding another tier of ginger intensity to their 2-tier core offering: at Expo West natural foods extravaganza in a few weeks they'll debut Reed's Stronger Ginger Brew, sporting 26 g of fresh ginger root per 7-oz bottle. New offering, with purple label and sunset scene within brand oval, buttresses Original Ginger Brew, with 17 g of ginger per 12-oz bottle, and the Extra Ginger Brew that was added 5 years later, with 26 g per 12-oz bottle. That makes new offering nearly 50% stronger and, coming 20 years after last extension, "probably way overdue," said Reed's founder/ceo Chris Reed. New offering is targeted in part at cocktail set, with recipes for Moscow Mule and Dark & Stormy imprinted on 4-pack carrier, as well as those who've been climbing intensity scale via Reed's and other brands. Tho ingredient costs come in a tad lower, the premium for 7-oz bottles means Reed's will line-price Stronger with 12-oz 4-packs of its existing versions.

Reed's Soldiers On with Kombucha Push Also at food show in Anaheim, Calif, in early Mar, co will formally intro its Culture Club Coffee Kombucha, which was teased at East Coast version of show in Baltimore last Sep. Tho other coffee-infused kombuchas are available from likes of Revive in Bay Area, Reed believes his may be only one to actually grow culture in the coffee itself. He's hoping entry adds momentum to Culture Club expansion, which has lately had to withstand launch of a newer, well-funded rival from KeVita, even as Whole Foods remains reluctant to pick up another national brand besides leader GT's. Culture Club brand is faring well with consumers, Chris said, but vowed: "We're going to win in kombucha one way or the other, even if we have to private-label it." Tho ceo seems resigned to kombucha push being a long slog, he said Reed's is close to announcing several new grocery-chain authorizations for brand.

Marketing Likely to Stick to Basics in 2015 Tho co has thought out loud to investors about moving toward greater consumer push effort behind its sodas as volume grows, and even toyed with modest TV effort last year, co seems likely to stick to tried-and-true basics this year, after all. Tho TV effort "was not a bad thing," Reed said he's not yet convinced it generated solid return, and is more inclined this year to focus on fundamentals like improving production economics, while keying marketing to in-store sampling efforts and presence at music fests and other fun events where consumers can be reached directly - to "just show up to sample, and be there at fun times," as he put it.  

Coca-Cola shares enjoyed lift in trading this morning as soft drink giant beat Street's expectations as it enters what it's said will be a transition year. On conference call this morning, KO brass upheld their commitment to maintaining more rational pricing implemented over past year, and said they anticipate slightly delayed closing of Monster Energy transaction, now expected in early Apr, not Mar. Meanwhile, BBI hears that termination letters to Bud houses started going out last night for transition to Coke bottling system on Apr 5 - Easter Sunday. "Nice Easter egg!" one Bud distributor noted drily. As reported recently, with some Bud houses entitled to 60 days' notice, questions had been building about status of deal among rank and file of both cos as chances of hitting original Mar transition target appeared to wane (BBI, Jan 23). Tho Coke cfo Kathy Waller stopped short on conference call this morning of saying deal is wrapped up, termination letters indicate parties don't anticipate significant snags any longer. As often reported here before, this is momentous transition that will sap significant share of profitability from many Bud houses and put them at crossroads regarding their participation in NA segment, even as it steps up KO commitment to energy segment.

For Q4, net operating revenues slipped 2% to $10.87 bil. Operating income plunged 31% to $1.45 bil. That left full-year revenues off 2% at $46 bil and operating income down 5% to $9.71 bil. On global basis, CSD volume rose 1% on strength of Coca-Cola, Sprite and Fanta brands, and noncarbs rose 2% thanks to performance of iced tea, sports drinks and bottled water, partly offset by declining juice category. KO ceo Muhtar Kent warned, "We continue to see 2015 as a transition year, as the benefits from the announced initiatives will take time to materialize amidst an uncertain and volatile macroeconomic environment."

In core North America market, unit case volume edged up 1% thanks to 3% rise in noncarbs even as sparkling stayed flat. Price/mix gain of 4% helped lift net revenues by 2% to $5.37 bil. But operating income fell 22% to $432 mil, hit in part by $89 mil in restructuring costs as pursues downsizing program. Coca-Cola brand grew "slightly" in US.

Monster Closing Delayed but Imminent, Says CFO KO cfo Kathy Waller said co anticipates closing Monster deal "beginning of 2d quarter," a bit later than anticipated but with no material changes to originally announced deal, which calls for $2 bil investment for 16.7% stake in MNST and big brand swap between cos that will see MNST collect and manage all of KO's energy brands. Back in Dec, KO had said it expected deal to close by end of Q1; ground troops on both sides have been restive as 60-day notification period has lapsed for some Bud wholesalers. But word that letters are going out suggests that whatever issues remain aren't viewed as thorny.

