BMI Archives Entry
06/27/2016
FANCY FOOD: Califia Farms Heads into Nitro Territory with Cold-Brew in Striking Aluminum Can
Califia Farms deepened its involvement in cold-brew segment with nitro offering packed in aluminum bottle that manages to eschew use of mechanical widget to infuse gas into liquid. Refrigerated line, in 10.5-oz bottles given white background, is debuting in Latte, Mocha and New Orleans recipes, and claims to be first nitro latte to be completely dairy-free. It uses blend of direct-sourced Colombian, Guatemalan and El Salvadorian beans with almond and macadamia milks plus microfoam to produce smooth drinking experience - "a creamy, yet dairy-free, cold brew latte that explodes in a thousand tiny bubbles of rich coffee flavor," per founder/ceo Greg Steltenpohl. New item ships in 2 weeks, at SRP of $4.99. It's new format for co that was early to offer nationally available cold-brewed coffees using bulbous PET multiserve carafes that are by now familiar from its juices and almondmilks as well as single-serve version. Glass-bottle and other entries are coming down pike, too, it seems, and co has teamed with foodservice player JoeTap to install stylish nitro-dispensing equipment at corporate and other accounts.
Califia Brain Trust Includes Lovejoy, Margolis, Strugatz Califia's coffee push seems to be getting lift from longtime innovation vet Brian Lovejoy, a familiar fixture at Califia's trade show booths over past year, tho neither he nor co execs are ready to say what his specific role is or detail breadth of projects he's involved with. A former colleague of Greg's at Odwalla, which Steltenpohl founded and eventually sold to Coca-Cola, Brian spent a decade at shot play Drinks That Work, was a cofounder and coo of KeVita and has marketed RTD coffees under Verve name as well as Dr Kefir brand of sparkling probiotics, per his LinkedIn bio. Also instrumental in nitro developmental effort was svp for R&D, Dr Geoff Margolis, MIT-trained chem engineer who's spent nearly 3 decades as independently operating inventor following early run at Nestle. He came aboard LA-based Califia a year ago. Also in Steltenpohl's kitchen cabinet is Peter Strugatz, entrepreneur and investor (including in Stonyfield Farm and Zipcar) who was early into mission-driven investments and whose Strugatz Ventures numbers among its other clients Light Phone (credit-card-sized mobile phone "designed to be used as little as possible"), Closed Loop Fund (helping cities finance recycling programs) and Brooklyn Fashion + Design Accelerator.
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The unquestioned focus of attention now, Balance item melds essences of 6 flowers like crowea and bush fuchsia with spring water in bullet bottle with large "Balance" in white font backed by deep blue hue on inside of bottle. (For design work, Balance continues to rely on pair of repurposed architects working out of Italian town that's so full of historically designated properties that there isn't much architecture to be done there.) Redone pack also seeks to counter alkaline trend that immunology-trained Chalk views as pernicious with reminder that pH of 7 is "perfect pH," per burst on bottle. (Another burst also emphasizes "not from a tap," reference to spring water sources in NY and Calif where line is bottled for US market, using wild-harvested Aussie flowers.) But brand stays away from overt functional claims, keeping its sloganeering to more generalized statements like "For a better day, every day, give yourself some flowers." Tho Chalk refers to co now as a single-sku operation, it is keeping one other item in production, Cleanse, which like Balance is available nationally in Kroger stores. But Relax, Focus, Refresh and Travel have been discontinued.
Looking back, Chalk is amused to recall early advice duo was given as it approached launch about a decade ago: hammer away at single sku called Balance that captured premise of functional benefits of floral essences. They instead went with range of specific functions and only years later came back full circle. Martin doesn't deny that cutting back was painful - Focus item had staunch adherents among consumers with ADD, those with autistic kids and those who meditate - but he maintains it clearly has proved right call. In meantime, co has pulled back on DSD to single market, NY, where it's serviced by Dora's Naturals, as it refines direction. It draws financing from PE shop Emil Capital.
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But there are likely to other, more subtle consequences of tax. Here's one: it could further complicate Coca-Cola's efforts to refranchise its NY territory, div of Coca-Cola Refreshments that encompasses city and immediate environs including NJ and Philadelphia area.
With Coca-Cola having accelerated timetable of its refranchising plans, lotsa bev folks had already been wondering what that means for NY territory, whose financial losses, mediocre performance and union issues have made area more daunting prospect for would-be franchisees. Those challenges had led many to assume NY deal might not happen for years. But with Coke having now declared target of putting full N Amer territory in private hands by 2017, clock is ticking.
Under new gm Fran McGorry, who'd spent most of his career at Philadelphia Coca-Cola Bottling, CCR seems to have improved service levels in NY area, per market sources, and transition of Vitaminwater and Smartwater brands a year and a half ago from indie distributor Big Geyser added at least temporary lift to top line. Still, NY remains a money drain, with some outside Coke system believing that Philly territory is only real profit contributor to division. Pending soda tax in Philly may take bite out of that, perhaps complicating effort to bring in outside partner to take over. Of course, KO could reconfigure territory to make them separate entities, but then soda tax could have effect of tarnishing Philly market that might have been easier sell on its own.
