Fast-growing alkaline water Essentia, which had been rumored to be well along in negotiations

with Honickman Group (BBI, Dec 21), has nailed agreement that places brand in soda bottler’s Canada Dry

Delaware Valley and Canada Dry Potomac Corp units, giving brand DSD coverage from Philadelphia south to

Virginia. (In another key Honickman territory, NY, brand will remain in indie house Big Geyser.) “With the

explosive growth in premium water and Essentia’s leadership position as the #1 alkaline water, we believe

Essentia provides a point of difference that will create value and growth for our retail customers,” said

Honickman Group evp sales/marketing John Taglienti, explaining addition.  Essentia also has entered Hensley in

Ariz, joining portfolio that already includes rival Aquahydrate. Hensley NA dir Brad Thomas explained move by

saying, “The premium water category is an important focus area in our non-alcohol portfolio, and we feel that

Essentia in particular has unlimited growth potential and will be a great addition to our family of leading beverage

brands.” As noted, quite a few DSD shops are carrying multiple alkaline entries.

Phoenix-based Budweiser distribution

giant Hensley is acquiring neighboring Bud house Golden Eagle of Tucson, and with it Golden Eagle’s carefully

nurtured statewide Spike NA unit. On NA side, deal narrows range of options available to brand owners in once

uncommonly well-served state for DSD that’s seen MillerCoors house Crescent Crown narrow its NA portfolio to

handful of sodas and now consolidates another effective option within powerhouse co that does about 30 mil

cases just in Anheuser-Busch volume. Another strong Ariz option remains Kalil bottler, tho tuff contracts are

turnoff to many brand owners. Hensley’s NA roster includes Sparkling Ice, Calypso Lemonade, Langers juices,

Aquahydrate and the newly added Essentia alkaline waters, Bai, Bang, Redline and Xyience energy drinks and

Jarritos Mexican soda, per its Web site, while Spike lists likes of Neuro, Marley, Hubert’s, Hint, V8, Nestea,

Inko’s White Tea, Voss, Icelandic Glacial, Knockout Energy, and the Reed’s, Virgil’s, Jones and Sioux City soda

lines, per their Web sites. Both houses were notable for moving outside their core Bud footprint for craft and NA

brands, move that’s frowned upon by A-B brass in St Louis but enabled both to grab opportunities in fast-

growing categories like craft beer, bottled water and energy. This at time that, as BBI sibling publication Insights

Express noted, A-B volume in Ariz has slid 21% since 2007 to 29.7 mil cases in 2014, one of A-B’s steeper drops

in US in face of big recession and subsequent Hispanic flight that left Ariz hard hit for some years, plus

marketplace shifts.  Financial details weren’t disclosed of deal, expected to close in Mar.

“This is a great story of a how after the tragic death of my husband Bill in 1995, we continued his legacy of

growing the business and supporting our community,” said Golden Eagle chairwoman Ginny Clements, whose

son Chris has served as ceo since 03 and daughter Kimberly as prexy. “It’s time to move on and enjoy the fruits

of our labor, and we’re doing this by selling to another family-owned Arizona business.”

Golden Eagle is owned by Clements family and is 3d-generation family-owned biz employing 430. Spike started

modestly under stewardship of Kimberly and Chris (it’s named after a beloved dog) but has grown to network of

7 warehouses located in Tempe, Tucson, Casa Grande, Buckeye, Flagstaff, Show Low and Globe. No word yet

on Hensley’s plans for those. For parts of state it doesn’t reach via its own operations it teams with Romer

Beverage and III Counties Distributing/Southern Arizona Distributing. Hensley is owned by McCain family and

employs 800; founder’s daughter Cindy McCain is married to US Senator John McCain.  Hensley has drawn

praise in recent years from many suppliers on beer and bev sides for crisp execution; Aquahydrate execs detailed

their Hensley partnership at recent BevNet Live conference (BBI, Dec 21).

