Beer Marketer's Insights - BMI Archives Entry

BMI Archives Entry

05/26/2016

FOLO UP: Bucha Paying $20 Mil for New Age and Its Brands; Acquired Co Generates $50 Mil in Sales

Bucha Inc as anticipated has acquired Denver distributor New Age and its XingTea and Aspen Pure brands (BBI, May 23), for combo of cash and equity totaling $20 mil, per formal release on Mon and 8-K regulatory filing. Price includes initial $8.5 mil in cash that'sto be paid by controlling shareholder Dan Carney at closing, as well as new shares of Bucha (which trades as ABRW) to key execs and Carney totaling $7 mil. The rest will be via promissory note for deferred payment to Carney of $4.5 mil in cash. Bucha and its ceo Brent David Willis say they have commitments for debt financing for that initial $8.5 mil payment. According to documents, New Age did more than $50 mil in biz thru its distributorship and brands, and generated more than $3 mil in free cash flow in 2015. Bucha is new name for American Brewing Company, craft brewer founded by Neil Fallon, who last year sold off brewing assets in order to segue to kombucha and other healthy functional bevs. He continues as chmn, with Brent handling what he described to BBI as "transformation" initiatives to shed costs, unify assets and expand platforms. As reported, over past coupla years Pizza Hut cofounder Carney has been looking to unwind position in orderly way as he gets up in years.

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05/26/2016

Life without AriZona Iced Tea? It's Distinct Prospect in Vermont as GMO Labeling Reg Approaches

By now, billion-dollar AriZona Iced Tea brand has become as much a grocery staple as Cheerios, Boar's Head and Campbell's Chunky Soup. But there's a chance that, in a few weeks, AriZona Green Tea will vanish from store shelves in Green Mountain State. It's among food/bev marketers that are on the spot as Jul 1 effective date of new GMO disclosure regs approaches. Faced with choice of either reformulating products or redoing packaging to declare presence of GMO ingredients, AriZona has been among cos rumored to be eyeing complete pullout from state, whose population is well below 1 mil. True? Its evp and chief sales & marketing officer, Rob Marciano, confirmed to BBI this week that co had earlier made decision to pull out, but said it's had 2d thoughts lately, particularly as efforts continue to moderate impact of law. Tho GMO disclosure proponents beat back late efforts in state to delay or water down law, battlefront has moved to Washington, where lobbyists for major food marketers are trying to get legislation passed that would pre-empt Vt labeling law. Assuming that doesn't succeed, among options that iced tea marketer is considering is to cut back range of items available in state to maintain presence but minimize relabeling effort. "We'll know in another week or week and a half" what direction to take, Rob said. Pro-labeling group called Vermont Right to Know GMOs recently congratulated proponents on beating back proposals to weaken regs within state (tho budget did get provision delaying citizen's ability to bring lawsuit under Act 120 for a year) but warned that, "Once again we need to turn our focus to Washington DC, where corporate food lobbyists continue to try to pass legislation to preempt Vermont's labeling law before it goes into effect on July 1st." Other BBI readers who sell GMO-including items in Vt, please reach out to BBI to let us know where you stand.

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05/26/2016

Red Bull, GoPro Include Equity in Alliance; Will Step Up Collaboration Across 1,800 Events

GoPro founder/ceo Nicholas Woodman told Adweek his hi-def camera co always felt like Red Bull's "younger brother." Now the 2 brands associated with athletic derring-do have tightened alliance, with Red Bull taking tiny equity stake in GoPro reported to be less than 1% and partners agreeing to feature GoPro's hi-def cameras at 1,800 Red Bull events in 100+ countries. Deal buttresses content creation of Red Bull Media House while giving Red Bull first look at emerging technologies at GoPro, which numbers drones among its product range. "This is a content-sharing partnership that is dramatically expanded from anything we've done before," Woodman told Adweek. Mag noted that alliance combines social media reach that amounts to 57 mil followers for Red Bull and 24 mil for GoPro .

