AriZona Iced Tea marketer Ferolito, Vultaggio & Sons is diversifying its sweetener strategy with range of lower-sugar, real-sugar and no-sugar entries, even as it preps for next phase of its not-so-sweet wrangling with estranged half-owner John Ferolito.

Audited Statements in Hand, Co Awaits Trial The wrangling first. With judge now having set valuation of company at $2 bil (BBI, Oct 14), next stage at end of Apr is trial to determine terms and conditions under which cofounder/ceo Don Vultaggio will buy out his equal but estranged partner and cofounder John Ferolito. That valuation, far below the $4 bil that Ferolito was aiming for, was key step in that direction, as was judge's dropping of steep interest terms on amount in meantime (BBI, Nov 14).

In brief phone conversation yesterday, Vultaggio's attorney, Louis Solomon of Cadwalader, Wickersham & Taft, said, "the main event is behind us," referring to valuation determination. "Now we need to figure out the terms and conditions." With Ferolito believing valuation of co is too low, favoring forced sale of co that might yield higher return, he's likely to push for onerous terms. Vultaggio's team, in turn, will argue for terms that impose manageable financial burden so co can continue to operate on sustainable basis. At hearing, financials will be brought up to date and Vultaggio team will call witnesses attesting to what co can reasonably handle, Solomon noted. He said he's hopeful that, having gone this far in protecting interests of co as going concern, judge won't do about-face at trial.

Until trial occurs, Vultaggio said he must be guarded about what he says, but underlined what a challenging time this has been for Ferolito, Vultaggio & Sons. "No independent operation ever intends to buy itself," he said during BBI visit Tues to AriZona's offices in Woodbury, on Long Island. But he noted key milestone that had occurred in past day: co had received first set of audited financials since 2007, thereby easing way to obtain financing on more favorable terms. In financial chaos stemming from partners' feud that hadn't been possible earlier. Speaking a day later, attorney Solomon added that he was heartened that "the auditors found nothing wrong to what management did," contrary to Ferolito's claims of self-dealing and other alleged abuses. Tho outcome of trial will influence range of financing options available, Vultaggio confirmed he's seeking way to buy out partner with just debt rather than introducing new equity partners into mix. As noted over years, there have been no lack of corporate and other suitors for well-established brand, including strategics like Coca-Cola, Nestle and Tata, stoking push by Ferolito team to see co go to auction to obtain best price.

Rethinking Sugar Issue: Good Brew, Oak Reserve, Real Sugar As always, co is hotbed of experimentation and innovation, and packaging is key part of mix, from upgrade of core 23.5-oz cans to offer fruit renderings, to addition of 16-oz can for alcoholic Mississippi Mud malt bev packed in distinctive ceramic-looking jugs, to entry into portion-pack game, with 8-packs of 11.5-oz Ball Slim cans, initially in 3 juice-based flavors. These days, tho, much of activity is focused on diversifying sweetness options available to consumers, as well as dialing up tea cues in some entries. Cofounder/ceo Don Vultaggio made no secret that current climate poses challenge to AriZona's highly successful model of offering highly sweetened, vibrant-tasting bevs at affordable prices. "The challenge is, where is the consumer going?" he said. "The reality is that most of our drinks are sugar-based." In its big-selling items, co employs such sugars and sugar alternatives as HFCS, ace-K, sucralose, honey.

So he's working with sons Wesley and Spencer, their mgmt team and longtime partners at Allen Flavors to diversify sweetener approach and, in some cases, dial up presence of tea flavor. Nor is the natural sweetener stevia viewed as silver bullet so far: tho co offers a smattering of stevia-sweetened items, overall it doesn't feel ingredient has adequately surmounted taste challenges, despite experimenting with dozens of versions so far, Spencer noted.

At higher end, coming to mix is Good Brew, hot-packed, more upscale, tea-forward offering that's due in 59-oz multiserve and 20-oz single-serve square-profile bottles this spring, in quartet of flavors: Unsweet Tea, Peach, Arnold Palmer and Green Tea flavors. (The Arnold Palmer riffs off the recipe of AriZona's hugely popular tea/lemonade subline, but dials up the tea, in keeping with Good Brew premise.) Both name and sparse label graphics adopt "less-is-better" tone suited to consumers who prefer items a bit outside mainstream. Package was previewed at NACS c-store show last fall (BBI, Oct 16) tho product wasn't ready for sampling, and team is still tinkering with flavors, offering BBI editor several variants to test.