Committed to Pricing Discipline KO, once viewed as primary aggressor on steep promotional pricing, avowed commitment to rational pricing in coming year. "We feel good about the actions taken and how the trade is responding," said evp Irial Finan. N Amer prexy Sandy Douglas noted that price realization plan is getting boost from consumers' continued embrace of smaller CSD packs, such as minicans, which scored further 15% gain in Q4. (Smaller portions offer lower calorie count, tho consumers pay more per ounce.)

Reiterates Refranchising Schedule KO brass reiterated that they're making steady headway on refranchising initiative in N Amer, closing several transactions amounting to 5% of bottler-delivered biz in 2014, and anticipating definitive agreements in this year's first half for similar amount. Program will continue to accelerate so that one-third of N Amer bottler volume has transitioned by end of 2017, with remainder anticipated by 2020 at the latest.

No Answers Offered to Wintergreen Advisors' (Rhetorical) Questions Aiming to keep pressure on, activist investor Wintergreen Advisors yesterday issued list of 8 loaded questions it would like to see addressed on today's conference call. Sample: "On the Dec. 15, 2014, modeling call with analysts, Coca-Cola cfo Kathy Waller acknowledged that Coca-Cola's 2010 $13 billion acquisition of the North American bottling assets of Coca-Cola Enterprises will apparently result in a zero percent return, at best, over nearly a decade. We think this is a shockingly bad investment. Who is being held accountable?" Or: "How many secret bonus shares have been granted under Article 13 of the 2014 Equity Compensation Plan without regard to meeting performance hurdles?" No response from KO brass today to any of those questions/gibes.  

Bindra Madoo can offer worm's eye view - from a crouch in front of shelves - of working Whole Foods stores in NY. Trinidad-born bev fixture in NY, now 47 and boasting stints at Reed's, AriZona and ONE Coconut Water, among others, spotted unmet need a few years ago, noticing how otherwise promising new brands were getting lost in shuffle at city's Whole Foods stores, getting discontinued before they'd had fair shot, their ambitions left sputtering. So he hung out a shingle as one-man merchandising crew in 2012 under name BSJ Merchandising Sales Services, and started by approaching husband-and-wife entrepreneurial teams who were betting their success on thriving in city's expanding network of Whole Foods emporia. He charges monthly service fee, without commission. By now, at least a couple of rivals - one a former ONE colleague - have followed him into realm, creating little cottage industry of Whole Foods merch specialists. Retailer is happy to accommodate these indie outsiders because they ease its own labor burden.

Currently Madoo manages array of 22 brands, many of them snack entries like chocolates, seaweed and energy bars, but also bev brands like Sambazon acai drinks and Fever Tree mixers. In addition, he assists trio of merchandisers employed by distributor Dora's Naturals, whose portfolio includes such major brands on natural side as GT's Kombucha, BluePrint cleanses and Harmless Harvest coconut waters and teas. He claims that overall his brands are up 60% in retailer's NY stores. "Nobody's complaining," he said of clients. To manage expanding workload, Bindra just brought on his first full-time employee.

Routine is to walk store each day with buy, placing orders for each brand client, then finding the delivery and packing it out onto shelves the following day, at every Whole Foods store in city. Relationships are key: each Whole Foods operates slightly differently, team leaders are rotated frequently, and all bring different approaches and have authority to resist regional mgr if they feel strongly about prospects for given brand. Formal planograms are set only once a year; after that, it's team leader's discretion what to do with bev cooler. "If you show up just once a month, there isn't much you can do (to influence process), even if you have a regional manager," Madoo warns.

Madoo makes sure to put on "full-court press" on Columbus Circle, Union Square and Tribeca stores, all among retailer's top-5-grossing units nationwide (Madoo believes Columbus Circle is #1). Even retailer's first NY store, cramped unit in Chelsea with lines snaking thru aisles, ranks among top 10. By contrast, velocities drop off markedly in suburban stores in NJ, so Madoo has let those go for now. Here are a few of his rules of road for succeeding at Whole Foods:

(1)  Be diligent about capturing orders for brand every day, then packing out store the following day.
(2)  Always be looking for incremental space and secondary placements at the checkout line or by salad bars, and create floor stacks when on promo.
(3)  Be available to assist with resets, labor contribution which gets you on good side of buyer.
(4)  Ensure that tags are always on the shelf.