Alliance between Anheuser-Busch InBev and Tilray dubbed Fluent Beverages will make its debut in Canada next week with CBD tea brand called Everie as curtain rises on legalized sales, Bloomberg reported. New line will kick off in recipes that are 98% pure CBD with only 0.05 mg of psychoactive THC, news service said, in Lavender Chamomile, Vanilla Rooibos and Peach Ginger Green flavors. For now, ABI doesn’t plan to move into THC-infused bevs nor will it be selling the Everie CBD drinks in US until regs open up, said Kyle Norrington, prexy of ABI’s Labatt Breweries of Canada unit. Next up will be non-alc sparkling CBD bevs, due early next year.

“Cola meet coffee,” as slogan has it. Straying outside its durable Starbucks alliance to further participate in burgeoning coffee segment, PepsiCo in Apr will launch cola/coffee hybrid called Pepsi Café with double the caffeine of its core cola. Brand will debut in 12-oz slim cans in Original and Vanilla flavors. It represents a reprise of unsuccessful experiment undertaken in 1996 under Pepsi Kona brand name, before category-blurring entries were a fixture of retail landscape. New brand seeks to meet consumers’ “needs of energy, indulgence and refreshment during that afternoon pick-me-up occasion,” in words of Pepsi marketing vp Todd Kaplan. PEP seems to have been keeping this launch close to vest, with no overt signs of entry amid welter of new stuff at recent NACS c-store expo (BBI, Oct 3). Archrival Coca-Cola has been playing similar hand overseas with Coke Plus Coffee, which seems headed to US soon, too.

As cannabis segment gradually moves toward mainstream, experts have been urging THC players moving thru dispensaries to adopt more of trappings of conventional CPG, devoting requisite attention to notions like coherent branding and retail merchandising.  Like invasive gypsy moths stowing aboard cargo ships, practice of demanding retail slotting fees seems to be along for the ride, to displeasure of some segment participants, as coupla panels at last Fri’s Cannabis Forum suggested. 

At BevNet event in Santa Monica, coupla speakers noted that pay-for-placement tactic already has become an established feature of dispensary channel.  Zola founder Chris Cuvelier, now managing bev buildout for acquirer Caliva, said slotting is a fact of life in dispensaries and there’s no reason to expect that conventional retailers will prove any different as big chains begin to play in that biz, too.  “In the mainstream market we’re not seeing it yet because it’s mainly independents, but I’m sure that’s coming as well,” he told BevNet audience.  Since Caliva also operates its own dispensary, it’s on both paying and receiving ends of arrangement, Chris pointed out.

Later that day, offering view from “both sides of the counter,” per title of his presentation, NUG founder Dr John Oram was more critical of practice, which he decried for slipping into still-ramshackle system that hasn’t yet moved to consistent planning or post-distribution sales support and education.  So retailers too often are focused on short-term sales, constant bogo’s, getting the cheapest wholesale price and asking for slotting fees “just because.”  When NUG challenges practice, buyers respond that they need to show the boss they’re bringing in revenue.  “They don’t understand that the highest-paying brand may not be the one that sells through,” he said.  That approach leaves almost no focus on merchandising or co-marketing, making brand loyalty very hard to establish.

Over past year, NUG itself has become retail player, first with dispensary in Sacramento, more recently with unit in San Leandro and with 3 more under construction.  He said he’s trying to fight tide via alternative approach, experimenting with different merchandising strategies (say, via displays organized by category or brand) with suppliers who’re not charged slotting.  Aim is to steer away from slotting practice and devote resources to more productive co-marketing programs instead, via text-message, Instagram or other mechanisms, with view to building profitable brands and traffic.

Sparkling tonic with European flair called Corsa that was devised by “recovering accountant” in LA got judges’ nod as winner of BevNet Live Showdown, besting 5 rival finalists that perhaps didn’t carry their functional intentions quite as lightly. “It’s a clever brand, it is focused, and they kept their messaging simple and refreshing,” applauded judge Ken Sadowsky, who serves as investment scout for Verlinvest family office, among numerous other roles in bevs. But Zico Coconut Water founder and PowerPlant Ventures partner Mark Rampolla told BevNet that Corsa likely should decide whether it wants to be botanical drink or sweet indulgence so it can simplify message to retailers and consumers. We’d profiled the 6 yesterday (BBI, Dec 10). Among notable past winners of Showdown have been Health-Ade Kombucha and HopTea hop-infused teas.

