Lotsa questions out there about potential impact of Pete Coors’ bid for US Senate. Pete will take unpaid leave of absence from Coors, tho he remains chairman. (Pete made nearly $1 mil salary/bonus in 2003, see below). To comply with fed election law, Coors has pulled ads that feature Pete, but just in Colo. (Ironically, those ads were the best-received by Coors distribs at recent sales conference.) Media already took some shots, like calling Pete a "beer baron." So have neos, citing Pete’s 97 USA Today statement that was interpreted as calling for lower drinking age. And you gotta figure scrutiny just beginnin’, as Coors co and family come under microscope yet again. For now, hard to see upside for Coors company in Pete’s candidacy. Then again, is it possible that Pete can put more positive spin on his co and beleaguered beer biz in general? Announcement "raised some questions," acknowledged prexy Leo Kiely in letter to distribs and employees. But Pete has "reiterated the family commitment to the company," assured Leo.

 "Single biggest factor" in future of independent distribs "will be the beer industry’s ability to make our category work best for the 21^st century retailer," Miller prexy Norman Adami told NBWA convention. Noting that "power has shifted from the manufacturer to the retailer," Norman took audience thru brief exercise walking in retailer’s shoes. Retail is a "a very, very tough business," with "very tough capital demands" and "margin structures." That causes retailers to "obsess" about "return on net assets." To manage that return, "essential element" is "growth" which "is not an option" for most retailers. In fact, growth "needed" to "invest competitively," service debt and for many retailers, growth necessary "even for mere survival."

So how can beer system become "increasingly essential" to retailers? Gotta "create consumer excitement" to "strengthen the pull of the brands," Norman said. Tho suppliers like to "grumble about the negotiating power of the big chains," Norman added "most progressive" chains are "starting to shift focus" from "banging heads at the back door." Now ask "us to use our heads in bringing relevant innovation in the front of the store. They know that beating us up on price has limited returns" and that "lowering costs alone will not create the growth they need." Beer biz must also "capitalize on our unique local strengths." US "independent beer distributor system" is "probably ... best-integrated multi-local consumer business system in America." Biggest supporters of "almost any community festival" anywhere in US will include local distrib 9 times out of 10, said Norman. Pointing to loss of localness in ultra-consolidated soft drink biz, Norman urged that as "system" consolidates, "we must ensure that as we evolve we do not sacrifice the local integration" that is 1 of "great drivers" of "long-term success." At same time, gotta "play a leading role in facilitating national efficiencies." Tho [local/ national] objectives seemingly contradictory, Norman said, gotta "find ways of connecting the two."

To drive progress on "national efficiencies" while retaining local character, beer biz has a "very powerful tool," namely DSD system. DSD "brings unique local knowledge right to the aisles of their store...lowers store level costs" and often delivers "twin benefits of higher velocity and lower inventory." Gotta tell that story. But finally, it all gets back to growth. "We must focus on growing the size and value of the beer category pie," Norman said. For most in beer biz, category growth "hasn’t always been our first priority... It’s easier to cut a one-time deal" than it is to "develop the creative programs that will add incremental profit to the beer category." But "potential profitability" of beer category compared to wine and spirits, soft drinks, and even non-bev categories must be explained to retailer. As number 2 player, Miller feels "a very strong obligation to the category itself." So distribs’ future "will be driven by our collective ability to make the 3-tier system essential to retailers." That "future will be decided more in the marketplace than in the courtroom," Norman concluded.

BBI editor doesn't remember his Colonial history as well as he thought he did: Georgia guv who drank yaupon tea a coupla centuries back was James Oglethorpe, not Thomas, as stated in profile of Asi Yaupon purveyor last issue. Story also omitted SRP, $2.69, and brand's Web site, YauponTea.com.

Reed's Inc, scrambling to deal with production hitches during addition of East Coast copacker that have resulted in excess accumulated raw materials inventories and out-of-stocks at retail, entered into additional term loan with PMC Financial Services Group that has principal balance of $1.5 mil at 11.6% premium to prime interest rate, for 14.85% rate. Co "believes that the additional capital will add flexibility and facilitate a smooth transition during the unwinding of the raw material inventory and solidification of the Eastern United States supply chain," co said. In Dec it entered into $1.5 mil term loan from PMC, whose terms have now been changed so that rate is keyed to co's EBITDA, rising from 9% to 12% if ebitda remains below $1 mil.

