At time ceo greed is getting a lot of media attention - if not much action at board level - Fortune mag has deemed Dr Pepper Snapple Group's Larry Young one of top 5 most underrated ceo's, a measure of stock performance vs compensation. Larry, who just collected Lifetime Achievement Award at Beverage Forum in Chicago, helped DPS generate total shareholder return of 51% in 2014, outperforming Coca-Cola and PepsiCo, on net income growth of 13%, Fortune calculated. Co returned 16.5% on capital. Yet Young's pay rose modest 6.8% to $9.6 mil. By contrast, "Coke saw returns in 2014 of less than 6% and Pepsi of just over 17%," Fortune notes. "None of the controversy surrounding Coke's pay policy here," mag pointedly notes. "Shareholder support for the company's pay policies rose from 89% in 2013 to 95% in 2014." Other ceo's who made Fortune's list were: Southwest Airlines' Gary Kelly, Alaska Air's Bradley Tilden, Avis Budget's Ronald Nelson and CDW's Thomas Richards . . . Sheila Stanziale, who built career at big food/bevcos like Nabisco, General Mills, Kraft, PepsiCo and Diageo-Guinness before seguing to more entrepreneurial Hain Celestial, has signed on as ceo and board member of Mighty Leaf Tea. Mighty Leaf operates as unit of Peet's Coffee and its controlling investor, investment shop Next World Group; Peet's ceo Dave Burwick is an ex-PepsiCo guy himself. Move comes as Mighty Leaf is moving its hot, iced and bagged tea products into Peet's stores, noted Food Business News.  

Young entrepreneur operating as Koa Organic Beverages has developed process of isolating fruit components that yields juice that maintains all the nutritional benefits of the fruit without any sugar or calories, process that's at core of co's own brand, Koa, but also harbors potential of being adopted by bigger cos. It amounts to more radical form of innovation than much of what we see in bevs these days, but with equally large challenge in conveying concept to consumers and scaling production.

Founder and former finance exec Adam Louras, 34, was inspired to investigate bev landscape in 2010 when he developed Type 2 diabetes, which he attributes to frenetic lifestyle that found him living on bottled smoothies and nutrition bars. His cofounders for initial phase were fellow students at Northwestern's Kellogg School of Mgmt, outside Chicago, who moved on after graduation but retain equity stake in what was initially called Eden Organic Water. Louras had searched stores for bev that was 100% natural, brought meaningful functionality and carried no sugar or synthetic sugars, but couldn't find any. At same time he found himself talking to classmate from fruit-growing family in Mexico that had devised separation process, akin to that used on dairy side to produce skim milk, that could break down an orange into 32 constituent parts, a concept Louras dubbed "olakino," using Hawaiian phrase. Relocated to Dallas, Louras recruited local entrepreneur Jonathan Rosenberg as investor and partner in 2011 for coupla years before he stepped back to mind his other ventures. (He remains board member.) Co has cumulatively raised $2 mil so far, including round that just closed a month ago, and is looking to close another round by end of year or early 2016, Louras told BBI.

Louras initially focused on making olakino in sustainable way; because he refuses to employ chemicals in process, that ended up being lower-tech (but still proprietary) approach. Plan to import olakino from Mexico, where process originated, was deemed too risky because of vagaries of bringing perishable food across int'l border. So Louras and Rosenberg drove length of Calif's Central Valley 8 times, by Louras' count, until they were able to sign 4 fruit processors as suppliers. Copackers were leery of handling item because of contamination risk from their other products, but co caught a break when Famous Ramona Water, a private-label water supplier to Target and Walmart in Ramona, Calif, offered to dedicate to Koa a production line it had just shut down. Still, in violation of everything he was taught in biz school, Louras jokes, he's had to go out and build and operate his own equipment to manage proprietary separation process.

Koa entry is intended as much to herald process' possibilities - in realms that can stretch from hair cream to use as base for brewing coffee or tea - as to be successful own brand. It's blend of 12 different fruits and veggies packed in 12.7-oz biodegradable PET bottle, priced at $4.99. Brand targets yoga moms as most receptive, tho other items will later be aimed at other demos.

