Starbucks scored another strong qtr to start fiscal year, in process acting more like cutting-edge technology co than operator of everyday coffee shops. Net revenues increased 13% to $4.8 bil and operating income rose 13% to record $915.5 mil, as co harnessed array of digital and mobile-technology tools to boost traffic and register rings. "Starbucks' record Q1 fiscal 2015 financial and operating performance was exceptional by every metric and standard," exulted chmn/ceo Howard Schultz. "Our reimagined in-store holiday experience that included a vastly expanded assortment of Starbucks Cards, new holiday food, beverage and merchandise offerings and the opportunity to win Starbucks for Life resonated powerfully with our customers and drove both increased traffic and tremendous excitement in our stores and around the Starbucks brand."

"Grande" results with a "venti" outlook, headlined Wells Fargo's Bonnie Herzog. "SBUX remains ahead of the curve (and its competition) in identifying secular consumer shifts, particularly in mobile technology," she wrote. "We believe this foresight combined with SBUX's robust innovation pipeline, impressive execution and financial discipline positions it for impressive near and long-term results."

In keeping with tech theme, co even elevated former IBM, Juniper Networks and Microsoft exec Kevin Johnson to prexy/coo, succeeding longtime exec Troy Alstead, who's headed for sabbatical in 2 mos. Johnson has served on SBUX board since 09 and move is "not part of an unannounced succession arrangement," Schultz emphasized. But he brings valued operations, mobile and digital expertise, Howard noted.

Along way, co indicated it will accelerate premiumization push aimed at leapfrogging so-called "third wave" roasters who've taken high ground with specialty offerings vs commodity image of Starbucks. Cutting-edge Starbucks Reserve Roastery and Tasting room that opened in Seattle last fall has received "overwhelming response," making for strongest opening in 40-year-plus history of co, setting new records every week, Schultz said. As reported, new facility is experiment in elevating emotional connection with customers, even as its small-batch roasting capacity enables co to diversify offerings of limited-quantity coffees and expand availability of micro-lot coffees to 1,500 SBUX locations ultimately. Co had already announced intention to open roastery in Asia next year, but ceo disclosed on investor call last night that co already is planning 2d US operation in "major" market. Also in works are smaller-footprint stores suited to denser urban areas, including pending pilot of stripped-down express locations in NY that integrate mobile order and payment (MOP) system that's been testing in 150 stores in Portland, Ore. Meanwhile, MOP is being rolled out to additional 600 Pac NW locations and should go national later this year.

Analysts were hard-pressed to find weaknesses in performance, tho some noted that N Amer transactions edged up tepid 2% (tho transaction sizes added another 3% to growth) and that register rings in burgeoning China market actually dipped. Longstanding SBUX weakness, food, seems to have turned corner with acquisition and integration of La Boulange bakery chain, and franchisees' increases in food orders were key reason for strong gains with them. And Schultz continues bullish on potential to double tea segment to $2 bil within 5 years, with Teavana not Tazo now the key premium vehicle. Teavana is expanding to Asia/Pacific, adding new channels of distribution and broadening line of well-received hand-crafted items like shaken iced tea and lattes for Starbucks locations. As noted last week, Teavana recently took Tazo's place as hot-brewed tea offering in Starbucks stores. 

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Folks involved in DSD startup in Fla under Onli Choice moniker (BBI, Jan 16) didn't get back to us in time with more detailed info of sort that some readers have since requested. Distributor currently operates 4 routes with 2 more due to start up Feb 1. Dedicated sales team of 5 supporting affiliated Onli bev brand in grocery accounts is also assisting brands in DSD house. Its warehouses are located in W Palm Beach and Tampa.  

Oakland, Calif-based Numi Tea has hitched onto turmeric bandwagon with 4-flavor tea collection, even as it's brought on Green Mountain Coffee and Mediterranean Snacks vet Tim Aldrich as its new svp sales. Turmeric line joins such other targeted collections as chocolate-based Indulgent line and hunger-allaying Savory collection, in flavors like Carrot Curry and Broccoli Cilantro. While Indulgent line has performed well at retail, Savory line has proved tougher to explain to consumers. To boost latter, Numi has been devising tempting recipes, including one from Omega Institute, org that's influential with many core consumers.

