Phoenix-based Inventure Food, which markets specialty and licensed food/bev brands, is heeding siren call of organics, announcing today that its licensed line of Jamba At-Home smoothie kits will intro certified-organic versions of the 2 top-selling flavors of 11-sku line, Strawberries Wild and Razzmatazz.  The new sku’s employ USDA-certified frozen berries and organic nonfat yogurt, going out at retail for $4.99-5.99 per 8-oz pack, each yielding two 8-oz smoothies.  The strawberry sku combines strawberries, organic nonfat yogurt and bananas, while Razzmatazz melds blueberries, raspberries, strawberries, bananas and organic nonfat yogurt.  “As American food demands change, we are seeing more organic options in grocery aisles,” explained Dan Hammer, Inventure’s svp/gm of frozen div.

It’s arguably been biggest bev misfire over past decade: quercetin-based energy play FRS went thru more than $100 mil in capital, array of hi-profile execs and exceptional degree of marketing ingenuity before retreating to modest, primarily online presence in hands of sister operation, quercetin-mfg Nutravail, amid broad expectation that brand was winding down its run.  But there may be new life for The FRS Co after all, as its founder, bev entrepreneur Tom Lines, appears to have quietly acquired brand a couple of weeks ago.

Operating as FRS International LLC, Lines apparently picked up trademarks and patents on the cheap on Jul 31, for just $1.5 mil in cash, tho investors retain one-third share of equity and thus chance to participate in any upside that eventually materializes, per letter dated Aug 4 from James Quandt, FRS chmn for past 8 years and managing partner at Thomas James Capital.  (Main investor over years has been Oak Investment Partners.)  Deal didn’t include Nutravail, based outside Washington DC, which changes its name from The FRS Co to Nutravail Holdings Corp.

In his letter, Quandt discusses retrenchment in 2014 after distribution alliance with PepsiCo fizzled, and notes that mandate to attain break-even status proved unattainable as brand performance continued to erode.  “After approaching a number of strategic buyers in the beverage and nutraceutical categories, we concluded there was no genuine interest.”  But Lines had remained passionate about potential of FRS brand and quercetin ingredient, Quandt noted, and “we are optimistic that Mr Lines can turn his tremendous enthusiasm for FRS into ultimate success for the brand.”  Meanwhile, Nutravail ceo Rick O’Neil is now shed of burden of supporting FRS, and can continue to move co in direction of extending its confectionery-style technology to manufacturing prescription drug products.

New batch of scanner data suggests that Big 3 soft drink cos are having good summer as brisk growth in noncarbs and energy drinks offsets softness in their traditional CSDs.  All-channel Nielsen data reported by Wells Fargo’s Bonnie Herzog displayed “sequential” improvement in CSDs, even as noncarbs and energy drinks enjoyed robust performance.  For Coca-Cola, $$ sales accelerated to 4.1% growth for 4 weeks ended Aug 8, vs 2.1% growth over 12 weeks as double-digit growth in juice, water and iced tea offset CSD declines.  On blue side, Pepsi’s $$ sales accelerated to 3.4% for 4 weeks from 1.6% over 12 weeks as softness in snacks and CSDs were offset by double-digit growth in waters, sports drinks (Gatorade) and shelf-stable juices.  And Dr Pepper Snapple Group maintained that pattern, accelerating its $$ sales to 3.8% over 4 weeks from 1.8% over 12 weeks, riding strong results in juices and teas (Snapple), tho unlike its peers its CSDs also scored solid gains (+2.4%).

Interestingly, all 3 big players scored gains in both $$ sales and pricing with their regular CSDs (collectively up 2.8% including private-label), but were undermined by weak performance on diets, off 3.8% as a segment.

Monster Regains Momentum in Robust Energy Category   Energy drink segment continues on robust growth pattern, rising 10.5% in $$, with Monster Energy apparently weathering transition to Coke distribution in half of country and outgrowing archrival Red Bull for 4-week period, rising 10.9% vs Austrian brand’s 9.1%.  (Its pricing edged off 0.7% while Red Bull’s rose 4.5%, however.)  And dark horse Rockstar, distributed primarily via PEP network, continued impressive recent performance, scoring 22.8% gain in $$ growth despite avg 1.2% price rise.