Question is of broad interest because some believe it will be necessary for Coke to sweeten pot to potential partner by enhancing portfolio with Monster Energy and Coke's VEB brands, including Honest Tea and Zico Coconut Water, currently ensconced at Big Geyser, which has performed strongly on those brands. (For their part Geyser execs maintain they have strong Monster contract, and Monster Beverage may have veto power over any such move by KO.) Query to Fran was referred to Coke rep in Atlanta, who said only, "We continue to negotiate additional agreements and are in constant discussion with partners who are excited about investing in the future of the Coca-Cola system. We do not comment about ongoing negotiations."
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BBI isn't invited to Bev Digest conferences, so we've gleaned these comments from others in attendance, and Nik was happy to shoot us his slide deck. His comments echo those made by marketers behind successful brands ranging from Sparkling Ice (which some view as diet soda cleverly disguised as bottled water) and energy drinks like Monster and Red Bull, whose marketers often view them as just a contemporary, more relevant, iteration of CSDs, not a flat repudiation of segment.
In essence, Modi pointed to all the less-than-healthy bevs consumers continue to buy in droves: energy drinks, specialty and craft sodas, Starbucks frappuccinos (which BBI has often referred to as milk shakes for adults). Indeed, both Starbucks iced bevs and energy drinks grew about 10% in 2015. Even within conventional CSDs, brands like Coke Zero, Mello Yello and Fanta have racked up compelling growth in recent years. "Are consumers trading one indulgence for another?" he wonders. In other words, bevs are not so much about health & wellness as about functionality and purpose, he argues. Marketing matters and the big CSD players aren't doing it very well. "Key CSD brands losing the pr/marketing battle, NOT the product battle," he wrote. Meanwhile, erosion is leaving them vulnerable to incursions by players like Starbucks and Anheuser-Busch, which just teamed up to drive into $1 bil RTD tea category with Teavana-branded entry.
Modi traced ad history behind Coca-Cola: from more purposeful positionings as "pause that refreshes" and "refreshing the Olympic spirit" to more recent "Open happiness." Where's the consumer, he asks. Nik said he likes Coke's new "Taste the Feeling" direction better because it brings back imagery of consumers interacting with the product. Campaign should be good litmus test of his theory, he believes. He's projecting acceleration of trademark's growth to 4% as a result.
Modi achieved good dramatic effect by flashing unlabeled bar chart showing steady growth to peak, then steady decline. Look familiar, he asked. Turns out it's chart of coffee consumption over past 100 years. Advent of Starbucks to premiumize and flavorize segment stabilized that segment in same way, Nik suggested, that fresher marketing could reinvigorate soft drinks.
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Honest Tea has had mixed track record in extensions. Seemingly close-in extensions from brand's tea base into yerba mate and kombucha haven't panned out, nor did a cacao entry. But building on juice biz, Honest Kids has been big success, and brand has built significant franchise at Whole Foods with organic, Fair Trade lemonade line. It's entering heavily promotional segment dominated by Gatorade that's proved daunting to countless entries over the years at time that other brands like Body Armor, in which Dr Pepper Snapple holds minority stake, are launching assault in belief that consumers are ready for all-natural alternative.
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06/24/2016
Kid-Targeted Wat-aah, Which Has Made Splash with Sassy Branding, Seen Making Sharp Cutback
Efforts by BBI to reach out to co in recent months have drawn no response, and once-frenetic social-media player hasn't posted on Facebook since early Apr. Phone line at office in Manhattan's Flatiron district seems to have been disconnected and cell # for Cameron wasn't accepting messages today.
Drawing broad admiration for rich marketing stew it conjured, Wat-aah took unusual stance of offering few concessions to kids' palates in form of flavors or sweeteners, instead opting for in-your-face branding that eschewed skateboarder clichés for open-mouthed kid icon screaming for "Wat-aah!" Cameron brought marketing smarts from career on agency side, and was married to another agency pro who'd earlier worked on Vitaminwater brand. Cameron - the sole of 3 founders to remain with brand after initial years - wielded sophisticated mix of art tie-ins, pop-up galleries, graffiti-art stunts and relationship with Let's Move push to raise awareness, garnering lotsa media coverage (including of backlash by graffiti artists who groused about Wat-aah trademarking "takingbackthestreets" hashtag they used to promote their art) and opening thousands of retail doors. But offering little in liquid beyond unadorned water, Wat-aah may have found it hard to resist pressures to relentlessly promote brand, which was often seen in range of $1 per half-liter bottle - still not competitive with Capri Sun, but likely unsustainable over long run for small indie brand mustering serious marketing initiatives. It was presumed that co at some point would seek exit with strategic that's stepping up healthy-bev offerings.
As often noted in BBI over years, offering healthier take on kids' bevs has been among most daunting challenges in biz, given highly promotional stance taken by leaders like Capri Sun and moms' need to buy items their kids will actually want to drink. Among numerous entries, only one to have experienced broad success is pouched Honest Kids extension of Honest Tea, organic entry which dials down sugar of most juice drinks. Scores of others have foundered over past decade, including kid-targeted entries from otherwise successful brands like Vita Coco and Hint Water.
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