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Solid but Slightly Lower Energy Expectations Based on survey results, energy drink sales have risen an estimated 8% in Q2 so far while "the 2016 sales growth overall for the category decelerated slightly to +9% from +10% previously, with the strongest growth expected from MNST (+9.8%)." Red Bull growth expectations have decelerated to +6.3% vs +8.3% previously, reported Bonnie.
MNST Innovations Might Be Billion-Dollar Boon Based on survey results, Bonnie noted, "it appears disruption and service issue for MNST are largely behind the company" and she is "most excited about MNST new innovation and encourage investors to buy MNST stock in advance of what could be disruptive growth for the company." MNST's anticipated new products "could significantly accelerate growth for MNST and if the past is any indication, this could be a $1B opportunity," wrote Bonnie. She wrote that MNST's much-speculated-upon Mutant product is expected to be in stores for July 4 holiday (BBI had heard not till Labor Day for brand that may be challenger to Mountain Dew CSD). MNST is likely to "roll out these products in a major way, leveraging the entire KO system on a scale significantly larger than its previous launches of Ultra and Rehab." Besides "an energy-enhanced water," she continues to anticipate MNST's new products to be in "soda, coffee and an isotonic/sports drink."
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Third Coast is among flock of Austin cold-brew players, several of which it antedated: High Brew, canned, shelf stable line that's partnered with Dr Pepper Snapple and is going aggressively national; refrigerated Chameleon brand; shelf-stable Kohana brand, and newest RTD entry, nitro-can Cuvee. All are available in markets well beyond Tex, unlike Third Coast, which so far has stuck almost entirely to core state. That could be about to change, tho.
So far, co has kept cold-brew operation small: asst production mgr Jeremy Garcia, who manages Frios Mio biz, brews just 120 lbs of coffee per week in small batches, steeping 5 lbs of Central American beans in 5-gal bucket for 18 hrs, decanting concentrate into kegs, aging it a week, then diluting it via ratio of 3 parts water, 2 parts coffee for RTD, in Unsweetened and lightly Sweet versions. Each 16-oz glass bottle contains about 260 mg of caffeine. The cold-brew counts as its biggest retail customer the regional Kerbey Lane chain of cafes, but it's also growing fast in office market serviced by Blue Tiger distributor, which installs cold-brew kegerators in accounts spanning 5 states. Another key pack is 64-oz growler, Jeremy said.
Third Coast was acquired in 08 by vet roaster Joe Lozano, who was among founders in 1999 of Cooperative Coffees importer that currently numbers 23 US and Canadian members, including Third Coast. Nearly all its coffees are Fair Trade and organic (exception is some Colombian beans, still in transitional stage) sourced via long-term contracts from small co-ops around world. Third Coast processes them in small batches, often using dry processing, to yield fruity, airy flavor, noted Garcia. Lozano brought in new partner 4 years ago, facilitating cold-brew entry and current expansion, said gm/roaster Tom Novak. That expansion to insulated space next door will more than double storage capacity, and accommodate walk-in fridge for cold-brew.
The whole beans are available in almost all Whole Foods, Central Market and Fresh Plus stores in central Tex, as well as Wheatsville Co-op and Kerbey Lane Cafes. As example of volume that ardent clients can support, Garcia noted that Kerbey Lane chain placed order for 800 lbs this week, restaurant called Dazzle in Round Rock goes thru 500-800 lbs per week, and even kiosk operator called On the Grind in college town San Marcos placed order for 580 lbs this week. So there's plenty of opportunity still in Tex, tho co is in talks with potential clients like multistate café chain that would take brand further beyond state's borders.
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Tho cobranded Caribou/Einstein stores are familiar in Twin Cities by now, "the addition of Argo Tea takes the coffee and bagels concept to another level with the addition of a unique open bar coffee and tea experience," reported NBC affiliate KARE. "The new bar features all-natural tea-based drinks on tap and a backdrop of a variety of colorful steeped teas." Store is located in downtown Minneapolis on Nicollet Mall at 11 St - just across from Target's global hq - in site of former French restaurant. Local rag The Journal said in-store bar will add Caribou's cold-brewed coffee and nitro offerings later this year.
Netherlands-based JAB (short for Joh A Benckiser) has been on acquisition tear in recent years in efforts to leapfrog Starbucks as global premium coffee power, picking up SF-based Peets Coffee & Tea in 2012 for nearly $1 bil, then adding Portland, Ore-based Stumptown Coffee and majority ownership of Chicago-based Intelligentsia Coffee.
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06/02/2016
OBIT: PepsiCo Icon Roger Enrico Dead at 71; Identified with Pepsi Challenge, Celeb Signings
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06/02/2016
PEOPLE: After 10-Year Incubation Run at Coke Consolidated, George Picks Up Top Sales Job at VEB
At BYB, Norm ventured into range of cutting-edge, premium segments, from refrigerated iced tea (Cha Da) to tea/coffee hybrids (Bean & Body) to licensed Cinnabon line. Most of those didn't pan out, and most enduring success proved to be kids-oriented line called Tum-E Yummies that proved successful challenger to Bellywashers and other popular brands in segments, growing to $100 mil at retail. It isn't premium nor particularly healthful, but it's proved significant revenue and profit generator for Coke Consolidated, which moved it out to much of Coke network across US. Brand was acquired by VEB last Aug.
