Sales of non-alc bevs “remain strong, up 6.6%,” estimates Bonnie Herzog of Wells

Fargo Securities based on survey of over execs who manage 15K c-store locations nationwide. Nearly 40% of c-

store retailers said sales “were up high single digits/double digits.” Bev gains were driven by energy drinks

(+7.5%), bottled waters (+9.4%), iced teas (+6.4%) and sports drinks (+9.8%,) noted Bonnie. Once again, lower

gas prices “continue to be a key contributor to in-store sales growth for the industry,” she added. That echoes

report from Natl Assn of Convenience Stores (BBI, Apr 13) but Herzog’s quarterly survey offers range of insights

into key impulse channel.

Coca-Cola bev sales were up estimated 5.4% in Q1 based on survey, outrunning Q1 2015 and up sequentially

from Q4, noted Bonnie. KO gains were driven by “solid result” for Minute Maid, Smartwater and brand Coke,

per retailer responses. KO was “more aggressive with pricing and promotions” this qtr, per retailers. “Share a

Coke” campaign was cited as leading to “significant increases over the past 2 years,” prompting retailers to hold

“high expectations” for “Share a Song,” “It’s Mine” and Olympic promos this summer. PepsiCo sales rose an

estimated 4.6% in Q1 based on survey, “a deceleration” from Q1 2015 but still ahead of Q4 results. “In general,

more aggressive pricing, new packages and continued success of Starbucks’ products, Kickstart and Gatorade

helped offset overall weakness in CSDs” for PEP, wrote Bonnie. C-store retailers have high expectations for

coming months “based on Starbucks innovation, DewCision launch in April/May and the PepsiMoji campaign

this summer.” Dr Pepper Snapple Group sales rose an estimated 5.4%, “significant” acceleration from yr ago,

driven by gains for DPS’ allied brands, its Batman v Superman promos, Snapple Straight Up Tea and “strong

results” from Body Armor. Retailers are very high on Body Armor, which they feel “could explode” going

forward.

Monster Decelerates but Retailers’ Expectations Still High Monster sales rose an estimated 8.2% in Q1, per

survey. While results were “solid,” that’s deceleration vs yr-earlier and Q4 gain of 10%. But MNST was facing

tough comp, particularly Q1 2015, “when Anheuser Busch distributors were incentivized to outperform ahead of

transferring territories to Coca-Cola,” reminded Bonnie. A good sign for MNST is that retailers indicate its price

increases have “had minimal negative impact on volumes.” Also, majority of retailers believe “service issues

have been addressed and we are now seeing great service levels.” And while not citing “any specific

knowledge,” several retailers believe MNST will launch an enhanced water product later this year.

Bai may have written big check to air Super

Bowl ad in 3 markets a couple months back, but Body Armor is claiming to have managed its own Super Bowl

ad, without media buy at all. That happened Thurs night – on what some were calling Mamba Day – when Kobe

Bryant played final game as Laker in LA, pouring in 60 points in comeback win vs Utah, all the while

unabashedly flogging Body Armor brand in which he’s major investor. From pregame on, Kobe was seen with

Body Armor-branded towel draped over shoulders, and he slugged back bottle on court at conclusion of game.

He conducted postgame press conference with 20-oz bottle of core BA on table alongside larger bottle of what

appears to be Body Armor water, perhaps a Propel alternative. Tho unannounced so far, that may one of

forthcoming items that cofounder/ceo Mike Repole teased in interview this week (BBI, Apr 13).

Of course, given tight tie of Gatorade to NBA, many of Bryant’s activities should be taboo, but any sanctions by

league likely would be viewed as sullying star’s classy exit and certainly would reap further bounty of free media

for Body Armor. As brand’s marketing vp Michael Fedele noted in internal recap, “Kobe took the Body Armor

brand along for the ride, introducing Body Armor to millions . . . all night long!” Other brands Bryant endorses,

such as Nike and 2K Sports, have been airing paid ads in runup to Black Mamba’s final night on hardwood.

