Up to 15 FTC agents raided Vemma Nutrition Co's offices in Tempe, Ariz, on Mon to seize co records while a fed judge froze assets and temporarily halted sales of Verve energy drink, reported NY Post. Vemma has long been criticized for its biz model of getting mainly college-age salespeople to pay co to get products to sell and attract others sellers to do same. "Rather than focusing on selling products, Vemma used false promises of high income potential to convince consumers to pay money to join their organization," said Jessica Rich, dir of FTC's Bureau of Consumer Protection. "We are also alleging that Vemma is an illegal pyramid scheme." Vemma asks salespeople for initial investment of $500-600, and another $150 a month to purchase inventory in order "to remain eligible for bonuses," said FTC. Agency claimed it received 200 complaints about Vemma biz practices. "Don't call us a fricking pyramid scheme because we're not," founder BK Boreyko, told Post 2 yrs back when paper first ran article on co's setup. Besides bank accounts, all assets including inventory stocked in warehouses around world are frozen pending hearing scheduled for Sep 3.

Cornell-Univ of Iowa study of soda tax passed in Berkeley, Calif, offers sobering conclusion to those who're hopeful of such measures as policy solution to obesity crisis: it's fizzled so far. Partly out of fear that passing on price rise to consumers would drive them outside city to make purchases, retailers have raised their prices by less than half the penny per oz collected by new tax, and even less on Coke and Pepsi products.

The findings, reported in Natl Bureau of Economic Research paper, found that for Coke and Pepsi, only 22% of tax was passed on to consumers, thereby undermining any effect tax would have in lowering consumption. "In light of the predictions of the proponents of the tax, as well as in light of the previous research, we expected to see the tax fully passed through to consumers," said John Cawley, prof of policy analysis and management and of economics in Cornell's College of Human Ecology. "In contrast, we find that less than half, and in some cases, only a quarter of it is. This is important because the point of the tax was to make sugar-sweetened beverages more expensive so consumers would buy, and drink, less of them." He hypothesized that "concerns about cross-border shopping could contribute to a low pass-through of the tax."

Cawley and co-author David Frisvold of Univ of Iowa canvassed nearly all Berkeley groceries, drugstores, c-stores and gas stations and recorded prices for wide variety of products, per account of study in Cornell Chronicle. They then matched that against data they'd collected from comparable sample across bay in SF, where similar ballot initiative had failed. The researchers compared price changes for regular and diet drinks - which were untaxed - in both cities in Dec (before tax went into effect) and in June (after).

Authors argue that, even if that part of plan hasn't worked out, program may still be justified on economic grounds because added taxes, projected at $1.2 mil in first year, go into Berkeley general fund and are partly earmarked for healthy living programs, thereby imposing cost of programs on those who are raising those costs by drinking sodas, called "externality" in economic parlance. "There is an economic rationale for taxes when consumption of the good imposes negative externalities, and obesity costs taxpayers billions each year in medical care costs in the US," Cawley wrote. "A sugar-sweetened beverage tax is a very narrow approach to internalizing the external costs of obesity, because there are many other food and drink items that are also energy dense and lack nutritional value. But to the extent such a tax helps internalize the external costs, there is an economic rationale for it."

CSPI Tallies Lobbying Against Policy Initiatives on Bevs In wake of investigative piece in NY Times that left bit of egg on Coca-Cola's face for duplicitous tactics in policy-influencing efforts, Center for Science in Public Interest has tallied available public info to conclude that Coke, PepsiCo and American Beverage Assn "have spent at least $106 mil to defeat public health initiatives at the federal, state, and local levels since 2009." That was amount of funds mustered to combat proposals aimed at reducing sugar consumption, such as soda taxes, tho targets also included school nutrition and Supplemental Nutrition Assistance Program. Still, CSPI argues that's conservative figure, since 10 of 23 jurisdictions that have considered anti-sugar policies don't disclose campaign finance and lobbying expenses. Among some of bigger commitments, soda biz spent $16.7 mil in Wash State in successful effort to get voters to reject soda tax of 2 cents per 12-oz serving passed by legislature. In NY State, from 2009 to 2015, bev biz spent $15.2 mil to defeat such measures as proposed statewide soda tax and effort by NYC Mayor Mike Bloomberg to cap size of restaurant soda servings at 16 oz. Another $2.4 mil from 2013 to 2015 went to unsuccessful opposition to proposed soda tax in Berkeley, Calif. Allies were more successful with the $9.2 mil they spent in 2014 to oppose similar tax in SF.