Monster Beverage is revving up innovation

engine for 2016/17 even as it acknowledges that brand’s better performance in grocery channel than c-stores

reflects ongoing struggle to get newly recruited Coke bottlers in US on same page. Meanwhile, brand is making

steady headway transitioning to bottling network of its strategic partner, Coke, overseas, tho MNST brass made it

clear that in some markets, whether because of tepid interest from local KO bottler or other factors, brand may

remain in indie hands. That’s case in Japan and may even pan out in Brazil, where its local partner AmBev has

been deemphasizing brand after co spurned its parent, Anheuser-Busch InBev, as ally in favor of Coke. “In

certain countries we’re looking at the performance of existing partners and it’s very good and maybe we don’t

make the transition,” ceo Rodney Sacks advised. Internationally, “Coke is the preferred partner, but the bottlers

have to be willing participants . . . If they’re not as enthralled about the category or the brand, we’re not going to

force a square peg in a round hole.”

Those insights were part of wide-ranging biz update that Corona, Calif-based marketer of Monster Energy offered

to Wall Street crowd in NY yesterday evening, with ceo Sacks sharing podium more this go-round with his

partner in acquiring Hansen Natural 2 decades ago and turning it into energy juggernaut, vice chmn Hilton

Schlosberg. Among other topics: efforts to position and rationalize expanded array of energy brands that came

via Coke transaction, dubbed “strategic brands,” and ways to blunt Rockstar resurgence.

Meeting brought most explicit discussion of Rockstar that we can ever recall. Tho distant #3 player in US,

Rockstar has been growing lately at 20%+ rate and, at least as reflected in scanner data, without reliance on deep

discounting that once seemed tied to its growth spurts. (For example, 13-week all-channel Nielsens cited by

Sacks showed brand growing 25% both in $$ and in units. Monster grew 4.6% in units and greater 9.3% in $$ as

price hike kicked in.) Sacks acknowledged that “there has been concern about Rockstar” given its dramatic

progress over past 13 weeks, and said it may reflect response by its main distribution partner, Pepsi, to

Monster/Coke alliance, judging by Rockstar’s stronger retail presence lately. Stepup by blue system seems

“inevitable” given Monster’s strengthened tie to the archrival red system, Schlosberg figures. Still, some of gains

continue to be on pricing, as Red Bull and Monster price hikes may have prompted sticker shock among their

consumers. In any case, in broader time frame going back to Jan 2014, Rockstar’s gains don’t seem quite as

impressive, Sacks argued.

Red Bull drew less direct discussion. MNST brass noted that they’re neck and neck with Red Bull in $$ sales in

US but substantially ahead on units. And they implicitly credited Austrian brand with helping to maintain

lucrative pricing umbrella, inaugurating price hike last Jan that Monster followed as soon as it was well enough

along in Coke transition.

Innovation: Bigger Platforms in Progress, Gronk Can for Now Monster brass contended that co probably has

never had as much innovation in pipeline as now, tho it wasn’t ready to detail major initiatives, which BBI hears

have not even been disseminated within co for fear of word leaking to would-be rivals. These include 3 or 4

major lines that move Monster brand into hybrid categories, perhaps with packaging twist – Morgan Stanley’s

Dara Mohsenian guessed water, coffee, juices and isotonics. At least a couple are expected this year.

More modestly, Java Monster coffee/energy hybrid has added Salted Caramel flavor, tapping into hot flavor for

coffee segment, and NOS brand acquired from Coke has added 24-oz resealable “cap” can that has been durable

performer for Monster brand, rolling out into all channels. In a departure, it’s also established rare tie to team

sports athlete, New England Patriots’ Rob Gronkowski, in item called Gronk, as way to deepen presence in

Northeast. Tho co is “not normally into stick and ball sports,” Sacks allowed, Gronk’s broad popularity even

outside New England harbors hopes he can prove a draw in manner that driver Valentino Rossi has been in

Europe, where cans carrying his likeness are among top sellers. “If this grows, we’ll look at other ways we can

take the celebrity line but be very careful,” Rodney said.