Farmers co-op Organic Valley is looking to rattle the barn again on marketing front with new

batch of efforts devised with agency Humanaut. After garnering 12 mil views with its gone-viral “Save the Bros”

campaign urging gym rats to abandon conventional protein drinks for co-op’s Organic Fuel bottled shakes,

partners are teaming on variety of initiatives intended to add pizzazz – and build velocity – for its other brands in

once-sleepy dairy category. These days, farmers co-op likes to remind folks that it’s first bil-dollar organic-only

co, sales figure it hit by a hair in 2015. Marketing team under Lewis Goldstein has revved up innovation engine,

added first shelf-stable products and been enlisting DSD players in efforts to turn co-op from meat-and- dairy

player to broader bev player, at time dairy segment is on consumers’ radar as ripe for upgrade. La Farge, Wis-

based co-op seems ready to take Geico-like approach of spraying different concepts around in view of hitting key

demos and hoping for further viral outbreaks. All the efforts are in partnership with Humanaut, which recently

got nod as agency of record. “They’ve brought us breakthrough communication that ties right into the brand

values” of being approachable, optimistic and authentic, brand mgmt dir Tripp Hughes told BBI.

Latest effort, currently in process, pushes co’s organic Half & Half offering as perfect adjunct for the better coffee

that consumers are imbibing these days, following in footsteps of rival Califia Farms, which has made inroads

into indie coffee shops with its Barista Blend. Platform for Organic Valley ad intended to air in mid-May is co-

op’s first-ever popup store erected in NY’s funky/trendy Lower East Side, where local chef Paul Lowe, who goes

by Sweet Paul, this weekend will be dispensing Vietnamese Cardamom and Blueberry iced coffee blends using

Grady’s Cold Brew and Organic Valley Half & Half.

At preview yesterday, Hughes told BBI that underlying concept was to flip barista experience to focus not on the

coffee but on the half-&- half (under hashtag #JustAddCoffee), using farmers to bring it to life. As planning

proceeded, they pondered idea of opening up set of film shoot, using real consumers in keeping with brand’s

approachability. NY friends steered them to Lower East Side as having appropriately authentic, unflashy, down-

to-earth vibe (in contrast to upscale SoHo, Tribeca and Meatpacking District that seem to have become default

sites for popups.) Store, in conventional 10-foot frontage, is billed as “world’s first organic half & half bar.”

Team then enlisted co-op member Gerrit van Tol, who farms acreage in Washington State, and flew him down to

Va to shoot some farm-based footage earlier this week (since Gerrit’s own farm in Wash hasn’t greened yet), then

brought him up to Elizabeth St popup to film barista experience. They’re doing some closed shooting in store

today but will open it to public this weekend to garner footage from passers-by who stop in. “We’re trying to

meet our consumers where our consumers are,” explained Kelly Gibson-Wolff, dir of relationship mktg. Many

have let co-op know that creaming their coffee with Organic Valley’s half & half “makes my morning,” she said.

Separate effort that just broke is building up recently restored line of flavored creamers, which debuted at recent

Expo West and is available now in curvy plastic bottles rather than gabletop of aborted earlier effort. The setup

there consists of series of spoof videos in which Organic Valley staffers read actual emails from consumers

who’d been pleading for return, often as costumed colleagues cavort against backdrop behind them. “You have

crushed the folks of Franklin, Tennessee, with this discontinue,” wrote one, while another warned of devastation

to coffee growers because he no longer would be consuming his substantial allotment of joe. Since flavored

entries have only limited distribution so far, Holmes said it’s too soon to weave them into broader Half & Half

effort.

Another initiative dubbed “Organic Balance Real Morning Report” seeks to debunk notions of modern women

leading yoga-infused lifestyles in perfect abodes, backed by research that yielded factoids like 26% of women

have worn same bra for 5 days or 79% have eaten their breakfast in a moving vehicle. Campaign’s purpose is “to

deflate the myth of the perfect woman—as seen on TV, Facebook and Instagram—and start a real conversation

about all the craziness that modern life entails,” as agency told MediaPost. “You know what 100% of us do have

time for?” asks one woman. “A real-life Pinterest board?” responds another. “Fermenting your own small-batch

kombucha?” offers another. “No! An organic breakfast in a bottle!” responds another woman waving an Organic