National Public Radio offered interesting take on "America's Forgotten Native 'Tea' Plant" recently. Plant in question is evergreen holly called yaupon, which a Tex cattle rancher named JennaDee Detro noticed to have handily weathered a severe drought in 2011, even as trees around it withered. Her investigations, per NPR report by tea expert Murray Carpenter, yielded revelation that caffeine-containing plant had enjoyed illustrious history in Native American purification rituals and was exported to Europe by early settlers before being crowded out by real Camellia sinensis. (Yaupon is technically not a tea but an herbal infusion, like other tea alternatives like rooibos.) After painstakingly figuring out lost art of processing yaupon, Detro teamed with her sister Abianne Falla to start selling Cat Spring Yaupon Tea (named for cattle ranch) at farmers markets 2 years ago, offering green and roasted black varieties. Soon enough, line was embraced by cutting-edge Austin restaurants like Dai Due and Odd Duck with focus on locally sourced food. Odd Duck mgr Jason James told NPR that yaupon's taste profile is close to black tea, but its lower tannin content makes it easier to avoid oversteeping. By now Detro and Falla are selling to customers in 36 states, and have prompted forays by rival companies in Georgia and Fla, suggesting ingredient may be due for comeback. No word that we've heard yet on RTD entries but can they be far behind? Story can be found here.

Count the quirky, boutique sparkling brand Fentimans among those rushing into the alcoholic soda realm ignited by Pabst's Not Your Father's Root Beer: at recent Fancy Food Show in NY, Vancouver-based marketer debuted Hollows & Fentimans All Natural Alcoholic Ginger Beer. Glass-bottle entry employs pulverized Chinese root ginger and botanical ingredients that are fermented for 2 weeks, what co styles as "slow fermentation and botanical brewing method." Resulting 4% ABV product is contrast to 7-day process for core NA line, which yields 2% ABV liquid that's diluted down to compliance. (In what could strike some craft brewers as curious view, marketing materials assure, "There's no wine, nuts, hops, malts or any other artificial nonsense." And because item isn't malt-based, it incurs higher excise tax.) Hollows was added to brand name (using married name of one of Thomas Fentiman's 4 daughters) to further enhance differentiation vs NA line, explained brand manager Samantha James, daughter of owner/ceo Craig James. It's quickly gotten picked up in 15 states, including all Whole Foods stores in those states as well as Trader Joe's, Gelsons and New Sun chains. It generally goes out at $4.99-5.99 per 4-pack ($4.99 at Trader Joe's).

Meanwhile, like other players in ginger realm, Fentimans is racing to capitalize on craze for Moscow Mule and Dark & Stormy cocktails. It's developing The Bartender's Ginger Beer, with recipe that uses extra ginger and includes muddled lime, and seeking to get new entry shelved in mixer set at retail. Among others, Reed's Inc is claiming strong success with extra-strong ginger beer it intro'd to work cocktail occasions.

Back at helm of FRS, entrepreneur Tom Lines offered some details of direction he plans to take with quercetin-based energy/endurance brand, opting for new brand name and reformulation at retail and far greater emphasis on clinically backed support for core ingredient's efficacy, while flanking it with 2 other brands.

In conversation this morning, Boston-based entrepreneur, who prospered earlier in his career from energy brands like Red Devil and Mad Croc and vodka brands such as Cristalnaya and Ursus, readily acknowledged that reset will be "no walk in the park," and said he's planning to build slowly this time. But he noted that quercetin science has continued to evolve, as have consumers in their quest for functional items with credible claims. That makes timing better now than a decade ago, he believes. Quercetin is natural antioxidant found in fruits like blueberries and apples that numerous studies have shown to work at cellular level to produce and sustain energy levels, mimicking effects of exercise by enhancing production of cells' mitochondria. That intriguing benefit, along with monumental investment made by investors behind FRS including respected entities like Oak Investment Partners, made brand's activities an object of broad fascination over past decade before it sputtered out and was quietly folded into sister nutraceutical mfg operation, Nutravail, which maintained it as mainly an online item.

As reported last week (BBI, Aug 18), Lines paid $1.5 mil to obtain control of trademarks and patents, with other investors retaining one-third equity stake so they have chance to participate in future upside. Those were terms outlined in letter to shareholders by chmn James Quandt. But Tom told BBI that letter doesn't tell full story. He said he's adding 2 brands to mix, one of them backed by great science and solid resources, tho he's not ready to ID them yet. (One of those brands is "classic DSD play," he promised.) And Lines said he's committed significant amount of funding to move project forward. He said he'd previously invested $40 mil in FRS, $28.6 mil in cash, out of total in range of $150 mil. He said he's also got strong mgmt team in place whom he'll be ready to intro within weeks.

