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LA-based Pressed Juicery has made its anticipated foray into NYC, settling on Noho nabe as site of its first standalone location, with others planned for later this year and 2016. It operates 30+ locations in Calif and Nev and has alliance with NY's Equinox Gym . . . Looking to mix things up a bit, Hint Water has intro'd limited-time Smash Ups melding 2 flavors, including Blackberry Raspberry and Cherry Lime, per online come-on sent out by SF-based co. "Because two in one is just more fun!" co explains. Most of its core flavors are straight down the middle . . . After disclosing that its initial 365-branded store will be in LA, Whole Foods said it's signed leases for 365 units in SF, Cincinnati and Cedar Park, outside Austin, averaging 28K square feet apiece. New WF units, by contrast, are coming in around 50K sq ft . . . Rebbl line of tonics and elixirs, based in Bay Area, has signed Christie & Co as agency of record to launch social media and communications campaign as it moves to broaden reach.
Glass bottles of San Pellegrino sparkling water in 750-ml size have been spotted in case displays at Whole Foods in New Orleans at $1.19 apiece, unusually low price even for aggressively promoted Nestle Waters North America import . . . Coca-Cola, which has been struggling to maintain presence in NY's up-and-down-street channel following transition from indie house Big Geyser to Coca-Cola Refreshments, seems to be getting more aggressive on price in larger-format stores. Latest evidence: Reader has sent image from flyer for Stop & Shop chain offering single-serve bottles of Vitaminwater and Smartwater for 79 cents for those who purchase 5.
Integration of made-at-home single-serve drinks into family life has taken further step with intro of GE fridge containing self-developed K-Cup brewing system. New Café Series fridge, priced at $3,300 in regular or cabinet depth configuration, was developed at GE's Louisville, Ky, appliance operation in collaboration with Keurig Green Mountain, which helped GE on issues like flow rate, temperature control and coffee extraction, said marketing exec Dan Goldstein at event Wed at NY's Eventi Hotel. Unit was designed to work on K-Cup pods, and brewer itself contains some Keurig branding but fridge otherwise is entirely denoted as GE product. It just hit Lowe's home improvement chain and some indie retailers, with other big box retailers due to get unit next year. It goes for $200 more than similar fridge without hot-bev feature. Among features GE marketers hope will find appeal is that unit heats up water only when needed to produce hot bev, saving on electricity and helping appliance garner Energy Star rating. It can be controlled remotely via cellphone app, for production of 400+ types of hot bevs available in K-Cups, from coffee and tea to cider and soup. It's latest entry from re-energized GE that's been harnessing crowd-funding, maker movement and other contemporary techniques to accelerate its innovation. Coming in a few months: an oven that allows users to roast their own coffee beans inside, feature that was developed via GE's FirstBuild.com initiative, which invites outsiders to brainstorm solutions to engineering problems. Since GE doesn't control the technology thereby devised, technique puts Louisville, Ky, co under pressure to move it briskly to market before rivals or indie entrepreneurs grab first-mover advantage.
Canna Energy, among flock of cannabis-based bevs to emerge as states move to legalize plant, has recruited beer consultant Mike Mazzoni as minority investor and put Mazzoni associate Tom Bushkie to work assembling DSD network in Midwest and other areas. Mazzoni and Bushkie had earlier teamed up first on Rainforest acai-based soda line, then Perk carbonated coffee entry, which both struggled and are out of market now. Over years, Mazzoni has enjoyed some outsize successes on Corona and other beers.
Canna Energy was launched a year and a half ago in local smokeshops and c-stores by Denver-based entrepreneur named Mark Spoone. It's all-natural play that melds typical energy formulation with non-psychoactive parts of cannabis plant to offer canned energy line that fans cite for offering sustained energy without jitters. (BBI profiled it as Expo East exhibitor in fall 2014 - Sep 26 2014.) It doesn't include psychoactive THC ingredient, which would be cumbersome because of regulations requiring that medical marijuana items be sold in state where they're made, but Mark told BBI that could come down the road, with expertise of Mike and his wholesaler contacts in managing highly regulated items invaluable. Tho market includes several brands and more are surely on way, Spoone emphasizes that he's only marketer using true hempseed rather than extracts and other shortcuts, thereby retaining omega-3 fatty acids and other beneficial ingredients and also obtaining lower glycemic index. Energy blend employs caffeine sourced from organic green coffee as well as B-vitamins and taurine. Canna is packed in 12-oz slim can priced at $2.49 in Original and Mango flavors, both sweetened with cane sugar, and 40-calorie Blueberry flavor melding cane sugar, stevia and erithrytol. Co may promote it at 2 for $4.20, playing on nickname for pot. Spoone claims to have already moved 1 mil cans of product without any wholesale distribution, relying on online and social media efforts along with diverse group of enthusiasts who've approached co about getting brand to stores - the proverbial "trunk slammers."