Balance protein shake as she heads to work in a cab. Higher-protein Organic Fuel got big lift from “Bros”

campaign, and now is time for co-op to do more to build female-targeted Organic Balance. Video can be viewed

here: https://www.youtube.com/watch?v=bh19YxASA-4&feature=youtu.be

After 28 years of

consideration, giant Pepsi-Cola sign that’s visible from eastern edge of Manhattan has finally won approval as

protected icon from NY’s Landmarks Preservation Commission. “Its prominent siting and its frequent

appearances in pop culture have made it one of the most endearing and recognizable icons on the Queens

waterfront,” effused LPC chair Meenakshi Srinivasan. NY Times offered somewhat more tempered praise,

referred to sign as “dazzling swirl of red curlicue letters that evokes innocent days of summer, heavy industry in

Queens and a spectacular disregard for the waterfront in the mid-20th century.” It’s now prominent feature of

new state park, Gantry Plaza, that’s been opening in stages in booming Long Island City nabe across the East

River from Midtown Manhattan. Park retains rusted gantries and other features as found sculptures evocative of

waterfront’s industrial past. It wasn’t just a Pepsi challenge: famously dilatory LPC has kept other proposed

landmarks languishing in limbo for decades but has come under pressure to act.

For once,

it’s not just about NY and LA. That was word from Body Armor ceo Mike Repole when BBI caught up with him

in leisurely discussion on Mon in wake of additional investment in sports drink brand from distribution partner Dr

Pepper Snapple Group and launch of marketing campaign that will more pointedly challenge sports-drink leader

Gatorade as inferior item (BBI, Apr 4 and 7).

By now brand is available in all 50 states and is national in Kroger, Target and 7-Eleven chains. “So there’s no

better time to start to talk about what is Body Armor and why should I drink Body Armor,” Repole told BBI in

conversation on Mon. While prior “Upgrade your sports drink” message was effective, it’s time to move to more

assertive “ditch & switch” phase, via out-of- home, digital and social media, he indicated. Meanwhile, in sales

calls to retailers, team continues to stress that Body Armor offers chance to add margin to stagnant, heavily price-

promoted category while bringing better-for- you option to their shoppers.

Other news may be imminent. Tho co has held off even on adding lower-calorie option until it got core brand

moving, it may finally be ready to start adding other products to mix. There’s a reason that co name is Body

Armor Sports Nutrition, Repole said, and future innovations will include items outside sports drink category. He

implied some of those may show up soon.

And as Kobe Bryant winds down playing career, expect him to add more time and focus to activities at Body

Armor. By now he’s been reported to be #3 shareholder, presumably behind Repole and DPS and ahead of

cofounder Lance Collins, who’d earlier created successful Fuze and NOS bev brands. Kobe will come to

enhanced role at Body Armor from perspective of seasoned athlete who sees younger players on Lakers

gravitating to other isotonic options, and who also has 2 soccer-playing teen daughters, Repole said.

Recall that, at time Body Armor launched in 2011, it was presented as brainchild of Collins alone. As it turned

out, Repole and Collins say now, Vitaminwater vet Repole was a silent partner from the start. That was partly

due to extensive slate of other activities Mike maintained, spanning Pirate’s Booty snack brand, Energy Kitchen

eatery chain and vast stable of thoroughbred horses, but also out of wish to avoid the extra scrutiny that comes to

entrepreneurs who try to repeat earlier success. “When I left the Coca-Cola Company [after Glaceau transition] I

said I’d never get back into beverages,” Mike recalled. But by 2012 demands of the biz “dragged me back in,” to

newly visible role. At this point, Repole is running brand while Collins spends most of his time on Core Water,

another brand that’s showing signs of breakout potential. Mike said the 2 talk all the time, mainly about families

but also about Core and Body Armor.