Given massive investment that yielded little brand awareness or retail velocity, Lines readily allows that FRS was "almost a laughingstock" in bev-marketing annals. But he's viewing it as new brand deserving of new start now, due for a new name at retail, if not online, where brand performs better. "The only place where the name works is direct-to-consumer" - probably because that channel affords the time to fully explain proposition to shoppers. At a 7-Eleven shelf, that proved different story, he said. Brand is being reformulated, tho it will retain RTD among its formats, and given more appealing package. Lines said he doesn't buy commonly held notion that he needs to take zero-calorie route to win over consumers.

In conversation Lines pointed to 3 issues he believes undermined FRS' chances of success, tho as non-executive board member he claims to have had limited influence in discussions surrounding them. One was name itself: FRS stands for "free radical scavenger," which proved confusing to consumers even as the initials themselves were not memorable. Biz had originally started as New Sun Nutrition, Tom reminded, and while that name was abandoned early on, he's embarked on quest to find better name.

Another lapse: co too quickly abandoned focus on quercetin's properties and benefits in favor of athlete endorsers and lifestyle pitches. (As it happened, key endorsers Lance Armstrong and Tim Tebow proved to be poorly chosen.) Tho the marketing was lavishly funded (to point where FRS at one time was by far biggest Internet marketer), $2-3 mil spent on comparative studies vs other brands might have proved wiser investment, Tom believes. Telling efficacy story more completely will be major focus going forward, he vows.

Lines also feels co didn't always treat its trade partners fairly - particularly DSD houses that were summarily abandoned in favor of national Pepsi alliance negotiated by prior ceo. (Since Pepsi's bottling system is committed to Rockstar Energy, FRS took calculated risk in moving into Tropicana refrigerated system, with mediocre results that resulted in partners going their separate ways a year and a half later, even as alienated DSD distributors were reluctant to return to brand.) That's not his style of doing biz, Lines assured.

As bev consultancies come and go, often serving as temporary resting spot for execs in hunt for next staff gig, principals of Cascadia Managing Brands have proved durable presence from their suburban NY base, serving as incubation or sales for scores of fledgling bev brands looking to attain some scale. Along way, partners acknowledge they've had to refine own vision of how to operate in fast-evolving biz, adopting more strategic style and broadening their view of DSD distribution. What is their current operating style, and where do they see biz going? BBI recently visited their offices in Ramsey, NJ, to sit down with principals Bill Sipper and Bob Corsaro for update. (Third partner, Bob Sipper, was called away to client biz at last minute.)

CMB currently maintains client roster of 18, a dozen of those focused strictly on sales development. For others role can be far broader, spanning development, positioning, marketing and logistics. In interesting twist, they'll host staffers for client cos, handling recruitment, insurance and other benefits for staffers who're on payroll of client co. (To date those include 3 staffers involved in sales, marketing and social media respectively.) Consultant is also retained by several major bevcos that it won't identify for strategic advice, "now that M&A has replaced R&D," as Sipper put it. The one area it doesn't tread is fundraising. CMB's client roster includes CideRoad switchel, Mudra Mushroom, VivaZen, Caliwater Cactus Water, South Africa's Beauty Water Q10 and Detox Water. Usually it seeks sliver of equity in brand. Past clients have included familiar names like Zico and Hint Water, as well as now-defunct Real Beanz, fortified RTD coffee that CMB's partners number among clients they most hated to see throw in towel because of strong product proposition and straightforward operating style. (It's not out of question that brand will be resurrected under new owner.)

Obviously, it's incubation clients that offer greatest scope for CMB's array of skills. "Our business used to be, 'Here's my product, go sell it,'" recalled Sipper. Now clients often come with idea for product and CMB does branding, positioning and marketing plan, tapping into outside allies as needed. These include formulation partner MetaBrand (3 projects currently); flavor houses Allen Flavors and Blue Pacific; ad agencies such as Arena Partners in Bklyn and range of designers. Unlike some consultants, CMB is adamant about not taking cut of action for themselves in such referrals. If client has ongoing relationship with agency, partners are happy to work with it, tho they try to insist on maintaining trade-PR function.

