BMI Archives Entry
Cheerwine, regional CSD out of NC with national ambitions, is drilling deeper into byways of Americana with release of 8-part documentary series depicting "local legends" encountered on brand's summer road trip thru 26 cities in 7 Southeastern states. Dubbed "The Local Legend Project," the branded-entertainment vehicle featuring co frontman Bo Stevenson is available starting this month on distribution platforms like iTunes, Vimeo, Amazon Instant Video, Google Play and Vessel via distribution agent Filmbuff. Parent Carolina Beverage has been getting word out via organic and paid social media, paid digital ads and by offering sneak peek to cadre of brand loyalists dubbed Cheerwine Authentic Soda Society. Series highlights colorful slices of Americana from Gus' Chicken Shack to trio of NC music people - "one-of-a-kind legends that make this country great," as Stevenson puts it. SVp marketing Tom Barbitta is hopeful effort will connect with millennials, who put a premium on creativity and authenticity.
Project intensifies change in direction Salisbury, NC-based co undertook a year and a half ago, when it abandoned agency model in favor of crowd-sourcing initiative titled "The Passion Project" that invited social media fans to offer ideas for how to power 98-year-old brand forward in less artificial way. Idea is that "we're going to be who we really are," Barbitta said. Tho by now co has gotten its cane-sugar-sweetened, glass-bottle entry into every state, it's focusing its brand-building efforts on about 20 states mainly in Southeast and heartland, where bulk of volume is via its conventional CSDs, via DSD network that dollop of indie and corporate-owned Pepsi bottlers, among others. Stevenson, brand's face, is former personal assistant to Tom Hanks who moved back east and clicked with brand; he'll be focus of 2016 marketing program.
For now, at least, co isn't returning to paid-media vehicles like radio ads featuring Scott Avett, frontman of Avett Bros roots band, with whom Cheerwine has enjoyed longstanding alliance. Partners will return, tho, to "Legendary Giveback" events that to date have raised $175K for charities, hosting 4th annual show at Tennessee Theater in Knoxville. That's rare divergence from Cheerwine's determination not to act like big brand, out of keeping with its true identity. "We may be the 'little guys' in the soft-drink category, but we love putting on a big, legendary show that gives back in a major way to amazing local and national nonprofits that support kids, families and those in need," Barbitta averred.
Small deal between 2 craft brewers in Washington State will spin off Bucha kombucha, restoring co to NA-only play just months after it was acquired by American Brewing. In deal, group of local beer enthusiasts who a year ago resuscitated historic Tacoma-based Pacific Brewing & Malting are now acquiring publicly traded Edmonds-based American Brewing, pending state approval. But deal is only for assets of brewery, which will no longer be publicly traded, American co-owner Scott Navarro told BBI sibling publication Craft Brew News. Only in Apr, American Brewing had acquired Bucha kombucha brand, but after Pacific deal closes, NA bevs portfolio will split off as separate entity. This "frees the functional beverages company to focus entirely on the non-alcoholic beverage business," American Brewing ceo Neil Fallon said in release. "It had become increasingly difficult for the brewing company and the functional beverage company to operate under the same ownership."
No Soda Tax Coming in Fed Food Guidelines
As Health & Human Services agency preps new dietary guidelines for release before year-end, Secretary Sylvia Burwell disclosed this week there will "be no push for a Mike Bloomberg-style tax" from Obama administration's guidelines, in words of NY Post. "We do not believe that that is something in the scope of the work that we are doing," Burwell told House Agriculture Committee on Wed. "That's not within the scope. It's not dietary. It's not nutrition and it doesn't belong in this context," added Ag Sec'y Tom Vilsack. "There's probably many other ways in which that conversation should be taken and should be had," he added. A congressman from KO's home state of Ga "questioned why the soda tax was even mentioned" in an advisory committee report, wrote Post. "When I see issues like tax on sodas and other things being recommended it seems to me that ideology is taking precedent over science and that creates a tremendous credibility gap," said Rep Austin Scott.