Inventive family behind VBlast cap-dispensed bevs and NY Spring Water is adding another prong to its business: new brand called BottlePort that focuses more on seeding the caps than complete bottle-and-cap systems, VBlast-style.  New brand is positioned as “eco-friendly water enhancer,” packed in nutrient-containing sports cap that fits most bottled water bottles.  The caps contain liquid reservoir that’s released into bottle by pressing top, and will be sold in 4-unit multipacks.  “Link up and drink up” is exhortation to users.  Consumers are encouraged to re-use bottle a few times before recycling, thereby cutting down on bottles in use.  New effort is being managed as separate biz out of West Palm Beach, Fla, by Luke Zakka, whose dad Richard, a character actor and serial entrepreneur, purchased upstate NY bottled water operation as platform for foray into bevs.

Tho details haven’t been finalized, general concept was described to BBI this week by younger Zakka, who said he’s begun pitching major chains with concept to intrigued reception so far.  He hopes to be shipping in early Sep, ahead of somewhat similar concept from PepsiCo called Drinkfinity that launched late last year in Brazil as “personal and portable hydration system” and may be headed to US in coming year.  Drinkfinity, launched out of Pepsi operation in artsy Sao Paolo neighborhood, employs squeezable pods and proprietary bottle that consumer retains, rather than recyclable PET bottles upon which BottlePort system is based.  But broader competitive set includes liquid flavor enhancers like Kraft’s MiO, home bev systems like SodaStream and Keurig, and of course RTD bevs.

Tho co will sell “starter kits” that include branded half-liter PET bottle, focus will be on tube-shaped 4-packs sold at retail and online, Zakka said.  Initial formulations will focus on flavorful hydration, with nutrients like electrolytes, antioxidants and vitamins, in formulas that are still being tweaked.  They’ll likely come in at zero calories, using natural sweetener and flavors and eschewing preservatives.

Zakka said technology is licensed exclusively for now from same unidentified co that provided initial caps for VBlast line 6 years ago, tho NY Spring subsequently segued to more reliable cap it had designed itself and has option of repeating move in future.  Caps are fabricated from polypropylene and small amount of rubber, rendering them “99% recyclable,” he said.  Presentation deck suggests retail SRP per 4-pack could come in as low as $2.49 at direct-shipped chains, tho co will experiment with DSD and other routes to market as it develops retail base.  Image of bottle and cap can be found at in-development Web site at btlprt.com.

Fruit grower Sunsweet has quietly undertaken significant realignment of its incubation unit in recent months, selling off its C2O canned coconut water brand and taking full operational control of its Ayala Herbal Water brand, which it will operate out of corporate hq in Yuba City, Calif, along with its other bev holding, Function Drinks, which saw last of its 3 founding partners exit in May.

Rumors had been out there for some time about change in ownership of C2O, which was launched out of Southern Calif by pair of youthful founders, Ron Greene and Adam Biggs, who’re still running co.  After undertaking series of experiments as it scaled up brand, including having Greene operate out of Sunsweet hq for a spell, co decided to accept fair offer made by outside buyer, Sunsweet initiative leader Tony Gerst acknowledged to BBI yesterday.  Tho he wouldn’t ID buyer, it’s understood to be Novamex, marketer of Jarritos and other Mexican food and bev brands based in El Paso, Tex.  No comment from Novamex on transaction.  Nor did Ron respond to query earlier this week seeking update on C2O.

Meanwhile, Sunsweet is stepping in to run day-to-day operations of Ayala, with its married founders, Ayala and Albert Cahana, now departing, Tony disclosed.  Brand will be run out of Sunsweet hq by co’s existing sales force and other staff jointly with Function Drinks, whose last founder, Dayton Miller, departed amicably in May for job at Boulder Food Group.  

