Continuing sweeping reorg on purchasing side, Whole Foods Market said it's recruited Target exec Don Clark as global vp of purchasing for non-perishables. Role includes natural retailer's 365 and other controlled brands, which amounted to 4,400 sku's and generated $1.8 bil in sales last year. At Target, Clark served for past 2 years as vp of merchandising for Perishables & Food Service div after leading healthcare strategy there, per his LinkedIn profile.

Coca-Cola and its largest indie US bottler, Coca-Cola Bottling Co Consolidated, have made further headway in their effort to expand Consolidated's mfg and distribution footprint. Late last week they closed on transaction that expands COKE's footprint to include Norfolk, Fredericksburg and Staunton, Va, and Elizabeth City in NC, and also signed definitive letter of intent by which COKE will pick up bottling plants in Sandston, Va, and Baltimore and Silver Spring, Md. Those plants will take role within newly formed National Product Supply Group that Coke has set up to coordinate production in US. The territories and plants in deal have all been operated by KO's Coca-Cola Refreshments distribution arm. Still to come are closings on other territories within Delaware, DC, Md, NC, Penn, Va and W Va that were detailed in May letter of intent. COKE hopes to be operating the 3 newly acquired plants sometime next year. As noted earlier, KO's inclusion of mfg facilities within its refranchising negotations reverses prior strategy of retaining control of all mfg itself in refranchised territories, with KO now opting for greater agility of outside partners to generate efficiencies.

Coca-Cola and its largest indie US bottler, Coca-Cola Bottling Co Consolidated, have made further headway in their effort to expand Consolidated's mfg and distribution footprint. Late last week they closed on transaction that expands COKE's footprint to include Norfolk, Fredericksburg and Staunton, Va, and Elizabeth City in NC, and also signed definitive letter of intent by which COKE will pick up bottling plants in Sandston, Va, and Baltimore and Silver Spring, Md. Those plants will take role within newly formed National Product Supply Group that Coke has set up to coordinate production in US. The territories and plants in deal have all been operated by KO's Coca-Cola Refreshments distribution arm. Still to come are closings on other territories within Delaware, DC, Md, NC, Penn, Va and W Va that were detailed in May letter of intent. COKE hopes to be operating the 3 newly acquired plants sometime next year. As noted earlier, KO's inclusion of mfg facilities within its refranchising negotations reverses prior strategy of retaining control of all mfg itself in refranchised territories, with KO now opting for greater agility of outside partners to generate efficiencies.

Move by Peet's Coffee & Tea to acquire majority stake in Chicago's Intelligentsia coffee, coming right on heels of deal to wholly acquire Portland, Ore's Stumptown, puts co into portfolio mgmt game, wielding 2 third-wave coffee roasters that perhaps are complements but also are rivals, each sporting fiercely loyal consumer base. Deal announced Fri as BBI was going to press calls for Intelligentsia cofounders Doug Zell and Emily Mange and their co-owner Geoff Watts to retain "significant" stake in biz and remain involved in operations. With Duane Sorenson still involved at Stumptown, that will join array of high-profile coffee proselytizers within co, including Peet's own Doug Welsh. Among other key figures in mix is Stumptown ceo Joth Ricci, like Peet's prexy/ceo Dave Burwick a RTD vet and also an ardent proponent of burgeoning cold-brewed coffee segment in range of formats. Now 20 years old, Intelligentsia maintains roasting operations in Chicago, LA and SF and runs 6 coffee bars in Chicago, 3 in LA and 1 in NY. Peet's is assembling its portfolio at time that industry leader Starbucks has been seeking to restore its coffee cred by moving aggressively into third-wave realm via its Reserve line and immersive Roastery & Tasting Room concept, first of which opened in Seattle in past year. It's planning to open 500 Reserve bars worldwide that feature the microlot coffees. BBI has heard a 2d Roastery may be coming to Brooklyn's Sunset Park nabe. In recent months Starbucks also pushed hard into cold-brew realm with heavily promoted in-store offerings; it's presumed a RTD version will follow in next year or 2 if segment growth seems to warrant it.