Working with sales dir Wes Wells, brought on in early 2014, co quickly landed Four Seasons/Ritz-Carlton hotel/spa group as customer; its insistence on plastic resolved glass-vs-plastic packaging dilemma, Louras said. Thanks to a Wells connection, Dean & DeLuca committed to launch in all its stores, with DSD house Gourmet Guru helping to build NY market, where retailer operates 5 stores. Guru has gotten brand into Fairway and other stores so far. Koa's main retail partner is HEB's Central Market chain in Tex, where it's #2 functional brand, but that means no presence yet at Whole Foods, which often initially spurns brands found at its crosstown rival. Gelson's chain in Calif is coming aboard next month. Distribution is via mix of small specialty and DSD houses and direct delivery. Still, Louras insists he'll take his time, aiming for no more than 250 points of sale by end of year as team refines product proposition and communication strategy. One obvious hurdle: since item looks like water, it takes some explaining to convey that it's really a complete fruit, minus the sugar, and worth the on-shelf price of $5. "It doesn't work unassisted," Adam acknowledged. Brand info at DrinkKoa.com.  

Idea of chocolate milk as ideal recovery bev is receiving strong support from college bastion of both athletics and dairy farming: Cornell Univ. Program lately garnering press attention from likes of NY Times and CNBC puts spotlight on former All American wrestler Clint Wattenberg, school's coordinator of sports nutrition, who was brought in Jul 2013. Seeing that school's athletes weren't adequately fueling their bodies during day, he reached out to Jason Huck, then dir of on-campus dairy at land-grant university situated in heart of NY's dairy farming region, and result has been stream of steadily improving protein recovery drinks, culminating in a few months with entry called Big Red Refuel. "The composition of low-fat chocolate milk is probably the gold standard for a recovery beverage," Wattenberg told Times. "We don't have to second-guess where this supplement is coming from." Using software program to develop conceptual formula that would fall within NCAA nutrition parameters, Huck and Wattenberg have come up with "smooth-tasting drink" with 18-day shelf life, and 16 g of protein and 230 calories per 8-oz serving," vs similar serving of low-fat chocolate milk that has 8 g of protein and 160 calories. Story notes that Wattenberg's research has concluded that 20 g of protein is optimal for muscle recovery for athlete weighing 150-160 pounds, before excess protein is stored as body fat.


Times story notes in passing that quite a few other schools with creameries have been devising recovery entries: Power Pack at NC State; a blend of yogurt, powdered milk, fruit juice and fresh fruit at Brigham Young; protein line called Bucky Fuel at Wisconsin, a protein line called Aclr8 at Penn State. No word in story on any efforts to commercialize Big Red Refuel or any of these other brands more broadly than on campus, tho other schools have already been asking Cornell about availability of Big Red Refuel.  

The earnings-heavy past week, which saw Coca-Cola, PepsiCo and Dr Pepper Snapple Group all report over 2-day period, has left RBC's Nik Modi sanguine that year is off to good start, in a way that would seem to have favorable implications for bevcos across the board. Big 3 soft drink players all reported revenue benefits from reduction in promo intensity as well as from better mix of products sold, with heavier tilt toward more-profitable single-serve items sold in c-stores' cold boxes. He notes that all 3 realized +3% price/mix gain in latest qtr, without any severe hit to volume as result. "With a benign cost environment also providing support to margins, we expect the companies to continue to deliver on their stated underlying target" excluding the headwinds caused by stronger dollar, Nik wrote. Judging by comments from DPS brass last week, as well as other heavily c-store-reliant cos like tobacco players Altria, Lorillard and Reynolds American, c-store traffic scored strong benefit from lower gas prices, which left gas purchasers feeling flusher when they entered store. That augurs well for Monster Beverage, which is about 70% reliant on c-stores for its biz, when co reports its earnings, likely next week. Environment is not as welcoming in Europe, where KO reported pricing pressures, suggesting CCE may offer sobering financials when it reports this Thurs.  