BevNet Live just another gabfest?  Certainly not in case of CBD bev panel assembled for this year’s event: trio of rivals invited to participate have gone a step further and decided to join forces via informal consortium that will lobby for greater regulatory clarity.  The trio – Ben Witte of Recess, Jonathan Eppers of Vybes and Joey Cannata of Daytrip – indicated they plan to invite other CBD players to join effort, which may pool members’ resources to produce white paper that clarifies safety issues, just as energy segment did in 2013 when Congress was holding hearings about possible dangers of caffeine and energy drinks, as former Rockstar exec Cannata recalled.

They disclosed move in lively panel in which they put better face on recent FDA moves that some had seen as presaging tough view on CBD, as agency indicated it’s not inclined to regard CBD as “generally recognized as safe” (BBI, Nov 26).  Reaction was “a little bit overblown,” said Recess founder Ben Witte.  As important was what was not said, he pointed out.  As for warning letters that agency simultaneously sent out to 15 cos, if FDA “really wanted to slow down the category, it would have sent us letters who’re here on stage but didn’t; it only sent letters to the worst actors in the space.”  So he’s not unduly alarmed, and still anticipates receiving greater regulatory clarity “some time next year.”  Added Cannata: “It comes down to bad actors,” noting that one of warning letter recipients “encourages you to use it for infants and children.”  He also praised his rival at Vybes, Eppers, for posting all his certificates of analysis (CofAs) online where consumers can view them, indicating that’s practice that responsible players can be expected to emulate.

Tho Witte and Eppers are new to bev space, Cannata brings benefit of 16 years’ experience as member of founding team of Rockstar Energy (not to mention having longstanding tie to Calif gov Gavin Newsom, for whom he ran early election campaign prior to joining Rockstar).  Perspective gained at Rockstar has enabled him to be patient amid current regulatory unrest, recalling similar controversy over taurine ingredient in Canada in early days that caused major chains like Couche-Tard to stay on sidelines, just as big retailers are today with CBD.  Eventually, determination that taurine doesn’t represent any danger to consumers “opened the floodgates” and leader Red Bull was everywhere at retail within 3 months.  “I feel the same thing will happen with CBD,” he said, particularly as political pressures to assist farmers hit by trade war build.  “In Oregon you see hemp fields dying because there’s not enough demand,” he observed.

At another point, Cannata noted that even in its nascent stage the energy segment once was dauntingly crowded with competitors just like CBD is today.  At first NACS show at which segment emerged, 40-50 had booths, at time there were couple hundred brands in market.  So it’s question of “just being patient, waiting for things to fall into place,” while staying focused on brand and message and putting together best team.

Meanwhile, even tho CBD is sidelined from national retailers, interest and awareness are “off the charts,” Witte noted.  So once coast is clear, every retailer will be carrying CBD brands within 2 months – and not in obscure parts of store, but right in prominent endcaps.

Some other observations from panel yesterday:  

CBD likely won’t be exception to big players’ innovation challenges   “No offense” to likes of Coke, Pepsi, Budweiser and Diageo, “but a lot of their growth over the years has come from M&A activity, I can’t think of many brands created from scratch,” said Daytrip’s Cannata.  Most of their successful new entries have come via acquisition route, “not from the ground up.”  (BBI editor made similar observation in BevNet magazine column last spring.   

CBD may not be center of marketing focus   Recess’ Witte is among cannabis execs who’s consistently argued that CBD is only getting the emphasis it currently receives because of its novelty and regulatory situation.  In the longer run, “my thesis is CBD is no more interesting than caffeine or whey protein . . . Fundamentally, I don’t think the consumer wants to hear 50 facts about hemp all day.”  So it’s question of devising right applications and formulations, then building brand on top of it, as Witte is doing at Recess by building content machine that serves creative types.  That’s what happened in energy (notably at Witte’s model, Red Bull), and “we don’t call it the caffeine category, we call it the energy category.”

