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Carbonated soft drink volume eked out 0.1% gain during last 4 wks thru Oct 3 in all Nielsen-tracked channels (incl c-stores), Wells Fargo Securities' Bonnie Herzog reported. CSDs got back to even vs 2.6% decline previous 12 wks as avg price increase slowed to +1.4% in latest month. Also note that 4-wk data includes Sun/Mon of Labor Day weekend, which came earlier in 2014. Full-calorie CSDs rebounded from -0.8% drop for 12 wks to +2.2% last 4 wks but diet CSDs were off 5%.
Brand Coke Rebounds Coca-Cola CSD volume edged up 0.2% last 4 wks in all-channel stores vs 3.4% drop prior 12 wks as its avg price increase was more than halved to +1.4%. "Brand Coke (43% of KO CSD sales) was back to positive sales growth (0.9%) following 2 periods of declines," noted Bonnie. PepsiCo CSD decline slowed from -3.8% for 12 wks to -1.5% last 4 wks with avg price increase of just 0.9%. Dr Pepper Snapple CSD volume up solid 4% last 4 wks as avg price increase dipped down to +0.4%. Private-label brands still getting solid volume gains (+3.8%) even with high avg price increase of 9.1% last 4 wks.
Energy Volume Slows on Better Avg Pricing Energy drink volume rose 6.5% last 4 wks in all-channel stores, down from 8.8% gain previous 12 wks. Avg prices were up 2.6% for category vs +1.4% for 12 wks. Monster Energy prices were up 2.2% last 4 wks after essentially holding even previous 12 wks. That slowed MNST volume to 2.8% gain vs 9% increase for 12 wks. Red Bull volume gain accelerated to +5.7% last 4 wks even with avg 4.5% price hike, which is in line with its 12-wk pricing trend in all-channel. Rockstar remains just that, with volume soaring nearly 27% last 4 wks on avg 1.6% price gain. PepsiCo brands (Amp) still rollin' along too: volume up 6.1% with avg 6.4% price increase last 4 wks.
Softer Prices on Sports Drinks Sports drinks volume increased 7.2% last 4 wks as avg price increase slowed to 0.6% for category. PEP's Gatorade volume was up 4.5% (vs +6.2% for 12 wks) with avg price increase of 2.5%. That's generally in line with Gatorade prices over previous 12 wks. With a boost from avg 5.2% price drop, KO's Powerade gained 14.8% in all-channel over last 4 wks.
Private-Label Still Outperforming in Water Segment Bottled water volume surged 12% on small avg price decline of 0.7% last 4 wks. With avg 2% price drop, private-label water volume was up 15.1% last 4 wks. That's right in line with +14.5% for 12 wks. Nestle water volume gain accelerated to +5.1% last 4 wks on lower avg price increase of 0.6%. Coca-Cola bottled water brand gained 8.8% with slight (-0.2%) price drop last 4 wks. PepsiCo waters slowed from 14.7% volume gain previous 12 wks to 9.6% gain last 4 wks on avg price increase of 0.8%.
Possibly looking to continue to diversify their portfolios beyond CSDs, Coca-Cola and PepsiCo are believed to be among co's interested in making a sizeable investment in upstate NY-based Chobani Yogurt, reported Reuters. Greek yogurt maker Chobani, hopes deal "could value it as much as $3 billion, including debt," sources told Reuters. Chobani hopes to sell "a minority stake," according to report, "including warrants owned by private equity firm TPG Capital LP," which account for 10-20% of co's equity. With investment, Chobani is looking "to help expand its supply chain, distribution, manufacturing base and geographic footprint."
Bai Brands, exhibiting at its investment and distribution partner Dr Pepper Snapple, has revamped its branding to return to just plain Bai on label, even as it expands popular coconut flavor to 4-flavor subline dubbed Antioxidant Cocofusion and similarly offers 4-flavor subline of Antioxidant Supertea. And like just about everybody else, it seems, it's added a watermelon flavor, Kula Watermelon.
Recall that brand had launched as Bai but pivoted to Bai-5 brand when stevia-sweetened 5-calorie subline proved to be winner in mix. Eventually it dropped the full-calorie entries altogether - rare example in marketing of co successfully abandoning core line in favor of flanker. Now, in move to eliminate confusion, it's back to just plain Bai, albeit for 5-calorie entries.