Marketing: Gronk Can, Back into Drag Racing On marketing front, MNST hewed to strategy of “not simply

buying ads and TV time but trying to create content, work with athletes, on our own Web site or social media

sites,” per Sacks. Co claimed successful year with sponsored athletes such as Formula 1 driver Lewis Hamilton

and Nascar driver Kyle Busch. Action sports continued to be productive, particularly X Games that were

televised in 150+ countries. Among sports added to mix, Monster succeeded Xyience as UFC sponsor and added

several MMA athletes to mix, some performing well and others not (apparent reference to upset of women’s star

Ronda Rousey). Co reconnected with drag racing after concluded its part of motor sports DNA of brand and is

effective in reaching older, blue-collar demo. Meanwhile, co continues to stir viral buzz via drifting videos by

Ken Block, whose latest effort drew 30 mil views. MNST apparently will step up music participation as good

platform to differentiate among its many brands, tying particular brand to particular genre. And gaming is

increasingly important, particularly in Asia. So Monster continues to sponsor Evil Geniuses team while adding

others, who play before vast audience averaging 30 mil – “often bigger than at the NBA and NHL

championships,” Sacks marveled. Also continuing key is cadre of Monster Girls as pillar of marketing. And co

is stepping up social media efforts that have seen brand generate 24 mil Facebook fans, as well as nearly 3 mil on

both Twitter and Instagram – with co continuing with stance of not paying for new fans, Hilton reminded.

Strategic Brands: More Consistent Positioning Across Borders, Complementary Roles to Monster Co has

been working hard to sort out these brands acquired from Coke, deciding which are losers and finding ways to

position others as complement to workhorse Monster brand with distinct identity. “We paid about $800 million

for that portfolio because we believed we needed flanker brands in some markets,” reminded Hilton. “Some of

these brands are very good, some of the brands may not survive.” But it’s just 7 mos into transition and bottlers

have a role in any decisions, so it’s premature to draw firm conclusions yet.

Among stronger US energy drinks, there’s no question about keeping NOS in mix. It boasts in-store velocity

behind only Red Bull and Monster. Former NOS driver Kyle Busch, more recently a Monster driver, will return

to NOS car in lower-level Nascar Infiniti series, while his brother Kurt Busch will drive for Monster in main

Sprint series. Driver Brian Deagon also has been signed to NOS. Co’s efforts to tap into dub culture will now be

refocused on NOS consumers. And brand will in part take on role as fighter vs incursions by other brands,

presumably Rockstar.

Tho Full Throttle brand has struggled more, brand numbers don’t reflect that primary sku does well. So rather

than making that a value play, as had been considered, it will serve as a fighter brand to help Monster battle vs

Red Bull and Rockstar during promo periods. Tho coupla 10-for- $10 deals on Monster had fostered rumors on

street that brand was slipping down slippery slope of discounting, Schlosberg maintained that those 2 promos had

been forced upon Monster, which doesn’t plan to repeat experience. “Now we have a brand we can take down to

those levels if we absolutely have to,” he said.

Among other strategic brands, European Burn brand has been redesigned to make it more vivid and added

Passion Punch flavor. Tho it’s done well in some countries (outselling both Red Bull and Monster in Norway,

where it’s #1) it has suffered from not having consistent personality, with local bottlers in some cases taking

brand in their own directions. It will consolidate marketing around such platforms as urban culture (including

breakdancing and graffiti), electronic dance music and Burning Man fest and its many imitators. Relentless has

also been redesigned with new logo and identity and is currently rolling out as Rockstar fighter in Germany via

330-ml sleek can and UK in 500-ml pack, leaving Monster brand to focus on Red Bull. And more granola-type

brand called Nalu in Belgium that reaches more females, white-collar workers via supermarket 6-packs is

expanding into Netherlands and will later hit other European countries especially in Scandinavia.

Domestic Coke Transition: Work to Get C-Stores Adequately Served, Progess in Foodservice Sacks and

Schlosberg offered frank discussion of transition to Coke. On domestic side, where Coke has taken over

territories previously operated by Bud wholesalers in about half of US (KO already had other half), transition is

not entirely completed, with state franchise laws enabling incumbent Bud wholesalers in Minn, Wis and Ark to

hold out. Sacks said MNST is in arbitration proceedings in Wis seeking declarative relief, and generally hopes to

have more clarity on situation in next 6 months. Those A-B distributors “are doing a good job, there’s no

argument with that,” he noted. Other exceptions, where Monster is content to stand pat for now, are Ariz, where

it moves thru indie bottler Kalil, and NY, where it moves thru Big Geyser, both areas specifically carved out with

KO. (Local sources, even on rival brands, credit both with strong performance behind Monster.) “We may well

transition them as well, but that will be something by negotiation in the future,” Rodney said.

