Red Bull North America has filled ceo void created when Selim Chidiac departed in Jan, elevating Latin American chief Stefan Kozak to post.  Stefan, an Austrian by background who took over responsibility for Canadian biz from N Amer ceo a few years ago, will retain those duties while relocating from Brazil to US and adding this country to portfolio.  He joined Red Bull 6 years ago after serving at Coke bottler Panamerican.  Word had percolated for some time that he might be heading this way but appointment was delayed, possibly because of visa problem encountered by Kozak’s Brazilian wife.  Tho some US distributors and RBNA staff had hoped that American exec more in tune with unique aspects of system here would be nominated, distrib noted that, as an Austrian national, Stefan might enjoy greater success than Lebanese predecessor in winning support from inner circle around brand creator Dietrich Mateschitz at Austrian global hq.  Kozak takes over at time Red Bull has been bouncing back from recession-induced slowdown, which in turn has alleviated some of strains on margins and other issues with distributors.  But as terminations continue, sometimes without cause, many remain concerned about co’s longer-term intentions, particularly given weak contract that offers little in buyout protection. That’s among issues Kozak will be expected to address once he arrives in early July.

Eric Schnell, natural foods and supplement vet who recently exited Steaz marketer Healthy Beverage Co, has signed on as advisor and operating partner at merchant banking firm 6Pacific Partners run by John Barrymore with eye to helping it deploy $15 mil fund seeking 4-5 targeted food, bev or supplement investments.  Eric, who created Steaz brand and served as prexy until apparently getting squeezed out by controlling shareholder Inventages, acknowledged to BBI that he views himself as street-level entrepreneur who’s garnered most satisfaction helping to build new brands like Steaz, Country Life Vitamins and Long Life Tea. But he said his pragmatic expertise should be complement to financial expertise of 6Pacific Partners, which had done work for Steaz in helping ID prospective allies.  Tho 6Pacific has eyed hundreds of prospective investments and done due diligence on dozens, it hasn’t yet pulled trigger on any, process that Schnell’s involvement should accelerate.  “They’ll pass on all their food and beverage deals to me,” said Eric, who’s already begun to do his own prospecting for suitable targets.  He’ll serve LA-based banker on part-time basis from his base in Philadelphia area.  Bank info at 6pacificpartners.com . . . Joth Ricci, who in Apr moved from running Jones Soda Co to post as mgg dir of operations at investment shop First Beverage Capital, has been named to board of key First Bev holding, Activate Water marketer Rising Beverage Co.  He joins First Beverage’s Bill Anderson and Michael Wong on board.  Joth, who earlier was gm at Columbia Distributing, joins Activate prexy Dan Hollander (ex-Mission and Haralambos) as wholesaler vet involved in rollout of brand that has positioned itself to channel as uncommonly wholesaler-friendly . . . Starbucks named Gallo and P&G vet Jeff Hansberry as prexy of global consumer products group and foodservice, responsible for debuting new brands in international markets at time SBUX is on a roll with product launches.  Jeff, who starts next mo, will report directly to chmn/ceo Howard Schultz . . . John Lupton, who ran giant Coke bottler JTL Corp that grew out of deal signed by his grandfather to purchase bottling rights for $1 in 1889, passed away at 83 after long illness.  After assuming JTL chairmanship upon his father’s death in 1977, Lupton went on acquisition binge that added bottling plants in Fla, Tex, Colo and Ariz, forming giant bottling unit responsible for 13% of US sales that he sold to Coke in 1986 for $1.4 bil.  After leaving biz, Lupton turned attention to revival of his native Chattanooga, Tenn, leading efforts to build Tenn Aquarium and Riverwalk promenade. 

In move that might seem to risk riling its partner Coca-Cola, Hansen Natural’s Monster Energy unit is said to be prepping a new canned tea line, which some say is under Admiral Tea brand, that it will offer to Budweiser and indie distributors. Move comes as Coke and CCE have claimed that Peace Tea line developed for them by Monster is off to brisk start as prepriced alternative to hugely popular AriZona Iced Tea line. It also comes as some Bud distributors are picking up a new Paradise Key tea line internally developed by Anheuser-Busch under licensed Margaritaville brand. Like Vidration enhanced water line before it, Admiral tea line may be viewed as way to boost Hansen side of biz while exploiting Monster Beverage unit’s skill in DSD, vs warehouse sector where Hansen traditionally has operated on natural-bev side. Recall that Monster Energy splits its territory between Coke bottlers and Bud wholesalers and has been serving as external development lab for both sides.  

