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Snapple may have gone on warpath vs other teas parked at its DSD houses but premium big-can brand Xingtea, from Denver's New Age Beverage, is finding itself well-armed to respond: in recent wks it's brought aboard Snapple vet Jeff Platt to crack major chains while devising alternatives at Snapple houses in region where it's been pushed out. Platt most recently was at merged Emigrant Capital holdings Jolt and Boylan and is currently developing new bev concept with Jolt creator CJ Rapp, who's also left co. But Platt's well-armed to navigate contractual thicket among Northeast Snapple houses now that Dr Pepper Snapple Group is aggressively trying those houses of other tea brands (BBI, Sept 14). In many cases it was Platt who wrote the contracts in the first place, back in Snapple days. In cases where Xing has had to exit Snapple house, as at Great State's NH operations (tho not in Boston, where it doesn't carry Snapple), he's finding alternatives, in this case NH Distributing. Up in Me, where Xing has had to undertake similar transition, he's landed brand at Pine State, beer house that also operates c-store div serving entire Northeast. Meanwhile, he's winning new retailer authorizations, including Hannaford Bros and, at year-end, Price Chopper. Jeff said he approached New Age, which had been his Boylan distributor, to offer consulting services thru year-end, when he hopes to jump to new venture, still under wraps. New Age also is fortifying ranks with some permanent hires behind rapidly expanding Xing line, including former Skinny Nutritional western-region DSD chief Mike DiOrio.
Rockstar, #3 player, scored 29.6% boost in 4 wks, in line with gain pace over last 12 wks. PepsiCo (Amp, SoBe) worked price cuts to grow volume, seeing energy drink volume rise 7% on price drop of 10%, while Coca-Cola (Full Throttle, NOS) energy volume sagged 15% despite 7% price drop. Looking ahead, "given that comps get more difficult from here, the actual growth rate likely continues to decelerate even as underlying trends may be stable or improve," said Bill.
On energy shot side, clear leader Living Essentials (5 Hour) saw rocket ride moderate only slightly: +55.7% vs 68.5% gain pace a yr earlier. Latest-period gain is generally in line with 58.4% gain over 12-wk span.
CSDs Moderate Their Decline Carbonated soft drink volume fell 3.9% in F/D/Mx/C-stores for 4 wks, per SIG figures. That's improvement from 6.9% decline over last 12 wks, noted Bill. Pricing remained positive, up 2% for 4 wks vs +2.4% for 12 wks. KO's CSD volume fell 5% on avg price rise of 3.7% while PEP volumes sagged 5.9% on avg 2.1% price gain. Dr Pepper Snapple volumes "continue to outpace the industry," Bill noted, as co benefited from flat pricing and volume fell just 0.8% for 4 wks. Private-label CSDs rose 1.5% on avg price gain of 2.1%; that's vs 0.7% price increase over last 12 wks.
'Significant Growth' for Sports Drinks; Powerade Jumps 62% Sport drinks "continue to show significant growth" in F/D/Mx/C-stores, reported Bill, as volume jumped 21.5% on just a slight drop (-0.6%) in avg price. KO's Powerade surged by 62% for last 4 wks, going vs 4% decline a yr ago, as avg price declined 2.4%. PEP's Gatorade volume rose 9.1% for 4 wks vs 3% decline a yr ago. Avg price for Gatorade rose 2%, well ahead of avg of -0.6% last 12 wks.
Teas' Growth Rate Slows Even while it slows somewhat, "growth rate in RTD teas continues to be quite strong," up 15.1% last 4 wks, Bill noted. That's lower than 17.7% gain pace for segment last 12 wks, but RTD tea was also cycling 10% gain for same period a yr ago. Avg price was down 1.9% for 4 wks, while RTD tea prices are off 2.6% last 12 wks.
