BMI Archives Entry
SodaStream Shares Surge on Beer System Intro
In followup note, tho, Dara noted that inclusion last year of Sat from Memorial Day Weekend also skewed results; looking just at 3-wk rather than 4-wk trends, declines moderate a bit on company level: KO off 2.3% (from -3.1 over 4 wks), PEP -1.2% (vs -1.9%), DPS -1.9% (vs 2.5%), MNST +4.4% (vs +4.2%). Still, trends bear close watching, he warned.
Energy Gains Slowed; Flat Pricing Energy drinks continue to subside from stratospheric performance of recent years, with volume gain cut in half to +1.5% last 4 wks, down from 3.3% gain for 12 wks and +6.7% for 52 wks. That's even with energy drink prices remaining flat over last 4 and 12 wks in all-outlet stores. Even with avg price dip of 0.4%, Red Bull volume trends worsened to -4.6% last 4 wks vs 2.7% decline for 12 wks. Monster Energy volume was up just 1.4% for 4 wks vs 3.6% gain for 12 wks as avg price edged higher to +2.7%. Rockstar continues to buck trend, scoring accelerated gain to 10.8% last 4 wks on flat avg prices. PepsiCo (Amp) dropped to gain of 1.6% last 4 wks (down from 5.8% increase for 12 wks) even with avg price dip of 1%. A steep price cut of 7% helped lift private-label brands to 17.3% gain last 4 wks.
Gatorade, Powerade Sag while PL Brands Still Up Sports drinks volume fell from flat performance over 12 wks to 4.9% decline last 4 wks. Avg prices edged up to +1.3%. PepsiCo (Gatorade) volume dropped 6% ( vs -1.7% for 12 wks) with modest 0.6% price increase last 4 wks. Coca-Cola (Powerade) swung from 1.6% gain for 12 wks to 4.4% drop last 4 wks even with price decline of 1.1%. Private-label sports drinks slowed to 3.6% increase for 4 wks (vs +8.1% for 12 wks) on solid 10% price hike.
Water Gain Cut in Half Bottled water volume gain of 2.8% for 4 wks was less than half gain pace for category (+6%) for 12 wks. Volume slowed considerably even as avg prices went lower to -2.4% for 4 wks. Nestle volume increased 0.8% (in line with 12-wk tend) as it avg price drop went much steeper to -5.5% for 4 wks. Coca-Cola water volume was up just 0.1% (down from +4.7% for 12 wks) on very slight price dip of -0.1%. PepsiCo water volume slowed to 5.6% increase on avg price drop of 5.2% last 4 wks. That's down from volume increases of 7.6% for 12 wks, 12.6% for 52 wks. Private-label trends slowed quite a bit to +3.5% last 4 wks vs 9.9% gain for 12 wks. Avg prices for PL brands were down 3.4% last 4 wks (vs -3.9% for 12 wks).
"Customers are already telling us that they want to meet us on this journey as cold coffee is now becoming a go-to drink," said chmn/ceo Howard Schultz. Co cited 20% surge in its overall iced portfolio in Q4 following launch of Cold Brew, even as Nitro Cold Brew has become 2d-best-selling bev at co's Reserve Roastery & Tasting Room showcase in Seattle. SBUX cited research indicating that US iced coffee consumption grew by 75% over past decade while cold-brew sub-segment exploded by 338.9% from 2010 to 2015.
Note that this action is happening on in-store side. Starbucks and CPG partner PepsiCo, of course, were late even to bottled iced coffee biz, but launch a coupla years ago has turned into colossal hit for allies. If initial launch of bottled cold-brew fares well, it seems certain more packaged iced coffee variants will hit market.
Looking to move beyond in-the-know influencers in awareness, Vita Coco Coconut Water this year is continuing with digital media campaign that demystifies coconut water by stressing its key benefits, but adding lifestyle twist that dials up beach and vacation vibe. Meanwhile, even as it rolls out Coco Community refrigerated brand, it's also launching several new packages, all while making major push into China via Red Bull network there.
Key directions were discussed by cofounder/ceo Mike Kirban and marketing vp Charles Van Es in meeting at brand's new Park Ave South hq in NY last week. Charles, of course, is former Heineken USA exec who came aboard last Jun after making splash with memorable "Never mind the bollocks" effort behind Newcastle Brown Ale, which Heineken imports.
With household penetration still very low, Vita Coco is continuing with campaign to simply let consumers know why they need to drink coconut water. In some ways, that's struck some segment watchers as counterintuitive, given concern Vita Coco brass has expressed in past about re-commoditization of category as rivals go down and dirty on price. In that sense, saying, as last year's campaign did, "It's water. From a coconut," might seem to reinforce notion that all brands are equivalent. But Vita Coco execs have pointed to category awareness in US of barely 10% in arguing that there's still much basic category building to be done, appropriate task for them as clear leader. So that effort is continuing this summer - but this time with more of a lifestyle twist. "Basic stuff to move beyond the influencers," Charles allowed. Still, as Mike added, "we can own the beach in the space. We want a little bit of escapism." Among major general-market brands, Vita Coco is only one that ardently plays up ingredient's tropical identity, giving it useful platform to herald Corona Extra Beer-like lifestyle vibe.
