Beer Marketer's Insights
Remember Blue Ox Energy? For a while, as Red Bull ignited, rivals ransacked the menagerie for macho-skewing species that could be harnessed for their own knockoffs, before segment consolidated around handful of major brands and extinction loomed. Not intimidated by this history, nutrition chain GNC is advising that “The stampede is coming, America” as it opts for Mad Pony as moniker for its own entry into so-called fitness energy segment. New line being sold exclusively within chain and on GNC.com employs extract called NeuroFactor, CoQ10 and GABA at its heart, along with 200 mg of caffeine, initially in Cherry Berry, Orange Mango and Watermelon flavors. SRP is $2.49 per 16-oz can. To try to generate buzz among youthful consumers, co launched brand on TikTok platform via “BuckHardChallenge,” in keeping with brand’s “Get Mad. Buck Hard” credo.
Nutrabolt is continuing to build out its Cellucor C4 line of RTD energy drinks, now commencing shipment of gray-can subline called Smart Energy that aims to complement core line’s “below-the-neck” functionality with corresponding “above-the-neck” functionality. New entry, teased a few months ago (BBI, Sep 3), contains Cognizin and other brain-enhancing ingredients, in contrast to workout-oriented ingredients like beta-alanine and citrulline of C4. It contains 200 mg of caffeine like core C4 line, and debuts in Freedom Ice, Electric Sour, Cotton Candy and Peach Mango Nectar flavors, with Rainbrow Frost waiting in the wings.
But it’s getting “more controlled launch” than yellow-can mainstay, founder/ceo Doss Cunningham told us this morning during visit to Nutrabolt hq in Austin. Initial retail customers are mainly specialty retailers and gym chains, tho Walmart also is picking it up and it will hit a few of C4’s DSD partners, including Big Geyser in NY, Doss told us. Tho in past years Cognizin-based RTDs like Nawgan had proved a struggle, timing seems to be better these days and, as Cunningham, incorporating them into broader vehicle like energy drink should make it more accessible. It’s line-priced with C4.
Smart Energy joins expanding array of sublines that includes silver-can C4 Natural Energy and black-can C4 Ultimate, with heftier 300 mg caffeine payload. Natural extension has been performing well at pair of initial retailer partners, Sprout’s Farmers Market on grocery side and Lifetime Fitness on on-premise side, Cunningham reported. New year will see that brand start to expand from that base. Co also is pushing harder to boost RTD in overseas markets like Europe and Canada, where powder line already has enjoyed a presence for about a decade. This fall Nutrabolt brought aboard Monster Beverage and Bang Energy vet to help orchestrate push.
Core C4 RTD line has also received some tinkering. It’s upgraded from sleeve to printed can, further upsized brand name and moved “zero sugar” callout to prominent disk placed near top of can. Cunningham said 2019 was all about getting distribution and brand had productive year, recruiting 90 DSD partners to cover 75% of US market, with network anticipated to be completed by end of Q1 to support servicing of growing array of national accts. ACV remains low, at 26%, with 18 pts of that accounted for by Walmart, which places brand in innovation set rather than higher-velocity energy set. In those other 8 pts of coverage, velocities have been encouraging, and in market like NY, with strong DSD partner, C4 already ranks as 4th-largest energy player over past 4 weeks, Doss noted. So far, then, premise seems to be resonating in segment that’s driving a lot of energy growth these days.
Rocky Mountain High Brands has landed pair of affiliated distributors in NY to bring its new Hempd Infused flavored CSDs to retail in city’s 5 boros and surrounding tri-state area. Dallas-based RMHB has enlisted Daniel Foods and Abraham Food to carry Hempd, which is labeled as carrying 20 mg of hemp extract. Asian-operated houses have deep reach into area’s bodegas and c-stores. RMHB prexy/ceo Michael Welch said new partner will pick up other lines from co early in new year, too.
