Carbonated soft drink volume slipped 0.8% (vs -2.4% for 12 wks) last 4 wks thru Sep 19 in Nielsen all-outlet data reported by Morgan Stanley's Dara Mohsenian. This "mid-cycle" update includes Labor Day holiday weekend. CSD volume decline slowed as pricing slipped down to +4% last 4 wks vs +5% previous 12 wks. Regular CSD volume increased 1% while diet brands fell 5%. Coca-Cola CSD volume trend improved to -0.9% (vs -3.7% for 12 wks) as its avg price increase was halved from +3.6% for 12 wks to +1.7% last 4 wks. PepsiCo volume improved to -3.5% (vs -4.3% for 12 wks) on 2.8% avg price increase last 4 wks. Dr Pepper Snapple volume swung from 0.8% decline previous 12 wks to 1.9% gain last 4 wks as avg price gain was halved to +1.5% compared to 12-wk trend. Average prices on private-label brands remained steady, up 3.9% which dropped volume 5.8% last 4 wks.

Rockstar Rolling in All Outlets Energy drink volume increased 9.4% in all outlets last 4 wks, matching 12-wk gain pace. Prices edged up to avg gain of 1.5%. Monster Energy volume up 8.4% (slower than 10.5% gain for 12 wks) on flat pricing over last 4 wks. Red Bull gained 5.7% despite solid 5.1% price increase last 4 wks. With a slight price drop (-0.2%), Rockstar volume surged over 30% last 4 wks. Up 25% for 12 wks. PepsiCo energy brands (Amp) improved to 5.7% gain for 4 wks as avg price gain slipped slightly to still healthy +7.6%.

Sports Slowed on Gatorade Drop Sports drinks volume slowed to 0.7% gain last 4 wks, down from 3.3% gain previous 12 wks. Avg prices were still up solid 4.8% in latest month. PEP's Gatorade volume was down 3.3% last 4 wks with solid 7.7% avg price increase (up from 7.3% for 12 wks). KO's Powerade up double-digits (+13.1%) last 4 wks aided by steep 5.2% price drop. Private-label volume improved to +7.2% last 4 wks on 1.6% price drop.

Price Cuts Boosting PEP Waters Bottled water volume increased 9.7% in all outlets last 4 wks, matching category's 12-wk gain pace. Avg prices were flat last 4 wks. PepsiCo water volume was up 14.2% with help of 3% price drop last 4 wks. Coca-Cola water volume increased 6.7% on modest 0.6% price increase while Nestle Waters up just 0.6% as its pricing remained up a healthy 2.4% last 4 wks. Private-label waters were up 15.1% on avg 2.3% price drop.

Got a compelling food/bev idea? You might be better off in Texas, region where angel investors lead nation in deals involving food and bev startups. Report from Angel Resource Institute at Willamette Univ in Portland, Ore, found that, since 2010, Texas angel groups accounted for nearly 30% of investments in food/bev cos, even tho they accounted for just 8.7% of total deals nationally. Meanwhile, other regions had other prime focuses - mobile technology and Internet deals in both Calif and NY, industrial and healthcare investments in Great Lakes region. Report doesn't speculate on reasons behind trend, tho fertile foodie climate, history of successful brands like Sweet Leaf Tea and Tito's Vodka, and presence of Whole Foods hq in region likely play roles. Full report can be found here.

Venerable teamaker Bigelow, which tried unsuccessfully in past to enter single-serve segment via alliance with AriZona Iced Tea, is trying again on its own. At Expo East it unveiled Bigelow Home Blend line, with downhome imagery and flavor range that includes Simply Unsweetened, Sweet Orchard Peach, Half & Half, Mango Lychee Green Tea and Citrus Pomegranate. At least initially, line will go out via broadliner UNFI, with Northeast's Stop & Shop grocery chain due to pick it up in Nov, said RTD sales mgr Timothy Richmond.

 It's become familiar phenomenon at Natural Products Expos East and West: brands that are new, but not quite new. That is, they launched as Whole Foods exclusives, and after period ranging from a few months to coupla years have come off the exclusive and finally are available to other retailers who might be trolling show floor. It's made for tricky balancing act for exhibitors, who want to flaunt their stuff, but not frustrate retailers by giving them a taste of what's forbidden fruit while still on Whole Foods exclusive.