Dr Pepper Snapple Group reported today that it recorded net profit of $114 mil, or $0.44 per share, in 4th qtr vs loss of $621 mil, or $2.44 EPS, last yr. Revenues declined 1% to $1.36 bil, which was right around what analysts were expecting. Co noted revs would have come in flat if not for loss of distribution of Hansen Natural products, notably Monster Energy. Bottler case volume was up 4% for qtr with CSDs growing 4% and noncarbs up 5%. DPS volume grew by 4% in both US and Canada. Trademark Dr Pepper volume slipped 1%, which co blamed on declines in foodservice biz, while “Core 4” of 7 Up, Sunkist, A&W and Canada Dry rose 3%. Hawaiian Punch grew 3% and Mott’s jumped 23% on strength of “strong promotional activity” and favorable comps.

“Despite tough economic conditions, I’m extremely proud of our accomplishments in our first full year as a standalone company,” said prexy/ceo Larry Young. For full yr 09, case volume was up 3% nicely balanced between CSDs’ rise of 4% and noncarbs’ 2% gain. Looking ahead, DPS anticipates sales growing in 3-5% range for 2010 with EPS of $2.27-2.35. “Someone wake up Dr Pepper ceo Larry Young,” declared Stifel Nicolaus’ Mark Swartzberg. “Coke and Pepsi are changing ship in a contracting soft drink market, and yet the market’s 3d-largest participant, Dr Pepper Snapple, is growing, keeps putting up good numbers, and expects to continue doing so.” Not least, “DPS finds itself with potential for another material financial windfall,” as Coke plan to acquire CCE assets in N Amer trigger change-of-control clause. PepsiCo said it would pay around $900 mil for rights to DPS brands handled by its bottlers when it struck takeover deal and today’s KO/CCE announcement presages similar feat. 

For months, as rival PepsiCo moved to purchase its biggest 2 North American bottlers, Coca-Cola has steadfastly preached the virtues of the franchise model. Then, this morning, it announced that it’s picking up N Amer assets of Coca-Cola Enterprises. So did KO blink? Or was it playing possum all along? Sure looks like the latter: on investor conference call this morning, KO execs made it clear deal has been in works for a long time – well over a yr, apparently. “It’s not a competitive reaction,” CCE ceo John Brock told conference call listeners this morning, noting that deal had been in works before PEP deals were announced. “We fundamentally believe in the franchise model,” vowed KO chmn/ceo Muhtar Kent. Just not for here.

In essence, deal calls for KO to acquire CCE’s North American assets – and pick up its $9 bil debt burden – in exchange for tossing CCE its Norway and Sweden operations and option to acquire German operations a bit further down the line. Transaction anticipated to close late this yr would leave KO in control of nearly 75% of its US bottler volume and 100% of its Canadian volume, while narrowing CCE to European play, market where co has logged stronger performance. In response to questions on conference call, Kent allowed that this isn’t necessarily the “end game,” tho he wouldn’t speculate on what may come next beyond saying: “We see a very meaningful role for partners in the end game.” The bettin’ is that, at some point, maybe soon, Coca-Cola FEMSA swoops in to pick up some or all of North American biz. Source tells BBI that FEMSA has particular designs on operating in fast-growing, Hispanic-rich markets in Calif and Southwest that are contiguous to its core Mexican territory.