Bottled Water Pricing Continues to Sag; Coke's Price Hike Yields 18% Volume Drop Bottled water category continues to require significant price breaks to get consumers to snap up water in F/D/Mx/C-stores. Volume rose creditable 10% last 4 wks but that was on avg price decline of 5.8%. Nestle volume jumped 27.5% as co benefited from 11.2% avg price drop. That's steeper price decline than co's avg over last 12 wks of -8%. PepsiCo water volume edged up 1.7% vs 0.9% gain a yr ago while avg price fell 3% vs flat trends over last 12 wks. Meanwhile, Coca-Cola took opposite tag: its hefty avg price increase of 18.6% last 4 wks was rewarded with 18% volume drop. That was even going vs easy comp of -6% a yr ago. Lower prices (-6.7%) helped boost private-label water volume to 13% gain for 4-wk period.
Red Bull North America and its Austrian parent have scored unusual coup, winning general exclusion order from International Trade Commission that will prohibit imports of gray-market product, a chronic bane of brand's US distributors. Tho RBNA has sometimes pursued importers it spotted bringing in unauthorized product from markets like Middle East, this puts the feds on the case, too: under order, US Customs Dept will block gray-market product from US ports. That apparently means not just drinks produced by RB for other markets but "those that infringe on any marks or designs confusingly similar to Red Bull's or are otherwise misleading as to source, origin or sponsorship," RB said.
Ray Kurz, partner in Wash office of Hogan Lovells, which repped RB, confirmed it's unusual outcome. "The ITC has issued general exclusion orders in gray market cases (which by their nature are directly targeted at gray market goods for a particular brand) in only a handful of cases," he said via email. Ruling's on president's desk and "we can presume that President Obama will not overturn the ruling." Recall that gray-market imports have been such a continuing headache that some RB houses welcomed launch of 12-oz can a few yrs ago mainly on grounds that, since it wasn't being produced for any other countries, it couldn't turn up in their territory as a gray-market item.
Coca-Cola's Odwalla unit has intro'd Heart Health Superfood, whose 0.4 g of plant sterols per 8-oz serving may support cardiovascular health. It melds apple, peach, banana and strawberry purees and joins 5 other Superfood sku's . . . Just as it debuts new version of "Ridiculously Bubble" 7 Up campaign, Dr Pepper Snapple Group has ousted longtime ad agency Y&R/San Francisco without review, in favor of McGarryBowen, Adweek reported. That spells end of 40-year relationship between WPP shop and DPS and predecessor cos. DPS had previously stripped agency of work on Dr Pepper, Snapple, Diet Dr Pepper, Canada Dry, Sunkist and A&W Root Beer, leaving only 7 Up . . . Calif Republican gubernatorial candidate Meg Whitman, on campaign trail, visited Function Drinks at New digs in Culver City on Tues, citing co as just the type of biz that state should be encouraging, TV station KABC reported. Tho they never overlapped, Meg and 2 of Function's 3 founders all worked in same Disney div earlier in careers, noted co-founder Josh Simon . . . Skinny Nutritional said its Skinny Water is now available in 4 flavors and 3-flavor variety packs via FreshDirect.com, NY online retailer that reaches 600K customers in NYC and surrounding counties . . . Adina for Life's Adina Holistics line was among winners of Clear Choice awards named by Glass Packaging Institute, for which independent panel rates brands in several alc and NA categories. Besides Adina (in organic category), winners included Route 66 Sodas (CSDs) and Old Orchard Brands' Very Cherre Montmorency Tart Cherry Juice (noncarbs). Overall winner was Boston Beer for Samuel Adams Barrel Room Collection.
Modjo said liquor house Glazer has picked up all 3 of its platforms for statewide distribution in La: Modjo for Life bev, caffeine-free energy shots and Synergy anti-hangover item. Moves comes on heels of acceptance of brand into 650 corporate-owned GNC stores. Other major retail wins are imminent, said Shep Doniger, whose Black Dog Commns pr/marketing agency has been brought on to help with launch and brand debut at NACS show in Chicago next mo. (Co previously worked for Bravo Brands and Celsius in bev space.) Modjo was founded by former Motorola exec Victor Diaz.
