For a few years now, mushrooms have been hot ingredient, with powdered-bev plays like Four Sigmatic garnering lotsa buzz and varieties like chaga and reishi turning up as fortifiers in RTD brands like those from Rebbl.  Standalone RTD line?  So far there’s not been much evidence of those.  But mega-mushroom co South Mill Champs – representing merger of South Mill of Kennett Square, Penn, and Champs of Aldergrove, British Columbia – is ready to throw its hat in ring after getting off to good start earlier this year with extensive line of Shrooms Snacks that were featured at this week’s Fancy Food Show in NY. 

Prototypes of the bevs were previewed at off-site reception but are still at early stage, with co saying it’s tinkering with production process, packaging format and other factors.  It sampled RTD coffees and teas under Shrooms brand, such as Arabica coffee that holds up well vs bitter flavor notes of reishi, as well as Passionfruit + Papaya Black Tea that also incorporates reishi into recipe.  Co is aiming to have something launch-ready by late summer.

Co only entered branded snacks biz earlier this year, with line of 4 product lines spanning 14 items, such as Splits item that melds filet mignon jerky with portabella mushroom jerky and mushroom crisps in Sea Salt and Spicy Jalapeno flavors.  But between its 2 farming operations, where it even makes its own compost and hay, co boasts big presence in produce section, easing snacks’ way into retailers like Costco, Shop Rite and nearly 3K Walmart stores, where it’s merchandised both in produce and center store.  With mushroom-aware consumers used to shopping produce aisle, exec team is leaning toward targeting bevs for placement there, said ceo Lewis Mcleod.  Among other key members of team are innovation dir David Eberwein and food scientist Chip Chalupa (who “knows his shiitake,” assured pr rep).

We apparently were first to spot signs of forthcoming Diet Coke “Unlabeled” campaign that drops labels from some cans to signify that people shouldn’t be labeled either (BBI, Jun 24) and a few more details are emerging now. MediaPost reports that the label-less cans will only be deployed at “special events where Diet Coke would give its products away to consumer for whom the idea of being ‘labeled’ has a special string. The can bought at the 7-Eleven will be unchanged.” Thus, earlier this month brand worked a Pride event in LA with cans stickered over with words like “Independent” and “Misrepresented.” A “manifesto film” is due in mid-July, too, says MediaPost .

National Beverage closed books on its 2019 fiscal year with reported 3.9% increase in net sales to $1.01 bil, with branded sales up 6.2% and its core “Power+” brands including Rip It Energy and Shasta up 8.9%.  Helping boost sales were expansion into Canada, 3 new flavors for NiCola line and expanded presence in club channel.  Net income slipped 6% to $140.9 mil, with some of blame attributed to tariff-burdened aluminum cost increases and higher mfg, shipping and marketing costs, tho FIZZ also drew favorable comparison vs last year’s corporate tax cut.  In soberly worded earnings release that was free of usual all-caps superlatives and exclamation-pointed exhortations from ceo Nick Caporella, co noted several initiatives under way in current fiscal year as it seeks to improve trends of its core La Croix line: national launch of Hi-Biscus flavor, launch of brand into UK and commencement of summer campaign.  As noted yesterday, co also is using occasion of packaging refresh to comply with new labeling guidelines to herald that La Croix is Whole30, non-GMO and produced with non-BPA liners.

Newly released 10-K indicates co moved from strong sales gain in Q1 to more modest gain in Q2 and declines in Q3 and Q4.  For full year, branded CSDs like Faygo and Shasta collectively were down 3%, while co no longer produces private-label CSDs following exit from segment a year ago as it moved entire focus to branded products.  Per filing, co employs 1,640 and operates 12 plants in 10 states, spending $38.3 mil on capacity additions last fiscal year, tho fiscal 2020 is anticipated to come in lower.  Discussion of legal proceedings gets a single paragraph, insofar as co believes they’re without merit and won’t have material effect.  Co paid $10.2 mil in management fees to co called Corporate Management Advisors that’s owned by Caporella via longstanding arrangement dating back to 1991.

Hint and Good2Grow enjoyed strong growth trends in flavored water segment tracked in latest Nielsen scanner data while Bubly, Spindrift and Sparkling Ice were strong percentage gainers on flavored sparkling side, perusal of Wells Fargo’s latest report indicates.  (We covered CSDs, energy, casepack water and sports drink categories on Tues.) 

On still side, Hint was top % gainer, scoring 66% $ increase for latest 4-week period, representing acceleration from 12-week trend of 56% gain for last 12 wks and 58% gain for last 52 wks.  Report has brand listed at roughly $50 mil in annual tracked sales (tho remember brand does big biz online and in untracked channels like corporate campuses).  In Zone Brands, which does Good2Grow kids waters with cartoon characters’ heads as caps, scored 40% $ gain in 4-wk period, in line with gains over 12- and 52-wk periods.  Its annual sales are in $40 mil range. 

On sparkling side, PepsiCo (Bubly) scored best performance among major bevcos, with $ sales up 98% for 4-wks, vs 85% for 12 wks and 228% for 52 wks.  (It did so with pricing edging down 2%.)  By now, it’s listed as $160 mil brand on annual $ basis.  Polar, at $190 mil trailing 52-wk $ sales, continued brisk rise, +11%, while Talking Rain (Sparkling Ice) rose 14% as it hovers in $500 mil range on annual basis.  National Bev (La Croix) suffered accelerated decline of 14%, at $470 mil annual sales rate.  Among emerging brands, Spindrift soared 151%, about in line with recent pace; it’s listed as $20 mil brand on annual basis.