At recently concluded Expo East show in Baltimore, the ranks of novel brands with entries coming off their Whole Foods exclusives included items from Honest Tea, Daily Greens, KeVita and Third Street Chai, among quite a few others. Honest Tea ended 2-year run of having its glass-bottle multiserve lemonades available only in Whole Foods, which precipitated launch when incumbent supplier Santa Cruz Organic proved disinclined to undertake heavy lifting of qualifying its product as Fair Trade. Honest Tea was happy to comply, and reaped continuing massive displays as result, thru one-year exclusive that it voluntarily extended another year. Now, 3 sku's have been upgraded from seasonal to year-round status and made generally available: Original, Mango and Watermelon. Another 2 flavors remain exclusive to Whole Foods, noted ceo Seth Goldman.

Among others coming off exclusive are Daily Greens's Half Pint, half-size pack targeting both kids and adults who'd prefer smaller serving size and lower pricetag. KeVita is now offerings its new line of Tonics to broader retail channel, while Third Street Chai went off Whole Foods exclusive with its single-serve bottled chai teas in Apr, just after the last expo edition in Anaheim. Chameleon Coffee came off exclusive with its Chicory, Mexican and Espresso single-serve cold-brewed entries.

Coca-Cola's Zico Coconut Water offered single-serve versions of its flash-pasteurized chilled blends that had debuted earlier as multiserve entry. Dues this fall, the new entries expand flavor range to include Natural, Pineapple Mango, Orange and Strawberry Banana. They're made from 100% not-from-concentrate Thai coconuts with no added sugar and go for $3.49 per half-liter TetraPak box. They seem to seek to straddle position between increasingly commoditized shelf-stable coconut waters and HPP brands like Harmless Harvest. On shelf-stable side, meanwhile, Zico debuted certified USDA organic and Fair Trade entry made from less-sweet Philippines coconuts, where Fair Trade principles are more established than in Southeast Asia. It's due to break in early 2016 in natural channel.

Honest Tea, finally reaching for broad scale, looks to be about to crack another US fast-food giant, even as it rides distribution clout of its owner, Coca-Cola, into Germany. On fast food front, after earlier getting its organic green tea into Wendy's chain, Honest Tea has won test in some of Chik-Fil-A's Fla restaurants for its Honest Kids Appley Ever After flavor, in special 6-oz aseptic box that's being offered as part of fast feeder's Kid's Meals option. Restaurant said it hopes to make entry nationally available in Jan as part of what its sr consultant of menu development for bevs, Matt Abercrombie, said is part of broader initiative to improve healthful offerings, at chain. At brand's Expo East booth, cofounder/ceo Seth Goldman happily confirmed test, but said he couldn't offer more than what's already out there from co and its social media followers. Meanwhile, Wendy's chain now is including Honest Kids single-serve boxes on menu board as option for its own kids meals.

As for Germany, move represents first time brand is riding its Coke connection into overseas market, as opposed to past moves into S Korea, Dubai and parts of Canada via exporters. Honest Tea is starting with 3 of its glass-bottle herbal teas, so as not to breach Coke's longstanding partnership on teas with Nestle, alliance that was dissolved in N Amer a few years ago but remains in place overseas. Amusingly, 1 of 3 flavors leading charge is Black Forest Berry, which was based on traditional German fruit dessert called Rote Gruetze, name that was eschewed as too confounding to American consumers.

On other fronts, Seth reported that co is making gradual with its stevia-sweetened Honest Fizz canned soda line, which has begun test in Target chain and also entered Kroger, Harris Teeter and Giant. And brand continues to ride consumers' increasing penchant for unsweetened drinks, adding Cinnamon Sunrise and Ginger Oasis herbal teas.

It still qualifies as rumor at this point, as we've been unable to secure any confirmation over past week, but looks like 2 small but agile NYC distributors are getting together. Word on street has been that Honickman-owned Good-O operation has merged with indie house Exclusive, best known for incubating Vita Coco coconut water brand and for its tenacious grip on city's ubiquitous Duane Reade drug chain. General view is that Good-O is absorbing Exclusive, with Exclusive founders Steve Gress and Mike Trefcer possibly heading over there to run sales. One local source said Exclusive's office staff was let go this week. If deal rumor is true, move would represent big step for Good-O, which has built solid base of ethnic and value-oriented bev brands in inner-city nabes but struggled to build momentum with more broadly appealing brands, particularly in affluent areas of Manhattan below 96 St, one of Exclusive's strongholds. In meantime, Good-O has extended reach beyond NY into New England (BBI, Mar 26 2013). Calls to Good-O have been referred to exec Joe Pignatella, who hasn't picked up calls and whose voice-mailbox has been full. Gress hasn't returned call left for him a few days ago either. Since Vita Coco moved to Dr Pepper Snapple operation, its distributor in rest of country, city has been rife with rumors questioning Exclusive's ongoing commitment to biz, tho distributor has continued to pick up brands like Foco Coconut Water and experimented with other kinds of biz like recycling restaurants' cooking oil. As deal hasn't been confirmed yet, it's too early to speculate on which Exclusive brands may make transition to Good-O.