Milwaukee-based Bushkie has moved quickly, enlisting Bud network in Ill, including Lakeshore in Chicago, and MillerCoors house Indiana Beverage in northern part of that state. Also aboard is big Bud house Ace Beverage in LA. Spoone and Bushkie say they'll play it by ear, not rushing things. Dallas is possible next market for intensified push, Spoone said. Meanwhile, Bushkie noted that Bud house LaMonica in Rockford, Ill, had managed to sell 400 cases to 58 accounts since picking up brand a month ago. Already, he reported, 30 of those retailers have reordered, without any brand support beyond POS. That suggests there may be real momentum behind concept.
Struggling to get on consistent growth curve while eliminating losses, Seattle-based Jones Soda reported 14% decline in revenues to $3.8 mil in its 3d qtr as it backed out of pair of unprofitable retail deals from last year. But it managed to reverse $177K operating loss in year-earlier period by eking out $3K profit, in keeping with mantra of ceo Jennifer Cue that profitability comes first after years of burning capital under prior mgmt teams. "Profitability continues to be a guiding principal and will be a factor in making promotional and operational decisions," she reiterated to investors, who've been anxious to see signs that can become meaningful player in altsodas. For year to date, revs were off 2% to $10.9 mil and operating profit narrowed to $318K from $1.1 mil. Latest qtr notched net loss of $179K vs $233K in year earlier. Among cost-savings initiatives Cue has undertaken have been moves to cheaper hq and switch of some sales staffers to commission-based compensation.
Without offering specific breakout, Cue cited momentum in core biz, which she defines as Jones Soda and its Naked and Stripped sublines. All told, case volume slipped 12% to 289K cases. Meanwhile, co has parlayed its longstanding ties to 7-Eleven in Canada to enter chain in US in 2016, tho Jennifer won't be ready to offer details on # of sku's and stores involved until next call in Feb. Other c-store wins included 250+ Kum & Go stores in Midwest and 200+ stores in new SW div of Circle K, both of which came on last summer. Cue also cited favorable early experience with Italian-inspired, non-Jones brand that's been testing in Seattle under Lemoncocco name (see discussion below).
On marketing front, co's initiatives like Caps for Gear swag program continue to bear fruit. Return of Jonesin' for a Fiat 500X summer photo contest drew nearly 50K entries vs 20K last year with winner to be announced in Dec. Back-to-school contest drew 200K+ entries despite fairly modest prize array being offered like case of PB&J soda and Go Pro camera. Last week partnered with Target to offer Nuka Cola Quantum Soda that drops Nov 10 timed to debut of Fallout 4 videogame. (Neon blue color has some speculating it's repackaged Berry Lemonade flavor.) Striking a common theme of recent qtrs, Cue contended that co's cane sugar fountain alternative is drawing interest from some large foodservice players but wasn't able to name any sales conquests yet. Looking ahead to 2016, co is planning raft of activities to support brand's 20th birthday, she promised.
Lemoncocco Due for Expansion in '16; Seltzer Is More Challenging Proposition Under Cue, JSDA has been known more for dropping sublines than creating new ones as she refocused biz. But she's drawn inspiration both from her Italian heritage and from innovators like AriZona Iced Tea to create noncarb "bevanda fresca Italiana" that's been testing in Pacific Northwest under Lemoncocco brand name, with no hint of connection to core Jones brand. "Completely new brand," she said on last night's call, "obviously some links to my Italian connections." It's out in single sku - just like AriZona and Red Bull in their early days, she noted - in 12-oz can flecked with yellow and white disks, melding flavor of Sicilian lemons and coconut cream for "a naturally flavored coconut and lemon beverage," as on-pack descriptor reads. Tagline: "Are you a lemon or are you a coconut?" It's sweetened with cane sugar and comes in at 90 calories per can. Plan has been to keep it under radar for now, tweaking it as needed, with view to adding new markets in 2016. Web site is DrinkLemoncocco.com.