Meanwhile, it's extended its popular Molokai Coconut flavor into entire subline dubbed Cocofusion, adding Puna Coconut Pineapple, Maui Coconut Raspberry and Andes Coconut Lime to mix. And it's intro'd subline of black-tea-based Superteas, in Tanzania Lemonade Tea, Paraguay Passion Fruit Tea, Narino Peach Tea and Rio Raspberry Tea. Tho co has been hit with legal challenge over whether its products really qualify as "antioxidant infusions," no backing down on that score on label. Bai exec said c-stores are key growth target this year, with co hoping to raise its ACV in channel from current 4% to 15-20% next year.
Rockstar Revolt subline debuts with Killer Citrus flavor vaguely reminiscent of Mountain Dew with hefty 240 mg of caffeine, in green camo can due end of Jan. If it works, other flavors could be added under Revolt name. And Bay Area-based co is going broader with Rockstar Cucumber Lime flavor that debuted a couple of months ago as am/pm exclusive and outsold even core sku; that goes broadly out to market at end of Jan. Using ace-K/sucralose blend, that comes in at just 10 calories per 16-oz can. And of course it also jumped on watermelon craze that's afflicting show, with Watermelon flave of its Pure Zero line, zero calories but packing 240 mg of caffeine.
Co also was emphasizing Rockstar Boom, which debuted earlier this year in pair of dairy-inflected flavors: Whipped Orange, with taste of orange creamsicle or Orange Julius, and Whipped & Blended Strawberry. Both contain about 160 mg of caffeine, in line with core brand. Interestingly, said SoCal regl mgr John McMahon, orange sku has done better west of Rockies and strawberry east of Rockies. In past shows, co has offered such unique offerings as organic subline and restaged its Rockstar Roasted as dairy-free line using almondmilk, thereby avoiding conflict with Doubleshot line. Both remain in mix.
After garnering some momentum with more artisanally positioned soda entries like Caleb's Kola and Stubborn Soda that aren't branded as Pepsi items, co is taking more overt approach with new retro-style entry called 1893 that attempts to "take premium soda to the mainstream," per marketing materials on offer at NACS booth. New line due next Apr debuts in pair of flavors using kola nut extract and Fair Trade sugar and what seems to be more subtle degree of carbonation: Original Cola and Pressed Ginger. Both are packed in 12-oz slim cans with retro graphic style, black can for the cola and gold can for the ginger. Making no effort to disguise brand's provenance, both sport modest-size version of Pepsi disk logo on front panel. They command premium by being line-priced vs larger 20-oz single-serve mainstay bottle at $1.79. Subline is apparently named for year Pepsi was invented by Caleb Davis Bradham at Bradham's Drug Store in New Bern, NC, per brand history posted on PEP Web site.
New 1893 brand was among considerable array of new items being sampled on both bev and snack side at expansive Pepsi booth, even as chefs turned out surprisingly sophisticated versions of nachos using PEP's snack brands. On bev side these included another artisanal entry, under Mountain Dew brand: dark berry punch dosed with herbal bitters in dramatic-looking 16-oz black can called Black Label. "A Dew from the dark side that makes your spine tingle with its intense flavor," marketing copy reads. Like 1893, it's due in Apr and priced at $1.79, about even with 20-oz impulse pack for core soda line, again making for slight premium but no sticker shock at shelf.
Co also continues to expand its canned Kickstart line, now up to 10 flavors. Among new flavors, PEP is harnessing popular Watermelon flavor for entry packed in 12-oz sleek can priced at $1.79 and due in Feb. Recharge line, with added dose of antioxidants and vitamins C and E, gets Blueberry Pomegranate and Blood Orange flavors in Feb.
Among other platforms, popular Starbucks Iced Coffee line got pair of black entries, one sweetened (15 calories per 11-oz glass bottle) and one unsweetened. Besides being more sophisticated take for those who like to actually taste the coffee in their coffee bevs, it should also help better differentiate line vs sibling Frappuccino, with its heavy dose of sugar and dairy. Meanwhile, canned Starbucks Doubleshot coffee/energy hybrids tap into more exotic flavor profiles that have been proliferating on more artisanal side of biz, as in cold-brewed coffee: Spiced Vanilla and Mexican Mocha. Frappuccino adds White Chocolate Mocha.