Sunsweet had startled bev world a few years ago with investments in bev brands that didn’t necessarily serve as outlet for its vast acreage of fruit crops, as had been driving force in RTD entries offered by other growers, from Pom Wonderful to Califia Farms.  Tho there were other potential synergies with Sunsweet’s production plants, its acquired brands for most part continued with indie copackers, tho Ayala worked out of Sunsweet warehouse.  Tony told BBI that co remains in hunt for intriguing new bev plays, but is more focused in near term on integrating Ayala and Function. 

As for Novamex, co has long preferred to operate under radar.  It’s made some waves with move of powerful Jarritos soda brand into DSD houses, mainly Bud operations, on West Coast, where Mexican Americans are fertile base for iconic brand, and may expand initiative to other regions.  It’s also been testing glass-bottle aloe line called Alova in Tex and Southern Calif as potential way to move into higher-value natural and specialty space, where C2O might offer further leverage.  Novamex owner has made investments in areas considerably further afield from Mexican soda, including Stubb’s Barbecue Sauce co, which likes C2O continues to operate independently.

Continuing turmoil on revamping production side at Reed’s Inc cost it estimated $1.5-2 mil in lost sales and helped throw LA-based co back into the red, tarnishing a 2d qtr that saw continued surge in core Reed’s Ginger Brew brand.  Among qtr’s highlights, its Reed Ginger Brew surged 22% to point where it reps 46% of total sales (+45% in latest 4-week IRI scanner data).  Co’s kombucha sales rose 15%, boosted by private-label project for unidentified major grocer.  In addition, surging popularity of Moscow Mule cocktail is generating increased opportunities, both with beer houses in DSD network and, more recently, with liquor houses like Southern Wines who’re about to get mixable 7-oz bottle of Mule-worthy Stronger Ginger Brew as Reed’s hits hustings with new partner Pernod-Ricard to promote Absolut and Ginger Brew.  But margin-rich Virgil’s craft soda biz was soft, dogged by out-of-stocks and other issues.  Founder/ceo Chris Reed also disclosed co is in running for bag-in-box assignment from fast-casual restaurant that could be worth $40-50 mil. 

Despite production shortfall, net revenue climbed 9% to record $12.2 million.  But after edging into black last year, co scored operating loss of $491K for this qtr, reversing year-earlier profit of $816K.  Net loss of $691K reversed last year’s $633K profit.  For 6 mos, revenue rose 13% to $22.9 mil.  Operating loss of $563K reversed year-earlier profit of $783K.  Net loss widened to $962M from $413M a year earlier.  Gross profit margin decreased 3 points to 30%.

“The numbers for the quarter do not reflect the true accomplishments of the company,” argued ceo Reed.  “Our new facility was not ready during the quarter and we shorted sales by approximately $2 mil.  We would have posted a 25% increase instead of 9%.  The issue with making enough product should be solved shortly.”

The issues stemmed from efforts to add 2d copacker on East Coast, even as co has been revamping its own LA plant to add hi-speed line.  Delay in bringing new copacker online had ripple effect on freight costs (higher as co sent out less-than-full truckloads) and inventories (as it accumulated raw materials that haven’t been used yet).  Not least, “to get West Coast fully operational, we need to have our second East Coast plant up and running.”  In meantime, co is forced to ship more product from East Coast copacker to West Coast to meet demand there, up from past 500K cases to 600-700K range.  So, “it kind of snowballed a bit,” Reed allowed.  He currently is hoping to have 3d facility up next week, which might allow LA plant to come fully on board by Q4.

The qtr’s numbers and Reed’s commentary suggested several divergences in strategy over past year or so.  For starters, ceo pooh-poohed private-label biz that in qtr dropped 60% and represented just 2% of gross sales, positioning it as necessary cash-generating ploy in 08 recession, time when consumers weren’t in mood to buy premium items, but not so necessary at time consumers are embracing co’s branded all-natural sodas.  With co in scramble to keep up production of branded items, including 5-liter Virgil’s Soda kegs for warehouse club, the PL biz seems less important, tho co’s cred as supplier should stand it in good stead during next downturn, Chris suggested. 