Deal Started with FEMSA Swap Idea? It’s not clear how KO got to this point unless it was being disingenuous in preaching superiority of franchise system for past several mos, but here’s 1 scenario: Recall, about a yr ago there were rumblings that Coke was trying to orchestrate territory swap that wd bring FEMSA in to run N Amer while compensating CCE with new territory elsewhere in world (BBI, Apr 20 09). In KO’s eyes, that would have been executional upgrade over CCE and wd have enabled it to avoid acquiring hard assets on its own. It’s possible talks started there and, perhaps when CCE balked, KO decided to find another way to get job done. “They wanted CCE out of North America in the worst way and were going to do whatever it takes,” said source familiar with some aspects of KO’s planning. Deal announced today clears barrier to subsequent deal that might bring in preferable operator for N Amer, most likely FEMSA. Tho KO in recent mos has made much of its greater “alignment” with CCE, bottler has spotty performance, formidable force in some regions but struggling in others, like NY, where it has taken feet off the street and nearly abdicated crucial independent channel.

Some KO watchers on Wall Street envision FEMSA role in outcome, too. Wrote UBS’ Kaumil Gajrawala: “We believe KO will streamline the NA operations, but eventually will look to sell. KOF is the most likely suitor, creating a borderless North American bottler.” Still, “we believe KOF’s focus near-term is on the several other opportunities in Latin America.” Note that FEMSA has sizable war chest to accommodate acquisitions.

Did I Say That? Analysts across the board seemed floored by what Stifel Nicolaus’ Mark Swartzberg referred to as sudden “strategic flip.” First question on conference call, from JP Morgan’s John Faucher, was about KO’s “fairly big about-face since November,” when KO had analysts and media in for Vision 2020 showcase and emphasized ability of franchise model to compete vs more integrated Pepsi system. But ceo Kent wasn’t giving an inch on that, saying today’s move is “totally in line with 2020” and adding, “It’s not about today or yesterday – it’s a natural evolution.” Hmmm.

Cost Savings, Yes, but Also a Way to Unleash Innovation? Clearly some of this – maybe most of it – is about cost savings. KO anticipates garnering efficiencies of $350 mil over next 4 yrs and expects deal to boost earnings by 2012 fiscal yr. Indeed, Muhtar noted that in key ways it doesn’t resemble any other market in which KO does biz: it has separate production/distribution operation for fountain, separate Minute Maid juice biz, and KO itself shoulders responsibility for hotfill bevs, at time noncarbs have grown past 30% of volume. Plan is to combine CCE operations with KO’s Minute Maid, foodservice ops and supply chain ops (including Coca-Cola Philadelphia) into US entity called Coca-Cola Refreshments USA and Canadian entity called Coca-Cola Refreshments Canada. Together, KO and CCE operate 120 facilities in N Amer. All that is why, when CLSA’s Caroline Levy wondered whether KO was abandoning investor image as international growth story, Kent replied that move is a “synergy, profit play.”

But it’s also about adapting innovation approach to N Amer market that’s greatly changed. As with Pepsi, Coke hopes to be able to make agnostic decisions about right route to market without sparking religious wars with bottlers. In some categories, benefits are obvious. For instance, after years of price wars by PEP and KO, casepack bottled water is no longer profitable segment for bottlers, but may fare better shipped directly to retailers. In vast part of country where KO will control distribution, change can be seamlessly made.

Implications are murkier for more premium and cutting-edge categories. Unified system eliminates threat of bottler jailbreaks, which in past has kept pressure on core supplier to innovate. Recall, it was precisely such activities by CCE – which at 1 point brought in brands like AriZona, Rockstar and Bravo – that prompted KO to make skein of purchases/alliances that brought Fuze/NOS, Vitaminwater, V8 Splash and other brands under tent, revitalizing portfolio and putting PEP on back foot. That creative tension, tho often inefficient and even destructive, now goes away. In addition, if bottlers can’t get new brands into right accounts, it’s not clear what other internal options KO will have to get job done. Warehouse option usually is worst at getting new brands the attention they need. But unified system will make it easier for KO to find the right external option, if needed.

Boon for Some Beer, Indie Houses? Maybe counterintuitively, compression of landscape could be boon to beer wholesalers and indie operators who over past yr or 2 have been quietly picking up Coke and Pepsi brands, often as sub-distributors, as bev giants have begun to recognize their limitations in reaching indie retail accounts where new brands generally are built (BBI, Jun 19 09). In a few cases it’s gone further than that, as Coke has parked new brands like Illy Issimo RTD coffee line at indie houses like Big Geyser in NY and Haralambos in LA, moves that wd have been unheard of just a few yrs earlier. KO acquisition of bottling operations in most of US opens door for such activities to be undertaken on bigger scale. It’s not out of question, for example, that KO could choose to award struggling Vitaminwater back to some of indie houses that built brand, at least for some channels. There are fewer signals on blue side as to whether PEP might be ready to take same route, tho like KO it’s been allowing more of its bottlers to sub some brands to indies for all-other-market channel.