Turmeric collection taps into ayurvedic ingredient that's buoyed such RTD entries as Turmeric Alive with promise of combating inflammation and aging, and aiding digestion. Launch was inhibited by lack of fair trade option in turmeric, so Numi in 2013 embarked on yearlong process of educating and funding Madagascar farmers on 5-step process to qualify their crops. Teas are departure from many turmeric products on market by using big granules, not powder. They're available in 4 blends: Three Roads (blended with ginger, which hails from same plant family, as well as licorice), Fields of Gold (chamomile and lemon myrtle), Amber Sun (rooibos, cinnamon and vanilla) and Golden Tonic (lemon verbena and lime). Price is $7.99 per 12-bag box.

At Show, It Was 'Time for Turmeric' Fancy Food Show sponsor, Specialty Food Assn, noted turmeric as key flavor trend at this year's show. It pointed to such other entries as Rishi Tea's Turmeric Ginger Tea, HealthVerve's Turmeric Rice, Bruce Cost Ginger Ale's Passion Fruit Ginger Ale with Turmeric and Navitas Naturals' Turmeric Tamari Almonds.  

B Icelandic Glacial Water, which has been seeking deeper penetration in its core natural channel in NY, is moving some distribution out of its national distribution partner and investor Anheuser-Busch to local specialist Dora's Naturals. Dora's will pick up responsibility for brand in all channels in its NY territory outside Manhattan, in some cases paying invasion fees to A-B shop, and in non-licensed accounts and select other accounts inside Manhattan. Latter will include some licensed natural grocers that typically won't accept NA brands off beer truck, a severe hindrance to A-B in servicing those accounts, explained Dora's biz development chief Chris Psuik. "A big part of our growth is in natural - that's the DNA of our brand," added Icelandic Glacial cofounder Kristjan Olafsson, who stressed that arrangement doesn't signal any lessening of ties to A-B.

Dora's Adds HPP Unit As so-called Bud "branch" operation owned by A-B, NY house in past had long been single-mindedly focused on building Bud Light, Michelob and other core A-B brands, and as consequence saw its Monster Energy brand migrate to another NY shop, Big Geyser, a coupla years ago. Dora's, meanwhile, has harnessed refrigerated distribution capacity of its affiliated Elmhurst Dairy biz to come on strong in DSD, carrying such fast-growing superpremium refrigerated brands as GT's Kombucha, BluePrint Juice and Harmless Harvest Coconut Water. Lately, it's moving into production end of high-pressure processing, installing modest Hiperbaric HPP unit for anticipated startup next month, and planning move to more substantial unit down line.  

"Truce of sorts" has been reached between PepsiCo and activist investor Nelson Peltz, in words of NY Times, with word that Peltz partner William Johnson will be given seat on bev marketer's board. When he joins PEP board on Mar 23 he'll be only 2d outside member, along with Colgate's Ian Cook, noted CLSA's Caroline Levy, who's been receptive to Peltz's plan to split bev and snack components of PEP. "Trian's campaign in favor of structural alternatives had been quite contentious, but all appeared to have been forgiven on Friday," she wrote, noting Peltz's praise of PEP chmn/ceo Indra Nooyi's "commitment to operational excellence," and Nooyi's reference "valuable input to many aspects of our business" from Peltz vehicle Trian. "While this does not ensure harmony indefinitely, we do not see a proxy battle being waged at least in the next year or so," she figures. Johnson's affiliation with Peltz goes back to activist investor's run at Heinz in 06, where Johnson was incumbent chief but eventually forged understanding with Peltz.

Times notes that Johnson appointment highlights new initiative at Trian, dubbed Trian Advisory Partners, to "help the firm identify potential new investments and to provide advice for management teams," as at PEP. Besides Johnson, inaugural members of TAP are former Legg Mason chmn Dennis Kass and Marathon Oil chmn Dennis Reilley.  