As so-called Fight of the Century between Manny Pacquiao and Floyd Mayweather approaches this Sat, count alkaline water Aquahydrate as playing sly, unpaid-for role. Aquahydrate owner/endorsers Diddy and Mark Wahlberg have been garnering ton of media coverage for $250K bet they've placed on outcome (Diddy's backing favorite Mayweather, Wahlberg's for Pacquiao), even as brand pitched as sports recovery water has been available in both fighters' gyms. Wahlberg also facilitated delivery of water to Pacquaio's hotel when fighter experienced severe cramping.

Next up: short TV ad shot at Diddy's home promoting pay-per-view airing on Showtime; tho brand hasn't been allowed into visuals because of network restrictions, it should get plenty of love in versions that go out online. And 2-minute ad featuring Diddy and Wahlberg to air at fight's opening likely will conclude with title, "Brought to you by Aquahydrate." Best of all, "we didn't pay a penny for any of this," said ceo Hal Kravitz, who joined LA-based co in Nov.

Expect to see more of these stunts from alkaline water brand now that it's solidified mgmt team after period of drift and is rapidly expanding retail footprint and upgrading DSD network. At heart of effort is former Coke exec Kravitz, who stepped in as ceo in Nov, filling void left by departure 2 years earlier of former ceo John Cochran for Ole Smoky Tennessee Moonshine. In interim, Hal recalled, co was being run by oversight group of 3 board members along with associates of Diddy and other key investor, retail and Brew Hub magnate Ron Burkle's Yucaipa Cos. Tho culture had remained focused and entrepreneurial despite uncertainty, at a time that premium water - and alkaline brands in particular - has been surging, co "desperately needed leadership," Kravitz said. Among many roles Hal had played at KO over years, those most relevant to Aquahydrate would be his involvement in co's earliest forays into noncarbs 20 years ago and his running of Glaceau in NY shortly after 07 acquisition of marketer of Vitaminwater and Smartwater.

Thanks to trio of core investors, Aquahydrate is backed by deep resources. And as noted, Wahlberg and Diddy, who together boast 40 mil social media followers, "are not just owners but ambassadors, a marketing machine that we can unleash," as shown in Pacquiao/Mayweather stunt, Kravitz said.

Still, behind those social-media fireworks, Kravitz has moved quickly to deal with key issues on operational, org and distribution side. Operationally, brand has moved to copacker and Penta Water parent United Packaging Group, offering greater consistency and chance to add range of multiserve and multipack options as needed. He's also grappled with thorny issue on distribution side: need to moderate co's DSD-only stance to accommodate retailers operating in areas with DSD voids or those who insist on receiving product directly. Tho touchy issue with wholesalers, resolution via system of invasion fees and revamped buyout clauses has allowed brand to add such new retailers as Winn-Dixie/Bi-Lo in Fla or Valero c-store chain in Tex (tho Valero was happy to employ DSD houses in markets like Calif where its stores are less concentrated). "DSD is our first choice and works great" in markets like New England, where all retail accounts are serviced via Polar, Hal vowed. One particular standout DSD market has been Ariz, via Hensley, which turned on brand's first Walmart stores and has done intensive brand activation in partnership with drug chain Walgreens. That's now considered model market for rest of country, Kravitz said.

On org side, architect of DSD strategy, Greg McCauley, departed and has been replaced by former DPS sales vet Rich Schuttenhelm. Marketing official Nate Puksta moved back to personal care biz at L'Oreal, with Kravitz handling marketing strategy himself for now. Among other key members of brain trust are former Anheuser-Busch exec Chris Albee running production and logistics, and trio of regional divisional vp's: Joe Gleason out West, Al Hermsen for Central, and newly added Glaceau vet Eddie Ennesser for East.

Tho ACV remains low, Aquahydrate is beginning to bring on hundreds of new stores, including new divs of Kroger, Circle K c-stores and exercise chain Gold's Gym. So far, c-stores account for biggest channel, but ACV is still just 4%, per Nielsen data, leaving plenty of upside. Grocery channel boasts 14% ACV. Meanwhile, such promising channels as colleges, hospitals and on-premise remain untapped. Key rival, Essentia, which shares quite a few DSD houses with Aquahydrate, has been expanding into similar channels, from its longstanding base in natural foods.