Another innovation seems to have built less momentum so far. Like other bevcos, Jones has been trying to figure out how to profitably play in fast-growing but highly promotional seltzer market, but test of 8-oz cans hasn't broken out yet and JSDA hasn't made decision yet to expand it. "New category for us, and we're looking at margins and seeing if it really makes sense," Cue said frankly. Co "has not given up on it," but is trying to pick and choose among innovative initiatives with care.
For most entrepreneurs who sell out to Big Soda or other strategic, it's been rare to last even 2 years in relevant role, or any role at all. Honest Tea cofounder Seth Goldman long ago smashed that barrier, notching 4 years as hands-on mgr of Bethesda, Md-based co since Coca-Cola closed on acquisition back in 2011, and this after several years in which Coke was minority investor. But now, at age 50 and after 18 years building brand, he's finally stepping away from day-to-day role, relinquishing "Tea-EO" title for "Tea-EO emeritus." But he's not takin' a powder, Goldman was quick to assert (not that Honest Tea uses powder - its tea is brewed from real leaves). He'll stay connected in oversight role, helping Venturing & Emerging Brands unit of which Honest Tea is a part scout for intriguing brands, while devoting other half of his time at plant-based foodco called Beyond Meat, a Manhattan Beach, Calif, startup whose investors include likes of Microsoft cofounder Bill Gates. "There's a salary there. It's real work, though not full-time," Seth said of Beyond Meat. As for that murky "emeritus" role at VEB, "I'll be an innovation catalyst. There are some amazing beverage companies that I'm helping VEB get connected to." Maybe biggest change, he noted, is that he'll no longer be reading each of dozens of emails that drop into in-basket each day from Honest Tea consumers. Succeeding him running Honest Tea is Ami Desai Mathur, Procter & Gamble vet who came to VEB in 2012 and has served as Honest Tea brand dir for past year. Goldman retains sliver of equity in Honest Tea but he dismissed any notion that potential financial upside constitutes golden handcuffs keeping him attached. He quoted quip of his cofounder Barry Nalebuff to Washington Post that, despite prosperity, he's still got same house and same wife.
Over past coupla years, as increasing portions of Honest Tea activities have been folded into broader ones within Coke and VEB, some have wondered whether gig could be as much fun as it once was, tho ever-ebullient Goldman betrayed no sign that it wasn't. In conversation last night, he took comfort from contrast to usual pattern where acquired brand's best days prove to be those just before it sold out to strategic, with slow decline in innovation and sales generally ensuing. Tho Seth declined to go there, that certainly would seem to be case with one-time archrival Sweet Leaf Tea, whose down-home branding vs more strait-laced Honest Tea once was source of anxiety among Honest Tea marketers (much as Sam Adams once feared Pete's Wicked Ale on beer side). But Sweet Leaf went inert almost immediately after acquisition by Nestle Waters and is barely growing these days, even as Honest Tea is almost doubling, to $200 mil range this year. (Within Coke, the best-days analogy seems true enough of Vitaminwater, but not necessarily of sibling Smartwater brand.)
"It's not that it's not as much fun as it used to be," Goldman insisted. "It's just not as challenging or scary as it once was. This year is the victory lap," as brand enters once-daunting new venues like national restaurant chains, where it's gotten ensconced at Wendy's and Chick-fil-A. In process it's fulfilling mandate to democratize organics. "At my stage of life I need a little more struggle," Goldman confessed. Timing was right because youngest of his 3 sons just headed off to college, even as brand has graduated to becoming more integral part of Coke portfolio. "It helps the brand to have someone in Atlanta to sit in meetings that, physically or emotionally, I can't sit in," he joked. Not only had Goldman stayed on so far into Coke's ownership, but so have several longtime employees in key roles; Goldman said he detected no signs they are about to flee. Rather, they seem reassured to hear he'll be in mix in more than nominal role.