In odd and surprising deal that's rich with possibility, Cricket Cola creator Mary Heron has assigned quirky brand to Real Soda, LA-based "paradise of effervescent excellence," as distributor likes to describe itself. Move, on undisclosed terms, puts green-tea-based soda line in hands of Danny Ginsburg, who's developed rep as obsessive fizzy-drink champion with broad portfolio of near-orphaned brands, solid reach in Calif and Pac NW, and ties to Hollywood set to whom he personally delivers oddball brands. ("So would it not seem somewhat illogical for the same guy who flies in a renowned hairstylist from Paris to trim his nose hairs to have a pantry in his 18-bedroom fortress-like mansion filled with aluminum cans and widemouthed 5%-juice 'all-natural' bellywash punch drinks that can be found at any gas station?" he asks in typical run-on style in "sodatorial" posted on co's realsoda.com Web site.) Ginsburg categorically rejects canned sodas; only glass bottles are welcome in his shop. "If it isn't a real soda in a real bottle, no CAN do!" Web site declares.
With brand now parked at ardent champion, "I'm basically out of it," Mary told BBI. She said Ginsburg had earlier approached her about taking stewardship of brand but she instead moved toward acquisition by Meridian Beverage (BBI, Nov 25 08), which couldn't raise capital to consummate deal and ultimately found itself in financial straits. So that deal was off. Since Calif was 1 of brand's best markets, Ginsberg was persistent and became best option. One negative to going with West Coast-only house was that brand would have to exit its other best market, Midwest - except that 400-unit Cost Plus World Markets chain has come thru with authorization, which Real Soda will fulfill.
Is That My Lapel You're Staring At? No Wonder! Mary now has moved on to post as natl exec dir at startup VueCare Media (vuecaremedia.com), which streams eyecare content to opthamologists' office and the like. Her husband and partner in Cricket, John Heron, also was familiar figure around bevs thru banking activities but he's segued back into direct-mail biz of his earlier days. Despite transition, Mary Heron still can be expected to turn heads when she attends upcoming NACS expo in Chicago, and not just because she's an ex-model. She'll be sporting on her lapel a mini-LED-screen that VueCare developed as novel delivery vehicle for its eyecare content and has decided to market outside its own segment. Mary figures it's a natural for samplers and others in bev biz looking to attract attention to their brands, so she'll stroll NACS floor looking to spark some interest.
Loose-tea marketer Zhena's Gypsy Tea is tying in with key retail partner Tully's Coffee to launch first consumer promo, offering winner a trek with Zhena's crew to fair trade gardens in Sri Lanka where they source Biodynamic tea line. Recall that Zhena's ousted rival Numi from Tully's a year ago and has been working hard to strengthen tie to 200-unit chain in western US, where it's only tea available, as part of broader emphasis on foodservice. Contest running thru end of mo will offer trip to winner and guest, and also to Tully's store mgr who most boosts Zhena's volume vs last year. As part of promo Tully's is offering in-and-out Pumpkin Spice Tea Latte drink. Brand creator and master tea blender Zhena Muzyka said she hopes to find ways to incorporate tours to growing regions in greater range of consumer and trade activities. Sri Lanka garden holds special meaning because she was married there, Muzyka noted, and whole family will make trip.
Pricing Structure Moves from 4 Tiers to 1 Promo comes as Zhena's has undertaken significant revamping of pricing structure after concluding that it offered confusing array of price tiers for various sublines, and overall too high a price for recession-hit consumers. So Ojai, Calif-based co has basically collapsed 4 pricing structures into 1, cutting price of Pink and Biodynamic lines by $2-3 per canister, so as to align them with best-selling Coconut Chai Black Tea. Overall, most of co's lines now go out at more pocketbook-friendly SRP of $6.99. "We hear our retailers - we listen," Zhena said. Co is being rewarded with new distribution for both Pink and Biodynamic lines in Vitamin Shoppe chain, even as crowd-pleasers like Tropical line (offering non-alc tea takes on cocktails under names like Berry Bellini) and whimsical holiday lines encourage promo efforts by key retailers. Whole Foods in Southern Calif gave good play to Mojito Mint and Berry Bellini tropical lines this summer, said Zhena. Last year's adoption of more whimsical look for holiday line is being extended to fall seasonals this year - "cute wins when people are depressed," explained Muzyka. "I'm all about teddy bears in this economy," she joked. Co is still working off $3.2 mil capital tranche raised from Westland Ventures last spring (BBI, Mar 26) and is being disciplined about new sku's, despite array of items Zhena's ready to roll with. Among new entries, popular Coconut Chai Black Tea is now being buttressed with green tea version, she said.