Artisanally inflected AriZona Oak Reserve Brewed Tea subline, which debuted last summer in core markets (BBI, Jul 14), is meant to be lightly sweetened (35 calories) entry that elevates the tea notes, which are being dialed up in current tweaking, noted Spencer. That line employs real sugars like honey, cane sugar and maple sugar, with the oak aging taming tea's tannic bite for greater drinkability. Also getting a refresh is 20-oz full-wrap PET bottle, with more realistic rendering of barrel staves and hoops (given convincing metallic finish now) and more prominent lettering for greater shelf presence. Closer to core line, co next month will launch Made with Real Sugar extension, in 16-oz widemouth bottle. Both Good Brew and Oak Reserve contain unsweetened sku's, heralding penchant by more consumers these days to avoid sweeteners entirely.

Licensed Lines: Skinnygirl Adds Energy Subline, Welch's Breaks Sparkling Line Co also is bullish about licensed line of Skinnygirl Sparklers, which just entered Walmart chain. In retailer's Long Island stores, brand has done in single week the volume associated with national avg of AriZona brand in a month, Don said. Now core 17-oz bottled line, with 5 calories per serving, is being buttressed by Energy Infused Fruit Sparklers, packed in 11.5-oz slim cans that contain just 10-20 calories per pack. They're fortified with green coffee extract, offering modest caffeine lift, and the superfruit acai. They launch in Peach Passionfruit, Black Raspberry and Strawberry Lemonade flavors.

Also entering mix is licensed sparkling line under familiar Welch's brand. Welch's Sparkling Grape and Sparkling Strawberry bevs are all-natural and packed in 23.5-oz cans. Alliance was outgrowth of relationship AriZona already has enjoyed with growers co-op by virtue of distributing Welch's products in NY, Don noted.  

Natural Products Expo West grew 7% in attendance to 71K visitors, who descended upon Anaheim Convention Center and nearby arena and hotels to view 2,700+ exhibiting cos, including 634 first-timers, said sponsor New Hope Natural Media . . . Waiakea Hawaiian Volcanic Water has entered Whole Foods' Southern Pacific and Northern California regions, and naturally alkaline brand also has cracked its first c-store: Wawa, in Mid-Atlantic region.  

 AquaHydrate, which has been in rebuilding mode under new ceo Hal Kravitz, should garner burst of national awareness thanks to fortuitous connection to Nascar racing star Blake Koch. Thanks to intro from Celsius ceo Gerry David, whose brand is affiliated with Koch's TriStar Motorsports, alkaline-water brand will have AquaHydrate-branded car at nationally televised 300-mile race at Auto Club Speedway this Sat in Fontana, Calif, not far from brand's LA base. Koch will be piloting #8 AquaHydrate Camry at event televised by Fox Sports. It's believed AquaHydrate investor Mark Wahlberg will be on hand to mingle with attendees. Move comes as Kravitz continues to quietly put imprint on co, which endured period of some drift before his arrival late last year. He just signed on new copacker, UPG, but also endured departure of marketing dir Nate Puksta, who returned to L'Oreal when intriguing opportunity opened up there. Hal said he'll fill that role for now, as he's been doing on sales side following departure of Greg McCauley on sales side, as he rebuilds team . . . Coca-Cola's Vitaminwater brand is tying into national interest in crowdfunding - and offering reminder of its own humble origins - with promo dubbed Project Hustle that invites entrepreneurs, artists and others to prep an elevator pitch for chance to share of $500K that will be distributed among 10 finalists. Promo kicked off Thurs and runs thru Apr 30, via Web site ProjectHustle.com. Entrants are also invited to pitch ideas live this Wed thru Sat at simulated elevator installed at Austin's The Fader Fort, invitation-only music event at South by Southwest fest. Come this Jul, consumers will get to influence outcome via bottle cap code that they can enter at Project Hustle site to allocate $$ among contenders. "Project Hustle is our way of supporting the dedication and tenacity of our most driven fans, hustling to make their goals and dreams reality," per sr brand mgr Ryan Robertson. "Vitaminwater hustled its way from a small startup in Queens, so we understand first-hand that hard work is the only path to success."

Under its new ceo Bob Groux, European energy line Little Miracles has retreated for now to East and West Coasts, where it's planning stepped up execution, including radio and outdoor push and street teams in NY and LA this Jun.

After carving out modest niche in Europe since its founding 3 years ago, Little Miracles had set sights on N Amer, making big splash at last fall's Expo East (BBI, Sep 30) but finding itself dogged by series of missteps, including overly broad expansion. That prompted exit of former Coke exec John Carroll as ceo and recruitment of Groux, whose Coast Brands brokerage had been retained to work Little Miracles' Acosta accounts during its put-brand-everywhere phase. At Expo West, Bob said running Little Miracles had been last thing on his mind but as search for successor proceeded, co concluded that as man on the spot he was best-positioned to grab reins and move quickly in new direction. He's been on job 3 months now. Promised an "aggressive" budget, Groux has been taking back-to-basics approach that draws in part on his earlier success in growing Snapple on West Coast, with view to using such tried-and-true techniques as working with radio personalities to talk up brand. Agency is McFadden Gavender in Tucson, Ariz. Also in mix is Greenhouse Agency to run aggressive demo program.