When Repole took reins he quickly simplified recipe, ditching numerous expensive ingredients to take out costs,

improve flavor and streamline positioning, allowing SRP to be dropped to $1.99. These days, brand is frequently

seen at 4 for $5 and occasionally at 10 for $10 in large-format stores and at 2 for $3 in c-stores. “There’s a fine

line between being premium and overpriced,” Repole noted. And while “we’re still 2 times the price of Gatorade

and 3 times the price of Powerade,” athletes and general consumers are coming to recognize the performance

advantages of a brand that’s all natural and contains vitamins and coconut water. To those consumers, “price is

not the most important thing.” Of course, that’s been assumption of dozens of other sports drinks that have tried

to crack Gatorade’s grip on sector but, as Repole likes to note, Body Armor is the brand with the experience,

capital and distribution to succeed. “To be the #3 sports drink is a huge accomplishment going into our fifth

year,” he insisted.

Tho it’s mainly aligned with DPS network, brand also is harnessing key indie houses, including Big Geyser in

NY (which has consistently reported that house brand is outpacing Vitaminwater at similar stage of development

a decade and a half ago), Honickman/Canada Dry in Mid-Atlantic states, Kalil in Ariz, Columbia in Pacific NW

and several members of NIDA group in Northeast.

By now, most distractions have fallen away, after Repole flipped Pirate’s Booty and closed Energy Kitchen. And

as much as at Glaceau, he’s working it. Last week, he visited Cincinnati, Minneapolis and Des Moines and next

week will take him to Indianapolis and Charlotte. (“I never was in Des Moines with Vitaminwater,” he noted.)

Back in bevs, he says game has changed. In past, new-age entries almost always ignited in coastal centers like

NY and LA before building in heartland markets. Early-stage brands that overinvested in inland markets on

strength of strong reception in NY or LA often found themselves overextended. A few may have bucked trend –

BBI can think of Marley relaxation brand in early days – but those were exceptions that proved rule. Count Body

Armor then as another of those exceptions – or a sign of what may be the new normal, now that consumers in

most nooks and crannies of US have become more sophisticated about what they eat and drink.

“Body Armor does well in New York and LA, but sells more cases in Philadelphia, Baltimore and Ohio,” Mike

observed. “It sells as many in Iowa and Kansas.” Seattle and Phoenix are performing well, he said, and Texas “is

on fire.” (That’s where DPS is based and operates arguably its strongest bottling unit, tho it now distributes Body

Armor in 34 states.) “New York and LA might crack the tail end of the Top 10,” Mike maintained. True, both

are contributing good # of cases, but that’s “because of their population, not velocity.” Data suggests that neither

NY nor LA is a strong Powerade market, and NY isn’t a particularly strong Gatorade market either, he added.

Since many in media scrutinize those 2 markets, Body Armor’s more balanced growth may have contributed to

earlier impression that brand was underperforming, he believes. “A lot of people think it’s all about New York

and LA. Let people keep looking at New York and LA.”

That’s big contrast with pattern during Mike’s Vitaminwater days, when “New York outsold the world 10 to 1.”

Mike is happy to conclude from that that Body Armor brand connects everywhere, but acknowledged his team is

trying to dig further into such trends as 200% gain in Mid-Atlantic region. Do the hot spots correlate with most

motivated wholesalers? “We always need the support of retailers and distributors,” Repole replied

diplomatically, “but at the end of the day it’s about consumers in that region.” Overall, Mar was up 150%,

generating case sales exceeding total for all of 2013, brand’s first full year after revamp, and making for 18th

consecutive growth month. IRI syndicated data shows brand up 150% to $47 mil in retail sales over past 52

weeks; in non-measured channels it’s growing even faster, he said.

“As an entrepreneur, every time you think you have a formula for success, it’s a recipe for disaster,” Repole said

of those who try to replicate a prior success by replicating that strategy. “If I managed Body Armor with the

same exact playbook that I managed Vitaminwater, this company would have been non-existent 2 years ago . . .

You have to evolve.” Successive startup brands, he added, should like you would 2 of your children with

different personalities.

For all his fervor behind Body Armor, one activity Repole isn’t neglecting is Repole Stables. After big run with

thoroughbred Uncle Mo a few years ago, he was back at Aqueduct Racetrack last weekend with a son of Uncle

Mo who won the $1 mil Wood Memorial there. Horse’s moniker seems to epitomize Repole approach that hasn’t

softened despite his making several hundred mil off Glaceau: Outwork.