Tropicana single-serve line, packed in 12-oz PET bottles, is also tapping into watermelon craze with 10% juice item that melds watermelon, apple and grape juices. That line also is adding Tangerine Lemonade sku. Both attempt to offer compelling counter to Coke's fast-growing Simply premium line. On CSD side, co offered Pepsi Cherry Vanilla in core 20-oz single-serve as well as 6-packs of half-liter bottles and 12-packs of 12-oz cans.
Tho some had wondered whether innovation efforts at CytoSport would sputter after acquisition by Hormel, opposite seems to have occurred, judging by NACS offerings: Benicia, Calif-based co offered new smoothie line and tweaked core offerings to lower sugar and fat counts.
New smoothie line adds juices to core protein formula, to offer 25 g of protein per 16-oz PET bottle but just 210 calories, in flavors like Strawberry Banana. Greg Longstreet, Hormel vet who's segued to role as CytoSport prexy/ceo based in Benicia, said spark was that 30% of users of Muscle Milk's protein powder use ingredient in home-made smoothies, so why not offer convenience of RTD format? It's line-priced with core line at $3.49-3.99, and is expected to strike particular chord with female consumers. Tho Muscle Milk had earlier sought to target women with dedicated line called Evolve (BBI, Jan 16 2013), Greg said co has concluded that equity lies in Muscle Milk brand, so offering right format's in that line is way to go. Launch will be backed with ads targeting women, as reflected in sample ad for smoothie line posted at booth that showed distance runner Sara Hall. "Refresh yourself," exhorts label copy on white-wrapped bottle.
Team has also tweaked existing lines. Core "Genuine" line has been reformulated to drop 30-40% of calories and fat, in part by ousting fortification elements like chromium that weren't viewed as necessary by consumers, while retaining core vitamin and calcium content. Pro line also got some improvements. Also on prominent view at booth was organic line launched a year ago in Chocolate and Vanilla flavors, at premium of $1 to core and smoothie lines, on par with Pro series (BBI, Jul 15, 2014). Hormel team is hopeful that brand will resonate across retail spectrum, from natural channel, where Muscle Milk doesn't play, to c-stores.
Convenience channel's steady migration toward healthier items was conspicuously on view at massive NACS show that opened yesterday at Las Vegas Convention Center, with greater array than ever, it seemed, of bev products that wouldn't be out of place at Natural Products Expo West. Even as big cos like Coca-Cola touted allies like Suja (in which KO recently took sizable stake), emerging brands that started in natural and specialty space dipped toe in water of biggest impulse channel. After exhibiting for first time at broker's booth, organic food/bev player Mamma Chia mustered standalone booth in new products area this year, and surging alkaline water player Essentia, which had built base in natural channel, took space in new-products area at show put on by Natl Assn of Convenience Stores. Organic milk player Organic Valley was back, and organic entry from Muscle Milk got considerable focus. Here are some of innovation highlights from show, with more to follow later this week.
Alcoholic CSDs are explodin', thanks to example set by surging Pabst-aligned Not Your Father's Root Beer. Inevitably, then, all the big beer players are piling into this space, in which top 2 brands alone are getting 0.7 share of total Nielsen beer $$ in recent periods.
Count Anheuser-Busch at forefront of latest charge. At regional meetings with distribs this week, it showed mockups of "Best Damned Root Beer" as its upcoming offering, BBI sibling publication Insights Express reports. (It didn't yet debut actual liquid.) That "Best Damned" moniker is apparently new brand platform for A-B, which will also debut "Best Damned Apple Ale" seemingly aimed at MillerCoors' growing Redd's brand.
Meanwhile, Not Your Father's, which is part-owned by Pabst principals, is already acting on what's next. A new Ginger beer will be in some mkts in 4th qtr, with other flavors like Strawberry Rhubarb in pipeline (and sampled at recent Great American Beer Festival in Denver). Then there's Henry Weinhard's line of hard sodas from MillerCoors, which are coming early next yr, including Ginger Ale and Orange. Boston Beer's Coney Island brand has got more coming too. But even smaller craft players don't want to be left out of emerging hard soda opportunity. Audacity Brewing "has been kegging up a new beer called Evil Cream Soda," wrote Dallas Observer columnist. "Is sugar the new hops?" he asked. "It seems like such an unlikely trend until you have a sip and get sucked into the childish appeal of it." On the other hand, "childish appeal" can cut both ways as public health types poised to criticize these brands as starter brands for underage drinkers.