A Decade In, Voss Water Moves to First Flavored Entries; Buttress Fast-Growing Sparkling Subline
Voss Artesian Water from Norway is making subtle - but still radical - move into flavors, prepping launch of Lemon Cucumber and Tangerine Lemongrass iterations of its fast-growing sparkling water. New entries, to be unveiled at NACS c-store show in Las Vegas next week, offer lightly carbonated, unsweetened refreshers in brand's distinctive straight-walled glass bottles with delicate line drawings intended to evoke Norwegian brand's Scandinavian roots, said cmo Ken Gilbert during recent visit to Voss' hq in NY. Lemon Cucumber flavor is intended to evoke spa treatments, while Tangerine Lemongrass should meld well with Asian food and other cuisines. A 3d flavor is on way, all with help from flavor house IFF. New items will be line-priced with core unflavored sparkling line and offered in single bottles and 12-packs. Tho in past years under different mgmt decade-old brand had ventured into short-lived energy drink line, it had never offered flavored versions of the core water line.
New flavors are expected to enjoy momentum of unsweetened flavored sparkling water category that IRI syndicated data shows to have risen 43% in food channel in 4-week period of late summer, +13% in c-stores, +8% in drug. It should also provide further lift after summer in which brand weathered inventory shortages attributed to West Coast port slowdown, severe winter and production issues, tho Ken said brand should still close year up 30%. Tho Voss is entering segment already well-equipped with unsweetened flavored entries at multiple price tiers ranging from Perrier down to Polar Seltzer and La Croix, "you're only late to the party if you come to the party with something other people are doing," observed Gilbert, a former colleague of Voss ceo Jack Belsito and strategy chief Joy Bayern at Snapple, which they made an innovation engine at time.
Gilbert feels Voss' take on segment is unmistakable, with subtle flavors, mild carbonation and memorable but not overly assertive graphic treatment. For starters, co execs had no concerns that flavored version of Voss would be disconnect to consumers, given fans' frequent postings on social media platforms like Instagram of photos of Voss bottles stuffed with fruit. So clearly they're drinking it that way anyway. In-depth interviews with 20 consumers in NY and Chicago also provided safeguard that new launch wouldn't drift beyond what consumers expect from Voss brand. Working with NY shop Spring Design, Voss team studied range of graphic possibilities ranging from renditions of midnight sky to subtle panels of saturated colors intended to evoke understated luxury. But team opted for elegant line drawings of fruit and leaves, placed on back panel so that image is viewed magnified thru the liquid in bottle.
One design challenge stemmed from subtlety with which Voss differentiates its still and sparkling sublines. Tall straight-wall bottles are given a gray overcap for still version, black for sparkling, meaning it might have been logical to stick with black for flavored sparkling entries. Seltzer-style color-coded caps were out, as "conscious decision not to deviate from our elegance," Ken vowed. Color-coded caps might also have erroneously implied more assertive flavor, too. Ultimately, noted Spring Design founder Ron Wong, partners opted for pearlized white cap for fresh look they would convey.
New entries will be supported with heavy sampling at high-end culinary events like wine and food fests as well as parties hosted by print-ad partner Niche Media, publisher of high-end books like Ocean Drive, Gotham and LA Confidential. Online giveaways will be part of social media support. Brand also is working on cocktail development with spirits distributors who carry brand, some of them with staff mixologists.
Mega Beer Merger Puts Pressure on Coca-Cola, sez Laboy; 'Expiration Date' on Independence?
As beer and bev worlds wait for next chess move from Anheuser-Busch InBev after SABMiller rejected its latest offer, HSBC's Carlos Laboy today noted that "pressure on KO builds" as well. "Investors need to ponder the list of innocent bystanders and how this affects the actions that they may have to take," wrote Carlos. The "Coke system is importantly impacted," and currently KO shares "do not in our view reflect the notion that it is the only major related party that will be required to respond to any potential ABI purchase of SABMiller AND that is vulnerable as the next major target." If mega-deal is completed, "rolling over the African territories and doing nothing puts, in our view, an expiration date potentially on KO's independence," said Carlos. In his view, "with a lot of equity in the proposed SABMiller deal, the new company could pay down debt faster and move in on its next target sooner, butting down the time a target would have to improve its operations and evade ABI."