Thus, new 15-second video set on a beach shows a coconut dropping from a tree and being sliced open with a machete as voiceover in lilting Caribbean accent explains, "Nature makes the coconuts . . . and they make the coconut water . . . and they make the electrolytes . . . that help to keep you hydrated." Spot concludes with more aspirational message, "Just get thirsty." Ad thus strikes at key benefits of natural product, electrolytes and hydration, as well as brand's unique beach/vacation mindset, Charles argued. (The video can be viewed here.) It's been augmented with 60-second version for use in social channels that explores themes a bit more deeply. As co eyes ways to expand reach, including TV buys in mix is not out of question, Kirban and Van Es noted.
Those themes are being activated in other ways, too. At last year's Summer Streets events in NY, where city closes major avenues down spine of Manhattan to just bikers and pedestrians, Vita Coco installed 30-ft slip-&-side apparatus and hosted yoga sessions on stretch of Broadway near City Hall. This year it's expanding effort to 3 more markets, Miami, Chicago and Las Vegas. (Vegas replaces key market, LA, that was scratched out of fear of connotations in drought-stricken state.) Dialed-up shopper marketer programs are touting coconut water as great accompaniment to summer barbecues. And sampling efforts are being buttressed not just in 4 core cities of NY, LA, Chicago and Miami but in Boston, Dallas, SF and Seattle.
Innovation is playing a key role. This spring, of course, brought launch of refrigerated Coco Community subbrand that takes on Harmless Harvest in superpremium space. Retailer reception has been excellent - Target chain picked it up on basis of just a sketch shown by Vita Coco staff. Further intros are coming later this year, Kirban and Van Es promised. Co is also broadening packaging mix. On Jul 1, it's joining wave of cool PET bottles invading dairy cases, with bulbous 1.5-liter pack of chilled coconut water in which copy on neck will advise shoppers, "50% less sugar than orange juice." Carrying SRP of $5.49, new item will have limited release in select retailers. Co is taking confidence from UK biz, where Vita Coco has only been available as a chilled item and is poised to leapfrog Tropicana OJ's 1-liter bottles next year. Vita Coco also is adding to mix 200-ml box for sampling initiatives. On merchandising side, co will continue to seek co-displays of its coconut water and coconut oil, which typically yields 20% lift to coconut water while boosting oil's sales, too.
Co is coming off a Mar that, despite iffy weather, was 2d-best month in co's decade-plus history, with sales up 50%. In reassuring note, natural/specialty channel has been growing again, thanks in part to hiring of specialized broker Alliance Sales & Marketing. Tho category had been showing signs of regressing to commodity status thanks to heavy price promos of some brands, Vita Coco team is taking heart from move by retailers to consolidate premium tier to 3 or so brands as alternative to past situation of carrying a dozen or more brands that would fight by price. (Meanwhile, Vita Coco, Harmless Harvest and flock of newcomers will build superpremium tier where pricing remains robust.) Consolidation move has been underway in Walmart and Target, and Whole Foods now is rationalizing set, Kirban said. Brand's 1-liter box has been driving lot of growth, serving as both a single-serve pack to some users and takehome to others. But so have 500-ml boxes, growing close to 20% for uncut coconut water, and multipacks of 330-ml boxes sold in club stores. Tho some flavors are fading, co is happy to focus on pure coconut water.
Since departure a year ago of prexy Jeff Popkin, who hasn't been replaced, Vita Coco has taken opportunity to remove some layers from org, empowering regional sales mgrs to run their own biz and elevating Pepsi and Red Bull vet Tim Dwyer, at Vita Coco 7 years now, to vp sales. He reports to Kirban, who continues to run US biz. (Popkin, meanwhile, has segued to ceo role at Sidney Frank, where he's trying to turn around spirits icon Jagermeister.) Vitaminwater vet Michael "Goldy" Goldstein has picked up Dwyer's old role of running natl accts. Reporting lines aside, Mike said co is striving to avoid trap of becoming hierarchical in info flow, to keep org nimble. New office, with panoramic view from window, maintains beachy vibe, tho during BBI visit employees in view resolutely worked at their stations.
Meanwhile, launch into China is moving forward, on heels of major investment from owner of Red Bull franchise there 2 years back. In its first full year in market, brand is moving thru Red Bull system in 6 key cities, backed by TV campaign that's just breaking. Even in nascent stage of launch, China already reps 3d-largest market for brand, after US and UK.