But Kravitz views his competition as not just other alkaline waters but bigger fish like Gatorade, Fiji and Smartwater. With trace minerals brought in from Utah, Aquahydrate boasts 60% the electrolyte content of Gatorade, double that of Smartwater and 6X that of Essentia. And while some alkaline brands attain their higher pH thru dosing with baking soda, which may degrade quickly on shelf, Aquahydrate claims its proprietary 3-step process can maintain brand's 9+ pH for years.  

Over past decade and a half, Fla-based entrepreneur Roy Warren has had many chances to hone his resourcefulness as he's struggled to develop fortified-milk items, first at Bravo Brands and more recently at Attitude Drinks, both publicly traded vehicles. Bravo, and its Slammers line, got slammed when its new national distribution partner, Coca-Cola Enterprises, did about-face as its core supplier Coca-Cola switched strategies, and Attitude has struggled to get its Phase III Recovery milk-based protein line adequate distribution in face of retail dominance of major players, who wield brands like Muscle Milk and Core Power in arena.

So he's done sweeping pivot over past year, piggybacking rabid ride being enjoyed by craft beer to keep him in the game as he takes yet another tack with Phase III. Attitude has invested in World of Beer concept, taking majority interest in Harrison, Vickers, Waterman and its World of Beer units in Conn and Mass, riding craft-intense on-premise operation to enhanced cash flow and, hopefully soon, more elevated share price. Meanwhile, Phase III has abandoned DSD as simply too expensive for margin-constrained product, regrouping for more direct-to-retail approach funded by the proceeds from craft-beer foray. "We're the Rolls-Royce of protein drinks, but we can't make the economics work" with DSD, he said. Since grocery channel skews more heavily female, he's developing - under different brand name - more female-targeted version that offers hefty 35 g hit of protein but drops carbs down to 3 g, making it more of a protein-load drink than a recovery drink. He's even got a smaller-pack toddler line in works. "Exactly right," laughed Warren today when asked whether he's using his craft-beer lucre to feed his protein bev habit. He quickly added: "But I won't continue to feed my protein habit unless it's profitable." By contrast, "the beer thing is scary profitable." He's about to sign major NY agency, he said, for robust digital marketing campaign to support new direction.

Meanwhile, ATTD announced this morning that it's completed major restructuring of balance sheet that eliminated about $6.4 mil of principal, accrued interest and penalties on co debt, issuing instead $3.2 mil shares of convertible preferred shares. Co also wiped out $1.7 mil in past-due payables via issuance of another 803 mil common shares. As part of deal, small staff is reducing accrued comp by $827K for preferred shares. In all moves convert $8.9 mil of debt to equity, with hope of further reductions as discussions with remaining creditors continue. On another front, co is working to produce last 2 qtr's worth of 10-Q's within next 30 days. As 51% holder of Harrison/World of Beer, ATTD can report all those restaurants' revenues on its balance sheet, hopefully finally offering a pop to beleaguered shares on pink sheets and buying headroom to try again with Phase III.  

Rethinking of label and look of Australia's Balance Water appears to have ignited new round of growth in core retailers, with units per sku sold nearly quintupling from less than 5 per week in Whole Foods' Northeast region at time of cutover in late Feb to 20-25 range by early Apr. Natural food retailer carries 2 sku's in that region, 1-liter bottles of Refresh and Cleanse varieties. Brand has been on similar trajectory at another key retailer, tripling velocity at Kroger, where brand is chainwide and shelved in natural set. Brand by now is in 4K store doors, including Safeway, where it's about to go chainwide, and Sprout's Farmers Market, Walgreens/Duane Read, Earth Fare and Central Market.

Label change at first might have seemed retreat from last iteration, whose use of aboriginal dot patterns printed in relief on label made for colorful, authentic representation of brand that employs flower essences wild-harvested from outback and other remote areas of Australia. But it proved too obscure for most consumers, so now co has evolved to more stylish, lifestyle appeal, printing Balance with upside-down V's for the A's, rendering functional designation in font with varying color palette and offering delicate white line drawings of key flower used in sku. Branding hierarchy on label now emphasizes function name, with Balance name off to side in smaller font size. Cofounder Martin Chalk, who runs co with Peter Maher, said he's hopeful look will clearly differentiate Balance from electrolyte-enhanced and high-pH brands that obtain their effects via artificial manipulation, at time consumers are showing greater interest in simple, non-manipulated ingredients.