Long aggressive on bev container deposits with its 10 cent deposit on soda and beer packs, Michigan now may move to corral noncarbs too. Legislation updating 41-year-old so-called bottle bill includes water, sports and energy drinks, juices, RTD tea & coffee, wine & liquor and mixed drinks, Packaging Strategies reported. Tho redemption rate of covered categories hit 89% in 2018, broader reg should elevate rates across the board by reducing consumer confusion over which bevs are covered and offering further financial incentive to return bottles and cans, per Susan Collins, prexy of non-profit Container Recycling Institute. Currently, noncarbs are recycled at mere 20% rate in state, pkg trade noted. Nationally, only 10 states currently have bottle bills in place, with 4 having added noncarbs to deposit laws: Calif, Hawaii, Maine and Ore. NY and Conn have added water to their deposit laws, while Iowa and Vermont have added wine and/or liquor, Packaging Strategies noted. This year, 9 other states intro’d bills to create new deposit systems. No assessment in story of legislation’s prospects. It can be accessed here.
Alkaline water brand Aquahydrate is prepping aluminum bottle that can fill void at growing ranks of retailers and corporate accounts that are souring on single-use plastic bottles. Tho staffer at new parent Alkaline Water Co said co likely won’t be ready to discuss entry until Jan, we’ve spotted promo image of 750-ml aluminum bottle in slim, straightwall shape with “Aqua” part of name in arrayed vertically in giant letters flanked by “hydrate” in smaller font alongside assurance that “We can hydrate better,” clear reference to both functional properties of high-pH brand and greater sustainability of new package. Move comes as leading-edge retailers like Jimbo’s natural chain in brand’s home base of Southern Calif have begun to oust PET-bottle waters from their stores; during recent visit to Erewhon’s store the water shelf set seemed to be dominated by glass-bottle brands. Other accounts from corporate and college campuses to SFO airport are adopting similar stance, prompting plastic-only brands like Aquahydrate to explore alternatives. No word on pricing, timing or extent of rollout for now.
“Build a great beverage first, then infuse it.” That’s strategy of Zola founder/ceo Chris Cuvelier to play in cannabis space, as he told Cannabis Forum audience this month in Santa Monica. But he’s employing unorthodox structure to do so: allied with cannabiz giant Caliva, first as an investor and consultant, then as an employee after Caliva bought his company from prior owner KarpReilly, the private-equity shop. The alliance brings together two complementary cos based in Bay Area: one of them an established plant-based bev player with base of 7K retail accts and seasoned team, the other a cannabis powerhouse operating vertically integrated growing, extraction, production and retail operation in San Jose. “We both believe infused beverages could be huge,” said Cuvelier. The CBD effort is a vehicle “to bring more people into the plant-based category.” As a combined co, the partners bring a base of brands that include Zola itself and Caliva’s in-house brands, including Caliva and Dogwalkers, along with the depth of expertise to be a regulatory resource for retail and distribution partners. In sign of trusted role it seeks to win, employees at its dispensary are termed “wellness consultants” rather than “budtenders.”
In presentation at conference put on by BevNet, Cuvelier set table for imminent product intros that will include an unidentified new brand that had first production run this month, another entry under Zola brand and a 3d brand due in Q1. With Cuvelier still holding P&L responsibility for Zola even as he runs bev planning across broader co, he’s working with agencies on pkg, driving product development & formulation, talking to emulsion cos to better understand process improvements, prepping for distribution of hemp CBD (HCBD) in mainstream market and building out team. Chris believes Zola brand is well suited for both HCBD and THC segments.
Launched in 2015 by Rich Brown, Caliva now sports 160K-sq-ft facility in San Jose’s so-called “green zone,” product of $50 mil investment. It’s fully licensed and vertically integrated, from 13 grow rooms thru on-site oil extraction and product mfg thru final sales via dispensary that ranked #1 in US in 2016. Caliva manages a 100-person sales team and operates own DSD, to service 250 out of 600+ licensed dispensaries in Calif even as 200 delivery drivers each day process DTC orders.