Big Red Rides Nation's Barbecue Wave; New Video Push Offers Sardonic 'Tips' Big Red, which moves heavily thru DPS system, has had longstanding association with barbecue and taco consumption occasions going back to Texas roots, tying in with country's 4 major barbecue orgs, working many among the 240 barbecue cook-offs that take place each year in Lone Star State. Now it's taking concept out to rest of country, kicking off "100 Days of BBQ" promo that offers buyers of Big Red and Big Blue instantly won swag like Weber grills and Yeti coolers and grand prize of trip for 4 to "Ultimate BBQ Tour Experience," tour of iconic barbecue haunts in Austin. Heartland markets where brand is strongest get limited-time Big Red Vanilla Float. And starting next week, brand will unleash series of 6 15-second comedic videos featuring pitmaster named Big Ed that spoof conventions of barbecue-tip genre. "Cleaning out a grill is tough work - so get somebody else to do it!" he commands as comedic partner, dressed as chimney sweep, emerges babbling what subtitle helpfully explains to be "British gibberish." "A clean grill makes your barbecue better - and so does Big Red," is conclusion. Brand also has enlisted Australian-born, Austin-based barbecue writer and "Hardcore Carnivore" Jess Pryles for NY media tour.
Among other elements in marketing mix, brand is offering scholarships to deserving students via alliance this fall with Hispanic Association of Colleges & Universities. And in Jul it's inaugurating 7.5-oz cans that can be given out at sampling events or sold in dump bins at 4 for $1 to woo newcomers to brand.
Moving thru Upgraded DSD Network, Xyience Works College Hoops, Football, Gas-Pricing App After purchasing Xyience energy brand from firm that owns Ultimate Fighting Championship, Big Red moved quickly to find more universally appealing marketing themes than UFC events, while moving to upgrade DSD network. On that front, Monster Energy departure from scores of Bud houses opened opportunities in lotta markets; overall, brand has changed out 100+ houses. In Pacific NW, where Pepsi system doesn't have access to distribution ally Rockstar, Xyience has found good reception, with indie Pepsi houses often giving it equal space to Pepsi-owned Amp, treating duo as portfolio. In Northern Calif brand has consolidated from about 20 houses into DBI. In Southern Calif, brand has segued from Statewide to network including Ace, Mission, Lenore, Straub and Hangar 24. And in Dallas, co has opted to set up self-distribution operation, marshaling 6 trucks to distribute energy drinks and, shortly, ancient-grains-based protein bars that debuted at Natural Products Expo West in Mar.
On marketing front, brand is just coming off college hoops program via 12-episode series on Campus Insiders website, with commentator Seth Davis doing nice job weaving brand into coverage via such tropes as highlighting the 3 X-factors in each game. Related sweepstakes sent winner to Final Four with behind-scenes access. Brand also continued to work college football, airing commercial featuring commentator Samantha Ponder on Big 10 and Big 12 coverage. That alliance will continue this fall. And co is doing summer tests with gas-price-tracker GasBuddy.com in Portland, Ore, Oklahoma City and Tulsa, popping up on consumers' radar as they're planning visits to gasoline c-stores, key channel for energy drink sales. To strengthen presence in eastern Canada, it's also signed on as sponsor of Montreal Impact soccer team, one of newer franchises within MLS.
One thing brand has moved away from is relentless discounting that characterized prior regime, with brand often viewed on sale at about $1. Now it's adopted no-coupon policy, with brand never offered below 2 for $3, Smith vowed. At same time, brand hasn't taken price increase since acquisition in late 2014. Meanwhile, Big Red team continues to evaluate whether 16-oz non-resealable can is right size for demo that's tilted more than most energy entries toward females, tho any move to downsize pack likely wouldn't offer enough in cost savings to go lower on frontline price. It's topic of ongoing debate.
Hydrive Gets 'Reboot,' Moving to New Pack, Zero Calories, Lighter Flavor Big Red team has pursued interesting thought process on Hydrive energy brand. Recall this is brand created by former Snapple chief Mike Weinstein and former Austin Nichols marketer Brian O'Byrne via their Inov8 incubation co. It's moved thru Dr Pepper Snapple system for some time, showing its greatest strength in Great Plains markets via retailers like Casey's General Store, Hy-Vee and Kum & Go. In areas where DPS gm embraces brand, it's solid performer among allied brands, Gary noted. Tho some outside co assumed Big Red's purchase of Xyience spelled end of relevance to co of Hydrive, Smith said that's anything but case. And now brand is due for a makeover of both formula and package, with rollout due toward year-end.
Tho straightwall bottle was distinctive at time brand first went out, explosion of Sparkling Ice and numerous knockoffs in similar bottle has caused confusion and made it hard to break out of 10-for-$10 promo realm that Ice inhabits. So bottle will move to more upscale look with proprietary shape somewhat like barbell clad in proprietary shrink-wrap label. Working with Allen Flavors, calorie count is being shifted from mid-calorie territory of 30 calories to zero, with sucralose the sweetener. With vibrantly colored liquid causing some consumers to mistake product for a sports drink, both color and flavor are being lightened up to make it more like a water, dialing up refreshment factor. Co is keeping top 4 sku's. They'll aim to get $2+ for energy brand in more upscale package, and hope they can get it bundled with other DPS allied brands like Bai and Vita Coco.
"Call it a reboot," Oh said. At launch a decade ago "it was a very innovative bottle, but with Ice and all its knockoffs, it feels like another discounted brand that should only be bought for $1." He noted that there was little point in dialing up overt energy cues of brand, considering that DPS already distributes its own Venom drink as well as Xyience.