Quietly, since 2012 relaunch, it's become one of hottest brands in PepsiCo bev portfolio: Pure Leaf iced tea, marketed by Pepsi Lipton Tea Partnership forged decades ago by PepsiCo and Unilever. With claim to serious cred as culinary product, brand has been mixing conventional brand-building techniques like national TV ad that broke in Apr with more subtle, grass-roots tactics that might reach broadening ranks of Americans who regard themselves as foodies.

That's what brought couple dozen bloggers on Tues evening to Manhattan's Chelsea nabe at cooking school and event space called Haven's Kitchen, for paired tasting of Pure Leaf teas and cutting-edge gourmet preparations. Presiding was Lipton tea master John Cheetham, one of only 10 or so in world to attain designation, who shuttles between UK and Unilever's offices in Englewood Cliffs, NJ, interspersed with frequent trips to tea gardens (Kenya next, in coupla weeks). Cheetham walked the bloggers thru pairings of foods and Pure Leaf while discussing exacting process by which Pure Leaf is brought to consumers. Some of recipes were Haven specialties, such as poached chicken breast entrée with sautéed bok choy, honey-roasted carrots and buckwheat soba noodles (paired with Pure Leaf Not Too Sweet Honey Green Tea). Others were specialties of key brand advocate, celeb chef Gail Simmons, such as tea-marinated grilled salmon with gingery Asian greens and cucumber salad (paired with Lemon Iced Tea).

Along way, Cheetham offered nuggets about exacting way that Pure Leaf is made and complex flavor profiles of it various sku's. To reconstruct consistent flavor profile with each batch, co harnesses at least 7 different teas, and as many as 30. Cheetham, whose family roots extend to both Britain and Brazil and who's done extended stints in areas like Sri Lanka, had nothing but praise for American tea culture, saying country "is at the forefront of iced tea, which is now spreading around the world." (Remarks seemed reminiscent of British brewers, who've moved from once ridiculing American beers to praising and imitating their fresh take on old styles.) And he patiently attended to bloggers' preoccupations, explaining, for instance, why GMO is not an issue that needs to be discussed for tea, since the plants have never been grown using herbicides or pesticides.

After Pepsi and Unilever's stop-and-start efforts to play in above-premium tea that go back to mid-1990s, latest push has succeeded in moving Pure Leaf to forefront of category, where it now ranks #1 in sales. Its roughly 6% share is about double that of Gold Peak, which it leapfrogged in $$ share in 2013, and well beyond Honest Tea's 1%. (Those 2 Coke brands are premium teas that come up most often in consideration set of Pure Leaf's targeted consumers.) Retail sales approached half-bil last year and are growing well into double digits again this year. Tho it's not topic Pepsi execs will discuss, Pure Leaf's hot hand is believed to be a factor in co's not collaborating with Starbucks on pending Teavana RTD launch, after having previously partnered on Starbucks' bottled Tazo entry (BBI, Jul 24). Scuttlebutt has been that SBUX is planning to go it on its own with that imminent launch.

In conversation a coupla weeks ago, marketing dir Kathy Kennedy attributed Pure Leaf's solid growth simply to having "quality product with a point of difference" - being brewed from real tea leaves. Core consumer is highly engaged both in tea category and in broader food culture, typically making tea at home in either hot or cold form and involved in the food sites and blogs with which brand has been collaborating.

To date, Pure Leaf has marketed just a narrow array of flavors, all based on black tea. Generally Sweet Tea is top-selling flavor, followed by Unsweet and then Lemon, tho in South and Southeast sweeter entries tend to do best. Tho line launched with single-serve array, it's added 6-packs and 64-oz multiserve packs. And brand should be stretchable to green teas and other varieties, Kathy believes. While her team has its eye on up-and-coming varieties like matcha, it's concerned not to hitch to trends that may prove flash in pan, she said. They'll also likely explore regionally targeted flavor offerings, as well as broader range of package sizes. And tho it only offers the single-serve bottle to foodservice side currently, that's area of focus now, particularly given dearth of fresh-brewed options in that channel, she said.

On marketing front, biggest challenge has been to overcome consumers' resistance to drinking bottled iced tea because they don't believe it tastes as good as fresh-brewed version. So brand, which downplays Lipton branding in packaging and marketing materials, stresses at every turn that it's brewed from whole leaves, not constituted from powder, via such slogans as "leaf to bottle" and "real leaf-brewed tea without the fine print." Brand's first national TV ad, which broke in Apr via creative shop Anomaly, shows images of tea leaves with voiceover that describes production process as, "Just let leaves be leaves … It might be a little more work, but that's what you do for the love of leaves." Early read is that ad has had positive impact on biz, at time brand still has work to do to build awareness and stress its point of difference, Kennedy said.