Peet's ceo Burwick said deal, like recently announced one that fully acquires Stumptown, is direct effort to reach millennial consumers "who are more affluent, purchase premium brands from other categories like craft beer and pressed juice, and seek variety and new experiences. To capture more than our fair share of this market, it's important that we offer differentiated craft coffee brands with unique propositions and appeal." He termed the 3 brands under Peet's umbrella "highly complementary" in serving needs of this "new coffee connoisseur." In a way, on a smaller scale, strategy echoes efforts on beer side by Anheuser-Busch to acquire regional craft brewers in markets like Chicago, NY, Wash State, Ore and LA, allowing them to operate independently and pursue expansion where it makes sense, including into one another's territories. As a longtime PepsiCo exec, Burwick would have experience juggling diverse brands, tho not diverse cos as here. No word on whether further acquisitions may be contemplated by Peet's. Founded in Berkeley, Calif, Peet's operates 240 US stores and itself was acquired in 2012 by German holding company Joh A. Benckiser, with private equity shop BDT Capital Partners as minority investor. That gives it access to significant financial resources. BDT, based in Chicago, would have had front-row seat to Intelligentsia's flourishing in recent years.

Zell, who started his coffee career at Peet's, told Chicago Tribune that there are plans to open Intelligentsia store in SF next spring and expansion plans in NY and LA. But he assured paper that growth will be "careful and thoughtful," adding, "We're not going to go out and open 100 stores. We will not compromise on quality." One area of potential synergy is brand's ability to ride Peet's retail delivery network, which delivers its bagged coffee to 14,000+ stores, Burwick told Trib. So far, Intelligentsia whole-bean coffee has only been available at retail in Chicago. It's also possible that Intelligentsia and Stumptown may be able to share roasting capacity - say, with Intelligentsia using Stumptown's NY plant if it decides to attack that market - tho nothing's been publicly said on issue. "Perhaps a good analogy is we've been showing our artwork at a local gallery and now have an opportunity for a spot at the Louvre," Zell wrote in open letter to employees and consumers, about his co's enhanced ability to scale up now.

Dallas-based EarthWater, which produces and markets FulHum high-alkaline bevs infused with fulvic and humic acid, is planning to take IPO route to bring in growth capital. It's prepping registration statement on Form S-1 with SEC with view to winning listing on Over the Counter QB Exchange under trading symbol yet to be determined. No details yet on pricing or projected enterprise value. Chmn/founder CJ Comu said co has retained securities counsel and auditing firm to ready move, while aiming to close a round C by Nov 30 in preparation for IPO. Tho IPO route can be daunting to small firms because of expense of meeting listing and reporting requirements and disclosure burden, CJ noted to BBI that's he's previously been involved with 5 IPOs outside bev realm. FulHum brand competes with a similar play out of NJ called BLK WTR . . . Bevolution Group, a maker of shelf-stable and frozen bev items and cocktail mixes that was recently established following Mar merger of foodservice players Juice Tyme and Lemon-X, is bolting on another set of brands via acquisition of Beverage Innovation's Tropics Mixology unit. Tropics portfolio includes likes of Tropics 100% Natural Infusions, Tiki Tropics cocktail mixes, Coco Tropics cream of coconut base and Tropics Refreshers, an all-natural caffeine alternative to conventional coffee bevs. Further deals are likely, Bevolution chmn Alex Guiva promised. "We will continue our proven model of supplementing organic growth with strategic acquisitions, and will search for additional M&A opportunities to enhance our market position, expand product offerings and grow our geographic presence," he said. Tho no details were offered on transaction, Tropics Mixology's owner, Beverage Innovations, apparently continue in some ownership and operational role. "Beverage Innovations is looking forward to partner with Bevolution Group to help guide Tropics® Mixology into its next phase of accelerated growth," said Marc-Alexander Lange, managing ptnr at Bverage Innovations . . . Middle-market equity investor Fenwick Brands has taken minority stake in mixer marketer Powell & Mahoney, providing growth capital to accelerate expansion as well as consumer marketing services out of Fenwick's Boston office. Terms weren't disclosed . . . JM Smucker has further whittled its bev portfolio with sale of US canned milk biz to Eagle Family Foods Group, which is controlled by private-equity firm Kelso. Unit produces such brands as Eagle and Magnolia from facilities in El Paso, Tex, and Seneca, Mo, that are included in transaction. Smucker is hanging onto Canadian canned milk operation. Smucker's remaining bev brands include Folgers Coffee and RW Knudsen.