 Mushrooms, adaptogenics and sparkling tea – but not CBD – were at the heart of finalist entries in BevNet Live Showdown, with winner to be announced later today.  Competition is sponsored by Coca-Cola’s VEB incubation unit which offers $10K in ad value to winner.  Here are thumbnails on those who made the cut via vote of judges and attendees yesterday.

Shroomi Mushroom Shots Focus on Mental Health   Playing on growing interest in adaptogenic mushrooms, Shroomi offers 2-oz shots to create a brand centered around mental health, said founder Taylor Jarvis Gargon, who cited jolt he got when he realized on Father’s Day that his father had tried to take his own life.  So shroom varieties like chaga, cordyceps and lion’s mane are harnessed to superfruits like yuzu in “east meets west” recipes.  Items lean on array of evidence from clinical studies that medicinal mushrooms can boost immune system, prevent viral infections, etc.  Hard from info on small package to tell about mental health connection, offered BevNet cmo Mike Schneider, but Interact creative partner Fred Hart was “blown away by the taste,” tho he wondered whether it might be wiser not to lean on mushroom identity so much and use different “Trojan horse” to pique shoppers’ interest. “There are not a lot of beverage propositions out there to support mental health,” said VEB’s Bill Ford. 

Heywell Boosts ‘Wellness Journey’   Heywell is functional line packed in 12-oz slim can that was devised by pair of entrepreneurs named Britt Dougherty and Ashley Selman who claim combined 25 years working in bev biz and finding it difficult to stay on their “wellness journeys,” as one put it.  (Britt spent a decade doing insights & engagement for Miller Coors while Ashley had 16-year run at Coors and then Miller Coors, per their LinkedIn profiles.)  The drinks meld organic caffeine with herbs and other functional ingredients in trio of initial flavors that balance sweet and tart notes:  Energy + Focus (Strawberry Lemon), Calm + Restore (Blackberry Ginger) and Energy + Immunity (Grapefruit).  Slide showed placements at cutting-edge Chicago retailers like Goddess & Grocer, Olivia’s Market and Foxtrot Market.  While Chebotarev worried that it seems like “another me-too product,” Schneider argued that “me-tooness” can be a good thing in educating shoppers about ingredients and functions.  Price of $3.99 might be “a bit challenging,” said Verlinvest sr advisor Ken Sadowsky.  Julie Terrazzino, sr category mgr for bevs at broadline distributor KeHe, liked interesting, calming package palette.

Corsa Botanical Tonic Puts Users on Health Journey   Created by “recovering accountant” Matt Kornberg as chief botanical officer, Corsa Botanical Tonic offers plant-based European-style sparklers in glass bottle that attempt to serve as “vacation in a bottle.”  Employing brand name that means “journey” in Italian, line started with trio of flavors: Kola, Spritz (Dolce Vita-inspired) and Cays (Caribbean spice), all meant to be “beautiful and transporting drinks.”  Each flavor contains at least 10 botanical extracts.  Brand has started gradually, hitting just 30 accts across LA so far including Erewhon, Equinox and Soho House.  It’s in discussions with Whole Foods.  SRP is $3.69.  It’s been recruiting talent bringing experience at Purity Organic, Ugly, Torii Labs and Soho House.  “Extraordinary” liquid, said BevNet’s Schneider while Interact’s Fred Hart said he “loved the taste, each one very unique, the branding is great, very aspirational.”  “The brand is cool,” said Cambridge Capital’s Polina Chebotarev.

Sofee Beverage Is Sparkling Coffee from ‘Craft Beer Nerd and Coffee Snob’   Sofee Beverage founder Chad Hazen describes himself as “craft beer nerd and coffee snob.”  Sofee reflects that as 12-oz canned carbonated “coffee for the curious” from home-brewer and home coffee roaster.  It’s all-natural, infused with CO2 rather than nitrogen and sweetened with agave nectar and monk fruit.  It offers a 6-month shelf life.  Initial entries are The Purist, the Hedonist (orange mocha) and The Masochist (highly caffeinated), with an oatmilk latte also on the way.  Gelson’s will carry in all stores and Tullamore Irish Whiskey has been lined up as on-premise cocktail partner.  VEB’s Bill Ford said “formulation is great, label really chic, minimalist” with “fanciful, playful” flavor names, but PowerPlant principal Mark Rampolla said he’s not quite convinced it’s going to resonate.