Mixed Outlook for Partners: DPS Likely Cashes In; Monster Sees Another Potential Acquirer Distracted; Decision Ahead for Evian? For Dr Pepper Snapple Group, which drew $900 mil payday from contract change-of-control provision exercised when PEP moved to buy its bottlers, likelihood is of another payday (see story below). “Manna from heaven,” noted 1 observer of anticipated double windfalls. For another key partner, Hansen Natural, picture is more mixed. Recall that when marketer of Monster Energy split its N Amer territory between 2 distribution partners, Anheuser-Busch and Coca-Cola/CCE, it seemed like shrewd ploy to stimulate interest among 2 potential suitors for co. But A-B’s acquisition by InBev seemed to scotch chances that it would buy HANS as it turned attention to debt reduction. Now KO deal with CCE may put any move on HANS on hold, too, at time that Hansen seemed to be moving to put Monster in more Coke bottler territories (BBI, Feb 17). KO won’t be spending much cash on CCE deal but will pick up sizable debt from CCE balance sheet and also will likely have hands full managing integration once deal closes later this yr. As for chance of 1-time payout, there ain’t one for Monster, noted KO cfo Gary Fayard. He told conference call listeners that, with bottler deal long in works, KO made sure to write alliance as 3-way deal with no change-of-control provision.

Danone, which recently pulled its Evian water brand from joint marketing alliance with Coke, also may have decision on its hands. For now, it’s chosen to remain with Coke bottling system for off-premise biz, even while re-establishing its own marketing organization to pick up role earlier delegated to Coke. Will red system still be comfortable home once deal closes? Hard to say.  

Lawyer for Kentucky man accused of strangling wife argued at trial Mon that excessive caffeine from sodas, energy drinks and diet pills left defendant so sleep-deprived and mentally unstable that he falsely confessed to killing, AP reported. "As a result of his altered state, (defendant) Woody Smith provided a false confession," defense attorney Shannon Sexton said in opening statement. AP termed argument a "twist" on earlier-stated defense, outlined in court documents, that "a high intake of caffeine rendered Smith temporarily insane and unable to form the intent to kill his wife." In statement Mon, attorney Sexton described her client as "in a zone" and "not himself" when he spoke with police.  

Nespresso is having its Spinal Tap moment. Nestle's capsule-based system, which has offered array of roasts on intensity-rating scale of 1 to 10, has now turned dial up to 12 with new entry called Kazaar. Limited-edition member of "Grand Cru" line blends Brazilian Cornillon Robusta, washed Guatemalan Robusta and Brazilian Cerrado Arabica beans that restaurateur/sommelier Stephen Asprinio, who's serving as Nespresso consultant, likened to big red wine from Napa. Its intensity tops such other Grand Cru entries as Rosabaya (high-altitude Colombian Arabica, at 6 on scale) and Indriya blend (Arabica/Robusta blend from southern India, which scores 10, in part because plants are exposed to monsoon rains).

Asprinio was speaking at Wed debut of Nespresso boutique on Prince St in NY's Soho nabe, hi-design shop that features espresso bar and Nespresso machines on 1st floor, and capsule line and accessories upstairs. Area near bar is dominated by "discovery wall" featuring range of color-coded Grand Cru flavors with clear vertical tubes displaying beans' evolution to particular roast. Quick coffee in paper cup to go is not an option: bar is about the full experience, Nespresso execs said.

Nespresso maintains that its pod machines yield brews that are equal of hand-crafted ones, with any lack of craftsman's touch more than offset by clusters' advantage of keeping coffee out of range of oxygen. More than half of coffee used is triple-A sustainable at this point, and fledgling effort is underway to move used aluminum clusters into recycling stream. There's no rush to organic, tho; so far, co believes fertilizer can sometimes be greener alternative than some of alternatives. Unit, which employs 4,500, is fastest-growing Nestle unit, up 30% annually in recent yrs and closing in on $3 bil sales. It sources all beans directly.