In newly transitioned territories, Monster execs acknowledged it’s sometimes been a challenge to get Coke

bottlers to carry adequate # of sku’s and make frequent enough calls on smaller-format retailers, notably

segment’s core c-store channel. That’s resulted in unusual situation in which Monster has been growing faster in

such “alternative channels” as grocery and drug than in convenience. “That is telling us that it has taken the new

parts of the Coke system some time to get to know the brand and its traction in the convenience channel,” Sacks

noted. Schlosberg added that Monster will deploy its corps of hundreds of field sales reps to buttress Coke

bottlers’ efforts to remedy situation. Still, Coke network has offered expanded coverage in foodservice, with

Home Depot now moving to national coverage. Volumes are nearly doubling in those channels, MNST execs

said.

Overseas Coke Transition: Progress in China, Standing Pat in Japan, Snags in Brazil, S Africa Top execs

have been making full-court press to get overseas transition accomplished by first half of new year, with top brass

visiting China, Australia and UK over past 6 weeks trying to nail down agreements with local Coke bottlers.

Note that, given brand swap that occurred as part of investment in Monster, in many overseas markets Monster is

using Coke system for brands newly acquired from Coke even while its own Monster brand moves thru local

rival.

By now, Europe is pretty much transitioned, total of 12 territories counting several that were signed in past week,

including Turkey. Russia had soft launch via Hellenic Bottling in Dec and is rolling out this month. Spain is

coming on in 2 weeks and Portugal is entering Coke mix too. All of Europe, Eastern Europe and Africa should

be covered in near future.

Progress is more mixed in Asia and S America. China is key target now, viewed as “largest single volume

opportunity in next 2 years,” 200 mil case market dominated by Red Bull, per Rodney. Progress has been made

establishing staff there, formulating product for that market and applying for required registrations, with

provisional approvals obtained in Shanghai and Beijing. MNST is in advanced stage of negotiations with all 3

bottlers who comprise Coke system, including unit of Swire, a key bottling partner in US, as well as Coke-owned

bottler and one that’s gov’t-owned. Talks are on track for launch in first half, tho perhaps not nationally. One

issue: what format to adopt, given low Red Bull pricing of $1 per 250-ml can, half Monster’s normal price. So co

is eyeing “slightly smaller” pkg than normal 500-ml can at below-$2 price, with details to be disclosed down

road.

Australia, where Monster picked up 18-share Mother energy brand via Coke transaction, has been “difficult,” but

discussions with Coke Amatil are in advanced stage and co hopes to transition from current 2 distributors in or

close to first qtr. And in Japan, where Monster holds nearly 40 share, strong performance by distributor Asahi is

being rewarded by its continued partnership rather than transition to Coke. “We will be with them going

forward,” Rodney said.

Brazil remains question mark, given dropping of effort behind brand by AmBev after Monster threw in lot with

Coke rather than AmBev parent ABI. At that point, after doubling size of brand, AmBev dropped efforts and

relaunched its own brand. “Not been a decision either way,” Sacks reported. “We’re in discussions with the

Coke system and hopeful we’ll move forward. Otherwise, we’ll re-engage at a different level with our current

distributor because obviously we will not allow the current situation indefinitely.” On longer-term basis, co still

expects Brazil to become its biggest market in S America.

Another market that may not transition is Chile, small market that is on way to becoming one of best Monster

markets by dint of indie distributor’s efforts, growing brand 70% to nearly 20 share. Talks are underway with

Coke system, “but depending on the appetites of the Coke system we’ll make a determination” as to whether to

stand pat.

Tho Monster has already segued to Coke system in surrounding nations, South Africa has suffered one-year

delay in transition due to what Sacks feels are misplaced concerns about impact on jobs. But brand will start

production trial there this month view to finally undertaking transition in Jun. In meantime, its existing

distributors are battling Coke system that moves strong PowerPlay brand, now owned by Monster.