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06/02/2016
Is Coke Ally Monster Prepping Attack on Mountain Dew? That May Be Premise of Mutant, Due This Fall
Dew, of course, has been uncommonly successful CSD platform for Pepsi, bucking erosion of CSDs and extending in more overt energy drink direction via its highly successful Kickstart canned line. Coke's lack of a credible response over period spanning decades has long been a frustration to its bottlers; indeed, by one account, KO's desire to defer Mutant launch into new year drew outcry from some indie bottlers and KO backed off. Ceo Rodney Sacks has IDed Mutant as a trademark the co is developing and has promised to reveal more info at co's annual shareholder meeting on Jun 14.
What else are investors likely to see at meeting? As noted earlier, another innovation may be line dubbed E2O that offers water-like take on energy and is packed in 500-ml PET can manufactured by Invento, on which MNST is believed to hold exclusive for that size in this country. E2O might be positioned, at least in part, vs another enduring Pepsi franchise: Gatorade and its Propel spinoff.
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Partners aren't ready to disclose a great deal about new line's packaging, production process, pricing or flavor range, but it's clear that A-B gets uncommon degree of control and participation: it will produce the teas in its own network of breweries, and distribute them to all channels except perhaps SBUX' own Starbucks and Teavana stores. For Starbucks, it solves conundrum of how to bring line to retail, since its close ally on coffee front, PepsiCo, is aligned with Unilever/Lipton on teas. PEP got dispensation from Unilever to launch bottled Tazo teas a decade ago, but line proved mediocre performer and Pepsi currently is riding hot hand with its own Pure Leaf superpremium line, leaving it reluctant to try to carve out another exception from longtime tea partner.
João Castro Neves, A-B ceo, termed deal a win-win, partnering brewer with "household name that we can trust" and tapping into fast-growing, premium segment. And while many were traumatized by departure from Bud network of Monster Energy, João termed this deal very different because of its 30-year term and because A-B "will produce, bottle, market and deliver" Teavana brand. "We go all the way from producing to point of sale," he said. Brewer and its wholesalers can take Teavana brand "to the next level," he promised. Both thru its stores and its uncommonly well-developed electronic platforms, SBUX, of course, has uncommon degree of reach among consumers to build new brand like RTD Teavana. So this could be formidable partnership, on this and potentially other brands, given Starbucks portfolio that includes such non-coffee brands as Evolution Juice and Fizzio sparkling items. Asked whether other brands or overseas markets may enter alliance, João allowed "that's a possibility," but said he's focused now on finalizing this deal and successfully executing launch.
For A-B, deal covers several key objectives. With many wholesalers still reeling from departure of Monster Energy to Coke system, it offers credible brand and partner to help fill void. It also contributes to A-B's 3-year effort to improve distrib relationships, partnership economics and portfolio. There were immediate signs that this was step being welcomed by distributors. Philip Mullin, chmn of A-B Wholesale Advisory Panel, today said his members are "absolutely thrilled" with Starbucks news and giving A-B "a huge amount of credit" for getting distribs back into part of cooler they may not have visited since losing Monster. "Margin potential is phenomenal," he added. Added former panel chief Tim Mitchell: "Huge opportunity for the system."
In addition, tho A-B has been on craft beer acquisition binge, lots in beer biz see that segment approaching period of saturation and declining margins, making NAs seem more appealing as 3d leg to stool, along with premium and craft/import beers. Indeed, A-B had been known to be kicking tires of early-stage brands, including iced tea entries, and a few weeks ago, at Beverage Forum, marketing vp Jorn Socquet acknowledged interest in rebuilding NA portfolio and filling Monster void, "but only with things we can have full control of." This 30-year deal - as close to perpetuity deal as we're likely to see these days - minimizes flight risk of brand, feature of NA biz that beer wholesalers don't face in their core beer biz.
Recall that Starbucks bought mall-based Teavana retail chain in late 2012 and has promoted tea segment as another billion-dollar opportunity - target it hit over past year in all formats and channels. It's rolled out brand into Starbucks stores in hot and iced formats to apparent great success, tho experiments in extending a few Teavana stores into hot-tea consumption on site didn't fare well and were unwound. So among bev watchers there's range of opinion on how strong Teavana will prove as a brand in competitive RTD segment.
"When we acquired Teavana in 2012, we saw a unique opportunity to do for tea what Starbucks has done for coffee and expand the Teavana brand across many customer experiences and products," said SBUX chmn/ceo Howard Schultz. We are excited to work with Anheuser-Busch to unlock the premium ready-to-drink market and further grow demand for the Teavana brand."
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