Looking to build retail velocity, probiotic bev marketer GoodBelly finally is ready to upsize its 2.7-oz bottles to RTD range. Boulder, Colo-based co is launching new line styled Grab&Go in 15.2-oz bottles that retail core probiotic strain but offer more approachable format and chance at greater shelf presence in impulse areas of store. The line has debuted at Sprouts Farmers Markets chain in Blueberry Acai, Tropical Green and Mango flavors, with SRP of $2.99. "We at GoodBelly know that accessibility matters," acknowledged ceo Alan Murray. Bigger bottles contain 20 bil live and active probiotic cultures from same strain used in core line, Lactobacillus plantarum 299v, deemed best able to withstand stomach's acidic environment. Brand is also sold in 32-oz gabletop cartons for multiserve use.

Pair of bev luminaries - Sweet Leaf Tea and Deep Eddy Vodka founder Clayton Christopher and former Glaceau marketing chief Rohan Oza - are teaming up on investment front via new fund called CAVU, aviation acronym for "ceiling and visibility unrestricted." They're being joined by hedge fund vet Brett Thomas who's also played in food/bev. That's word from BevNet.com, drawing on SEC filing, tho principals apparently aren't ready to say much until they've completed raising the $100 mil they're targeting for fund. Both have been prolific investors in bev and snack startups.

 A small study blaming sugar-sweetened bevs and foods for leading to health problems such as diabetes and heart disease in children grabbed lotsa headlines yesterday. Study of 43 Latino and black children and teens who are patients at Univ of Calif San Fran obesity clinic found that, when sugar was drastically cut from their diets over 9 days and replaced even with starchy foods such as pizza and potato chips, their health still improved substantially, reported Wall Street Journal. Researchers replaced "sodas, pastries, sugary cereals and other foods and beverages sweetened with added sugar" with starchy foods, which in turn "reduced sugar in their diets to 10% overall calories from 28%," per WSJ. The kids' "cholesterol and other lipid levels improved, and their insulin levels dropped," noted researchers. "We reversed virtually every aspect of their metabolic syndrome," said lead author Robert Lustig of UCSF Benioff Children's Hospital. Triglycerides, which can contribute to hardening of artery walls and cause acute pancreatitis, showed "very, very large improvement," reported Lustig.

While some fellow researchers praised study by longtime industry foe Lustig and called for more research, some trade groups invested in selling sugary items weren't convinced it deserves praise. Grocery Manufacturers Assn "questioned the study's size" and also noted that since Lustig only studied patients with metabolic disorders, it is "irresponsible" to generalize that result. "The broad conclusions and policy recommendations in this study only serve to further the author's policy agenda without scientific foundation," contended Leon Bruner, chief science officer at GMA. American Bev Assn said "study doesn't demonstrate causation," wrote WSJ. "That's the problem with studies like this. They raise an alarm without the proof," said policy veep William Dermody. "There's nothing unique" about sugars or calories in different products.

Fortifying its foodservice portfolio, PepsiCo has inked alliance with publicly traded Barfresh Food Group that will put co's array of better-for-you, ready-to-blend smoothies and frozen bevs in portfolio of PepsiCo foodservice sales reps, with potential for packaged versions sold at retail in US and Canada down the line. PEP rep said items fill gap in portfolio of PepsiCo North American Beverages, with Barfresh staffers handling fulfillment once sale is made. Array of customers is anticipated to include quick-serve restaurants, corporate cafeterias and the like. Barfresh items are formulated without preservatives or artificial flavors or colors and its smoothies are made with real fruit. Alliance should help Beverly Hills, Calif-based co "expedite the test-to-market process with large national accounts," noted Barfresh ceo Riccardo Delle Coste, who founded marketer of "whirl-class" bevs in 05 after earlier career rolling out Zoop and Fruju juice bars in Australia. No timetable on possible move to offer packaged versions of product, the PEP rep said.

Looks like Red Bull North America is expanding its self-distribution footprint following series of deals in Northern Calif and Conn that had forced decision from Santa Monica, Calif, energy drink giant. Meanwhile, RBNA has done a bit of portfolio reshuffling, apparently dropping its zero-calorie flavored "Editions" but adding Orange and a summer-oriented Green, at time it's biz has been growing robustly.