Chicago's Forbidden Root Pushes Botanical Beers, Using Cassia Cinnamon, Tarragon, Patchouli, Oak Aging Tho most of bigger entries in alc-soda space are pretty sweet and can arguably be classed with malternatives like Mike's Hard Lemonade, some players are taking more refined touch. Prime example: Chicago's Forbidden Root, city's first botanic brewery, which is far more about flowers and roots than it is about hops. It's by no means first into realm - Rogue's Buckman Botanical entered fray a few years ago with counterintuitive initiative to brew beer without bittering hops in IPA-crazed Portland, Ore - but it's certainly among most ambitious.
As founder Robert Finkel explained to BBI sibling publication Craft Brew News in Jun during brand's NY launch, Forbidden Root views itself as "return to a lost era" when brewers used whatever was available, i.e. "roots and herbs wrested from the earth." Brand's Web site describes mandate as "pioneering the effort to place naturally sourced flavor at the forefront of craft brewing." Forbidden Root's lead brand is a root beer, but one that is unlike Not Your Father's Root Beer. NYFRB tastes similar to some non-alc root beer brands, and that is big source of its appeal. Forbidden Root's root beer depends on such botanical ingredients as "wintergreen, vanilla, cassia cinnamon, fennel, nutmeg, cardamom, black pepper, ginger, clove, star anise, tarragon, basil, capsicum, patchouli, sandalwood, balsam of Peru, licorice root, yerba santa, cocoa, molasses and finally aged with oak to round off the flavor." So it's not as sweet, and ultimately finishes more like a beer than a soda. (In fairness, NYFRB also uses nearly 40 spices, tho taste profile is quite different.) Also in Forbidden Root mix are Sublime Ginger, light (3.8% ABV) ginger beer with fresh key lime juice, and Divine Mud, imperial stout brewed with pecans, magnolia flowers and West African chocolate. The longneck bottles sport earth-toned labels that may look murky from far away but are distinctive enough to be readily spotted by devotees seeking out brand. Because of esoteric ingredients and craftsmanship involved in production, Forbidden Root is not cheap, with 4-packs typically priced at $10.99-11.99. But plenty of consumers have shown they'll pay those prices for 4-packs of specialty beers from likes of Dogfish Head.
And here's an odd twist: At time that craft brewers are being scarfed up by private equity shops, Forbidden Root can claim to have been launched by former PE guy. In previous life, Finkel founded Prism Capital, which oversaw 40 portfolio cos and had $190 mil under mgmt. He styles himself "refugee of the corporate world."
Tho co so far has been gypsy-brewing its beer at nearby contract partners like 5 Rabbit, locals have been avidly anticipating opening of its first brewpub, in converted landmark movie theatre built in 1920 in Chicago's West Town nabe. Chicago Eater just quoted Finkel saying he hopes to have it open this month, tho foto of interior illustrating story made it clear there's still work to be done building out 8K-sq-ft space. Finkel's equity partner is well known author/consultant Randy Mosher.
It was likely inevitable: Americans' boundless-seeming fascination with IPAs and other hop-intensive craft beers has begun to ripple out to NA sector, with producers in variety of categories experimenting with hop additions to their bevs. Here's rundown on some coffee, kombucha and soda plays - all of them, natch, launched from beer-crazed towns.
Anchorhead Hopped Coldbrew Coffee Based in Duvall, outside of Seattle, roaster Anchorhead Coffee has been offering a Hopped Coldbrew Coffee that adds Citra hops to its proprietary Narwhal coffee blend that's been cold-brewed for 20 hours. It's available in 12-oz heritage beer bottle at $3.99, with 3-month shelf life making it DSD-friendly. It's unsweetened and contains no milk. "The best thing about drinking this cold brew," assessed gourmet food site Tasting Table, "is you'll get that IPA punch without enduring the shame of cracking open a cold one before noon. Now that's coffee innovation." This from Brewpublic: "Definitely a cold brew designed for the craft beer drinker in mind and one to seek out." Note that hops are intended to primarily add aroma, not bitterness, which would fight bitter-free nature of cold-brewed coffee.