Purity Organic juices, about a dozen years in market now, has launched its first paid-media campaign, positioning brand as representing "The art of organic." Primarily out-of-home effort is breaking now in 3 core markets - SF, NY and Boston - in executions that variously feature the core juice line or higher-end Superjuice subline. Representative execution shows silhouetted farmer in bucolic farm setting pushing wheelbarrow containing gigantic peach, with trio of juices dominating right side of ad. Ads in SF remind viewers that Purity is "a San Francisco company."

Intent, said ceo Dave Minnick, was to highlight brand's visually striking appeal while flagging the craft and care that go into its products, all with clean look. Effort was developed in-house. Outdoor ads, just popping up on buses in SF, phone booths in NY and solar kiosks in Boston, buttressed imminently by video on brand's Web site. In meantime, co has stepped up its guerrilla marketing, working opportunities like move-in day in college-heavy Boston with sampling blitzes. Among brand's key wholesalers supporting efforts are DBI in SF, Big Geyser in NY and Great State/Blue Coast in Boston.

On org front, co has finally concluded hunt for sales vp with recruitment 3 weeks ago of Todd Fenton, former Glaceau exec who's well known to such Purity associates as Glaceau alum Jason Camillos, now a partner at Purity's key investor First Beverage Group. Since then he's done stints at Vuka functional bevs and Einstein Bagels, after longer runs earlier in career at Nabisco and Coke bottler CCE. Minnick himself, recall, joined co 8 years ago just a few years out of school, when Purity Organic was much smaller co, and has run with progressively increasing responsibilities, with help from execs at Purity's parent, big organic tree fruit grower, and at First Beverage.

Meanwhile, Superjuice line - shelf-stable glass-bottle entry that adopts several cues of high-end HPP segment - is winning growing acceptance. It's gone national within Target chain, and after test earlier this year has gone chainwide within Publix too. Brand shortly enters Bi-Lo and Winn-Dixie chains too.

Minnick said overall biz among all its juices and coconut waters is up 50% this year nationally, and scored 75% volume lift in Jul in NY.

WhiteWave Foods is undertaking targeted launch of shelf-stable, single-serve versions of its Silk cashewmilk and almondmilk, tapping Worcester, Mass-based Polar Beverage to test whether DSD will prove effective for new format. Silk-branded items are launching within next coupla weeks in 12-oz bottles in Chocolate and Vanilla flavors, for 4 sku's all told, at $2.49 SRP, confirmed Polar vp John Wetzonis, as part of limited launch that's also seeing debut of new format in San Diego and likely WhiteWave's Colo backyard. "We're their DSD training wheels," he said. John noted that Polar was enticed to pick up brand at time 1 in 3 US households seem to have purchasing the dairy alternatives, particularly since it holds no potential to cannibalize any other bev items in house. With launch, WhiteWave is following in footsteps of other refrigerated brands, like Sunny Delight and Nesquik, that have migrated into impulse-oriented shelf-stable offerings and tapped DSD houses for their ability to deeply penetrate market.

Polar Resolves NY Conundrum with Diverse Approach Tho Polar Seltzer has been one of more spectacularly successful new brands to launch into NY market in recent years it's certainly had bumpy ride on distribution side. A few years ago its wholesaler, dairy house Beyer Farms, abruptly closed its doors after Dean Foods reputedly put squeeze on parent co, and recently another house, Heineken and Guinness shop Phoenix Beehive, was acquired by Manhattan Beer, which declined to take on Polar line. In meantime, brand has been in and out of key accounts like Duane Reade drug chain. Since Phoenix deal closed a few months ago, Polar has mainly been going it alone in city. Now it's adopted highly diverse solution: it's assigned brand to indie DSD house Drink King in NY and diversified food distributor J Kings on Long Island while going direct to some accounts and allowing smaller operators (Wetzonis calls them the "white van guys") so service some of the nooks and crannies in metro. So is it a Wild West approach, in the manner of an AriZona iced tea, where anybody can go anywhere with brand? Not at all: key distributors have been assured that any accounts they open up are theirs to keep, Wetzonis said. That makes it "modified Wild West," he joked.