In other development that plays on tea's role as lifestyle marker, Zhena's has reached agreement to launch upscale Fair Trade apparel line in spring 2011, starting with cotton tees. Licensing agent original Star Wars licensee looking to play more at high end, she said. She cited fascination with scarves, prayer beads and tea tables as pointing toward broadening impact of brand, tho she'll start small to see how it goes.
Reed's Inc, which started using stevia as sweetener in its diet Virgil's line even before sweet leaf was blessed by the feds, is further upping the ante on ingredient, reformulating line so the stevia isn't cut with any other sweetener. Move flies in face of those who've been saying stevia offers flavor challenges in CSDs, even if it's been made to work OK in noncarbs. "Pure stevia," gloated founder/ceo Chris Reed. "Not like those who marry up stevia with sugar alcohol." Until restage Virgil's Diet was among those, melding stevia and xylitol to get right flavor profile. Reed did tip hat to small natural-foods soda Zevia for managing pure-stevia formulation but says he's truly nailed it. Sweetener seems to work well with subtle blend of spices employed in Virgil's products.
Move is part of broader restage of diet line which sees it renamed Virgil Zero Root Beer (just like KO does with Coke Zero, Powerade Zero and Vitaminwater Zero!) and given new label that scraps light colors that are conventional for diet lines in favor of richly colored look that takes brand's distinctive cloud motif even further - "elevating Virgil's to a saint," Chris said. Why "zero"? "'Diet' is antiquated. It means neuro-toxic chemicals," replied Reed. As part of redo, line finally gets nutrition panel rather than supplement panel that was required before stevia was approved by gov't as "generally recognized as safe" (GRAS). New look, name and sweetener system is being extended across other Virgil's flavors such as Black Cherry Cream Soda.
Moves come as co has been reporting string of quarters topping 20% growth, with 3d qtr expected to top $5 mil in revs, at time co expects further lift in near future from fledgling private-label biz it launched over past year. Diet Virgil's items have been contributing to success, growing 70% per yr, co says.
After sidelining its bev ads for last year's Super Bowl for first time in 23 yrs, PepsiCo will be jumping back in with 3 spots for Pepsi Max for Feb 6 game on Fox. Three 30-second spots for its "struggling" Pepsi Max will air along with 3 ads for Doritos as part of a contest in which PepsiCo will once again turn creative over to amateurs, reported USA Today. From Sep 27 to Nov 15, consumers can submit ads for Max and Doritos at crashthesuperbowl.com. Consumers will vote for 4 spots to be aired and co execs will pick remaining two. Under contest rules, if ad created for Pepsi is voted #1 in USA Today's Ad Meter poll, that person can win $1 mil. They earn $600K for #2 rank and $400K for #3. Even in slow economy, Fox sez it's already sold 90% of ad time for Bowl, even at $3 mil per 30-second spot. Though Pepsi didn't run any ads for its bevs unit last yr, choosing instead of focus on launching Refresh effort, it's still one of game's biggest advertisers, spending over $266 mil over last 10 yrs, per Kantar Media. "For Pepsi Max, the high-profile move is about focusing its somewhat confusing image," wrote paper. Brand latest has garnered lotsa buzz for ad reprising older effort of rival Pepsi and Coke drivers.
Looks like distribution switch is imminent in Red Bull North America's backyard around LA: word on street is that energy drink marketer has elected to self-distribute in Orange County territory currently handled by Prestige Sales, one of RBNA's biggest and longest-serving houses. Several sources over past week said Santa Monica-based RBNA is conducting interviews in local hotel to staff up operation under its own name, effective as early as Sep 30. No response from Prestige, which is believed to be biggest RB house in Southern Calif and whose departure is sure to come as a shock to many. Wholesaler handles range of craft beers and other NAs, too. RBNA rep wouldn't comment, citing policy of not discussing relations with distributors. No initial word on whether termination is for cause, on grounds which in other terminations have run gamut from performance to transshipping and intermingling of RB with other brands, or without cause, trend that RBNA ushered in last year to consternation of DSD network. It also would comprise first major public move by new prexy Stefan Kozak, who succeeded departed chief Selim Chidiac early this year. More as we hear it.