Balance, recall, is line of botanical waters employing essences of Australian flowers like bush iris and bottlebrush that are shipped to US for blending into local spring water at bottling plants in NY's Catskill Mountains and Calif's Sierra Nevada. At time most high-end domestic bottled water marketers process the liquid via mechanical, electrical or chemical means, packaging now emphasizes Balance formula of "American spring water with Australian flower essences." The unsweetened, unflavored bevs are offered in the functional varieties Focus, Relax, Cleanse, Refresh and Travel, targeted primarily at women age 25-40. On marketing side, brand leverages the followings of such users as actor/investor Hugh Jackman and Ed Norton. Jackman, who famously turned on theater audience member whose ringtone went off during performance of A Steady Rain on Broadway (all while staying in character), is working Balance Water into such stunts as phone-free day. "Because flowers make you feel better" is among slogans used in ads and social media. Co also offers Balance starter kits to perceived influencers, has launched Balance America wellness program and is infiltrating "mindful work" meditation rooms at corporate sites like Goldman Sachs. Recent alliance with foodservice giant Sysco in NY and LA is intended to make that bigger part of mix. Co based in Sydney and NY is backed by Emil Capital. On org side, former Red Bull and Talking Rain exec, Bruce Trent, recruited to run sales last year has moved on.  

Stoked by techie appetites and funding, it's intriguing new direction: protein-rich bevs under brand names like Soylent, Schmoylent, Schmilk and People Chow that serve not as occasional meal replacement for people on the go, but potentially as regular food replacement for weeks or longer. They offer less sugar and protein than some conventional meal replacements in favor of more balanced nutritional blend. The meals run about $85 for a week's worth of nutrition, a deal in pricy tech environs like Silicon Valley. NY Times yesterday took deep dive into phenomenon, including offering review by restaurant critic, just at time that BBI has been hearing rumblings that at least one player, Soylent, may be ready to offer RTD versions of its elixir.

Piece opens with glimpse of techie Aaron Melocik, who every night blends half gal of water, 3.5 tbspn of macadamia nut oil and 16-oz bag of Schmoylent powder, nursing one jar thru morning and retrieving other from fridge for lunch "so he can focus on coding instead of grabbing a bite to eat." He tells paper: "It just removes food completely from my morning equation up until about 7 pm." Demand for some of items has been running so high, Times reports, that there are waiting lists of 1-6 mos for new customers' first orders. Techie entrepreneurs like Reddit's Alexis Ohanian are investing in likes of Soylent. VC firm Andreessen Horowitz also is Soylent investor. Some are marketed just in plastic bags labeled with a Sharpie, but BBI has heard that Soylent marketer Rosa Labs, for one, may be ready to venture into RTD version. (Inquiries in recent weeks to bev vet Chris Running, who's advised co, and Rosa Labs vp Julio Miles, haven't drawn response.)

And how does Times restaurant critic Sam Sifton rate these drinks? "Some of them elevate Ensure, the liquid nutritional supplement used in hospitals and to force-feed prisoners at Guantanamo Bay, to the status of fine wine," is his verdict. Nor did he find them fully satiating. Main story can be found here.  