Good example of CMB's operating style is its contrasting efforts behind pair of incubation clients, Feel Good juice and Alpha Wolf energy/focus brand. Feel Good is product of well-heeled parent, Wow! Nutrition, that's major player in Brazil, with top juice, artificial sweetener and soymilk brands there. In home market, Sao Paolo-based co goes out entirely in cans and brick packs, formats that CMB's principals suspected would be non-starters in US. So they took Brazilian client on US tour where she was wowed by ubiquity and appeal of PET bottles and committed to investing in molds to enter plastic realm. In fact, co has moved much of its product in Brazil to plastic bottles too. Launch is imminent, with more details available soon.

Relationship with young entrepreneur behind Alpha Wolf started in similar fashion: he came to CMB with item packed in 12-oz can that consultants felt would prove impossible to distinguish vs legion of canned energy plays. So they turned down biz, Bill said. As with Wow!, entrepreneur proved willing to tinker with concept, and he allowed advisors to drop carbonation and put Alpha Wolf into PET bottle, improving flavor in process. CMB marketing staffer Briana Wolf came up with slogan "Drink. Focus. Conquer. Repeat." Where Alpha Wolf diverged from Brazilians, tho, was in having tight budget. So in moving on to design label and marketing graphics, CMB eschewed full-service design agency, instead posting contest online that offers $1,500 to winner. Effort has yielded 300 submissions so far, quite a few of them credible contenders, BBI perusal suggests.

Sippers were to bev biz born, their dad Fred operating early indie NA house, Mootch & Muck, distributing over 100K cases of Evian and tallying $18 mil in sales at peak. Bob Sipper and Bob Corsaro, a former sales exec at Snapple, have been consulting partners for 15 years now; Bill teamed up with them 5 years ago, after career that segued from consulting to client-side jobs at brands like Naked Juice, Nantucket Nectars, Fresh Samantha and New Leaf Tea.

Amid shifting distribution and retail landscape, those decades of experience can be double-edged sword. Like other long-time consultants, CMB has sometimes been criticized by former clients for being too wedded to traditional DSD system that's become spottier and less effective in recent years, as indie tier has withered and non-conventional channels like natural food stores, cross fit gyms and yoga parlors have come to greater prominence as outlets for cutting-edge brands. But Sipper and Corsaro argue that they've evolved, too, both in taking broader view of distribution and in adopting more strategically driven orientation.

On wholesale side, "we seek distributors you normally wouldn't look for, ones you would have pooh-poohed in the past," Sipper said. In key metros like NY, LA and Baltimore/DC, that includes thriving but often-abused tier of Korean distributors, who're given verbal promise of exclusivity and modest per-case buyout for time that successful brand may move to more mainstream, established house. Since those are better terms than they usually receive from clients, it locks in commitment, Sipper believes. CMB has also been accumulating knowledge of hundreds of small distributors in commodities ranging from candy to Bic lighters who have ability to sell bevs. And if one house in given market insists on minimum drop size, CMB may tier it with another house to provide better coverage. "From a traditional beverage perspective, these are not good distributors," Sipper said of some of new options. "But who is these days?" Even in established DSD houses, he added, "essentially, you're building the brand yourself these days." CMB will happily enter those that are available and committed, "but we won't try to fit a round peg in a square hole," he vowed. (Fred Sipper has shown similar eclecticism since exiting Mootch & Muck: he went on to set up Beverage Universe online fulfillment operation at Mitchell's NY, piggybacking infrastructure of major newspaper/mag delivery service.)

In addition, while CMB partners make no secret that they enjoy tactical side of biz, they've learned to adopt more strategic view in recent years, Bill said. Some like Mudra Mushroom are viewed as strictly a natural food play, while others like VivaZen work hard to succeed in c-stores. Caliwater built solid base in West Coast grocers and Fresh Market chain before targeting distribution in Northeast; along way, opportunity emerged to develop overseas biz and, somewhat to CMB's surprise, brand has proved successful so far in Japan, New Zealand and Australia.

Throughout, consultants insist they make best effort to stretch their clients' hard-won dollars. Offered an inexpensive opportunity recently to decorate a few trucks operated by Korean distributor in NY named Abraham Foods, partners quickly polled their client base and found interest among 3 cos. Abraham proved not to have enough vehicles available, but a sibling distributor did. By time dust settled, Beauty Water had taken 4 trucks, Detox Water another 4 and CideRoad one. Efforts like these "are not about winning Obie awards but selling more cases," Sipper is quick to avow.