Coke may have become savvier as steward of brand in any case. Just a coupla years ago, as reported here but not commented upon by Goldman, "consumer insights" specialist that Coke rotated into Honest Tea pressured Goldman to revamp label to new look that trade partners derided as generic. (Goldman successfully resisted move, and that exec has moved on from co.) By contrast, it was Coke execs who initiated more recent move to Fair Trade organic sugar, switch that is adding hundreds of thousands of dollars to annual ingredient bill. Such moves "traditionally are not in the playbook of big companies," Seth said. "It was great proof that they get it." Meanwhile, adoption of new label that's more in synch with Honest Tea's values has helped velocities at shelves jump by 25%. And Coke sales force seems to have pulled back on frequency of 10-for-$10 deals that threatened to undermine premium identity of brand.
Monster Beverage assuaged trepidation about its transition to Coca-Cola bottling network by reporting 19% surge in net sales in Q3 to $756.6 mil, sending shares soaring from $132 Thurs close to $150 range. True, some of that increase was cause by anticipatory orders ahead of Aug 31 price increase, which likely added $11 mil to net sales figure, and archrival Red Bull continues to win share in some recent scanner data. But results still were "better than feared," as Wells Fargo's Bonnie Herzog headlined, particularly since headwinds like anticipatory buying, production issues in Britain and lackluster efforts by overseas distributors facing termination are likely to be temporary, in view of Bonnie and other Wall Streeters.
"Although we achieved another quarter of sales growth, distributor transitions and uncertainties in portions of our international non-Coca-Cola distribution network limited further revenue growth during the quarter," said chmn/ceo Rodney Sacks. "Changes in foreign currency exchange rates also adversely affected our results."
This qtr MNST adopted new reporting structure to reflect addition of Coke energy brands to portfolio and departure of non-energy brands such as Hubert's Lemonade and Peace Tea. So-called Finished Products segment - mainly Monster brand, which co continues to produce itself - enjoyed sales gain of 15.5% to $686.7 mil. Concentrate segment - that is, the former Coke energy brands that continue to be produced from concentrate by bottling partners - came in at $69.9 mil, with no comparison offered vs year-earlier. Net sales to overseas customers rose 25.2% to $170.6 mil, with standout performers including Japan, Great Britain, Germany, France, Belgium, Sweden, Ireland and Greece. Operating margin widened to 38.5% from 29.9%, thanks in part to addition of more profitable concentrate-based items.
From Sacks' comments, it's clearly been all hands on deck fomenting transitions to Coke bottlers around world. Transition was completed in Germany in July, with execution improving right away, he indicated. Deal has been reached that expands alliance with Hellenic Bottling to 28 countries from 14, with brand moving to Hellenic from indie distributors in markets like Italy, Romania, Ukraine and Slovenia. Brand will finally attack Russia, by year-end, thru Hellenic. That partner also will shepherd brand into 2d largest energy drink market in Africa, Nigeria, with local production. In continent's largest market, South Africa, local production will commence in a few months. Monster also is moving into Spain/Portugal via Iberian Bottling. Co has filed for approval in China and commenced negotiations with Coke bottlers there, hopefully for launch in next year's first half. And it's reached definitive agreement with Coca-Cola Bev in S Korea for transition there. Negotiations continue over transitions in South and Central America as well as Australia. Tho China and Russia both hold considerable upside, Sacks emphasized that co will stick to strategy that's served it well in past, launching in limited channels and geographies and taking things a step at a time.
As noted in coverage from recent NACS c-store show, new-product debuts from Monster have been sparse lately, likely so as not to further complicate Coke transition. But Sacks noted that co is on track to launch Pipeline Punch and Ultra Black nationally, and argued that repositioned Rehab, Juice Monster and Punch Monster are making good progress. He promised robust pipeline of new stuff in 2016, starting early in year. As for brands acquired from Coke, including NOS, Full Throttle, Relentless and Burn, co is climbing learning curve on those, tinkering with positioning, design, package sizes, flavors and innovation as it seeks proper role for brands in each market in 2016, per Rodney.