Lifeway Foods, leading supplier of kefir bevs, "is talking to investment bankers about a possible sale," reported NY Post. Danone, which holds 20% stake in co, is "the most logical suitor" but reportedly isn't interested in expanding its holding, source told tabloid paper. Danone "has the right to match" any offer but per agreement with Lifeway it "can't stop a sale." Lifeway declined to comment on report . . . After winning $1.7 mil judgment against Monster Energy for copyright infringement, attorneys for The Beastie Boys now want co to pay out another $2.5 mil to cover their fees. "Monster failed to engage in good-faith negotiations to resolve this matter and repeatedly sought to increase the cost of ultimately litigating this matter," wrote lawyers from Sheppard, Mullin, Richter and Hampton LLP in Jan 17 brief, per NY Daily News.  

Having depleted all $10 mil from its first private-equity fund on single entity - Runa Guayusa and its South American supply chain - MetaBrand is raising capital for 2d fund whose $25 mil will be dispensed in smaller increments among broader array of emerging food, bev and supplement players. MetaBrand founder Eric Schnell said $10 mil raised for initial MetaCapital fund had been intended to go to 4-5 small cos, but potential surrounding Runa led to decision to deploy nearly $6 mil to Brooklyn-based co and remaining $4 mil to growers and other parts of supply chain in Ecuador. New fund should support roughly 10 investments, he said. Runa, of course, has made yerba-mate-like guayusa ingredient center of product range that includes RTD bevs, energy drinks and loose leaf guayusa sold under its own brand and supplied to other cos like Mighty Leaf and Mamma Chia. Eric said MetaBrand plans to formally unveil fund at upcoming Natural Products Expo West in Anaheim, Calif, in early Mar. Philosophy of MetaBrand's capital approach is to meld patient view of angel investor with assistance in best practices offered by conventional private-equity shops, tapping into MetaBrand's own extensive expertise in areas ranging from product formulation to distribution.

Vita Coco's Kirban Now Investor, Advisor; Matusow, Rubenstein Join Runa Team Interesting news on Runa front too: Schnell said Vita Coco cofounder Mike Kirban has been enlisted as investor and member of advisory board, even as Vita Coco's marketing dir, Jeff Rubenstein, has segued to similar role at Runa. Meanwhile, former NY-based Sambazon acai exec Richard Matusow has come aboard as prexy of Runa. Both have been given interim titles until it's clear they're good fit with Runa's culture, Eric noted.  

Just a few months after Coca-Cola's poorly executed reformulation of Vitaminwater drew consumer backlash that forced return to original recipe, its Honest Tea brand seems to be weathering smaller-scale eruption. Looking to go broader this year, organic, fair trade brand has switched in recent weeks to taller, lighter-weight version of its half-liter PET bottle that's often been seen buckling on store shelves, even as efforts with some flavors to dial up the sugar or incorporate stevia in sweetener blend are arousing ire of Honest Tea loyalists on social media. But this kerfuffle seems to be heading toward different outcome: unlike case with Vitaminwater, Honest Tea appears to have moved immediately to engage complainers and to undo less successful flavor tweaks. As always with social media, it's hard to say whether angry posts reflect broader reaction - as proved case with Vitaminwater - or just a few squeaky wheels among consumer base. Revamped PET bottles sport new labels that dial up brand's distinctive hollow-T motif, do more to emphasize that it's organic and "just a tad sweet," and characterize serving size as full bottle rather than 8 oz, reflecting that most consumers drink full bottle at a time.

A smattering of Facebook posts on flavors over past coupla weeks: "What's with the stevia in the Half Tea & Half Lemonade? Yuck I took a few sips and poured the rest down the drain." "Wish you hadn't reformulated the Peach Tea. For a long time I enjoyed the low calories and low sugar. Won't be buying any more." "Why did you feel like you had to add more sugar to the green tea and honey? I know it was only 1 gram but the reason I enjoy this tea is because it's less sweet." "Noticed that with the 'New Look' came an increase in the grams of sugar on your Lori's Lemon Tea. Very disappointed customer here." Perhaps reflecting different demo that purchases Honest Tea, comments generally adopt more polite tone than often-abusive posts that greeted Vitaminwater redo.