Low-key Boylan Bottling, owned by Emigrant Capital, is edging more

into spotlight by signing on as official sponsor of 2016 Tribeca Film Festival, obtaining pouring rights for both its

retro-style natural sodas and its Boylan Heritage line of cocktail mixers. “The Tribeca Film Festival is

authentically New York and Boylan Bottling has been a staple of the city for 125 years,” explained Boylan svp

Chris Taylor, referring to key brand anniversary this year . . . Monster Energy is sponsoring premier of new video

from The Cult called G O A T (“Greatest of All Time”), which depicts amateur MMA fighter Orlando Friol going

thru routine at Miami’s Knockout Zone Gym.

Food/bev sales led

c-stores to record sales year in 2015, per newly issued data from Natl Assn of Convenience Stores. It was a

paradoxical year in which plummeting gas prices exacted a toll on sales at the pumps outside, leading to 28%

drop in sales to $483 bil, but drove more affluent-feeling consumers inside the stores, where sales rose 5.8% to

$226 bil. Much of the gain in food/bev was in what NACS categorizes as foodservice, including prepared and

commissary foods, hot-dispensed bevs (mainly coffee) and frozen-dispensed drinks, accounting for 20.8% of

sales but 33.7% of gross profit. But packaged bevs came in 2d, contributing 15.1% of sales but 18.8% of GP.

Data was released at assn’s State of the Industry summit in Chicago this week. NACS is promising more fine-

grained breakdown in Jun, when it releases State of the Industry Report.

In tough market, more milk producers are discovering now is the time to emphasize milk’s key

attributes: local and fresh. “Add milk to the long list of traditional foods that are being rediscovered by young

entrepreneurs and reintroduced in small-batch – and often high-priced – form,” observed NY Times. The “advent

of high-end milk is about more than just a fashionable business venture,” as low prices have left local farmers

struggling, noted paper. So many now “are choosing to ride the wave of the nation’s new food awareness” by

“eschewing traditional model of selling to commercial processors” and instead bottling and selling their own,

direct to consumers, restaurants and small retailers.

Sales of grass-fed cow milk have grown high-double- digits at Whole Foods Markets nationwide over past 2 years

and will likely increase in 2016, said Julie Blubaugh, mgr of local products in co’s Midwest division. “That surge

is even more remarkable given the long slump in overall milk sales,” as per capita consumption dropped 36%

over last 40 yrs to 159 lbs per person annually in 2014.

Full-Cal Milk Edging Back into Fashion Skim, 1% and 2% milks have helped segment hold onto consumers

becoming more weight- and health-conscious as they age, but a review of research on dairy fats found people

should stick to regular milk, noted NY Post. Researchers “found no difference among rates of cardiovascular

disease and Type 2 diabetes between full-fat and low-fat dairy” consumers, per study published in European Jnl

of Nutrition. On top of that, full-calorie milk drinkers were found to have “lower body weights than those who

used low-fat products.”

Decision by Boston house Great State to sell

out has sent shockwave thru ranks of early-stage brands and created gaping hole in coverage for indie-distributor

alliance that goes by NIDA name. As dust settles, eyes are quickly turning to NY-based Good-O Beverage and

its New England Distribution arm as best hope to provide indie option in crucial metro that’s flush with college

students, techies and other early adopter types that play outsize role igniting new brands. “This is their time, this

is their moment to shine, if they really want to get into Boston,” said sales chief of indie brand that’s been in Blue

Coast portfolio said of Good-O. “They have the money to do it, the infrastructure, and there’s nobody else

willing to go into Boston.” Good-O exec Joe Pignatella was traveling in Dominican Republic today, colleague

told BBI, and couldn’t be reached immediately for comment. Most other involved parties to whom BBI reached

out seem to be keeping cards close to vest as developments unfold.

As reported yesterday, Hooksett, NH-based Great State has agreed to sell its NH assets, including its portfolio of

Bud beer brands, to fellow Bud house New Hampshire Distributing (BBI, Apr 12). It is selling its Mass assets,

including operations in Boston and on Cape Cod, to regional soft drink powerhouse Polar, long the nemesis of

New England members of the Northeast Independent Wholesalers Assn. Tho Polar subs some brands to NIDA

members in some of its 4-state territory, it has increasingly been taking on such coveted growth brands as Vita

Coco, Core, Bai, Essentia and High Brew, either directly or after stint within NIDA member houses. As result of

deal closing in early Jun, Sparkling Ice and Body Armor are among growth stars likely to make transition to Polar

next.