Dr Scobii Water Kefir Sparkling Probiotic Tonic Aims to ‘Supercharge Your Day’    New entry in what seems to be burgeoning water kefir segment goes out under name Dr Scobii in 12-oz glass bottle that can help “supercharge your day!”  It’s out in Sea Buckthorn, Blackcurrant, Coconut and Pineapple flavors, with flavor profile more like soda than kombucha.  A “probiotic for everyone,” is how it’s pitched.  It’s in Erewhon chain in LA and Down to Earth in Hawaii.  BevNet cmo cited “extraordinary” taste but thought those were “pretty longtail flavors” with more accessible flavors maybe warranted.  And “I don’t like the name because a SCOBY is what you use to make kombucha,” not a water kefir.  BevNet founder John Craven worried that rival product from kombucha leader GT’s with lighter taste profile is potent threat.

Spritz Sparkling Tea Aims to Empower Women    Sparkling tea segment keeps drawing new entrants, with BevNet Showdown competitor Spritz seeking role of empowering women.  The canned entry Spritz aims to be “go-to drink for health-conscious women throughout their day,” said founder Kathryn Dougherty, a former strategic marketing exec at Johnson & Johnson.  It’s “softly sparkling” entry with “more than an essence with elements of fruit, sweet and tea” and zero sugar or calories.  SRP is $2.99 and 1% of net revenue goes to women’s empowerment orgs.  Brand is based in Columbus, Ohio, had its inaugural run last week and is starting locally, then moving out thru Midwest.  “Would have liked to have a little bit more of a tea payoff,” said VEB’s Kellam Mattie, “very much like a White Claw non-alcoholic option.”  Offered KeHe’s Julie Terrazzino:  “There’s a lot of people moving away from soda into beverages like this,” tho she too expected more of a tea flavor. 

“We are 18 months in and it feels more like KDP than it does Keurig or Dr Pepper,” said Derek Hopkins, chief commercial officer of KDP during interview with Beverage-Digest exec editor Duane Stanford at Future Smarts conference in NY yesterday.  There were certainly plenty of skeptics when cos struck deal in Jul 2018.  “People are skeptical until you actually deliver,” said Derek, and “if you look back at the past year” you could say KDP delivered.  KDP gained or maintained share in every category it competes in, while pulling together an organization with 25K employees.  “As you deliver and perform, the skepticism goes away,” he added.  Part of that massive integration was losing some key allied brand partners, including red-hot Body Armor.  Derek didn’t focus on what-if’s.  “The way we look at it is, the partnerships have to be mutually beneficial,” said Derek, and added it’s “important to look at what we did” in response, such as buying Core, bringing in brands like A-Shoc, Forto, Peet’s, among others.

Asked if KDP has want or need to take over more of its distribution going forward, Derek responded, “we are in a very good place” with dist partners. He cited growth of Dr Pepper share over past few years, and while crediting “some very good marketing” with its college programs, he flagged brands’ “distribution partners” as other key reason for gains.  “It’s a profitable brand for them” and KDP is “very happy where we are.”  What about need to invest in refrigerated distribution over next 5 yrs or so?  “For us, there is still so much space in shelf-stable” and “that’s where our focus is,” replied Derek.  He noted KDP will keep an eye on it, and if opportunity or need arises, they “will certainly invest.”

Keurig Connect The Dots  Derek shared some thoughts on Keurig Connect brewing machines that are connected to Internet and give KDP and its coffee partners tons of data to mine.  So far machines are in about 13-14,000 homes.  “We understand exactly what brand they’re brewing, the time of day, the size” and other customizations consumers select, said Derek.  “We take that data, and it’s really the first in-home consumption data that exists for a CPG company,” which KDP then compares with IRI household data “and provides that overlay to our coffee partners.”  So far, they have “gotten tremendous amount of insights out of that.”