All Shelf-Stable Players Decline in Tea; Milo’s Refrigerated Line Continues Boom   Broad RTD tea category seems to be a slog lately, with overall category off 3.7% in $, accelerating declines of 2.3% over 12 wks, 0.4% over 52 wks.  All major bevcos on shelf-stable side are suffering accelerating declines, including Pepsi/Lipton (-4.1%), AriZona (-2.8%), Coca-Cola (-6.9%), KDP/Snapple (-2.8%).  But refrigerated Milo’s brand, whose growth has spurred construction of new facility (BBI, Feb 19), continues to soar, rising 22.1%, generally in line with prior-period gains.  Nielsen has it listed as $160 mil brand at retail over 52 wks. 

Coke’s Coffee Blitz Seems to Be Stalling   In recent years, Coca-Cola has gone from having negligible RTD coffee portfolio to robust lineup comprised of entries branded as Dunkin’, McCafe and Monster (with Costa-branded entries on way).  Lately, tho, they’ve collectively been losing ground, -22% for latest period, accelerating 12-wk decline of 18.8% and undoing 9% gain over last 52 wks.  So effort doesn’t seem to have done much to close gap in measured channels vs powerful Pepsi/Starbucks alliance, which is doing $1.93 bil in annual retail sales to Coke’s $160 mil.  For its part, Pepsi/Starbucks scored 2.7% gain in last 4 wks, off a bit from 4.1% of 12 wks and 3.8% of 52 wks.  Among emerging brands tracked by Wells Fargo, Califia Farms has flattened out to 0.5% gain in latest period vs 30% gain for 52-wk period. 

“Get your CBD-infused snacks and drinks while you can,” advised NY Post, as New York City’s Dept of Health & Mental Hygiene’s ban on products goes into effect on Jul 1. City will start issuing fines ranging from “$200 to $650 on businesses that are not in compliance,” by Oct 1, noted Post. Retailers are already “spooked” by regulators’ raids in recent months. Fresh&Co, which operates 18 health-focused eateries in NYC, said it won’t risk fine and will pull its CBD-infused bevs. (As of yesterday evening, when BBI editor popped into Fresh&Co’s Chelsea Piers location, Recess CBD was still on shelves.) New York State push to legalize marijuana use went down with a whimper last week, so no quick fix to situation appears on horizon. “Initially many stores and manufactures had ignored the FDA’s edict, first issued in December, figuring that consumer demand would persuade the FDA to reverse itself,” but as Post noted, “that hasn’t happened yet.” FDA only had its first hearing a few weeks ago and is still taking comments (BBI, Jun 5), so no significant policy change would seem imminent at fed level.

With plastic backlash intensifying, PepsiCo announced coupla moves to further push co towards its recycling goals to make 100% of its plastics recyclable by 2025. Beginning next year, PEP will offer Aquafina in aluminum cans to US foodservice outlets such as contracted restaurants and stadiums, while also testing concept at retail. With “an industrywide backlash against plastic,” PEP’s response will be “one of the highest-profile cases of companies ditching plastic” so far, noted Bloomberg. PEP will also pkg its Life WTR brand in 100% recycled PET, which co noted “builds on success of Naked Juice, the first and only nationally distributed juice” in 100% rPET. “Tackling plastic waste is one of my top priorities and I take this challenge personally,” per statement from chmn/ceo Ramon Laguarta. “We are doing our part to address the issue head on by reducing, recycling and reinventing our packaging to make it more sustainable, and we won’t stop until we live in a world where plastics are renewed and reused,” he added. As reported in BBI, as issue rises on consumers’ radar, we’re seeing influx of canned waters in recent months, even as incumbent players scramble to vet alternatives, at time that both cans and can packing capacity are squeezed. That was issue of considerable discussion at this week’s Fancy Food Show, with several bottled-water players confiding to BBI that they’re eyeing alternatives as key corporate accounts move to ban plastic from their cafeterias and microkitchens.

Cleveland Browns are saying they were stiffed by Brooklyn-based co called Hard Beverages that claimed to be offering new breed of caffeinated bev infused with vitamins and supplements in flavors like Tonic, Club and Citron. Citing papers from Common Pleas Court, Cleveland.com reports that Browns contend Hard failed to make a single payment on $524K sponsorship deal signed in 2018 and due in 4 equal installments. Football team wasn’t commenting, and news site said it couldn’t find any way to reach co, which wasn’t repped by lawyers at earlier arbitration proceeding and repeatedly missed deadlines and offered filings in violation of guidelines .

Beset by legal woes and seeing once-red-hot La Croix brand erode, National Beverage has decided to engage directly with consumers to refute what it derides as “buzzworthy” publicity that it may take months or years to address in court. In letter to “our La Croix family” distributed via Twitter and other social-media channels, co argues that “we recognize that a brand that presents itself as pure, innocent and healthy has an obligation to its consumers,” and goes on to offer point-by-point discussion of ingredients and packaging including certified-natural and non-GMO nature of ingredients and status as one of first cos to use cans without BPA liners. Pkg changes under way to put brand in compliance with revised fed regs will state that brand is Whole30, non-GMO and produced without a BPA liner, letter informs customers. “We never have, and never will, make false statements about our products,” letter goes on to say. Among legal challenges are cases charging it doesn’t use natural ingredients, that it hasn’t used BPA-free cans as long as claimed and sexual harassment. FIZZ shares have eroded from $118 last summer to current range in low $40s.