On org front, Groux has brought back Bob McLeod - former Royal Crown and AriZona Iced Tea exec who was on launch team of Coast Brands - as natl accts vp. Northeast region mgr based in NJ is Matt Barry, former Neuro and BluePoint exec. Area sales mgrs have been appointed in Southern Calif and are being sought in NY metro.

The good news, Groux said, is that product proposition seems to work as tea-based, organic, non-GMO energy line, sweetened with agave and packed in 11-oz wrapped PET bottle. Its 70% female target seems to respond well to premise, at $1.99 price (promoted at 2 for $4), Bob concluded. At one 200-store upscale chain, he said, Miracles has moved avg 80 bottles per store per month. It recently added Rooibos Tea & Elderflower as 5th flavor, joining entries based on lemongrass tea, black tea, green tea and white tea. That said, tho band around middle of label states "Organic Energy," Groux's team stays away from overtly promoting line as energy brand.

Tho co now is working smaller geographic footprint than under departed ceo Carroll, it's intensifying DSD push. In NY, it's recruited distributor Drink King, and co is pitching NIDA group of indie Northeastern houses to help it reach the 750 chain stores Groux says he's recruited in region over past 3 months. Those include Stop & Shop, Giant's Lancaster and Carlisle divs and Shaw's (via Great State distributor). It's recently hit first Whole Foods region, Pac NW, via broadliner UNFI, and is about to sign Unique Foods as Canadian distributor.  

Natural energy drink Golazo took step into organic status, attaining full certification for its full-calorie items and lesser designation for its sugar-free items. "Putting the 'O' in Golazo," shouted sales materials for soccer-themed brand based in Seattle and available primarily in Northwest quadrant of country. Rebranded items are due in May.

Move to organic, with all cost and complexity that entails, can be tricky decision, considering that research indicates some consumers aren't clear that natural and organic designations mean different things. But at time that brands labeled natural are apt to come under fire from regulators and plaintiffs bar, garnering organic status can be way to resolve dilemma. "We'd always aspired to have organic," said coo Mike Brown. Even in conventional groceries, seal should reinforce brand's natural credentials, he noted. To Golazo, he added, "natural" means non-GMO-verified and organic. Brand's full-calorie energy drinks and hydration bevs have been able to meet threshold of 95% of ingredients (by dry weight) being organic for full certification. Zero-calorie entries crossed lower threshold, 70%, to be able to claim to be made from organic ingredients. Mike termed cost impact of going organic "modest" and said there would be no pricing change for line.  

Coca-Cola's Zico brand offered eclectic array of innovation at Expo West, from first certified-organic items to recently launched juice line to early effort to harness natural sweetener stevia. Coke brand managed by VEB brand incubation unit is bringing in first Fair Trade and organic product this summer, sourced from Philippines, in 500-ml resealable Tetra Paks. That's intended exclusively for natural channel, at least initially, backed by creative within Jessica Alba platform. The box sports USDA Organic seal prominently on front, just below cap.

Brand also has jumped on surging popularity of watermelon as ingredient with early stevia-sweetened item, Watermelon Raspberry, in its bottled from-concentrate line. Line clocks in at 90 calories per 14-oz bottle. Also in stevia portfolio is reformulated Pineapple flavor, at 80 calories per 14-oz bottle. Releases continue Coke's experimentation with natural sweetener in new-age lines like fully flavored Vitaminwater items, where move prompted backlash that led to switch back to earlier recipe, and in Honest Tea line, also managed by VEB.

Its chilled juices, first unveiled in Sep, are 100% juice blends that extend consumption occasions, in Natural, Orange and Pineapple & Mango flavors, packed in 1.5-liter boxes that prominently note that they contain 33% to 50% fewer calories than regular fruit drinks, depending on flavor. And Zico showed 8.45-oz (250-ml) resealable Tetra pack, in Natural and Chocolate flavors, that it will be able to get out at $1.50, promoted at 99 cents.  

Is cold-brewed coffee about to get a giant hit of consumer awareness? That's prospect as roasting giant Starbucks throws hat into ring, saying it will roll out cold-brewed coffee to 2,800+ stores in Northeast, Mid-Atlantic and Midwest, following successful tests in Boston and SF. Those are regions where iced coffee in general has proved most popular for retailer. Also in mix will be handful of stores north of border, in Toronto, Vancouver and Calgary.