RBNA's bigger self-distribution move, the way things are unfolding, is occurring in NorCal, where Columbia Distributing has purchased Mesa Beverage of Santa Rosa (BBI, Jul 31) and where separate transactions are proceeding that will see Anheuser-Busch acquiring rights to distribute its brands in service footprint managed by ME Fox in Silicon Valley and Horizon in Oakland (BBI, Sep 3). As anticipated at time, it looks like Red Bull is opting to self-distribute in Fox's territory, biz that amounts to more than 600K cases, but word is it's also pulling brand from DBI in territories that include San Francisco, Truckee/Lake Tahoe and Chico, and from Mesa in Santa Rosa. DBI, which has been building big warehouse in South San Jose, is expected to pick up many of Fox's non-A-B brands once dust clears, but not Red Bull, it now seems. However, Mesa and DBI apparently will continue to manage Red Bull brand on-premise. Move continues RBNA's general push toward self-distribution, tho some had wondered whether it might not stand pat at Mesa, considering that new owner Columbia is Red Bull house in parts of its Pac NW base. Apparently that's not how it's playing out, tho we've heard nothing official yet. Keep in mind that RBNA is well-known for tuff contracts that allow no-cause termination with minimal compensation, conferring uncommon degree of freedom to mix things up. A couple of years ago it converted Southern Calif to self-distributed area, in process terminating some distributors that co itself had heralded as outstanding performers, apparently in interest of operating unified swath of key territory. Same logic may be underway in NorCal. RBNA itself won't discuss distribution moves, which it regards as internal matter.

The smaller move is occurring in VT, where G Housen has sold its Vt portfolio to fellow Bud house Farrell in order to confine its focus to NH (BBI, Sep 15). Tho Farrell was hoping Red Bull brand would come along, word on street is that RBNA is opting to self-distribute in that area too. Tho far smaller # of cases are involved here than in NorCal, the move, if confirmed, would be significant in adding to evidence that RBNA now is eyeing self-distribution in less densely populated areas than it once considered, precedent that may have been set with similar move in Albany, NY, area. No word back so far from Farrell exec from whom we asked about Red Bull status.

NACS Adds Kiwi Edition for Summer, Orange for Permanent Portfolio; Zero-Calorie Editions Out of Mix Red Bull will be taking new-agey flavor turn next summer with launch of limited-time Summer Edition in Kiwi Twist flavor. Item packed in 12-oz slim can in green hue will be available from early May thru Labor Day, backed by digital and social media ads, outdoor ads and search ads, RBNA informed visitors to its large booth at recent NACS c-store show in Las Vegas. It will also get heavy sampling support from Wings team and student brand mgrs. RBNA is also buttressing year-round array of Editions with Orange flavor. But it's apparently dropping short-lived zero-calorie editions that debuted last spring in Orange and Cherry flavors, not depicted in NACS sales materials as part of 2016 portfolio. That leaves Red, Blue and Yellow Editions available in both single 12-oz cans and 8.4-oz 4-packs and the new Orange, in just the single cans for now.

Cott offset sluggish activity in private-label soda with rise in contract production and continued growth in its acquired DS Services home-and-office delivery (HOD) biz in 3d qtr. Overall, thanks to DS acquisition, revenues rose 41% to $756 mil and gross profit rose 234% to $233 mil, with gross margin expanding by 1.1 point to 14.1%. Operating income rose 52% to $28.6 mil. While major branded CSD players have been patting themselves on the back for their pricing restraint in recent qtrs, Cott ceo Jerry Fowden took occasion of investor call this morning to once again call them out on claim: there ain't much restraint at large-format retailers that are Cott's core customers, he contended, where promos have been continuing challenge. Jerry cited "frequent and continued" deals putting 2-liter PET bottles at $1 and 12-pack cans at $3. And judging by his remarks about UK biz, energy pricing is getting more promotional there, with gap vs his private-label offerings shrinking by 30% lately.

Disproportionate amount of conference call was devoted not to core domestic private-label biz nor big DS Services purchase but rather UK biz, where perfect storm of adversity had some analysts asking why Cott doesn't just ditch the whole operation. Fowden was having none of it, noting that a few years ago it was UK biz that stabilized co when N Amer was floundering, and insisting co is taking steps that will leave it a stronger unit in a coupla years' time. "We feel we'll come through this," Jerry declared. More on that below.

CSDs, Juices Sag in North America, but Contract Biz Headed for High Range of 2017 Target Cott North America volume was broadly flat, as weakness in CSDs and shelf-stable juices was offset by gains in contract mfg (+50%) and growth in segments like sparkling water (+50%) and mixers (+9%). Still, revenue sagged 4% to $339 mil (2% excluding foreign exchange impact), tho part of that was caused by fact that contract biz produces lower topline for same earnings yield (since contract customers typically hold their own ingredient and packaging inventory). The qtr brought 5 mil case-equivalents of new biz, +50%, putting total new biz up at 44-45 mil cases, with over a year left to hit co's stated target of 50-80 mil cases by end of 2016. In other words, Cott seems headed for upper end of target, Fowden noted. (The qtr's $31.1 mil in contract mfg revenues in N Amer compared with $270.4 mil of core PL biz and another $30 mil in branded items.) The stable volume helped gross margin edge up to 12.8% from 11.5%.

DS Services revenue rose 3.2% to $268 mil thanks mainly to growth in HOD water, single-cup coffee delivery and retail sales, offset in part by a declining energy surcharge as diesel fuel prices drop and lower sales in traditional brew-basket coffee. COT continues to make selective additions to DS footprint, this qtr closing on 2 HOD acquisitions that should yield $9 mil in annual sales and working to complete 3 smaller deals worth another $1 mil or so in sales. Co continues hunt for further deals, but will be careful not to do so many in same territory that route changes disrupt crucial ties between sales reps and their customers, Fowden assured.

From Hard Discounters to Bad Weather, a Perfect Storm in UK Think you're dealing with range of adversity in your biz? Then take solace from turbulent run Cott's having in its UK/Europe biz, which brought in $139.9 mil in revenues for qtr. Volume sagged 6% and revenue 19% due to remarkable confluence of factors including bad summer weather, sharply declining CSD and juice segment, and competitive environment that's seeing Cott's core grocery customers so bludgeoned by small-format hard discounters Aldi and Lidl that all 4 have changed ceo's over past year. "Most of them are going backwards in revenue (3% or more) and we supply all of them with a large chunk of private-label or value beverage programs," Fowden lamented. Cott does have foothold with the discounters, but it will need to work harder to get costs down to broaden that role. But that's not all. Strong dollar and sagging euro have also wreaked havoc, including by stimulating rash of low-cost bev imports hitting south of England. And in robust energy segment, price gap between branded and PL energy drinks has narrowed by 30%, weakening Cott's competitive position. All this while co had already been scrambling to replace loss of key Tesco contract (it will be 40% of way there by Feb, Fowden assured, not counting a big contract its Aimia food brand has won). So co has commenced discussions with UK workers and local authorities over reductions in staffing and benefits, it's decommissioning some slower production lines and is plotting reconfiguration of warehousing infrastructure, tho changes won't yield benefits until beyond 2016. "Structurally, we're well-positioned in the UK," where unit is frequently lauded as top supplier by its retail customers and served as important counterbalance to N Amer challenges 3-5 years ago. "It's business unit we're still highly supportive of," Fowden said. Pressed by analyst, he acknowledged that it's prime asset that likely would find multiple bidders should it be put on block, but said that's not under consideration. "It's a bloody good business … it has been a great performer for us over the past 3 to 5 years," the Briton emphasized.

No Tray? Bien! The Small Improvements that Make a Difference As example of incremental steps co takes to cut costs and improve efficiency, Fowden cited reconfiguration of shipping process for core 2-liter PET soda bottles. Package size currently employs 8-unit configuration on tray that doesn't cube out well on pallets, which in turn don't cube out well within truck, requiring more dunnage to prevent slippage and movement in transit. The solution: tray-less 6-bottle shrink - yielding better cube-out on pallet, more pallets on truck with need for less dunnage. Because shift requires retailers to accept new package and adjust their own warehouse processes, Cott's practice is to share savings with them.

Playing off format popular in bars for alc bevs, entrepreneur operating as Inspired Brands unveiled test-tube-based energy line called Tube Shot Energy. Sold in "pocket-worthy" 3-packs priced at $5.95, energizers are formulated using natural caffeine sourced from coffee beans, yielding 200 mg of caffeine, along with 100% daily value of vitamins B3, B6, B9 and B12. But pack is just one-seventh size of conventional 2-oz energy shot like 5-Hour Energy. Flavor range includes Arctic Mint, Grapefruit Infusion, Cinnamon Fireball, Raspberry Lemonade, Grape Glacier and Orange Tangerine. Entrepreneur at heart of launch is Bob Levi, former Kraft exec who once ran co's bev unit and also was involved managing partner brand Starbucks in now-dissolved alliance. Levi also drew recent notice in this letter as key investor in intriguing co launched by former Nestle exec Neel Premkumar that used NACS as platform to unveil c-store-targeted coffee shot called Forto (with 175 mg of caffeine, targeting similar occasions to Tube Shot) and that earlier had gone out with an all-natural liquid water enhancer called Stur for natural and grocery channels (BBI, Sep 11 and Oct 5). Info on TubeShot can be seen at TubeShot.com.

Bev Vet Gates Joins Forto Team to Manage Drive into C-Stores Meanwhile, Premkumar's operation has brought aboard seasoned sales hand in Phil Gates to serve as biz development mgr for c-store channel behind its Forto coffee shot. Phil had worked for DSD-oriented bev brands like energy drink Killer Buzz and fortified RTD coffee Real Beanz.

Rodger Collins, 2-way player who traverses both traditional sodas and new-age brands in role running allied brands at Dr Pepper Snapple Group, has been re-elected chmn of lobbying group American Beverage Assn. Also re-elected to board were Jeffrey Honickman, of influential Pepsi house Honickman Group, as vice chair, and Polar Beverages prexy/ceo Ralph Crowley as treasurer . . . The passing of Staples founder and ex-ceo Tom Stemberg at age 66 reps blow to bev sector too, given entrepreneur's role as director at publicly traded David's Tea. Tally by Fortune mag had energetic exec also serving on boards of Lululemon, CarMax, Guitar Center, Indochino, J McLaughlin and Pharmaca.

 There will be a slight tradeoff on cost, but True Drinks Holdings has cleared way for production setup behind its kids-oriented AquaBall Naturally Flavored Water Drink that's both more efficient and all-natural with pending move to Niagara Bottling as copacker, starting in Feb. Move disclosed this morning by publicly traded TRUU, which is based in Irvine, Calif, locks in annual capacity of 3.2 mil 24-pack cases of AquaBall over next 5 years and, as importantly, eases shift from coldfill to hotfill production of kids brand sporting distinctive globe-shaped packs adorned with images of licensed cartoon and superhero figures. Stevia-sweetened line has been able to boast of offering zero calories, carrying abundant vitamin reinforcement and containing no artificial flavors, but allure was undermined by coldfill requirement that it employ artificial preservatives like sodium hexametaphosphate. When moms read monikers like that on label, it undid a lot of the good work, ceo Lance Leonard readily acknowledged to BBI today. At same time, marketing- and sales-oriented mgmt team was too often bogged down dealing with gnarly production issues, in process tying up nearly half of co's working capital accumulating inventory. Those issues all go away in Feb, Lance said. Deal was secured by personal guaranty by TRUU investor Vinny Smith of Toba Capital. Family-owned Niagara is biggest private-label player in bottled water, operating 19 plants, figure that will grow to 22 by mid-year 2016.

AquaBall has been familiar figure on stores shelves for its globe-shaped bottles and use of characters licensed from Disney and Marvel, with brand authorized in 25K retail outlets within first coupla years. While catchy characters proved great sales bait for kids and their moms, need to hit aggressive price point dictated that brand go coldfill route, hitting price of $1.29 ($1 on promo) that sometimes undercut even Capri Sun on price per oz. (Brand also goes out in 6-packs for $3.99 at mass merchandiser Target and in special 16-pack at $7.99 at Sam's Club warehouse stores.)

But consumer feedback was consistent, Leonard said: moms bridled at the artificial preservatives, which undermined brand's claim to be alternative to bellywash shelved nearby. Enter Niagara, which will enable move to formula employing only purified water, natural fruit flavors, stevia and vitamins. Negotiations, which entered final phase during recent NACS c-store show in Las Vegas, were arduous: Niagara at first insisted that bottle would have to change significantly to accommodate its production lines. "That was like saying your kids are ugly," Lance recalled. "No way." But future partners worked out compromise, in which bottle will shift to more ergonomic shape with dividend of better fitting in car cupholders and in store glide racks. It also will be downsized from 12 oz currently to 10 oz, so that brand can go out at same frontline price but absorb higher hotfill cost. Niagara will employ "cutting-edge technologies including panelless, lightweight bottle technology that will help True Drinks achieve their business objectives," per Niagara prexy/ceo Andy Peykoff II.

TRUU is plotting other significant changes in 2016. It will better balance its gender appeal, adding more gender-neutral characters like Mickey Mouse to Fruit Punch flavor, co's #1, that's currently adorned only with Disney princess figures. Orange flavor will be swapped for trending Strawberry Lemonade flavor. And new designs will seek to raise current 3-10 age target to include tweens.

Liking what it's seen so far, TRUU will also dial up its DSD mix in 2016 while not retreating from hybrid strategy that sends products directly to retailers like Kroger, Sam's Club and Rite Aid and via broadliners to other chains. Mix has included Drink King in NY, which Leonard cited as standout performer, as well as Lakefront in Chicago, Polar in New England and 15-20 Bud houses scattered around US. available in four flavors: orange, grape, fruit punch and berry.

 Kroger's Simple Truth private-label brand is on track to be $1.5 bil biz for grocery operator, top brass indicated during co investor event in NY today. Brand had been launched about 4 years ago as execs parsing their shoppers' behavior - particularly those hard-to-peg millennials - witnessed clear shift to clean, healthy ingredients, and it has grown at double-digit level over past 3 years. Overall, natural/organic foods should account for about $11 bil this year, execs noted. Another salient fact: chain's exclusive brands, including Simple Truth, collectively represent 6th-largest brand at chain, which includes range of banners from Ralphs to recently acquired Harris Teeter.

During presentation, execs noted that fresh items have probably grown at 3X the rate of shelf-stable center store items over past 3 years. And "local is no longer a trend - it's essential," one noted. "Local means community, and community to our customers is important." In produce alone, co probably manages network of nearly 300 local suppliers, not including co-ops whose ranks might include local growers.