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05/26/2016

DEALS: German Ingredient Power Doehler Seen Buying NJ-Based Teawolf; Mix 1 Life in Production Deal for No Fear with Pepsi Northwest

German ingredient house Doehler apparently has acquired natural extracts house Teawolf of Pine Brook, NJ. Tho there's no sign deal's been formally announced, it was confirmed by exec at brand incubator MetaBrand, which has been affiliate of Teawolf. Teawolf lists as its core offerings tea, vanilla, coffee, cocoa, guayusa (with Runa as a client) and hibiscus. Doehler, which is based in Darmstadt and dates back to 1838, describes itself as marketer of "technology-driven natural ingredients" and has been on global acquisition push in recent years, with its prizes including Beverage House (now Doehler North America) in Cartersville, Ga. Doehler now operates 30 production sites around world. Deal comes at busy time in sector, with Monster Beverage recently closing on acquisition of key flavor house, American Fruits & Flavors . . . Mix 1 Life of Scottsdale, Ariz, said it's struck deal with Pepsi Northwest Beverages to produce its No Fear energy line. "PNB's quality manufacturing along with the significant cost savings from this relationship is another milestone which will help MIXX achieve our 2016 sales and gross margin goals," said Mix 1 ceo Cameron Robb. Tho it's had tangled history in recent years, recall that No Fear goes back to SoBe brand acquired by Pepsi, and Pepsi houses in Pac NW without access to Rockstar energy have been receptive to giving it another try. Mix 1 also markets protein line of that name.

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05/26/2016

Coke Offers Big Swath of SW Territory, Including Texas, to Latin American Power Arca in Alliance with Coca-Cola United

Coca-Cola took another big step toward target of refranchising all North American operations by next year with recruitment of Latin American giant Arca Continental to pick up big swath of territory including Texas, bringing transitioned territory to 60% of biz. Complicated transaction calls for KO to cede its operations in Tex and parts of Okla, NM and Ark - known as Southwest operating unit of Coca-Cola Refreshments - to new entity called AC Beverages that's being set up as joint venture with indie bottler Coca-Cola Bottling Co United, based in Birmingham, Ala. Arca will have majority stake, KO 20% and United the rest. AC will own 9 bottling operations in Tex and 2 in Okla. Meanwhile, Coke United also is picking up part of Okla that it will contribute, along with undisclosed cash amount, to AC Bevs. Coke brass didn't offer specific rationale for complex structure, but it seems intended to offer Arca local expertise in US market in which it's never operated before, tho it's co's #2 bottler in Latin America (and #3 worldwide). Coke United's existing franchise territory is unaffected. In separate transaction, Ozarks Coca-Cola Bottling of Springfield, Mo., is picking up modest amount of CCR territory in northwest Ark, Kan and Okla. Arca had long been expected to garner role in Coke's US distribution. Deal still leaves another key player, Mexico's Coca-Cola Femsa, out of picture, tho other Latino-heavy territories near Mexican border, notably Calif, still are up for grabs. Also a big question mark is NY, money-losing operation beset by labor issues. By its own accelerated timetable, KO has another year and a half to get it all sorted out.

Coke Restructuring Int'l Biz as European Bottler Unification Advances toward Completion Lotsa action on int'l front too for Coke. As bottling system advances toward unified entity in Europe, Coca-Cola has revamped int'l mgmt team, creating Europe, Middle East and Africa (EMEA) Group led by 19-year KO vet Brian Smith, currently prexy of Latin America Group. Dan Sayre continues as prexy of Western Europe, but now reports to Smith. Another 19-year vet, Alfredo Rivera, now prexy of Latin Center Business Unit, will take Smith's old job, like Smith reporting to KO prexy/coo James Quincey. John Murphy, prexy of South Latin Business Unit, will segue to prexy of Asia Pacific Group, also reporting to Quincey. That unit's current prexy, Atul Singh, moves to chmn role until planned retirement in Mar 2017. Moves came as Coca-Cola Enterprises said its shareowners had approved combo with Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetränke to create massive European entity - Coke's biggest indie bottler globally - with closing now anticipated by end of week. Merged cos will go by name Coca-Cola European Partners.