As for new bottle, which is often seen in stores with indent in shoulder: "Your new plastic bottle design is not as hearty as the old design. Don't know if you tested it, but every bottle of the new tea bottle that I have gotten has a big dent in the upper portion."

Honest Tea cofounder Seth Goldman noted that not all complaints are well informed, but those that are have been directly addressed. "Despite their reputation as label readers, you'd be surprised how many HT consumers we've heard from who are complaining that we've doubled the calories in the drink, which of course, we haven't, we've just switched from talking about calories per bottle instead of per 8-ounce serving," he noted. Seth said change to Lori's Lemon was unintentional result of changing tea ingredient to less coarse cut, and has already been corrected. Co's forthright response to complainers: "In an effort to improve Lori's Lemon Tea, we made some changes-most notably to the proprietary blend of organic and Fair Trade Certified black tea leaves we use. Our aim was to make it taste better, but we've been hearing from fans such as yourself that it isn't the case. So we're going to switch back to our original tea blend and make a few other tweaks to get it back to the flavor you know and love."

Similarly, change to Half & Half has been scrapped, and co is offering complainers the older version as peace offering. Its message: "We thought we were making Half Tea & Half Lemonade better by adding a touch of stevia - and we're hearing from our fans that they don't like it. We're listening, and will change back to the beloved original recipe ASAP. We'll brew our next batch with the taste you know and love. Check back in about a month . . . We really listen to our fans and appreciate that you took the time to let us know how you felt. We'd love to send you a bottle of the 'original' formula from our office stockroom as an apology." That's marked contrast to initial Vitaminwater response to complaints, which stated co really likes its new formulation (BBI, Jun 5 and 12). As for PET bottle issue, Goldman noted that co had experienced similar challenges with 2 prior lightweighting efforts, and latest glitch seems to have been rectified with supplier. "Not ideal," he allowed, but better to happen in Jan than Apr.

Those tempests in teapot aside, it's by no means all off-notes lately at Honest Tea. New versions of stevia-sweetened Honest Fizz line, as with Golden Ginger Ale flavor, seem to eliminate almost entirely metallic aftertaste that's made stevia a challenge in CSDs. Together with rival Bai-5 Bubbles line of Bai Brands that similarly employs stevia/erythritol blend, Honest Fizz entries suggest flavor technology is advancing rapidly as bev marketers chase holy grail of naturally sweetened but good-tasting sodas. And on glass-bottle side focused on natural channel, Honest Tea has been dialing up unsweetened entries with items like Ginger Oasis Herbal Tea, at time more consumers seem to be gravitating to unsweetened bevs.  

Bag. At Fancy Food Show this week in SF's Moscone Center, Brooklyn-based Grady's Cold Brew intro'd a do-it-yourself format for its New Orleans-style coffees, offering compostable bean bags, packed 4 to a metal canister, that can be soaked overnight to yield 9-10 cups of coffee. Bags contain coffee, chicory and spices in exact recipe used for co's bottled concentrate line but don't need to be refrigerated, eliminating multiple issues at distribution and retail levels. Founder Grady Laird told BBI he's hoping to launch subscription service by end of month - either on ongoing or prepaid basis - that allows consumers in homes or offices to brew 36 cups for price of $25-30. At roughly 70 cents per cup, that's way cheaper than pricy cold brews at cafes or even regular cup of Starbucks. They'll go out via such retail partners as West Elm, Urban Outfitters and Anthropologie as well as online.

Intro comes as Grady's is expanding its operation in Brooklyn's Greenpoint nabe, moving from 55-gal drums to custom-made 1,000-gal tanks that Laird styled a combo of brewing and winemaking vessels. New equipment should be hooked up shortly. Core refrigerated concentrate line, in 16- and 32-oz bottles, has been available in Whole Foods' Northeast and North Atlantic divs and just added Southwest div including Tex.

More coverage from Fancy Food Show next week, readers!