Nobody can fault class action bar for lack of agility in finding new openings with which to pursue purported corporate malefactors. Now GT's Kombucha product Millennium Products is in crosshairs of suit that holds it to govt's newly emphasized responsibility for kombucha producers to keep their products alcohol-compliant even if maintained in unrefrigerated state at retail. Suit also goes after co for allegedly unsupported antioxidant claims. Those are different tacks from other class actions recently reported here that went after alc and sugar labeling (BBI, Oct 21).

Suit filed in US District Court in Calif's Central district by Bursor & Fisher of Walnut Creek, Calif, lists consumers in several states as plaintiffs: Jonathan Retta of Anandale, Va, who made purchases in DC and NY; Kristen Schofield of Louisville, Ky, who made purchases in Ky, SC and Va, and Jessica Manire of Denver, who made purchases in Colo, Calif, Tex and NY. It invokes subclasses of consumers in both Calif and NY State. Plaintiffs employs indie labs Brewing & Distilling Analytical Services (BDAS) and ETS Laboratories to test GT's Enlightened (non-alc) products purchased under variety of conditions at retail. Case # is 2:15-cv-01801-PSG-AJW.

Suit's approach seems to be grounded in regulator TTB's recent emphasizing that kombucha producers are responsible for keeping alc level to no more than 0.5% by volume at all stages of supply chain, including at retail, whether maintained in refrigerated state or not as marketers of raw, unfiltered kombuchas recommend. Thus, BDAS tested GT's products that had been kept refrigerated 1 week after purchase and 1 week before listed expiration date, and also products that had been kept at room temperatures on similar time frames. "The smallest percentage of alcohol by volume detected among all the products tested by BDAS amongst all 4 of the testing methods was 0.96% alcohol by volume," the suit reports. "Not a single product tested was below the federally mandated 0.5% alcohol by volume limit. In fact, a majority of the products tested well above 2% alcohol by volume at some point prior to the listed expiration date. Further, many of the products tested at close to 3% alcohol by volume at some point prior to the listed expiration date, with one product, Enlightened Synergy Trilogy, testing at 3.81% alcohol by volume one week prior to the expiration date." ETS' battery of tests similarly concluded that not one tested item was compliant. Suit, or at least the substantial portion we saw, doesn't provide breakdown of which products scored which alc levels, nor does it seem to contain any specifics about precise type of tests the 2 labs conducted. Some kombucha proponents have been arguing that generally used sample handling protocols and testing procedures are unreliable and need to be revised.

On antioxidant issue, case contends that "Enlightened Kombucha does not have even a single nutrient that the FDA recognizes and approves of for labeling statements using the term 'antioxidant,'" referring to FDA's requirement that label single out nutrients like vitamins A, C, D and E, not compounds like the EGCG contained in tea. "Enlightened Kombucha claims to contain a 'unique blend' of 'powerful antioxidants,' but does not contain even a single antioxidant nutrient with an established RDI," the suit states. "Indeed, Enlightened Kombucha is a type of tea, and the FDA considers tea a food of no nutritional significance. As such, Defendant's labels are misbranded and misleading." As suit notes, these are similar grounds to those that led FDA to issue warning letters in 2010 over antioxidant claims made by Pepsi/Lipton for Lipton Green Tea and by Dr Pepper Snapple Group for Canada Dry Sparkling Green Tea Ginger Ale.

 In recent years it's been easy to write off Rockstar Energy as distant #3 player that was steadily losing ground to US kingpins Red Bull and Monster Energy. Even in periods when it did enjoy spike in sales measured via syndicated data, that was usually accompanied by signs of increased promo activity. Those in field reported lotsa deals that essentially took 16-oz can price down to $1 in battleground markets like Southwest, and brand has maintained ongoing 2-for-$3 deals at 7-Eleven and Walmart this year.