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05/26/2016

RETAIL: Whole Foods Opens Much-Anticipated 365 Store in LA; Stripped-Down Format Still Supports Robust Array in Categories like Cold-Brew, Kombucha, Craft Beer

To avalanche of local coverage, Whole Foods yesterday opened its first 365 banner in LA's trendy Silver Lake nabe, unveiling stripped-down offering that avoids seeming like desperate knockoff of retail nemesis Trader Joe's, as some had expected. Tho BBI, stuck on wrong coast, is still teasing out details of bev assortment, it seems that at least in some trendy segments like cold-brewed coffee and craft beer, retailer is offering broad range of choices of brands and flavors. Voluminous media coverage, while almost uniformly glowing, could be double-edged sword in drawing onerous contrast to higher prices and self-important clientele of core Whole Foods stores. "Everything about 365 is more affordable than its yuppy parent store -- the hot and cold food bars are priced by size not pounds, all meats are prepackaged, and most things cost $20 or less," enthused Thrillist. "A Grocery Store You Can Actually Afford," headlined LA Eater. As opposed to . . . ? Right, Whole Paycheck. Even so, comparison of basic grocery staples by local TV station found items still were cheaper at Albertsons than at 365.

The 365 store, named for Whole Foods' private-label brand, has been given vibrant color palate and more whimsical vibe - say, sign that says "Silver Kale," in play on Silver Lake, or self-checkout area that limits # of items to "5ish." "It's all good," assures giant sign over beer coolers. Promised technology focus includes tablets stationed in alcohol section to help shoppers select right wine pairing and "teabot" tea dispenser that allows up to 1K combos, in style of Coke's Freestyle fountain unit, with shopper determining temperature, caffeine level and other specs. Store accepts Apple Pay. As anticipated, stand operated by partner Allegro Coffee features hot and cold items, including nitro-infused cold-brewed coffee. Overall, store carries formidable range of organic produce and other staples, often on low tables, as well as full selection of beer and wine (with consumers able to sit down with a beer in one area). In other areas, selections are more tightly edited - say, 3 brands of ancient grains rather than 6, noted LA Eater.

At BBI request, LA-based bev innovation vet Dino Sarti of LA Libations swung by new store this morning. His take? Small footprint reminds him more of a Sprout's than a Trader Joe's. Wide aisles, now that opening day crowds have subsided, could be viewed as roomy or sparse, he said. "Not a lot of wow factor" - apparently intentionally so as not to spur assumption that prices must be high. As for bevs, they're merchandised mainly in 3 areas: cooler that includes full doors of cold-brewed coffee and kombucha; warm aisle of maybe 24 feet, and refrigerated case near checkout featuring similar brands to warm shelf. Brands are "mainly big dogs" rather than early-stage innovators, Sarti said, with brands like Hiball and Runa enjoying multiple placements. Juicero's $699 home juicer was being sampled in store - all week and likely all month, attendant told Sarti while trying to convince him to buy one for his wife.

Photo sent in by another locally based BBI reader shows back cooler full of single-serve cold-brewed coffee offerings under brands like Blue Bottle, Stumptown, Chameleon, High Brew, Kohana, Hiball and Califia Farms. All those brands are seen in broad flavor array, as is case with Guayaki yerba mate, on bottom shelf of same cooler. But almondmilk selection is more pared-down - all 365-branded items except for Almond Breeze in Chocolate flavor and So Delicious almondmilk creamer. Photo of dairy cooler shows retailer's 365 brand dominating 3 of 6 shelves, but others contain brands such as Silk, So Delicious and Good Karma (flaxmilk). Display activity on floor includes Califia Farms' new horchata offering in floor well in Vanilla and Cinnamon flaves.

Want a glimpse of new store? Lotsa photos included in LA Eater and Thrillist items

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05/23/2016

FLASH! Denver's New Age, DSD Power and Xingtea Owner, Merges with Bucha; CEO Willis Aims to Build Out Diverse Platform

For past coupla years, Pizza Hut cofounder Dan Carney has been quietly shopping Denver's New Age Distributing as he approaches his mid-80s and moves to liquidate his holdings in orderly fashion while doing what he can to protect interests of co's operators Scott and Tom LeBon, for whom he's served as mentor as well as investor. He's been open to offers for entire co, which includes Xingtea natural tea line and Aspen Pure Water, or components separately if necessary. That search now has reached conclusion, with acquisition by Bucha Inc, kombucha co that recently came under control of former Anheuser-Busch and Cott exec Brent David Willis (BBI, Apr 7). Willis' plan, as he explains it to BBI: to create $60 mil (revenue) entity that can serve as platform from which to scale variety of plays in healthy-bev space. â€œWe'll combine Xingtea and Aspen Pure and Bucha into a complementary portfolioâ€ buttressed by future acquisitions, all moving in Colo thru New Age, durable and influential DSD house that's played key role nurturing lotsa breakout brands over past coupla decades. Its current portfolio comprises brands like Sparkling Ice, Xyience, Jarritos, Everfresh, Voss, Core, Aquahydrate, Calypso, Cabana, Hubert's, Original NY Seltzer, Nestle and WhiteWave, as well as range of malt liquors and craft beers.