STRATEGY: First Aid Shot Therapy Rolling Out Revamped Brand; J&J Quietly in as New Investor
Tho First Aid Shot Therapy (FAST) made lotta noise out the gate a few years ago for melding progressive formulations with RTD marketing savvy of ex-Coke exec who launched it, it's taken intentionally quiet approach in past few months. But that's nevertheless been eventful period: Johnson & Johnson took equity stake in co in spring, even as co in Jun took audacious step of pulling all product from stores in order to do clean cutover to new look and formulation and expand line to 4 functions. Hitting shelves in July, Cold remedy joined existing sku's Pain, Heartburn and Hangover, all packed in 1.35-oz shot format. In keeping with co's strategy of offering not just convenience but progressive formulations, Cold formulation melds ingredients that act as cough suppressant, nasal decongestant and oral anesthetic.
Developments emerged in recent conversation with Andy Steele, former Store 24 buyer who'd moved on to extended run managing c-store channel for Glaceau and now has been working as Houston-based consultant under moniker Anonymous Consulting & Sales - 3 years now in case of FAST. Recall that FAST was launched out of Bay Area about 4 years ago as collaboration between former Coke exec Mary Page Platerink and Johns Hopkins medical prof Jay Pasricha, with early capital round co-led by Sofinnova Ventures and Redmile Group with participation from investors including Sofinnova HealthQuest, Clearwell Group and Zico Coconut Water founder Mark Rampolla. This past spring, J&J came in with unspecified amount, Andy confirmed, tho he declined to release further details for now. He said J&J was proving solid partner for FAST not just for capital resources it contributed but for help it can offer on formulation front.
Radical product change this summer up-ended packaging look and branding hierarchy as co applied market learning it had picked up in earlier markets like Seattle and Boston. Tho initial bottle was intended to have upscale, silvery look, it grayed out on shelf, so co has opted now for brighter colors, different one for each function. That function itself is called out in way that gets greater visibility, considering bottle's 3-in height, followed by "Fast Liquid Relief" descriptor. That means that, unusually, actual FAST brand name now is 3d in hierarchy. Sideways-printed text wasn't legible enough, so that's been rectified, too. Meanwhile, co has been scrupulous about positioning, for instance not heralding, as other brands may do, that it's FDA-approved but rather FDA-compliant, since strictly speaking FDA approves only drugs, not supplements. Brand's new look can be viewed at FAST's Web site, FirstAidShotTherapy.com.
So far, key retailers like CVS, Rite Aid and HEB seem to be embracing revamp, Steele reported. HEB, for instance, has committed later this year to adopt "brand-blocking" strategy that will place brand on regular shelves, on side panels at endcaps and in small coolers. Tho FAST isn't refrigerated brand, it still will taste better cold, per idea of HEB buyer who thought up gambit.
To support relaunch, FAST is deploying field marketers in Boston, Austin, Seattle, LA and SF. And while it may continue to experiment with such paid media as TV ads it ran in SF and subway ads in Boston, focus will be at store level. Also effective has been such social media stratagems as listening in on Twitter traffic for posters who complain about having a killer hangover, say, or having pulled their back at CrossFit training. Co will approach them and say, tell us where you are and we'll have relief delivered to you in 20 minutes, Andy said. Such careful targeting has generated helpful word-of-mouth endorsements, as with poster who's taken to calling brand "Jesus in a bottle."
SodaStream managed tightrope-walking act associated with its sweeping repositioning from sodas to sparkling waters with general success in 3d qtr, matching Wall Street earnings expectations while enjoying favorable reception at retail to revamped flavor array. Revenues of Israel-based co declined 13% to $125.9 mil, hit by $16 mil currency swing, but ceo Daniel Birnbaum said he envisions topline stabilizing in Q4 and co returning to growth next year. Sales were off in all regions. Its most developed market, Europe, sagged 8% as double-digit growth in Germany, Switzerland, Austria, Italy and Belgium was offset by declines in France and Nordic nations ahead of brand repositioning that's just under way. (But unit sales of gas refills grew in France and held steady in Nordics, as sign that user base has remained loyal during transition.) Sales declined 11% in Americas, 32% in Asia Pacific, 27% in rest of world. Starter kits - the actual machines - were off 17% to $34.2 mil, -22% in units to 629,000. As encouraging sign of ongoing use of machines by consumers, CO2 refills rose 10% to quarterly record of 7.02 mil units representing 400 mil liters of finished bevs, "best indication" that usage is growing, Birnbaum noted. But flavors were off 12% to 6.73 mil units as SODA segues from emphasis on sodas to sparkling water in many markets. On CO2 front, newly appointed Americas chief John Sheppard took occasion of this morning's conference call to disclose partnership with UPS to test home exchanges of gas cylinders as way to eliminate key inconvenience of SodaStream process. Test will begin later this month in Mid-Atlantic region and be rolled out if it shows promise, he indicated.