US biz, up 50% ytd, is still in early stage, and standalone boutique (not far from Nespresso bar inside Soho Bloomingdale's store) aims to drive awareness. Tho brand in Europe is associated with ubiquitous TV ads featuring George Clooney, ad activities in US so far are limited to outdoor in NY and Montreal and NY-only print effort lauding "new coffee culture." Tho its machines go out via retailers like Bloomies and William-Sonoma as well as directly, the clusters are only sold direct. Nespresso boutiques have proliferated around Europe, but only handful have opened in N Amer, including earlier unit on NY's Madison Ave and others in Miami and Montreal. A boutique sans espresso bar exists in Boston. Nespresso operates bars in half dozen Bloomies stores around US.

Brand is also trying to carve out on-premise niche, upgrading restaurants from offering just 1 or 2 roasts to full spectrum that they can match with customer's bottled water or food choices, said Asprinio. System has cracked hi-end eateries like London's Fat Duck and NY's Trump Soho as well as British Airways. Still, out-of-home consumption amounts to less than 10% of consumption.  

Rainforest Beverages has set initial distribution footprint for its acai-infused Rainforest Cola entry, picking up group of 9 indie beer houses scattered around eastern part of US to test proposition. That lineup is comprised of Atlas Distributing and Blue Coast in Boston area, Vukelic shops Balkan Beverage and Saratoga Eagle in upstate NY, Savannah Distribution in Atlanta, Kentucky Eagle in Lexington/Louisville area; Long Beverage and Coastal Beverage in NC, and Ideal Distributing in Tenn. Several are investors in co co-launched by Mike Mazzoni, longtime beer exec and distribution consultant with close ties to many of them. Prexy Tom Bushkie said co will take go-slow approach, seeding 50-60 accounts in each market to gauge response to stevia-sweetened black-can line that taps into fascination with superfruits and is in process of developing cause-related tie to Rainforest Alliance. Costco test is also being undertaken. Tom said Mazzoni himself wrote distributor-friendly contract. Brand will be on view at upcoming NACS c-store show at booth of its co-packer, Pri-Pak . . . Hint essence water has signed up Saccani to serve 21 counties in Northern Calif and Spike to work entire state of Ariz. Sales vp Tom Keeney said brand's plunge into economically hard-hit Ariz seems justified by strong same-store sales performance in Sprout's served via Nature's Best and Whole Foods and Sunflower chains via UNFI . . . RelaxZen relaxation bevs have now entered 3,300 Rite Aid stores nationwide, 900 Hess Express c-stores and 205 Shop Rite grocers. 

Nestle Waters North America has lured Walmart aboard for 4th annual installment of Nestle Pure Life "Pink Pack" program that raises funds for breast cancer research. Tho promo started small, targeting mainly regional retail accounts, in past year it's broadened in scope in hope of bringing in national participants. Conn-based co is expected to announce next wk that Walmart is among 'em. Pink Pack program donates 10 cents per 24-pack of half-liter bottles of tap-water brand to cause, and next mo will make $250K donation with prior proceeds to Breast Cancer Research Foundation, bringing tally to date to $500K. Co anticipates that 2010 edition will draw enough retail support to fully fund a research project in 2011.  

Guess Indra Nooyi should be flattered folks are so impressed with her performance at PepsiCo that her name keeps surfacing for other top posts. Then again maybe she's tired of it. Just last month, Indra's name came up on short list of those thought capable of taking reins of Tata Group for chmn Ratan Tata. When asked about speculation at time, Indra politely declined, while noting, "I am running one of the greatest companies in the world, PepsiCo. I love my job." Now, with word out that Lawrence Summers soon will exit post as dir of the Natl Economic Council, Financial Times reported that Indra is among names that "have already surfaced." While no selection or announcement is imminent, and may wait 'til after elections, there is school of thought that President Obama may turn to top ceo to mend fences with Wall St. "There is something very legitimate about having run a business and created value and I think the administration could lean in that direction," offered Michael Greenstone of Brooking Institution's Hamilton Project.