How Zola Evolved from Acai Play to Plant-Based Champion Zola history may be familiar to some BBI readers: Chris launched first packaged acai juice in 2002, generating $250K sales first year and pulling in first outside capital in 2006. Acai proved a challenge because it got very fragmented and drew influx of supplement players (Chris didn’t say it, but many weren’t above-board). So Zola pivoted from superfruits to broader “fruits of the world.” On surfing forays during trips to Brazil to support acai supply chain activities, Cuvelier had noted that local coconut water was very salty, so he went to Thailand to source better-tasting ingredient in 2012. Key milestone occurred in 2016, when KarpReilly came in as investor – not just taking stake but acquiring entire co and inducing founder to stay on. With new resources, Zola doubled down on 100% plant-based positioning, at time coconut water segment had grown to triple the size of acai. Meanwhile, after having strategized for 7-8 years on how to get into biz, Cuvelier was beginning to see HCBD market get some traction. KarpReilly managing partner Allan Karp bought into argument that Zola was perfectly positioned for space, since it already was about plant-based solutions. Tho segment already was getting crowded, Zola already had account base of 7K retailers and seasoned team in place.
How Zola/Caliva Deal Came Together: ‘Buy Me’ As it happens, Zola and Caliva seem to have been put together by a stranger to both. At cannabis conference in Las Vegas last year, Cuvelier and Caliva ceo Dennis O’Malley were taking questions from dais when attendee asked O’Malley, why wouldn’t you and Chris get together? “Dennis looked at me and smiled and said that’s a good idea,” Chris recalled. O’Malley invited Cuvelier for Caliva tour, and within a week Cuvelier had invested his own money to close out $75 mil Series A round that included likes of ex-NFLer Joe Montana and tech vet Carol Bartz, who’s chmn. Chris began consulting for O’Malley on bevs in Nov 2018, inaugurating relationships with emulsion cos like Sorse that have handle on way to make hemp oils immersible in water. Productive partnership led to discussion about more formal arrangement and Cuvelier said, “You should acquire Zola,” as he recalled. O’Malley did.
Challenges of Cannabis Category Cuvelier didn’t disguise how difficult the category is currently. It was very limited base of production capacity for THC and HCBD bevs that prompted Caliva to build its own bev plant. Mainstream packaging suppliers still aren’t ready to sell to cannabis cos. “One company we worked with for 10 years said if we find a bottle with our code with cannabis, we’re going to come after you,” Cuvelier recalled. Distribution also remains a challenge. Caliva is leveraging its internal DSD for its THC products, while Cuvelier’s team is working the bev contacts it’s cultivate over 18 years to find partners for HBCD. Mainstream retailers remain nervous about HCBD – and “it’s hard to build brands in only 700 doors.” Marketing tactics like Google and Facebook ads often prove to be illegal for cannabis. So for now, “we focus on a sustainable return on investment, not burn through tons of cash,” Chris said. A further layer of complexity comes from dealing heavily in cash as banks shy away from segment. So Zola/Caliva has been testing different payment systems as work-arounds.
Among bev-specific challenges Cuvelier highlighted were the poor quality of first wave of cannabevs employing preservatives and high sugar content. Dosing remains unreliable. Onset times are slow – often prompting impatient users to drink another one, only to eventually find themselves “sitting on couch for 8 hours, which is not good for anybody.” (Nano-emulsion techniques hold promise of mirroring alcohol onset times.) Long degradation times have opposite effect, “one and done.”
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St Patrick's Day set up doesn't get much better than a Friday with March Madness tipoffs to boot. So even tho on-prem recovery remains slow-going, the channel "should see significant velocity uplifts" CGA suggests, seeing green shoots ahead for today's Paddy's Day celebration. A third of consumers plan to celebrate in hospitality venues, including 47% of 21-34 yr olds, per latest survey of ~1600 consumers across FL, TX, CA and NY.
MC debuted new ad campaign for Blue Moon LightSky with tagline "Serious on Flavor. Light on Serious," co announced. New 15-second ad debuted on TV and across digital channels during March Madness tourney, depicting two friends discussing "citrus" and "light and effervescent" tasting notes of LightSky while also playing mini golf. This juxtaposition of being "serious about flavor without taking itself too seriously" is an interesting message for brand aiming to balance communication of its craft attributes while also appealing to broader audience.
Tho AB trends remain soft in the US, Anheuser-Busch InBev continues to rack up global mktg honors. ABI will once again be awarded the Cannes Lions "Creative Marketer of the Year," the 1st time a company ever won 2 yrs in a row. Award recognizes co's "sustained creative excellence that has driven sustainable business growth," org wrote in announcement yesterday.