Cash-and-stock deal, for amount not immediately disclosed on Fri, takes out Carney, with Scott staying on as prexy, his bro Tom staying on to run sales and Willis leading what he calls â€œtransformationâ€ effort, which should yield $5 mil or more in short-term synergies. Chronically undermarketed Xingtea will finally have resources to build broader footing, Tom indicated.

Willis has had varied career, with roles at Coca-Cola, A-B and private-label giant Cott, where as ceo Willis controversially led sweeping transformation that included unsuccessful attempt to create co's own brands but that also set it more decisively on road to reducing reliance on CSDs that's been a hallmark of his successor, Jerry Fowden. It was during that branded push, when Cott brought Xingtea into DSD network it was assembling, that Willis met LeBon bros and became familiar with potential of tea and juice brand. Since leaving Cott, he's served as chmn/ceo of portfolio of private-equity-backed brands he's assembled since 2010, including XFit Brands, Liberty Ammunition, ULearning, Throwdown and Vascular Technologies, in which he holds equity stakes. As for Buch, based in Torrance, Calif, it's undergone fair amount of upheaval, splitting with former ceo Ron Lloyd and merging nearly a year ago with Washington State craft brewer American Brewing Co, which has since moved to shed its brewing assets to focus on what it views as less crowded, faster-growing kombucha sector. New Age deal now makes Willis latest to harness dream of assembling range of promising new-age brands in quest of critical mass while sustaining existence of key all-other DSD house in market that's produced lotsa cutting-edge NA and craft beer brands.

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05/20/2016

PROFILE: JMK Consumer Growth Partners Seeks $2-5 Mil Investments in Early-Stage Brands

It's an acknowledgement many in bevs can ruefully make: earlier in career, John Kenney turned down chance to invest in Vitaminwater because at $10 mil in sales, co was too small for fund he was then managing. Determined not to miss out on other early-stage gems, Kenney for past coupla years has been operating his own NY-based shop, JMK Consumer Growth Partners, that's zeroing in on smaller consumer brands that have successfully surmounted proof-of-concept phase. To date, fund numbers just 2 investments, both on personal care side, but he and cofounder Sarah Woelfel have been kickin' tires of lotsa bev brands. Here's quick profile, gleaned over coffee with John in Anaheim, Calif, during Expo West a coupla months back and followup call this week.

At JMK, Kenney is aiming to deploy growth capital in chunks of $2-5 mil in cos involved in hi-growth sectors within food, bev, personal care, fashion, household goods and pet care whose $2 mil or more in trailing revenues suggest proof of concept has been demo'ed beyond narrow channel like Whole Foods. Ideally JMK is only investor in co, tho it will partner with others if it's in lead role and things don't get too unwieldy. Follow-on investments are likely, up to total of $10 mil. John likes to characterize JMK role as being active but non-operational "thought partner" to co's principals.

Investment targets should offer something unique, but not at riskier bleeding edge. Food/bev items should offer some degree of functionality but no compromise on taste and be in growth segment that's likely eventually to be of interest to strategic as preferred exit. Kenney readily acknowledges he's playing in similar space to Andy Whitman at 2X Consumer Products Growth Partners, which has invested in cos like Beanitos and Orabrush.

Kenney spent a decade co-running consumer and retail practice at AEA Investors LP, $1.5 bil fund which counted among its successful investments Burt's Bees, Acosta Sales & Marketing and Tampico, then segued to 5 years as managing partner at TSG Consumer Partners. By time he and wife had quadruplets, TSG had grown to $1.3 bil fund that couldn't really devote a lot of focus to the smaller investments in early-stage cos that Kenney liked. So he took time off, eventually teaming Audax and Deutsche Bank vet Sarah Woelfel to launch JMK in Apr 2014. Third member of team is Anders Kolding, with coupla years at Chardan Capital Markets. Kenney has also been willing to invest on his own as an angel, including in WTRMLN WTR.