Lately, tho, picture has changed markedly. Sales have been surging without noticeable increases in promo activity, tho it's possible brand is getting some lift from transition issues during Monster migration into Coke network in about half country and recent price increase that brand took. (Monster already went thru KO in other half of US).

"The 12-week data is outstanding. We have a lot of momentum," said Joey Cannata, Rockstar's evp for sales & distribution. "We're getting real focus from the Pepsi system on Rockstar. We've become a priority of theirs. And our innovation is outstanding: Boom Strawberry is the best new sku in the energy category." For 12 weeks ended Oct 3, a unit surge of 25% yielded a revenue surge of 27%, indicating little movement on pricing. Brand picked up about 1.7 points of share, even as Monster, in midst of Coke transition, slipped 1.8 points. Few who play in sector doubt that Monster will rebuild momentum as transition concludes, but meanwhile it's offered window for Rockstar to gain momentum and cement its importance to distribution partner Pepsi, which manages brand in all of US outside of northwest quadrant, where brand has hung onto its original beer wholesalers and holds its highest share. With Monster having just inaugurated price hike that matches one that Red Bull took in early 2015, Rockstar will get small additional edge on price without having to deepen its own dealing. "We'll benefit from that price hike," Cannata acknowledged. He was quick to add that, with household penetration still low for energy category, "there's tremendous upside and potential for this industry to grow and grow over the years" without need to engage in punishing share-wresting price wars. Indeed, having a strong 3d brand seems to have made the pie bigger in Rockstar's core western territory, so "we'd like to see the rest of the country catch up," he said.

Whereas Rockstar arguably was playing copycat to Monster on innovation front a few years ago, more recently it's kept steady stream of innovative items coming - driven in part by need to differentiate itself from other items in Pepsi portfolio under Amp, Starbucks Doubleshot and Mountain Dew Kickstart brands. Its success with noncarb Rockstar Recovery likely prompted Monster to step up activity behind its similar Rehab brand, and array more recently has included organic entries, lactose-free energy/coffee hybrid that employs almondmilk and super-sour flavors. Recently concluded NACS c-store show was no exception: while innovation was modest at Red Bull (which has never gone in for significant product proliferation) and Monster (likely so as not to disrupt Coke transition), Rockstar showed such items as citrusy Rockstar Revolt, Watermelon flavor for Pure Zero subline and dairy-inflected Boom in Whipped Orange and Whipped & Blended Strawberry flavors (BBI, Oct 13). It was indulgent mouthfeel of Boom Strawberry that Cannata was exulting over.

Some of headway has been made thru careful cultivation of key partners in crucial c-store channel, which still accounts for most sales. That Pure Zero Watermelon flavor is going as exclusive entry into 7-Eleven chain starting in Nov and Dec, promoted in cold barrels, displays and abundant POS. (Coincidentally, it seems, Pepsi intro'd Watermelon flavor in its Kickstart line, too.) By late Jan, flavor will roll out to broader range of retailers, in time for spring shelf resets. Another flavor innovation, Cucumber Lime, launched exclusively in am/pm chain earlier this year and will roll out more broadly at end of Jan. And Revolt debuted in Speedway chain, with national availability anticipated for Mar. Some have viewed that green camo-can entry, in Killer Citrus flavor with 240 mg of caffeine, as thrust vs Mountain Dew and its Kickstar extensions, tho Cannata declined to go there.

On distribution front most of noise lately has been coming from Monster, with its transition to Coke, and Red Bull, with ongoing moves to self-distribute. But Rockstar has had a few transitions, too. After its NY distributor Phoenix Beehive was acquired by Manhattan Beer, which distributes Red Bull on-premise, brand moved first to Pepsi-Cola Hudson Valley in MBC's territory north of city and more recently to powerful Honickman Pepsi operation in city itself, thereby aligning more closely with PepsiCo in crucial territory. Newburgh operation hit ground running, Cannata said, and he's hopeful Honickman will similarly upgrade presence in market where Rockstar has been barely visible. Another win occurred at opposite end of country, Alaska, where brand transitioned from Coca-Cola house to Pepsi and scored big sales gains.