Drink King, launched by former Red Bull exec Peter Strahm, started initially with Street King shot line but since then has considerably broadened offerings, which include its own low-glycemic sports drink, Nth Degree. As for J Kings, that's $200 mil (sales) family-owned shop with refrigerated capacity that's strong on foodservice side and handles array of packaged foods, meat/produce, grocery items and Tropicana OJ on bev side. It boasts one unusual skill set: ability to cost-effectively wrap its own trucks, just as many distributors have in-house POS production capability. That's particularly valuable to supplier like Polar that does significant biz with summer and winter seasonal lines, which can enjoy shorter windows as featured items on Kings trucks.

 With announcement yesterday of planned sale to indie bottlers of 9 production units, Coca-Cola has made sweeping U-turn on its manufacturing strategy, which not long ago called for co to itself control production while bottlers migrated to straight distribution function. Now Coke is forming National Product Supply System (NPSS) in US in which 3 indie bottlers - Coke Consolidated, Coke United and Swire Coca-Cola - will join with KO-owned Coca-Cola Refreshments as members of National Product Supply Group (NPSG) to coordinate production activities in footprint that currently accounts for 95% of Coke's total US-produced volume. Deals are anticipated to close from 2016 to 2018 if definitive agreements can be reached.

KO chmn/ceo Muhtar Kent characterized move as logical way to "leverage the strengths and capabilities of the 4 largest producing bottlers in our US system . . . to operate as one highly aligned and highly competitive national product supply system," while also cutting costs as part of $3 bil plan. The 9 plants being sold to Coke Consolidated, Coke United and Swire Coca-Cola have combined book value of $380 mil and buttress operations of key bottling partners that have been expanding their footprint as Coke proceeds with its refranchising of bottling system acquired from Coca-Cola Enterprises in 2010 that now operates as CCR. As CCR continues to cede territories to indie partners as part of refranchising, it now seems clear, other plants will come up for grabs.

Until a few months ago that wasn't the plan at all. Rather, KO had ambitions of controlling all production itself, and future of bottling function was key element of negotiations over expanded territory with bottlers like Coke Consolidated (COKE). Asked in mid-May, when Consolidated announced dramatic widening of its franchise territory, whether that would possibly mean reduction or even complete withdrawal from its venerable production role, COKE investor relations vp Lauren Steele told BBI, "there's a lot of discussion on that issue" and nothing's been finalized (BBI, May 14). Now, new direction is clear.

Tho an about-face on key issue, move is in line with other ways KO has been rethinking its biz to focus on its core strengths while allowing partners to ply their competitive advantage. As example, over past coupla years it's been content to make arm's-length, minority investments in companies like Fair Oaks Farms, Keurig Green Mountain and Monster Beverage rather than risk strangling their creative impetus with too close an embrace. In similar way, yesterday's move seems to reflect view at KO that agile indie operators can do better job on cutting costs, maintaining quality and responding to changing product and packaging preferences than giant org within Coke itself. In brief comment on announcement, Wells Fargo's Bonnie Herzog applauded move: "This marks a clear shift from KO's previous plan to retain its manufacturing assets, and a move that we believe makes strategic sense," she wrote. By divesting capital-intensive operations, KO will also improve its return on invested capital, she added.

Reflecting the relatively abrupt strategy shift, Coca-Cola said it will rethink setup in some previously announced refranchised territories "in due course." Further, "CCR's territories will continue to be refranchised as previously announced and decisions on any remaining production facilities in those territories will also be considered at that time." Noted Coca-Cola North America prexy Sandy Douglas: "Importantly, we believe the NPSS structure allows us to leverage our significant system scale with the unique competitive advantage of being able to act with speed. This will be enabled by the outstanding commercial capabilities of a strong local bottling system."

Considering that most bottlers trace their mfg operations back to their roots, new direction allows them to continue to expand geographically while not being forced to turn their backs on key skill set. "We are excited about the opportunity to own and operate additional manufacturing facilities and become a part of a new national product supply group for the Coca-Cola system," said Coke Consolidated chmn/ceo Frank Harrison III.

The specific bottling plants being acquired in the deals announced yesterday include Sandston, Va, Baltimore and Silver Spring, Md, Indianapolis and Portland, Ind, and Cincinnati (to Consolidated); New Orleans (to United), and Phoenix and Denver (to Swire).

Meanwhile, refranchising progress continues. In unrelated announcement, Swire Coca-Cola said it's purchasing expanded distribution rights in Ariz for $133 mil, adding population centers like Phoenix and Tucson, in deal anticipated to close in next year's 3d qtr.