Celsius Holdings, which has been on fast growth track in recent years, is

hoping for increased liquidity and broader analyst coverage with upgrade of its share listing to OTCQX Best

Market status, joining cos like Heineken, Danone, Lufthansa and Volkswagen. This moves it into ranks of fully

reporting cos . . . Baltimore Health Commissioner Dr Leana Wen has teamed with council member Nick Mosby

to intro bill requiring warning labels on sugar-sweetened bevs, WBAL radio reported . . . Teamsters local 727 in

Illinois voted by 17-1 margin on Sun to ratify new 3-year contract over issues that had resulted in work stoppage

at bottling plants in Niles and Alsip (BBI, Jan 4).

Matt Collins, Bay Area-based exec who

enjoyed long runs at Metro Mint marketer Soma Beverage and then Zola Acai, this month landed at Forager

Project in role of chief revenue officer, per LinkedIn update. He apparently also continues with role he took up a

few months ago assisting healthy-popcorn brand 479 Degrees, too. We weren’t able to immediately reach Matt

for further elucidation about ambitions at SF-based marketer of organic HPP-processed lines of greens, roots,

nuts, nutmilks and other items.

Fruit drink and coconut water marketer Purity Organic is extending its footprint into

superpremium teas with 5-sku bottled line based on matcha green tea, yerba mate and guayusa, even as Starbucks

moves its Teavana platform of loose teas into more overtly functional realm via new wellness line.

Purity Organic line uses familiar 14-oz straightwall glass bottle of its recently launched Superjuice line – shelf-

stable subline that emulates cold-pressed brands but at more accessible price point – this time with stone-ground

ceremonial-grade matcha green tea from Aisha, Japan, in initial flavor range that includes exotic ingredient

blends like Brewed Matcha Green Tea with Hibiscus, Honey & Lime; energizing Brewed Mate Tea with

Grapefruit & Ginger; Brewed Guayusa Tea with Pomegranate & Peach. New line, which augments plastic-bottle

organic juices and teas and aseptically packed organic coconut water, will debut at winter edition of Fancy Food

Show opening in SF on Sun.

Meanwhile, reaching out to those following new year’s resolutions, Starbucks’ Teavana line has debuted 7-sku

line of loose leaf “wellness” teas with names like Defense (melding white tea, blackberry leaves and amaranth

grain), Purify (white-tea- based entry incorporating jasmine and orange flowers) and Rejuvenate (black tea and

yerba mate) to its 350 North American stores and online platform. The other entries are called Rev Up, Serenity,

Recover and Comfort. As noted last year in BBI, first bottled tea line also is anticipated from Teavana in coming

months.

Red Bull

tycoon billionaire who bought into Vita Coco Coconut Water a year and a half ago has made another bet on

health-&- wellness-oriented Western bevco with designs on Chinese market: Voss Water. Parent Voss of Norway

said this afternoon it had signed definitive deal with Reignwood Group for “strategic investment” with view to

harnessing prospects of brand “that can satisfy the growing Chinese demand for trend-setting, premium

products,” per Yasmin Lu, who runs Reignwood’s FMCG (Fast Moving Consumer Goods) unit. Co told Wall St

Jnl today that investment of $105 mil will get “slightly more” than 50% of co equity. Existing investors,

including ceo Jack Belsito, who’s orchestrated turnaround over past 5 years; private equity firm Juggernaut

Capital Partners and co-founder Christopher Harlem, will remain shareholders. Juggernaut now holds nearly one-

third but will cash in some winnings, tho. Beijing-based Reignwood, run by Chanchai Ruayrungruang, has built

fortune on Red Bull concession in China, where co claims to hold 70 share, and also operates 60 cos involved in

16 segments ranging from lifestyle brands to industrial products. It bought 25% stake in Vita Coco in summer

2014, just as that brand was eyeing major push into China. Under Belsito, Voss already has been expanding

sizable overseas presence, including in markets that are obsessed with premium brands like Mideast nation, and

has made tentative foray into China.