Spending millions on software upgrades and allowing customized orders has helped Nestle boost its US water delivery sales in big way, reported Wall Street Jnl. Nestle's home delivery biz "grew twice as fast as shipments" to stores in 2014, up 14% vs 7.8%, and in 1st qtr this yr at-home sales jumped 21% vs 5.5% gain at retail. "The world is going this way," said NA prexy Tim Brown, reiterating theme he's struck over past year at trade conferences. "It's the convenience factor." Nestle delivers to about 1.5 mil homes and offices, accounting for 20% of its $4 bil US sales, noted WSJ. Co has 2,000 delivery trucks that can reach 60% of US population, with avg order costing "about $35, with roughly 20% of that for shipping costs." Besides standing weekly or monthly orders, upgrades have now allowed customers to place 1-time orders, with delivery within 24 hours. While consumer is getting convenience, they are paying for it and Nestle is avoiding price wars at retail, noted report. Online customers "typically pay $6 to $7 for a case of 24 half-liter bottles delivered," vs $5 or less at retailers. Competitors obviously see value of Web biz too, as WSJ noted Cott's purchase of DS Services of America, #2 in at home delivery behind Nestle, while Coke and Pepsi water brands can be ordered on Amazon. Fiji, which has furthest to ship, also offers at-home delivery, with a 36-pk of 330 ml bottles going for much-pricier $47.50, per WSJ.

Carbonated soft drink volume trends improved to -1.8% last 4 weeks ended May 16 (vs 2.7% decline prior 12 wks) in Nielsen all-channel data reported by Wells Fargo Securities' Bonnie Herzog. Avg prices were up 4.5% last 4 wks, up slightly from +4.3% avg over prior 12 wks. Regular CSDs (-0.6%) continue to outperform diet brands (-4.6%) over last 4 wks. Coca-Cola slowed its CSD decline to just -0.4% last 4 wks vs 3%+ drop for 12 wks. Avg price on KO brands was up 4.1% in latest month compared to +5.8% previous 12 wks. PepsiCo's CSD volume trends improved as well to -2.6% for 4 wks vs -3.2% for 12 wks. PEP pricing shift was opposite of KO's, widening to +5.8% for 4 wks vs +4.1% for 12 wks. Dr Pepper Snapple CSD volume slipped 2.2% on avg 3% price increase in all-channel data for last 4 wks, similar to 12-wk trend. Private-label CSD prices still rose a solid 6% last 4 wks with volume down 1%.

Higher Prices Help Red Bull Outperform Monster in $$ Sales Energy drink volume gains accelerated to +9.6% gain in all-channel data thru May 16. Avg prices were up 2% in category, matching avg pricing over previous 12 wks. Monster Energy volume was up 9.5% last 4 wks with just a slight increase in prices, up 0.1%. Red Bull volume was up 8.7% despite much more substantial 5% price increase last 4 wks. That lifted Red Bull to 14.1% sales gain vs 9.7% for MNST last 4 wks. Monster "has reported 3 straight months of single-digit sales growth, which we believe could be partially related to the transition in distribution," noted Bonnie, referring to cutover from Bud to Coke distributors in half of US. Rockstar volume surged 17% last 4 wks on avg 2.3% price drop. PepsiCo (Amp) volume gain slowed to 1.3% last 4 wks while avg prices rose 5.8%. Coca-Cola (NOS, Full Throttle) was still up double-digits: +12.9% last 4 wks, +14.2% last 12 wks. Avg price on KO brands, tho, was just +1%. Remember, Coke's energy brands are about to segue to Monster Beverage as part of broader transaction due to close in coming weeks.

Gatorade Outperforms; Flat Pricing Sports drinks volume gains accelerated to 4.5% last 4 wks in all-channel data, up from 3.8% gain last 12 wks. Avg pricing for category slowed to +0.9% last 4 wks vs +2.6% avg for previous 12 wks. PepsiCo (Gatorade) volume trends improved to +7% with slight (+0.1%) price increase last 4 wks while Coca-Cola (Powerade) volume slipped 2% with avg 2% price increase.

Steady Growth in Water; PEP Prices Still Low Bottled water volume was up 5.1% in 4-wk all-channel data compared to gains in 6% range for previous 12 and 52 wks. Avg prices were up 1.1% in category in latest month, up slightly from avg 0.6% gain for 12 wks. Nestle volume gains slowed to +1.8% (vs 3.8% for 12 wks) as avg prices swung up from a small decease to +0.7% last 4 wks. Coca-Cola water volume gains decelerated as well to +3.8% on higher avg price of 2% last 4 wks. PepsiCo water still up double-digits (+13.2%) boosted by avg 5.5% decline in prices last 4 wks. PEP prices down in same range for 12 and 52 wks.