Challenges remain. It seems likely that, having acquired Coca-Cola's energy portfolio as part of broader investment deal, Monster Beverage will wield Full Throttle brand as fighter entry to compete more vigorously on price with rivals like Rockstar. And Pepsi hasn't always been predictable partner, putting big resources behind Kickstart even tho, to extent Kickstart is viewed as an energy drink rather than high-caffeine soda, it's violation of Rockstar contract. It's presumed Rockstar extracted some concessions in return, tho that's not a subject its execs care to address. If Kickstart launch was infuriating to Rockstar's mercurial founder, Russ Weiner, lately he's been privately drawing kudos from Pepsi colleagues for adopting more deliberate style, portending smoother collaboration. Certainly, with Coke/Monster partners stepping up game in energy, it would seem to be in PEP's interest to nurture its Rockstar alliance in coming year. From point of view of Cannata, as well as other Rockstar execs encountered at NACS show, that attention is welcome, and they hope to live up to it.

Dwight Richmond, high-profile departure from Whole Foods earlier this month, has turned up at smaller rival Earth Fare, even as Whole Foods is moving quickly to fill void.

Dwight's accepted spot as senior category mgr at Asheville, NC-based operator of 39 stores, reporting to Jesse Garcia, dir of category mgmt, per email traffic shared with BBI. Dwight, who'd served as global grocery purchasing coordinator at Whole Foods, shares senior category role at Earth Fare with Melissa Coppel; also on team are category mgrs Eric Swanson and Kevin Maddox. It's not immediately clear how those responsibilities are being divvied up. Moves follows Earth Fare's hiring in Aug of former Fairway Market organic food dir Eric Bielsky as dir of grocery, overseeing operations. Bielsky reports to Garcia and to acting ceo Dave Mock, the chain's former chief merchandising officer. Meanwhile, Earth Fare's vp of non-perishables, purchasing and logistics, David Bowles, has moved on. Earth Fare operates mainly in Southeast and Mid-Atlantic states but has begun opening in areas like Mich, too. Whole Foods' exec grocery coordinator Errol Schweizer, with whom Richmond worked closely over past 4 years, offered tip of his hat in memo to suppliers, saying Dwight's "work ethic, sincerity and passion for the product really helped establish many of our brands and validated such important trends as Fair Trade and Non GMO."

Meanwhile, Whole Foods has tapped 14-year vet Jason Stein to fill 1 of 2 open purchasing mgr/category mgr positions in restructured org. Stein, currently co's Southwest grocery coordinator after stints in Midwest and Fla, will begin training for new role next month and step in full-time in early Dec, Schweizer said in memo. Errol cited him as aggressively advancing co's responsible sourcing and transparency initiatives. Stein joins team led by senior coordinator David Lafferty that also includes Matt Jimenez as purchasing coordinator and category review and promotions lead. Also key members of team are associate category buyer John Scalzo, in place since late summer, and Adam Kaman, associate buyer and category analyst. In other moves, Andrea Boger has transferred from Southwest region as promotions analyst, supporting associate promotions buyer Cheryl Franklin.

The changes occur just as WF is moving thru 2016 category reviews, with RTD coffees and teas, shelf-stable functional bevs and shelf-stable juices up next on grocery side on Nov 10 and refrigerated dairy/functional/juices and probiotic drinks up that day on grocery/dairy side.  

7-Eleven has taken striking step to lessen its reliance on McLane as key distributor to its stores, enlisting Core-Mark Holding as recommended wholesaler in Las Vegas, central and northern Calif and parts of Utah via 5-year deal effective next Oct. That amounts to about 900 stores, or 10% of total at 7-Eleven, which until now has exclusively used McLane. Internal memo obtained by CSP suggested small # of stores will begin working with Core-Mark on shorter timeframe to sort out inevitable transition issues. "This transition will serve the long-term interests of both our franchise stores and [7-Eleven] to be able to leverage the services and scale of multiple wholesalers across the United States," wrote Sean Duffy, 7-Eleven's svp of logistics and demand chain, citing shorter trips, at time c-store giant has been expanding array of fresh offerings. Core-Mark is based in S San Francisco and is regarded as stronger than McLane in western regions.