It's no secret that 3G, the Brazilian group that controls ABI and Heinz, has long had KO on its mind. A source told Bloomberg that back in 2008, shortly after 3G completed A-B takeover, co-founder Jorge Paulo Lemann commented at luncheon, "We'd love to take a look at Coca-Cola." Referring to 3G's notoriously tight operating style, he'd joked at time, "We could run it with 200 people." Atlanta Jnl-Constitution just reminded its readers of that line yesterday. KO employs of roughly 100,000.
The uniting of cold-brew proselytizer Stumptown Coffee with the resources and logistical capabilities of Peet's Coffee & Tea and its deep-pocketed parent, Benckiser, likely will further accelerate Stumptown's single-serve cold-brew biz - particularly since heads of both cos had earlier built careers steeped in RTD products and DSD distribution. Peet's ceo Dave Burwick was a rising star at PepsiCo before moving on to run Weight Watchers and then Peet's (his departure was often cited as evidence of brain drain at PEP), while Stumptown prexy Joth Ricci brought deep experience distributing alc and NA brands at Columbia Distributing in Pac NW. Ricce, recall also did more recent stint at PE shop and advisor First Beverage Group. By some estimates, Joth already has built Stumptown's cold-brewed coffee offerings to $10 mil run rate via range of formats including stubby glass bottles, gabletop milk cartons, nitro cans and kegs (BBI, Apr 16). Coincidentally, co just expanded the nitro cans to national availability while also launching seasonal Winter Cheer cold-brew as it builds momentum ahead of 2016. For its part, Peet's made tentative venture into RTD teas back in 09, well before Burwick's arrival, but line didn't stay long in market.
As reported in BBI yesterday (BBI, Oct 6), Peet's has acquired the 90% stake in Stumptown held by private-equity shop TSG Consumer Partners, which had been known to be shopping stake in recent months, as well as share held by founder Duane Sorenson, viewed as roasting royalty by coffee connoisseurs. Peet's, of course, is owned by Brussels-based Benckiser coffee-and-fashion empire. Tho price wasn't released, one person in touch with bev deal flow said he'd heard price was $70 mil, modest multiple that would be no more than 2X revenues. By contrast, $70 mil round of Bay Area rival Blue Bottle led by Fidelity this past spring carried implicit enterprise value well beyond $400 mil for co much smaller than Stumptown. Peet's operates 200+ coffee shops and has well-developed whole bean biz, while Stumptown has just a dozen shops as well as growing foodservice biz and rapidly expanding cold-brew biz. It operates roasting plants both in Ore and in Brooklyn, NY.
In call to BBI last night jointly with Ricci, Burwick was quick to emphasize that the 2 cos will continue to operate independently, with Ricci remaining at helm of Stumptown and Sorenson also continuing his involvement. "Peet's and Stumptown are 2 different brands and companies, and we'll allow them to run that way," Dave emphasized. For his part Ricci, fresh from announcing deal to Stumptown staff, said it had drawn positive response from employees who're "happy to be part of a larger coffee culture" embodied by trailblazer Peet's. Tho both cos employ same roasting equipment there will be no consolidation even at that level, with both cos pursuing their separate strategies. Ricci said. As for Sorenson, "he'll wake up tomorrow and continue to do all the things he's been excited about doing," Joth said.
In blog to Stumptown fans, co promised that, as result of deal, "you'll probably see more of us as we open up new Stumptown cafes, starting with the one at the Ace Hotel in New Orleans early next year. For all of you folks around the country hollering for more Cold Brew and sending us listings of vacant cafe spaces in your neighborhood, this should help out with that, too. We'll continue to source and roast our own coffee, and brew our own Cold Brew. Our staff and cafes will remain our own. Duane will still be involved as our founder, friend, creative advisor and spirit guide." Tho Stumptown fans in Pac NW freaked when TSG purchased co in 2011, its values haven't visibly changed under Ricci as prexy, and furor eventually died down; some local observers said corporate owner steeped in coffee culture like Peet's and its parent probably is more logical home for Stumptown and its values than PE shop with shorter-term ambitions. TSG has certainly known how to pick 'em in past, with Glaceau investment, and it's currently involved in Pabst and Sweetwater on craft beer side. This deal creates major entity in coffee with lotsa moving parts, at time upper end of segment seems to have wind at its back.