Operating income plummeted to $5.4 mil from $8.9 mil but excluding forex hit, would have been up 18% to $10.5 mil, reflecting "underlying health of our business," Birnbaum offered. Earnings per share, at 22 cents, exactly hit consensus of 6 analysts tracked by Zacks, AP reported. Co's cash hoard dipped a bit to $43.5 mil from $46.9 mil at year-end 2014, primarily because of spending on new production facility in Israel where all functions have been consolidated.
Recall that co is undertaking sweeping transition away from position as home soda maker to sparkling water, trying to get in synch with consumers' greater health & wellness concerns. New line, packaged in more upscale-looking bottles designed by Yves Behar, hit Kroger, Fred Meyer and Bed Bath & Beyond about a month ago, and sales have accelerated week over week since then, culminating in strong Sept, ceo Daniel Birnbaum noted. New flavors recently hit shelves at Amazon, Target, Walmart and Staples, with co continuing to prospect for new retailers, particularly on health & wellness side. In one encouraging stat, despite exit from 3K doors during restage, to current level of about 13K, revenue per store has actually risen 20%, Sheppard noted. Enhanced formulations, using expensive natural sweeteners like stevia and erithrytol, has forced co to raise prices, even as its gross margin has narrowed from mid-50s to mid- or low 40s, and SODA decided to take up the price even of its CSD flavors in interest of uniformity. Has that exacted consumer pushback, analyst asked. Birnbaum admitted to some, which will require better effort to explain ingredient story. But silver lining is that market penetration had low enough that not so many consumers would have become wedded to old price point.
In mature markets, notably Germany, where biz remains solid and aspartame fears haven't sent consumers fleeing from diet sodas, co is taking its time on transition. Indeed, Germany may not launch new flavors until late 2016 or even early 2017, Daniel noted. But cutover is now complete in US, where SODA is offering sparkling waters in 5 categories, even as it's segued its CSD offerings to new bottle, with diet cola proving top-selling flavor so far (using sucralose, not aspartame, as sweetener). As reported, it's been testing new ads exhorting consumers to "Be a sparkling water maker" as well as elaborately produced TV spot called "Factory of One," while assuring Wall Streeters there will be no more Super Bowl ads until new direction is fully proved out, if ever.
Conference call marked first step into spotlight for new Americas chief John Sheppard (BBI, Sep 23), a Coca-Cola vet whom Birnbaum lauded as having "consistently succeeded in turning around and reigniting brands" in career. John noted that over long years in bevs he's seen many trends emerge that were touted as disruptive but didn't prove to have staying power. But he said he loves the new positioning, adding, "10 years ago this wouldn't have worked, as it wasn't where the industry was headed," but now it's "spot on." His 2 priorities will be to refine the brand messaging until it's right, while improving field execution. In one step to raise awareness and better align on side of healthier bevs, SODA yesterday said it's become first national bev brand to team up with American Diabetes Assn.
With venerable Beverage Digest newsletter now under ownership umbrella of consultancy Zenith International, merged entities will be offering trifecta of conferences in NY in mid-Dec: Bev Digest's annual Future Smarts confab on Mon, Dec 14, followed by pair from Zenith on Tues and Wed that Bev Digest is now managing. That Tues will bring WorldWideBev conference focused on overseas developments and export opportunities for US cos, while Wed brings H2Opportunity on water sector. Info at ZenithInternational.com/events . . . That's in busy Dec period that, the preceding week, features Santa Monica, Calif, edition of innovation-focused BevNet Live franchise, running Dec 7-8 at Loews Hotel. Info on that at BevNet.com/events.