Move by 7-Eleven comes as distributors and their suppliers are holding their breath over other recent and anticipated transitions. Core-Mark is fresh off another key win, Murphy USA chain, which also had previously used McLane. Meanwhile, Speedway is transitioning acquired Hess Express and WilcoHess c-stores into what would be largest corporate-owned c-store chain, setting stage for another major transition. Speedway uses Core-Mark and Eby-Brown, while Hess uses McLane and Wilco uses HT Hackney. Tho 7-Eleven chain boasts larger # of stores, it is mix of corporate and independently franchised operations.  

Starbucks concluded strong 2015 on brink of becoming $20 bil player, scoring big gains both in stores and in consumer packaged goods. For Q4, net revenues surged 17.6% to $4.91 bil, including non-store revs (mainly CPG and foodservice) that were up 13.3% to $546.8 mil. For full year, net revs rose 16.5% to $19.16 bil and operating income advanced a similar 16.9% to $3.6 bil. Of this total, non-store revs rose 11.8% to $2.1 bil.

Among key segments of particular relevance to BBI readers, net revenues for Americas segment rose 11% to $3.4 bil, driven by 8% growth in same-store sales and incremental revenues from 612 net new store openings over past 12 months, SBUX said. Region's operating income rose 13% to $840.6 mil. As for Channel Development segment, which includes range of packaged goods, net revenues surged 14% to $456.7 mil, thanks mainly to higher sales of Pepsi-produced bottled items like Frappuccino and Doubleshot and whole-bean and pod coffee sold in groceries. Segment's operating income rose 15% to $197.3 mil, with operating margin up 20 basis points to 43.2%, thanks mainly to higher income from Pepsi alliance, dubbed North American Coffee Partnership, as well as leverage on cost of sales.

On conference call Thurs eve, SBUX brass continued to express bullish views on potential of their Teavana brand, and touted in-store-made Cold Brew as key contributor to coffee performance at retail. They acknowledged contribution of packaged items produced in collaboration with PepsiCo, as well as extension of that alliance to Latin America, as previously announced. As has been case in recent qtrs, tho, there was no mention of once-touted platforms like Evolution Fresh cold-pressed juices or Fizzio handcrafted sodas. Analyst q&a was dominated by discussion of mobile apps and China expansion, 2 key growth vehicles.

As noted, co will continue to roll out more stores, both in US and overseas, including higher-end Reserve stores like one that just hit London in recent weeks. Co expects 1,800 net new openings in coming year, half of them in China but 700 in N Amer, where there already seems to be a Starbucks store on every corner. But chmn/ceo Howard Schultz dismissed suggestions that co is reaching store saturation. "Nothing could be further from the truth, as in the intervening years we have opened thousands of new stores, with each successful class of stores outperforming the prior class," he said. "And our newest class of stores is performing at the highest level in our history, generating first-year average unit volumes of $1.4 million, up nearly 20% from only three years ago, while also delivering record profitability and returns on investment."

SBUX credited its bev program with driving 6 points of comp growth, fueled by such innovations as Cold Brew, which has been heavily promoted in stores, as well as greater food orders. Sales of iced items like Teavana Shaken Iced Teas grew 20%, said prexy/coo Kevin Johnson, and limited-time offerings like revamped Pumpkin Spice Latte outperformed co's expectations. Overall, SBUX brass noted, Teavana-branded handcrafted tea bevs generated nearly $1 bil in sales in co's US stores in 2015, up 12% vs 2014. They promised launch of Teavana-branded bevs in stores in China/Asia Pacific and Europe/Middle East/Africa regions next year. No word on bottled versions, tho BBI has reported that line of teas and chais is well along in development for US launch, perhaps next spring. Co also will be moving its Cold Brew coffee into stores in China, but offered no word yet on whether it plans to intro RTD version any time soon in any geographies.

Another priority in stores: so-called Wall of Chill, grab-and-go food presentation in higher-volume urban locations that's intended to coax consumers into grabbing Bistro Box or other lunch item to take with them for later in day. "Portability is important," said Cliff Burrows, group prexy for US/Americas as well as exec running Teavana. That could up shelf space available to bevs, too.