Group of industry vets that's quietly been building incubation biz under name Genesis Brand Developers will unfurl flag at upcoming Natl Beer Wholesalers Assn trade show in Las Vegas. Its clients so far have included likes of Icebox Water, Real Brands USA, Signature Springs Water and CocoJoy marketer FAL Food & Beverages. Group is dispersed among Tex, Calif, Fla, NJ and Pacific NW, all key regions for new brands, each partner counting 25+ years of bev experience on brands like AriZona Iced Tea, Red Bull, Monster Energy, Gallo Wine, Boo Koo Energy and Xyience, giving them strong ties to DSD network as well as to key broadliners like McLane and CoreMark. Group's managing dir and prexy/coo Jeff Jonke bridles at term "broker," saying co prefers "sales company," but it also promises to help emerging-brand clients in other disciplines, including pricing, marketing, presentation design, promos and product development. Key members of team include managing dir and prexy/coo Jeff Jonke, a Boo Koo vet based in Dallas. Also in mix are 2 Fla-based principals, ceo Russ Rickon, who's run distributorships in Fla and Ohio and served as vp sales for several bevcos, and AriZona and Red Bull vet Lee Berzman. AriZona vet Dick Thibault is based in NJ.
EarthWater has brought in GBS Growth Partners' John Blackington as interim prexy to help it scale up its FulHum brand, a highly alkaline water rich in fulvic and humic compounds. Former Coke exec Blackington has been involved for past decade with consultancy GBS, which will help build distributor network and retail and regional footprint for brand operated by entrepreneur CJ Comu. GBS' clients have included Bolthouse Farms, Celsius calorie-burning drinks and brands managed by Coca-Cola Consolidated's BYB incubation unit.
EXPO EAST: After Revamping Inko's White Tea, Kotecki Team Takes on Inko's Energy, Blue Buddha
Industrious crew assembled by former beer exec Kevin Kotecki celebrated their first anniversary since plunging into NA bev game by displaying at Expo East their latest tinkering with acquired Inko's White Tea and Blue Buddha ayurvedic lines, undertaking sweeping restagings of the Inko's Energy and Blue Buddha to buttress earlier work performed on core glass-bottle Inko's Tea line. Tho Kevin has played on considerably bigger stages in beer career that included Coors, Pabst and Mike's Hard Lemonade, these small entries put him into "the first growth category I've ever been involved in," he noted with a smile, speaking at recent show in Baltimore.
Chicago-based group has switched Inko brand's durable 16-oz canned energy line from all-natural formulation to organic while dropping calorie count from 150 range to an even 100, prominently heralded on front of can. That leaves what's now dubbed Inko's Organic Energy at half the calorie count of conventional energy drinks, with tea-derived caffeine serving as active agent, Kevin noted. Center of can now sports large "E" (for energy) with tea leaf serving as middle arm of letter. And flavor range has been extended beyond Citrus with addition of Mango and Blackberry. Kotecki is hopeful now-organic brand will generate greater momentum at $2.99 price than its less differentiated predecessor did at $1.99. He'd purchased brand from founder Andy Schamisso.
His team has also moved to eliminate cost and complexity from Blue Buddha Organic Wellness Tea line acquired from entrepreneur Kris Whalen. They've moved from array of 4 flavors that each sported a different functional offering, Vitaminwater-style, to new lineup that retains 3 most efficacious functional ingredients for use in all 4 flavors. Now brand is able to boast that it offers meaningful amount of ashwagandha (for clarity), maitake mushroom (vitality) and Indian gooseberry (immunity), while simplifying flavor decisions for consumer and eliminating need to purchase obscure ingredients in tiny amounts to support just a single flavor, noted cmo Andy Horrow. The flavors, all designated as being "with ashwagandha," are Blueberry Rose, Lemon Elderflower, Raspberry Hibiscus and Cherry Lavender. Top of label promises "Acuity - Immunity - Vitality." Hard-to-spot dark labels have been lightened up, while retaining distinctive blue Buddha head, and glass bottle shortened for snugger fit in cooler. Sweetener blend of cane sugar and stevia yields just 40 calories per 14-oz bottle.
As for core Inko's tea line, Kotecki noted that velocity has climbed more than 40% since switch to organic ingredients, vindicating expensive move (BBI, Apr 21). He remains in hunt for other brands to develop.