So far, JMK has made coupla investments in personal care realm: Supergoop, high-SPF skincare line that's sold in Sephora and Saks, and Babo Botanicals, maker of skin and hair care items in which JMK is only institutional investor. Last year JMK reviewed 310 deals and anticipates that # will grow well beyond 400 this year, Kenney told BBI.

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05/20/2016

PEOPLE: After Decade-Long at Cheerwine Soda, Barbitta Heads to Non-Profit Side at Stop Hunger Now; Ex-Dean Foods Chmn Davis Pleads Guilty to Insider Trading Ahead of WhiteWave Spinoff

After decade-long run helping to expand Salisburgy, NC-based regional brand Cheerwine Soda into quasi-national brand via unusual blend of authenticity and ingenuity, Tom Barbitta has decided to take skills to nonprofit sector, signing on as cmo at Stop Hunger Now, located not far away in Raleigh. In new spot Barbitta, who'll report to ceo Rod Brooks, will aim to broaden activities of 18-year-old org from hunger relief to sustainable communities - proverbial move to not just give starving person fish to eat but teaching them how to fish. "Profoundly different calculus than anything I've ever done," said 30-year marketing vet who made stops at Miller Brewing, Unilever, Nabisco and Oberto Jerky before arriving at quirky soda operated by Ritchie family. "I hope to bring classical marketing principles to the space: positioning, brand promise, targeting." Tom urged others in for-profit segment to consider similar moves as cap to career, while also noting he'd be reaching out to soft drink companies that might view support for causes like his as means to reach disaffected millennial consumers. Meanwhile, Tom said successor has not been named yet at Cheerwine, for whom he's keeping hand in a while longer as consultant to owner Cliff Ritchie, wrapping up several ambitious initiatives to be unveiled later this year. Stop Hunger Now operates meal packing sites in 20 US cities and several overseas sites . . . Eyebrows were raised last Aug when former Dean Foods chmn Thomas Davis suddenly resigned from board seat without explanation. Reports surfaced soon after that he might be embroiled in insider trading investigation related to DF's spinoff of WhiteWave Foods. That probe now has resulted in guilty plea as his alleged accomplice in activity, pro gambler in Vegas named Billy Walters, was charged in NY with securities fraud, wire fraud and conspiracy in scheme claimed to have netted more than $40 mil in illegal profits, per Reuters and other news services. Davis, 67, pleaded guilty Mon and his attorney said he's cooperating in probe. Golfer Phil Mickelson, also involved, wasn't charged but agreed to disgorge $1.03 mil in illegal profits and interest. "These bets were no gamble at all," said US attorney Preet Bharara. "They were sure things." g

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05/20/2016

EXTENSIONS: Joia Sees Move into Vodka-Based Premixed Cocktails As 'Natural Evolution'

Minneapolis-based Boundary Waters Brands, which has been patiently building its Joia All Natural Soda line, is taking plunge into higher-margin alc biz with launch of Joia Spirit, craft cocktails that are debuting at this weekend's Natl Restaurant Assn show in Chicago. Line melds Joia's culinary flavor combos with premium vodka, in contrast to ranks of malt-based cocktails that include preservatives, artificial ingredients and HFCS. Joia Spirit is packed in 12-oz slim cans at $3.99 ($14.99 per 4-pack). They contain mild alcoholic hit of 6-7%. Initial flavor range is Sparkling Moscow Mule (based on Joia Ginger Apricot & Lime), Sparkling Greyhound (Joia Grapefruit Chamomile & Cardamom) and Sparkling Cosmopolitan (Joia Cranberry Pear & Lime). Founder/ceo Bob Safford termed it "natural evolution" for soda line that has often been used as mixer. Joia Spirit is getting limited launch in Jul in home state via Phillips and Johnson Bros spirits houses and select other markets. Recall that alcoholic extensions have proved sometimes treacherous realm for NA brands, with brands ranging from Rockstar Energy to Calypso Lemonade encountering hurdles in efforts. With vodka-based formulation, Joia also eschews tax and distribution advantages conferred on malt-based cocktails.

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