Founders Jake Paulson and Mike Steiner, both 29, had come out of music biz, working sound systems for touring acts like Third Eye Blind, and were frustrated at lack of good coffee on the road. After exiting hurly-burly, they toyed with opening coffee shop but decided that was too much to take on off the bat. Jake was making cold-brewed coffee at home, and realizing bottled cold-brews weren't yet available in Seattle, the friends figured that might offer entry point. They started in May 2014 out of Mike's garage, constructing commercial-grade kitchen where they roasted the coffee, cold-brewed it and hand-bottled it using skills they picked up on Internet. No point searching for any regional or historical meaning in Anchorhead name: partners just made it up, thinking it sounds cool. By now, backed by pair of unidentified SF investors, they've moved to 2K-sq-ft warehouse space that's about to double in size. They've got their regular and hopped coldbrew bottles, cold-brew concentrate and whole-bean coffee in about 130 retail locations, from QFC stores in Pac NW south to Berkeley Bowl in NorCal, but that's about to ramp up. Brand is distributed by R&K Wholesale Natural Foods and DBI. Partners also feel ready now to open bricks-and-mortar location in Seattle, hopefully within next 4-5 months.
Note that Anchorhead isn't only one playing this game. Corvus Coffee Roasters in Denver is offering a hopped cold-brew that's brewed in 60-gal beer fermenters using co's Everyman coffee blend, dry hopped with Citra hops throughout 17-hour process, per co's Web site. Item resulted from collaboration with several Denver brewers and a local whiskey distiller, too. Outfit in Columbus, Ohio, called Crimson Cup even created a dry-hopped nitro cold-brew, tho not in RTD format - coincidentally, at same time that Starbucks tested "dark-barrel latte" that tastes like stout in a few Ohio stores. (Starbucks item didn't seem to contain hops.)
Brew Dr Kombucha Citrus Hops Brew Dr Kombucha, from Portland, Ore's Townshend's Tea, touts its 6-month-old Citrus Hops entry as first crossover between beer and non-alc kombucha. Project originated about a year and a half ago, founder Matt Thomas told BBI, when homebrewer employee started toying with concept, even as city's IPA mania was tantalizing local drinkers with plethora of interesting hop varieties. "With so many interesting hops and more crossover drinkers, it was time to make a great-tasting kombucha with hops," Matt figured. USDA-certified organic entry employs organic Northwest Chinook hops with 12% alpha acids sourced from Crosby Hop Farm in Woodville, Ore, along with small amount of Crystal hops for aroma, white tea base, and dried oranges and coriander that are familiar components of Belgian witbiers. Hops were used both in fermentation and in dry-hopping stage just before bottling to obtain fresh, citrusy aroma. In keeping with functional tilt of kombucha category, hops are cited by co not just for their bittering and aromatic qualities but for combating anxiety, restlessness, insomnia and other sleep disorders, and as digestive aid. As with other Brew Dr entries, each 14-oz glass bottle is claimed to contain 2.2 bil live and active probiotic cultures. It's line-priced with co's more conventional kombuchas.
Proper Soda's Hop Soda Out of another craft beer hotbed - Grand Rapids, Mich - comes Proper Soda Co, which is offering up a Hop Soda along with its Hibiscus Soda and Coffee Soda, all packed in 8.4-oz slim cans priced around $2. Hop Soda is made from blend of hops dominated by Cascade, but co aims for "light, citrus and slightly floral" taste, without bitterness associated with IPAs. It's sweetened with cane sugar. Proper was launched in 2012 by Stephen Curtis, who had Hop Soda prototype ready a year later and added Hibiscus last year and Coffee more recently. Co's Grand Rapids base has been locus of craft beer excitement from likes of Founders Brewing. We haven't heard back from our approach to co, so can't say yet what its expansion plan may be.
NNOVATION VIEW: Hybrids Crossing Alc/NA Divide in Both Directions with Hop-Infused NAs, Hard Sodas
We seem to have entered an era of wild experimentation, so it should be no surprise that players on both the beer and non-alcoholic bev sides are riffing off each other's innovations. Will any of these new segments prove to be durable? That's always hard to predict, but here's a smattering of intriguing efforts we've been tracking in 2 categories: NA players who're picking up on country's infatuation with hops, and beer players who're adopting subtle flavors and marketing cues of boutique sodas.