And as once-touted kombucha launch struggles in face of Whole Foods’ reluctance to add another national brand and deep-pocketed pushes by rivals like KeVita and Health-Ade, Reed hasn’t hesitated to accommodate unidentified grocer’s request for private-label version (grouped for reporting purposes with branded kombucha, not PL biz, which would have amounted to 9% of sales counting the kombucha).  Addition of PL biz reversed 16% decline in branded kombucha, as co eased off on marketing and promos, into 15% gain.  “Our feeling on kombucha is we’re going to make money from kombucha one way or the other,” even if that means private label, Reed averred. 

Diversification Moves: Spirits Mixer, Fountain   Experiencing greater success both in restaurants and as on-premise cocktail mixer, co is determined “not to stay so grocery-centric as we have for 25 years,” ceo Reed vowed. 

On cocktail side, relationship with Pernod-Ricard started as a “one-off” but now is formal alliance that has booze co’s 1,250 sales people behind Absolut Vodka pushing Reed’s matchup, including via special pack containing bottle of vodka, Reed’s Ginger Brew and Mule recipe.  The new 7-oz bottle has been designed as less-wasteful mixer for liquor trade.  Down road, partners hope to weave in other liqueurs and times of year, Reed said.

The fast-casual contract is by no means in the bag, but Reed rates his co’s choices as excellent.  He said approach was made 9 mos ago by unidentified large fast-casual chain for natural fountain version of Reed items, which offer benefit of eschewing sodium benzoate and HFCS, containing higher juice content and having potential for functional additions.  That would replace existing offerings that essentially provide “high-fructose corn syrup/sodium benzoate cocktail after what’s touted as a healthy meal.”  Discussion started out with co pitching draft version “and ended up being a fountain discussion.”  So co has worked with major fountain equipment mfrs to devise system that’s “more sexy, in line with the draft beer tap handle experience,” while offering economics that might save client $100 mil per year.  “We believe we’re the #1 contender for $40-50M new biz,” which would go to trial in 3d qtr. 

Consider this a big week for small caffeinated water sector:  Hint Essence Water has thrown its hat into ring, even as longstanding entrant Avitae has landed its first major national retail account, Safeway. 

In its decade or so building unsweetened essence water brand, SF-based Hint has been spare in adding extensions, with lightly carbonated Hint Fizz the only permanent addition to line so far.  Now it’s added another fillip: a caffeinated entry with more complex flavor range.  Hint Kick offers 60 mg of naturally sourced caffeine, in trio of flavors: Apple Pear, Lemon Cayenne and Black Raspberry.  The flavor combos, a departure from single note struck in core Hint flavors like Peach and Watermelon, move brand in direction of more overtly culinary essence waters like Ayala.

Meanwhile, Ohio-based Avitae has won national distribution in Safeway, first such win for brand that’s been restaging under ceo Norm Snyder, at time it’s finally acceded to retailers’ requests to offer flavored as well as plain versions.  Safeway had previously carried unflavored 90 and 125 mg versions in its Eastern div, which is now picking up new Pomegranate Açai, Tangerine, Blackberry and Strawberry Guava flavors.  In addition, it’s picking up same 2 caffeine levels in unflavored form for 1,327 new locations across its Northern and Southern Calif, Portland (Ore), Seattle, Houston, Intermountain and Southwest divisions, in banners like Safeway, Vons, Randall’s and Tom Thumb.

Safeway win comes as brand has added such other chains as Harmons Neighborhood Grocer, Raley’s and Save Mart, which all opted for 90 mg level in both plain and flavored versions.  Also aboard is fitness chain 24 Hour Fitness, for 60 units across Calif, in both 90 and 135 mg versions, including some of new flavors.  None of retailers has opted for lowest-caffeine option, 45 mg.  Half-liter PET bottle of Avitae generally commands $1.49.