For other brands, likely including Purity Organic (a rival to Polar’s Nantucket Nectars) and Hint Water, DSD

options in Boston are few and far between. In note to his non-alc suppliers, Great State principal Ron Fournier,

who’ll be transitioning to NH Distributing, suggested that groundwork has been laid for Good-O to pick up the

orphaned brands. “Polar Beverages of Worcester, MA, will assume a portion of the NA portfolio and Good-O

Beverages of NY/CT will tentatively assume the remainder of the NA portfolio,” he wrote, adding, “We have

done everything in our power to assure that there is an option of distribution for all suppliers and two months to

plan next steps.”

Good-O Beverage is owned by Richard Hahn and is affiliated with Honickman Group, giving it access to growth

resources. Traditionally, co has focused primarily on ethnic neighborhoods in NY, leaving more affluent areas to

Honickman’s Canada Dry NY operation, but 3 years ago it extended its reach into New England via operation

called New England Beverage that’s picked up array of premium brands (BBI, Mar 26 2013).

Great State exit also poses quandary for NIDA, which loses coverage in biggest metro north of NY. Recall that

Blue Coast’s founding by Great State a decade ago was encouraged by NIDA peers as response to Polar’s 2004

acquisition of Snapple of Boston, which left Polar as sole non-captive option for new brands. One option might

be to invite Good-O into NIDA ranks, despite overlap in some territories with incumbent NIDA members. Topic

was sure to have been front and center at regularly scheduled NIDA meeting held yesterday in Mass, tho no word

back to BBI yet on what vibe was there.

Within NIDA, Great State was departure in uncommonly extensive portfolio it accumulated, in effort to create

critical mass to succeed in difficult Boston market. Tho portfolio list on Blue Coast website is clearly somewhat

out of date, among brands it lists are juices such as Nantucket Nectars and Calypso Lemonade; soda brands like

Reed’s, Virgil’s, Grown Up Soda and Regatta; bottled water brands such as Sparkling Ice, Hint, Voss, Saratoga

and Qure, and teas such as Snapple and Marley. Tho there likely were other factors involved in timing of

decision to sell, BBI sibling publication Insights Express noted that Great State was 1 of 5 Bud houses operating

in smaller-volume state of NH where A-B did under 10 mil cases last year. So consolidation in some form has

been viewed as inevitable, with more deals said to be in pipeline in New England.

Great State Beverage, which

operates in New Hampshire and crucial Boston market via its Blue Coast unit, appears to be on brink of exit from

biz. Word is that co disclosed to employees that it’s closing doors on Jun 3, selling off NH biz to New Hampshire

Distributing and eastern Mass biz to giant Polar Beverage. Ron Fournier, who ran operation, will stay involved,

moving to NH Distributing, which is also picking up Anheuser-Busch beer portfolio. That’s what we heard last

night but no response immediately to queries placed to Ron, Polar or others close to Great State and Northeast

Independent Distributors Association of which it’s been influential member. NIDA is alliance of indie DSD

shops with deft touch on new-age brands that together offer potential of extensive regional coverage for new

brands.

Over years Great State has nurtured breakout brands like Vitaminwater and Fuze in its eastern Mass (including

Cape Cod) and NH territories, and after regional power Polar Distribution acquired Snapple of Boston in 04 Great

State took on challenge of offering 2d option in college-heavy metro that’s been key launchpad for innovative

brands. It opened doors of Blue Coast in 07 and was able to make a go of it, even as rival house Burke, was less

successful with similar undertaking and eventually threw its lot in with Great State. That filled key void in

Northeast for a decade. In recent years, tho, breakout brands have been harder to come by, with some of more

promising entries going to Polar, partly in search of alignment with Dr Pepper Snapple system. Departure in Feb

2015 of Vita Coco coconut water brand was particular blow.