“If companies are going to market authenticity, they need to make sure they fit that notion of authenticity. If you

are going to market yourself as transparent, you need to be transparent. There needs to be recognition of the

power relationships that exist between companies, retailers and consumers, as well as a level of respect.” That’s

take on Mast Bros scandal from Carla Martin, Harvard lecturer and exec dir of Fine Cacao & Chocolate Institute,

in Specialty Food Assn article that can be found here:

https://www.specialtyfood.com/news/article/what-mast- brothers-controversy- means-specialty- food-industry/

The distinctively bearded artisanal-chocolate poster boys were unmasked last month by Dallas food blogger as

not always having created their chocolate bars straight from cacao beans and for fudging other aspects of their

story. Article gleans lessons for those not just in chocolate biz but broader specialty food category.

How far can you get with Internet marketing initiative that mustered barely $10K as production budget?

Icelandic Glacial bottled water appears to have done well enough with such a project to push itself into upper

ranks of bottled waters on Facebook and Instagram, per LA-based co’s ceo, Reza Mirza.

Riffing off brand’s slogan “Discover Iceland’s Greatest Natural Resource,” intended to reinforce among

consumers that the water truly does derive from source of uncommon purity in Iceland, Reza sent colleague to

North Atlantic island nation to shoot raw footage of the spectacular vistas that seem ubiquitous there, he recalled

in recent meeting in LA. Idea was to do it quickly and cheaply: “I said, if you do it with an iPhone, fine,” Mirza

joked. The images were taken to NY filmmaker to edit, and team spent hours listening to RoyaltyFreeMusic.com

with view, as site name indicates, to avoid having to budget music royalties for showing ad. Resulting execution,

which can be viewed at https://youtu.be/u-K7cKHvGNM , offers dramatic, documentary-style narration against

arresting cinematic images of Iceland. “Long before man reached the remote island of Iceland, . . . a massive

volcanic eruption occurred creating the Olfus spring, a majestic underground spring deep below the earth’s

surface,” intones narrator against striking footage of caverns and glaciers. “For 5,000 years water has filtered

slowly through layers of lava rock, creating exceptionally pure and naturally alkaline water with a perfect mineral

balance.” Kicker is: “Clean, crisp and untouched. Discover Iceland’s greatest natural resource.” All told the

production effort yielding visually dramatic 60-second ad came to just $12,500, Mirza said. That doesn’t include

money used to advertise effort to draw eyeballs, believed to be in low 6 figures, tho Reza wouldn’t disclose #.

Straightforward ad wasn’t attempt to go viral, effective way of minimizing spend on placement for those that hit

jackpot, as Organic Valley did last year with its “Save the Bros” campaign.

Working with agency Jun Group, by mid-Dec Icelandic Glacial had placed ad on over 1K food and lifestyle-

oriented Web sites, including those of Cosmopolitan, Men’s Health, Zagat, People and ESPN, and drawn more

than 250K total views and nearly 3 mil total impressions. Effort yielded quick boost in Facebook fans to 70 K (vs

48K when Mirza came aboard last Mar), placing it 4th among water brands behind Evamor, Pure Life and Perrier,

and ahead of San Pellegrino, and 3d on Instagram behind Voss and Evian.

In other marketing news at Icelandic Glacial, Lara Bandler Hogan, who played pivotal role in building

Vitaminwater brand earlier in career, and her LA-based Co-Op Agency have been tapped as agency of record for

brand, Mirza said. Assignment came thru last mo.

The Fresh

Market grocery chain reached out to Walmart and Food Lion vet to manage its product assortment with

recruitment of Pamela Kohn as evp/chief merchandising officer. Greensboro, NC-based chain, operating 183

upscale stores in 27 states, said Kohn is responsible for enhancing customer experience while accelerating

improvement of merch selection, customer value and brand messaging. Her oversight duties include supply chain

functions that bring the items to the stores. She reports directly to prexy/ceo Rick Anicetti.  Kohn has spent 30+

years in retail, including 12 years at Walmart, where she led perishables biz and Neighborhood Market program

of smaller, more urban stores. Earlier in her career, she led merchandising at Stop & Shop and Food Lion grocery

chains.