After running investigative article on Coca-Cola’s donations to nonprofit Global Energy Balance Network, which promotes exercise as key way to cut calories over calorie intake, NY Times doubled down with critical editorial today.  “Coke Tries to Sugarcoat the Truth on Calories,” paper headlined.  “Coke and other beverage makers have long funneled money to industry-leading scientists and formed innocent-sounding groups to spread the message that sugary sodas have no deleterious effect on health and should not be taxed or regulated,” wrote Times. It goes on to criticize soda industry for using “a variety of tactics to spread its message,” including providing convention speakers, funding studies of “like-minded scientists” and “deploying armies of lobbyists” to defeat legislative action.  “In a particularly brazen move, Coca-Cola paid dietitians to write blog posts or articles in February suggesting that mini-can Coke would make a good snack food,” added Times.  “The evidence continues to mount that sugar-sweetened drinks are a major contributor to obesity, heart disease and diabetes,” while exercise is only a “modest” contributor to weight loss, declared paper. 

Coca-Cola fostered flurry of speculation on co’s power dynamics with surprise elevation of James Quincey to coo role that hadn’t been occupied since Muhtar Kent ascended from there to ceo in 08.  As prexy/ceo, Quincey, who at age 50 is a 19-year vet of co, will have as his direct reports all region prexies, including N Amer chief Sandy Douglas, as well as bottling investments and supply chain chief Irial Finan, global biz services chief Harry Anderson and pair of execs managing KO’s strategic investment partnerships, Deryck van Rensburg and Doug Jackson.  Meanwhile, evp Ahmet Bozer, prexy of Coca-Cola Int’l, will retire next Mar after 25 years at co.  Ahmet, 55 years old, had been regarded by some as potential successor to Kent, along with Steve Cahillane, with whom he once shared 2d mgmt tier at KO.  Cahillane left during reorg in 2013.  As prexy of Europe Group since 2013, Quincey deserves credit for recently announced merger of Coca-Cola Enterprises, Coca-Cola Iberian Partners and Coca-Cola’s German unit to form Coca-Cola European Partners, which will be largest indie Coke bottler by sales.  At his various stops within KO system, Quincey also showed knack for spotting and acquiring promising noncarb brands, including Innocent juice line in UK and Jugos del Valle in Mexico.  “Given Quincey's global background and significant deal experience, we can't help but wonder if KO will accelerate growth through stepped-up acquisitions,” wrote Wells Fargo’s Bonnie Herzog. . . Dean Foods has reached to once-prominent soda exec to serve as new chmn in wake of abrupt departure from post of Tom Davis.  Jim Turner, a DEAN board member since 97, once operated largest privately held indie bottler in US, Turner Beverage Group, and then served as prexy/ceo of Dr Pepper/7 Up Bottling Group, before its acquisition by what is today Dr Pepper Snapple Group.  He’s currently principal of investment vehicle JLT Beverages LP and owner/ceo of JLT Automotive, as well part of ownership group of Texas Rangers baseball team.  Tho abrupt departure of Davis came as shock to Wall Street, it has since been reported by Wall St Jnl that he may be target of SEC probe into insider trading involving DEAN’s spinoff of its WhiteWave div, first announced in 2012 . . . Jim Hinkle, 10-year vet of ingredient house Tate & Lyle, has segued to N Amer sales dir job at Kanbo Int’l, where he’ll work to build acceptance of co’s sucralose, which is produced in Dongying City, China.

Coffee-fruit-based KonaRed has recruited Pom Wonderful vet Kyle Redfield to serve as prexy/coo, with responsibility for managing sales, new product development, production, distribution and HR.  He reports to founder/ceo Shaun Roberts.  At Pom, Redfield has served as gm, launching industrial biz 2 years ago that pushes extracts toward other mfrs . . . Jim Kayser, long a mainstay on sales team behind New Age Beverage’s Xingtea canned tea line, has segued to nutrition marketer E-Hydrate as chief sales officer.  Jim had served as vp for Eastern US at Denver-based Xingtea, and earlier in career held varied spots like sales exec at Anheuser-Busch and gm at Atlanta’s General Wholesale Beer Co.