Celsius Holdings said its retail customers Sprouts Farmers Markets and GNC have added its Celsius Sparkling Cola to their flavor lineups . . . Mix1 Life said its RTD protein line has entered Lucky Supermarkets in Northern Calif . . . Santa Monica, Calif-based Wanderport Corp, which offers hemp-based items such as CannaEnergy, DuBe energy shots and Cannabissimo Coffee, has set up an online store to reach potential consumers in areas where it hasn't yet established a retail presence, at time it's been focusing sales and marketing efforts on major metros to improve velocities. Wanderport ceo Eric Brown said co hopes to intro its own brands by Q4, too

Sweet Leaf Tea cofounder Clayton Christopher has joined slim ranks of bev entrepreneurs who've enjoyed multiple successful exits, with sale of his Deep Eddy Vodka to distiller Heaven Hill Brands of Bardstown, Ky. Austin-based entrepreneur had segued to vodka segment in 2010 shortly after selling Sweet Leaf to Nestle Waters North America, teaming up with vodka vet Chad Auler (Savvy Vodka) and growing brand to 500K+ cases today. (An earlier vodka growth star, Tito's Handmade, also hailed from Austin.) Meanwhile, Clayton's partner at Sweet Leaf, David Smith, is embarked on his own quest to repeat first-time success, via canned cold-brewed coffee line High Brew.

Reacting to controversy stoked by NY Times expose of its funding of front group touting exercise over calorie intake as solution to obesity problem, Coca-Cola ceo Muhtar Kent promised greater transparency in co's funding of scientific research. He pledged to publish online a list of health and well-being partnerships and research activities KO has funded in past 5 years and update it every 6 months. Writing in editorial in Wall St Jnl, he wrote: "I am disappointed that some actions we have taken to fund scientific research and health and well-being programs have served only to create more confusion and mistrust. I know our company can do a better job engaging both the public health and scientific communities - and we will" . . . Tho Panera Bread project to eliminate HFCS-containing bevs from its menus poses potential threat to key PepsiCo brands like Diet Pepsi and Sierra Mist, co isn't out of mix: PEP rep notes that fast-casual chain has been testing co's new natural fountain offering, Stubborn Soda, at Panera store in Lutz, Fla. Stubborn handily meets Panera's new ingredient criteria, employing Fair Trade cane sugar and natural flavors, in culinary combos like Black Cherry with Tarragon, Classic Root Beer, Lemon Berry Acai and Agave Vanilla cream . . . Inevitable backlash has struck at reformulated aspartame-free Diet Pepsi, with media outlets like Fortune and NY Post chronicling outraged comments on social media from betrayed users. "Thanks for helping me break my Diet Pepsi habit," is among tamer examples. So far, PepsiCo is unbowed, as Post reported. "Social media tends to skew more negative," a PEP rep reminded tabloid, adding that co took years "to make sure we got this right" and only released reformulation after more than three-quarters of respondents to numerous surveys rated it best diet cola on market.

Talking Rain Beverage and former Seattle Seahawks cornerback Marcus Trufant both took leaps into unknown this week - Trufant leaping out of Sparkling Ice-branded plane at team's training center, and Talking Rain in signing up as team's exclusive sparkling water sponsor via its Sparkling Ice and Talking Rain brands. In Trufant's case, hometown fave landed without incident at Virginia Mason Athletic Center, where 2,600 attendees were regaled with various swag including new cobranded items marking collaboration between locally based Ice, from Preston suburb, and Seahawks.

In case of Ice, sponsorship takes it into territory that proved treacherous a few years back for another local bev brand, Jones Soda, after spending demands of deal distorted co's marketing priorities and undermined its finances. But Talking Rain commands considerably more financial heft and mainstream acceptance, and prexy/ceo Kevin Klock termed alliance "a natural fit," adding: "As a company with strong ties to our community, the opportunity to collaborate is truly an exciting endeavor. We're honored to be partnered with such a hardworking and passionate team on and off the field." Terms weren't disclosed.

Among activation elements of tie, Sparkling Ice is launching custom variety 12-pack with Seahawks branding, and Talking Rain Sparkling Mountain Spring Water will flag Seahawks tie on its Natural and Lemon Lime flavors. Both should be on-shelf at Wash State retailers by Aug 31. The 2 brands also will participate in text-to-win promos with 710-AM ESPN Seattle's "Seahawks Weekly" radio show, offering rewards such as pair of tix to every home game at CenturyLink Field during upcoming season and "Tailgate Essentials Packs" that include Sparkling Ice 12-pack, a $50 gift card and Ice/Seahawks branded swag.