But it's the more subtle efforts that appear to have built brand's cred. So Pure Leaf has partnered with Tastemade network of bloggers and other influencers, producing 6-episode Web series in which Sweet Pea chef Lacy Baier, for instance, showed how to make homemade sweet mint lemonade iced tea. Food52.com has also been partner. And brand has collaborated for coupla years now with Simmons, star of Bravo's Top Chef and special projects dir at Food & Wine mag, most recently at Austin Food & Wine Fest, where Gail did meet-and-greet with guests at expansive 40x45-ft setup. Events like Bon Appetit's Asheville, NC, food fest have also proved enticing venues to get word out about brand to sophisticated consumers while leveraging print-ad partners.

Anheuser-Busch's move to acquire distribution rights to its beers in service footprint of Northern Calif's Horizon and ME Fox may be drop in bucket on beer side - a fraction of a percent of its total domestic volume - but it's anticipated to have significant reverberations on NA side. Initial word, not yet confirmed, is that energy drink powerhouse Red Bull North America is pulling out in order to self-distribute in market, even as exit of ME Fox eliminates go-to house that had proved adept over years at bringing innovative new brands to early-adopter types who populate Silicon Valley.

A-B announcement said beer giant is "acquiring a portion of Horizon Beverage Co's distribution business in Oakland" and "buying the Anheuser-Busch distribution rights" of Fox in San Jose, 2 territories which A-B styles as "contiguous" and which it will operate itself now as so-called branch operation. (They're contiguous on map, but limited, chronically congested roads will make efficient operation a challenge.) Those are 4th and 5th branch deals A-B has announced this summer, counting 2 in Colo and 1 in NY, tho it's also sold 2 as mandated by new law in Ky. These acquisitions have been hot topics throughout much of beer biz in the summer of 2015, and many A-B distribs and their advocates are watching these developments very warily, as BBI sibling publication Insights Express noted yesterday. These latest deals give A-B beachhead in NorCal, after operating several branches in southern part of state for years. Both deals are expected to close in Nov.

But for each, the real value in their operations resides in the non-A-B beer brands that generate significant volume and higher profit per case, and those will sell for much higher multiples. Tho A-B sez it "plans to keep several local craft beers in our portfolio," bulk of Fox and Horizon import/craft portfolios (notably Corona and other Constellation brands) will reportedly be sold to local MillerCoors distribs, DBI in San Jose and Bay Area Bev in Oakland.

ME Fox sells about 2.2 mil cases of beer in all and another 1 mil cases of NAs, including 600K+ of Red Bull, for which it was one of earliest DSD houses when brand launched in States in 1997. It's expanded that territory over years and now is reportedly largest indy Red Bull house in Calif, potentially a tenuous position considering absence of franchise protection for Red Bull brands. Its NA roster also includes Jarritos, Sparkling Ice, Hint, Purity Organic, V8, Nesquik, Ito En and Langers. With owners' approval, many of those brands presumably will make transition to DBI, which has been building 10-acre facility in South San Jose.

Fox has had outsize influence on NA side of biz in variety of ways. House was founded by Michael and Mary Ellen Fox almost exactly 50 yrs ago - anniversary was on Tues - and all 6 of their children have worked in the biz over the years. Current prexy Terence Fox was on NBWA board of directors. ME Fox was among first Bud houses to recognize incremental value to be gained by carrying "golden cases" of non-A-B brands, starting with some of earliest new-age entries like Original NY Seltzer and Koala Springs. It went on to pick up likes of Snapple, AriZona, SoBe and Vita Coco, as well as craft beer brands like Widmer and Redhook. That renegade stance insured years of skirmishing with A-B, which has frowned on having its distributors devote any attention to outside brands, tho ironically big brewer ended up purchasing stakes in Widmer and Redhook and tried to acquire Original NY Seltzer (when that didn't pan out, it launched its own short-lived entry, Zeltzer Seltzer).

Fox, along with another indy Bud house in NorCal, also was at center of termination case that sent shockwave thru biz in late 2004, when dispute over termination by Fiji Water went to arbitrator who ruled that the 2 houses had not been treated fairly and awarded them $4.2 mil - outsize award for houses that each did less than 15K cases per year. Judgment was often viewed as sending reassuring message to distributors that, if they do effective, good-faith job in building brands, legal system may afford them protection beyond what contract might narrowly stipulate.

Campbell Soup concluded challenging fiscal year that included massive reorg and cutbacks with better-than-expected financial performance in Q4, as it cleared decks for future in which emphasis will be on faster-growing refrigerated food and bev categories that are burgeoning in interest, particularly among younger consumers.

Sales at Camden, NJ-based co sank 9% to $1.69 bil, but were up 1% excluding effects of currency fluctuations (-3%) and one less week in reporting period (-7%). Operating earnings skidded 14% to $263 mil. For full year sales dropped 2% to $8.08 bil, but were up 1% on organic basis. Earnings per share closed out year at $2.46, at high end of co's predicted range, thanks in part to accelerated benefit of cost-cutting program put into place earlier this year. Tho chmn/ceo Denise Morrison told investors on conference call this morning that underlying trends are beginning to show signs of improvement, she was careful not to stoke expectations of return to growth.

This was last period before CPB switches over from 5-segment reporting structure to 3-segment structure in which mature, center-store brands from soups and crackers to shelf-stable V8 juices are grouped together and more promising perimeter-aisle brands like Bolthouse Farms juices and salads, refrigerated soups, hummus and refrigerated salad dressings are gathered in another group. The overall plan, as outlined to investors at all-day event in Camden in Jul, is to slow declines and aim for price realization on mature brands while juicing innovation on refrigerated side, where co has wind at its back.

Meanwhile, like other food/bev and restaurant giants, CPB is rethinking its fundamental approach, offering greater transparency into ingredients and processes it uses via WhatsInMyFood Web site and other devices, while moving to reformulate recipes to eliminate ingredients like artificial colors and flavors from nearly all items sold in North America, as Morrison reminded investors on call today.

Qtr capped another year of decline in shelf-stable US Beverages segment, where sales fell 10% to $165 mil, -4% excluding extraordinary items. The sales declines, coupled with 1 week less in reporting period, caused operating earnings to fall 23% to $33 million. During period, continued modest declines in V8's core red juice were offset by growth in V8 Veggie Blends, with new campaign expected to drive further trial. V8 Splash and V8 Plus Energy both continued to perform well. But V8 V-Fusion continued to sag - "leaky bucket," ceo termed it. The immediate consumption channel - that is, the cold box segment serviced by indie DSD distributors recruited to replace the Coke bottling system after that alliance was unwound - is beginning to see some momentum, Morrison said. "We feel good about the overall direction of this business," she said.

More promising was Bolthouse & Foodservice unit, where 2% sales decline to $328 mil masked 4% increase in organic sales, as gains in Bolthouse Farms juices and salad dressings more than offset softness on carrot side. (Acquisition of Garden Fresh Gourmet added 3 points to sales total, too.) Segment operating earnings slipped to $28 mil from $29 mil a year earlier. Among brand highlights, rollout of 5-flavor 1915 brand of cold-pressed organic juice, Bolthouse's first HPP play, which was developed in less than a year, is off to good start, in 2K retail doors now with another 8K likely to be aboard by Q1. New line gets Bolthouse to play in superpremium part of refrigerated juice segment, but at lower price than some of indie brands that have pioneered category.  

Former Ohio State football player Preston Harris has been sentenced to 6+ years in prison and commanded to pay $400K in restitution for role in stealing investor money from now-defunct marketer of OxyWater sports drinks, WCBE reported. Prosecutors had argued that Harrison, 43, and 2 others lied to investors about sales and profits, then misappropriated the money for personal use. Harrison and wife Lovena, 42, were also convicted of conspiracy to defraud government, for routing over $1 mil of investor money thru her daycare business and filling false tax returns. She gets 1 year in prison and pays restitution. Third person convicted will be sentenced Oct 1 . . . Add Seattle-based Dry Soda to ranks of bevcos fleeing from poor connotations these days of "soda": it's now going to go by Dry Sparkling . . . SunOpta is playing naming game, too: rebranding its citrus ingredients and extraction operation in San Bernardino, Calif, with trendier moniker Fresh Pressed Industries . . . PepsiCo will test Senomyx's S617 natural sweetener in Manzanita Sol on national basis and Mug Root Beer in Philadelphia and Denver. Pepsi has exclusive rights to Senomyx items for NA bev applications while Firmenich has rights for foods and alc bevs . . . Essentia Water has become official water of Clif Bar CrossVegas, largest annual cyclo-cross race in US held in conjunction with Interbike Int'l Bike Expo in Las Vegas.

In recent pickup of NPR profile of yaupon tea category that focused on Tex-based co selling loose tea to high-end restaurants and retailers (BBI, Aug 24), BBI idly wondered when RTD versions might materialize. Didn't take long for attentive reader, consultant/banker Eric Skae of Bricktown Group, to make intro to brand just getting started out of Savannah, Ga. That's Asi Yaupon, from former grain trader named Lou Thomann who's become a high-spirited convert to indigenous plant with properties similar to yerba mate or guayusa. Among first words out of Lou's mouth in phone conversation a few days ago: "Yaupon's time has come. There's magic going on."

Lou, who particularly cites book from 1980s called The Black Drink, has done his research. Once served to first Ga gov Thomas Oglethorpe by local tribal chief, yaupon was used by Indians in purification rituals - lending Latin name "ilex vomitoria," which Thomann suspects was chosen by people protecting tea trade to put potential consumers off. But "it's everywhere in the South. Old timers know it" because during wars or other economically stressful times when coffee and tea would be expensive or in sort supply, folks went into the woods to pick yaupon instead. Thomann theorizes that history may have further stigmatized ingredient to point where it's been underappreciated in recent decades. He aims to do his share to change that. Like another Native American ritual, sweat lodges, he thinks it's due for a comeback as authentically American cousin to yerba mate.

So he's gone out regionally with Asi Yaupon RTD line packed in 14-oz glass bottles and offered in Traditional, Aronia Berry, Sweet Tea, Muscadine Grape and Honey Blossom & Mint varieties. Asi is Native American name for yaupon. Every ingredient - muscadine grapes, honey, aronia berry - is native to region except for cane sugar, which is domestically sourced. "Grown, picked and brewed in America," marketing materials assure consumers. "Only native source of caffeine in the US." (Strictly speaking, Charleston Tea Plantation grows tea in SC.) He's got crews of "hippies, Latinos and African Americans" picking plant on remote Barrier Islands, untouched by herbicides or pesticides, at rate by weight that he says works out to at least $15 per hour.

In the drinks, the yaupon leaves are claimed to contain 4 g of natural sugar, 22 "clean" calories (tho scientists are not entirely sure what), 30 mg of natural caffeine and 372 mg of antioxidants. Thomann has made it point not to vie with energy drinks, instead positioning drinks as rich antioxidant source. He notes that Bai-5 brand, positioned as "antioxidant infusion," contains 200 mg of antioxidants, barely half Asi's. His aronia berry sku is up at 428 mg.

Thomann is considering extensions into cold-pressed or carbonated versions. On flavor front, he's eyeing other native species, perhaps elderflower, which may pair well with ginseng. Asi also sells yaupon loose in canisters, as do small rivals in Tex and Fla, as noted in NPR story.

On biz front, Thomann has been hand-bottling items but recently reached agreement with his muscadine grape juice supplier to move production there, at new line that copacker will install to handle both cos' items. A cofounder, George Ryan, who'd studied Southeastern Native American history, is easing out, and Thomann has brought on retired Ernst & Young exec as partner. With access to capital from affluent angel investors, he's recruiting other staffers to handle gradual expansion throughout Southeast, in such pockets of progressive consumers as Asheville, Charlotte and Raleigh, NC. Jacksonville is in mix, and central and south Fla are next aboard in coming weeks. Brand has entered Whole Foods and Earth Fare stores and recently was accepted by 35 Kroger units in Southeast via Atlanta-based distributor Destiny Organics. Regional c-store operator Enmark has also taken flier on brand. UNFI has just picked up brand, too. He's signed on Fla-based Fitzgerald Marketing and Dallas-based Advantix to handle social media. He's worked to create buzz via such means as beer collaboration with local craft brewer, Service.

Despite exhaustive investigations under heavy congressional prompting, FDA hasn't found smoking gun that would force it to take decisive action to curtail presence of energy drinks. Today, tho, it said it's going after 5 distributors of pure powdered caffeine, ingredient that's "already resulted in the known deaths of 2 teenagers" back in 2014. Why the distinction? Agency cited fact that "the difference between a safe amount and a toxic dose of caffeine in these pure powdered products is very small. Furthermore, safe quantities of these products can be nearly impossible to measure accurately with common kitchen measuring tools," considering that single tablespoon of powdered caffeine is equivalent to 28 cups of regular coffee. "While consumers of caffeinated products such as coffee, tea and soda may be aware of caffeine's less serious effects - such as nervousness and tremors - they may not be aware that these pure powdered caffeine products are much more potent and can cause serious health effects, including rapid or dangerously erratic heartbeat, seizures and death. Vomiting, diarrhea, stupor and disorientation are also symptoms of caffeine toxicity," agency writes. The 5 distributors who received the letters do biz under names like Smartpowders, Purebulk and Bridge City Bulk.