For its offering, SBUX has opted for 20-hour cold-brewing process, as yielding rich, dense and slightly sweet flavor. It uses blend of coffees from Latin America and Africa, specifically chosen for cold-brewing approach. So far, co only has experimented with cold brew made in stores and consumed there; no word on RTD version, at time RTD entries are proliferating from established roasters like Stumptown and Blue Bottle, indie brands like Chameleon and High Brew, and cos venturing in from other food/bev realms like almondmilk and citrus player Califia Farms. On retail side, tho cold-brewed coffee has been increasingly prominent offering at indie coffee shops, more mass-oriented players have taken wait-and-see approach, with only a few exceptions such as Red Mango (BBI, Jul 3) and Chik-fil-A, which partnered with Thrive Farmers Coffee for its offering.

Nation's Restaurant News noted that cold-brew will be hand-crafted in single batch each day at participating stores, yielding just 40 "grande" (16-oz) servings for store's clientele, at slight premium of $3.25 to reflect labor-intensive nature of process. By opting for shorter brewing cycle, some retailers, like Red Mango, get benefit of being able to set up cold-brew at closing time and having it ready by store opening the next morning, but SBUX's 20-hour cycle would seem to complicate logistics. Original Boston test in Aug, per StarbucksMelody blog, employed core Ethiopian roast brewed in Toddy system, purveyor that's been offering cold-brew systems for decades.  

At time co has missed targets and is downsizing workforce, Coca-Cola ceo Muhtar Kent passed up $2.4 mil bonus for 2014, but still found himself under fire from investor and critic Wintergreen Advisors, which has been campaigning for change at top. "It's encouraging to see that the Coca-Cola board is beginning to take a tougher line with management. It took the view - shared by us - that Muhtar Kent didn't get the job done for Coke shareholders in 2014. The board needs to act with even greater urgency and find a new ceo to lead the turnaround Coke so urgently needs," Wintergreen said in statement, adding: "Mr. Kent still stands to benefit handsomely from his equity grants. Thanks to the equity compensation plan he rammed through last year, he is the most overcompensated ceo in Coke's history, which is more bitter news for shareholders." Excluding a $7.1 mil change in pension value, Kent's comp came in at $18.1 mil, off a tad from last year's $18.2 mil . . . Meanwhile, PepsiCo has reached out to ceo of former #2 N Amer bottler PepsiAmericas to serve on board. Bob Pohlad, 60, currently is prexy of Dakota Holdings LLC, which operates 25+ businesses in banking, commercial real estate, auto dealerships and entertainment. His family also owns Minnesota Twins baseball team. 

Mix1Life has made further progress in efforts to purchase No Fear brand from incubator Shadow Beverages, saying it's entered into letter of intent to acquire bev license, operating system and sales support behind brand. "The addition of the No Fear brand will generate additional revenue to our company while providing seasoned executives and an operating system which will accelerate our growth with both brands," which includes Mix1 RTD protein line, said Mix1Life ceo Cameron Robb. Contacted by phone today, Cameron said he couldn't comment further on deal or strategy behind it until transaction actually closes. In regulatory filing a week ago, co had indicated sale price was $12 mil for No Fear, which is licensed from apparel retailer of that name and once was marketed by PepsiCo's SoBe unit (BBI, Mar 2).  

Mountain Dew is rolling out new craft-style brand called DEWshine, garnering an instant hit of awareness with some critics' complaints that packages "look like craft beers," as USA Today reported. New Dew brand (made with real sugar) is packed in 4-pks of longneck 12-oz bottles which "may be getting as much buzz as its contents," paper said. "The line between alcoholic and non-alcoholic beverages is intentionally being blurred by producers of both," claimed Michael Scippa, dir of public affairs for Alcohol Justice. Both alcohol cos and "producers of high-sugar content" are trying to boost sales "by appealing to young people." Pepsi rep Jen Ryan was quick to squelch controversy, pointing out that longneck bottles are "consistent with other premium soft drink brands" (read that as brands from Boylan to Joia to Dry Soda) and added that "we've used this bottle for Mountain Dew in the past." (BBI editors, who also publish Craft Brew News, certainly can't recall any craft beers packed in clear bottles, tho brands like Mike's Hard Lemonade and Corona go in for them.) Branding was "inspired by the brands roots in the backwoods of Tennessee," Ryan notes. DEWshine is rolling out nationally in large- and small-format retailers, with particular emphasis in Dew's best markets, Midwest and Southeast. PEP defines target as men age 20 to 30, similar demo to that being targeted by recently launched Caleb's Kola. Here's new brand: