Beer Marketer's Insights
Benjamin Zuckerman, who helped guide his family’s century-old bev packaging brokerage, Zuckerman-Honickman, into new formats and segments as the industry changed, passed away on Tues, Nov 16, at the age of 72 at his home in Bryn Mawr, Penn. He is survived by his son Michael and three grandchildren. ZH, based in King of Prussia, Penn, just outside Philadelphia, has now prospered over 120 years thru 4 generations of the Zuckerman family, Ben’s son Michael noted to us yesterday.
At the helm of a company launched near the turn of the 20th century, Ben Zuckerman proved adept at spotting emerging trends and pivoting ZH to support them, seguing from being primarily a supplier to large CSD family franchises to entering the burgeoning new-age category servicing brands such as Mistic and Snapple, and expanding from a regional to a national footprint. That meant adding glass and PET packages to the mix and, more recently, cans, too. As a result, ZH became trusted supplier to many of the country’s fastest-growing bev brands as they broke out, including Fuze, Vitaminwater, Honest Tea, Bai, Jones Soda, Body Armor, Hint and Spindrift.
Ben was an integral part of this company for almost his entire life, as president successfully directing the company through some of its toughest times, Michael recalled. “We are where we are today in large part because of Ben’s vision, perseverance, as well as the team he was able to build,” Michael told us. “He focused on creating partnerships with both manufacturers and beverage brands in their infancy and mentoring them through many of the difficulties faced with growth. He thought of everyone at ZH as part of his extended family; he would do whatever he could for each and every one of you, professionally and personally.”
It may be the quiet holiday period but the churn in hyperactive CBD segment continues, with Michael Lewis quietly exiting as ceo of early RTD player Sprig. The brand is being managed by Michael’s former biz partner and cofounder Ethan Feffer, who comes out of legal services sector, along with a new partner, Tom Koss, who seems to be serial entrepreneur also based in SoCal. We’d reached out to Lewis for word on new products anticipated for launch this fall, but in email yesterday he declined to say more than that he’s left and is pursuing new opportunity. We weren’t able to track down Feffer for comment yet but we hear the new team has brought aboard former Sipp and Better Booch exec Josh Rosinsky to run sales effort as vp sales.
Lotsa balls in the air on this one, as Sprig had recently exited LA Distributing for more established Haralambos Beverage, only to see Haralambos sell out to Classic, which may have declined to take on the brand. So it’s not clear what status is of brand in key market. Sprig, of course, was one of earliest movers into space now amply populated by well-financed rivals and trying to defend its niche, with Lewis putting a hold on any further major expansions (BBI, Jul 20), tho whether that’s plan of new team is a question mark. Co earlier this year dropped dispensary-distributed THC line to focus on sparkling CBD line, 20 mg entry aggressively priced at $3.99 that has entered thousands of stores in couple dozen states, often via Bud houses as DSD partners. Presence Marketing had been enlisted this year to broaden reach. Among other recent moves in space, we’d recently heard that well-traveled bev exec Dan Holland has segued from running West Coast sales for Recess to ceo job at newcomer Mad Tasty launched by One Direction frontman Ryan Tedder (BBI, Nov 22). All this action at indy players are occurring at time the major vertically integrated cos like Canopy Growth and Tilray are readying their suites of RTD bevs for imminent launch in Canada and then US.
PROFILE: Cocktail Bar Habitue deBary Offers Proteau Line of NA Aperitifs, Starting with Ludlow Red
In time for celebratory time of year, NY-based cocktail maven John deBary has launched non-alc botanical aperitif called Proteau, starting with blend of blackberry, violet, black pepper, dandelion and fig vinegar called Ludlow Red. It just hit first on-premise accts in recent weeks, including Gamercy Tavern, Dirt Candy, Momofuku Ko and, as cocktail ingredient, influential PDT lounge, which melds it with Seedlip non-alc mixer for reconstructed Diablo drink. Due in spring is 2d sku: a sparkling variant called Rivington Spritz that’s made with Chinese rhubarb, gentian and champagne vinegar. Brand name is portmanteau of “prototype” and “eau” (water in French), while flavor designations will all adopt street names from Lower East Side, culinary hub where deBary is based.
DeBary, who goes by JdB, had enjoyed 5-year run at PDT before heading to bar director job at Momofuku restaurant empire, for whom he opened 10 restaurants, in later years moving to devise non-alc drinks that replicated texture of alcohol while offering complex flavor profile. He left 2 years ago to write a book that demystifies cocktails under title Drink What You Want and credits his “culture of procrastination” during that period for spurring him to experiment with botanicals and other ingredients that he ransacked at Kalustyan’s spice shop, longtime standby for city’s experimental mixologists. He settled on fig balsamic vinegar as offering right flavor and stable acidity level.
He said he’s financially backed by institutional investor whom he declined to identify, and copacking at small operation in northern NJ while seeking bigger-scale partner. He’s enlisted Park Street as distributor, tho so far the focus in NY is strictly on-premise, given state laws that make it illegal for NA items to be sold in wine & spirits stores, where brand like Proteau would be most at home. He’s made exploratory trip to LA, where regulatory climate is more welcoming for NA alc alternatives at retail. Info at DrinkProteau.com.
Happy Thanksgiving, readers!
Pulling the veil back on suite of so-called Cannabis 2.0 products it’s begun producing, Canopy Growth said it’s employing a process using trademarked phrase “Distilled Cannabis” in which whole-flower cannabis is distilled into a clear liquid for use in CBD and THC-infused bevs. The range of bevs includes Tweed-branded THC RTDs in 355-ml cans, THC-based Houseplant and Deep Space lines as well as a diverse array of CBD and THC sparkling waters under the Quatreau brand name. And a mixer line is in the mix, too, also under Tweed brand name. Unifying theme is intent to offer “the serving sizes and onset times that consumers experience with other beverage formats,” the co said. The cannabevs join array of chocolates and vaping items, and will be emerging from 150K-sq-ft bev plant in Smiths Falls, Ontario, that just received operating license last Fri from regulatory authorities (BBI, Nov 25). Some details, issued by co ahead of planned media event in Toronto tomorrow:
Tweed RTDs offer brand’s 3 core cannabis strains, including Penelope and Tonic containing 2 mg of THC and 1.5 mg of CBD, Bakerstreet & Ginger Ale and Houndstooth & Soda each contains 2 mg of THC per can. Thru alliance with Houseplant founders Seth Rogen and Evan Goldberg, Houseplant Grapefruit and Houseplant Lemon bevs each contains 2.5 mg of THC per can. Quatreau, mimicking popular sparkling essence waters, aim at wellness enthusiasts. Initial 4 bevs are Cucumber & Mint, and Passion Fruit & Guava, each with 20 mg of CBD, and Quatreau Ginger & Lime and Blueberry Acai, each with 2 mg CBD and 2 mg THC per can. More potent option is Deep Space, packed in smaller, 222-ml cans and containing maximum allowable THC payload of 10 mg. As for the mixers, Tweed Distilled Cannabis is packed in 150-ml bottles containing the clear-liquid Tweed Distilled Cannabis, for mixing with NA bevs or sipping on the rocks. The familiar Tweed strains are employed here, including Penelope (five 2 mg servings of THC and 1.5 mg CBD) and Bakerstreet and Houndstooth (each containing five 2 mg servings of THC but no CBD). They’re due early in the new year.
As noted, co also is releasing vape pens and cartridges, as well as chocolates developed in partnership with Hummingbird Chocolate, produced at former Hershey plant in Smiths Falls, once a chocolate production hub.
After operating pilot plant in LA for past 2 years that helps get new bev concepts off the ground quickly and cost-effectively in small quantities, bev incubator Power Brands Consulting is stepping up its game with lavishly outfitted new facility dubbed BevPac that can produce bevs in millions of units. That plant is having its shakedown run now, with capacity sold out thru year-end, but will open doors to new clients in Jan. Addition comes as Power Brands continues to expand fledgling sales/DSD distribution operation called BevGrow that helps get those newly incubated bevs to influencer retailers in Southern Calif and assesses feedback for needed tweaks. That means Power Brands now offers service range that runs from market intelligence to product formulation, package design, pilot production, mid-size production and sales/distribution, an integrated array we can’t recall seeing before outside the major bevcos. In phone interview yesterday, owner Darin Ezra joked that he often steps back and wonders just what he’s gotten himself into.
South African-born Ezra, of course, has long been familiar figure in bev innovation scene by virtue of work on brands ranging from Odwalla to Neuro and Diabolo, both of which he ran as ceo for a spell. Over the years Power Brands has played role in building client brands from Odwalla to LifeAid, even as it’s helped create new brands like Neuro functional drinks and Go Girl energy drinks. By now Power Brands claims to produce bevs for most of top 10 bevcos, including PepsiCo, Nestle, Danone, KDP and Molson Coors, as those players seek to become more agile in their innovation activities. Ezra said co employs 60 by now, including 9 staff food scientists, 5 graphic designers, even its own IP attorney. Co has been involved in 100+ new-product launches annually over past 16 years, he said.
His mfg setup in LA represents key piece of infrastructure to ease path of innovation for newcomers and established bevcos alike. It aims to solve conundrum of bev marketers who, working with development partner like Power Brands, wish to start small and continuously improve proposition but find they must navigate conventional copackers’ crammed schedules, long changeover times and high order minimums. We’ve reported on similar concept on East Coast where incubation co MetaBrand has established pilot plant at former Allen Flavors facility in Edison, NJ, for roster of clients that’s ranged from strategics like Hain Celestial down to scores of startups (BBI, Sep 18 2017 and Apr 19 2019). But investment in extensive range of new gear at Power Brands seems to put it on different level. Darin declined to specify pricetag beyond saying it’s many millions, and wondering again at his own sanity in extending himself so far. BevGrow sales/distribution arm, of course, weaves into mix a vital feedback loop at retail to help with further iterations of product.
The pilot facility, located not far from Dodger Stadium, has offered clients the ability to produce runs as small as 50 bevs off countertop unit, to 2K drinks for store test, to 25K for regional rollout. It can handle range of can sizes from 7.5-oz to 19.2-oz in conventional and sleek formats, along with bottles from 1-oz to 48-oz and includes small tunnel pasteurizer. But with clients clamoring for bigger runs of 1 mil packages and beyond, Power Brands embarked on new phase of development at site near LAX, bringing its mfg footprint to 40K sq ft all told. At time canning capacity has been squeezed, new unit operating as BevPac boasts 3 in-line canning lines and large counterpressure rotary filler. The plant offers full-scale tunnel pasteurizer as well as HTST and UHT treatments. It can produce up to 3 mil cans per month and similar amount of bottles, in glass or plastic, including hotfill, coldfill and with regular or ROPP caps. Darin said 95% of equipment is new and made in America, with exception of a few key pieces that were only available from European producers or on extended lead times in US. With reliability a key consideration, he opted for new chillers, compressors and other infrastructure to minimize breakdowns. Ezra said operation is highly automated from depalletizing stage onward, with exception of robotic palletizing arm he hopes to add soon.
The sales/distribution arm, which operates as BevGrow out of Van Nuys, wields own sales force under prexy Bill Juarez, who once ran Avanzar Sales & Distribution in region and has consulted for brands like energy newcomer 3D. It manages fleet of 10 vans plying about 1K retail accts, including Walmart and Target, in LA, Orange, Ventura and San Diego counties. By end of next year Ezra hopes to have expanded that to 30 vans servicing 3K accts. Smattering of info on various units is available at PowerBrands.us, BevPac.com and BevGrow.com.
Urban Mate Reps Collab with Lassen’s Retail Family Power Brands can always be presumed to have intriguing array of new brands emerging from skunkworks. Among those Ezra has key role in is Urban Mate, yerba mate RTD that’s “super-charged” at 140 mg of caffeine and was devised in collaboration with members of family behind venerable 11-unit Lassen’s natural-foods chain. It’s out initially in 16-oz bottles in Traditional, Ginger Lemon and Hibiscus Berry flavors, sweetened with cane sugar at 45 calories per bottle, but Darin said canned version will debut next month, with first distributor landed in Hawaii. Vibrant bottle graphics and ingredient panel can be viewed at under-construction site UrbanMate.com.
Bear’s Nutrition Wins $250K Prize from Calif Milk Advisory Board Power Brands also played a role in bringing to market line of dairy-based nutritional shakes called Bear’s Nutrition that earlier this month won inaugural startup competition sponsored by Calif Milk Advisory Board in tandem with VentureFuel Inc. In winning prize of $250K in “resources and funding” Bear’s Nutrition prevailed over 8 other finalists. Brand was created in Bay Area by David Sheu and Kevin Yeung, both parents who got idea while their families were vacationing together, and targets kids 3 and up with bev fortified with 10 g of protein, 9 vitamins & minerals and omega-3’s.
Familiar name from PepsiCo is latest alum to enter cannabis space. Jill Beraud, who used to run soft drink marketer’s successful jv’s with Starbucks and Lipton, has teamed with branding vet Charlie Herbstreith on CBD-infused tea called Má Functional Iced Teas, launching in 500+ Vitamin Shoppe stores. Operating out of Wilton, Conn, as Sh’nnong Beverage, partners claim to have retrieved recipe used by father of Chinese herbal medicine, Emperor Shennong, who added 20 herbs/spices to his Má teas. As contemporary twist, they’ve added hemp-derived CBD, initially in Green, Oolong and Bai Mudan versions priced at $4.99 per half-liter bottle. Announcement doesn’t state CBD level, but DrinkMyMa.com website indicates it’s 15 mg. Thru use of natural sweeteners, entries come in at just 10 calories.
Oolong Peach Spark, dubbed Focus, uses brain-stimulating adaptogens of ginkgo biloba, gotu kola and Rhodiola Rosea, along with 40 mg of natural caffeine. Lavender Berry Chill, dubbed Relax, uses blueberry-infused, caffeine-free Bai Mudan white tea blended with CBD, chamomile, lavender, lemon balm, elderflower and passionflower to impart calm and help reduce stress and anxiety, co states. And Emperor Spice Cleanse, dubbed Detox, also caffeine-free, is detoxifying brew with green tea, lemon, chamomile, schisandra berry and dandelion root. Launch partner, Vitamin Shoppe, has been among more aggressive chains in playing in nascent CBD space.
Recently elevated from marketing chief to prexy of Halen Brands’ Only What You Need nutritional shake brand, Mark Olivieri is moving quickly to shape org in anticipation of dramatic broadening of availability in 2020. Matt O’Connell, who’s built grocery biz over past 2 years, has been elevated to svp sales, covering all channels and customers, while sales strategist Blodin Ukella has been elevated to svp commercial, post where he’ll be “focusing on route to markets, revenue growth management, and our hyper-focused Maverick ASM program,” Mark told us, referring to area sales mgrs. who work to build activation and velocity in key markets such as NY. In 2020, Blodin will build out field sales org on national basis, Mark told us. As for O’Connell, he’s familiar figure in NY bev circles after 7 years managing NY market for Muscle Milk, which moves thru same house, Big Geyser, before seguing to national accts mgr at protein drink marketer Aloha. Muscle Milk, of course, is prime target for plant-based, allergen-free brand like OWYN. “Today’s consumers don’t want confusing, sugary, bulk-up protein,” argues Olivieri. With Mark moving beyond day-to-day on marketing side, he’s seeking marketing vp to take his prior role. Also being sought are additions to ecommerce team focused on lifecycle marketing, growth and tech, he told us.
As reported earlier this month, Olivieri got nod from Halen chief Jason Cohen to take reins after working at Cohen’s side to refine and establish brand (BBI, Nov 6). It comes as brand created by husband-&-wife team of former athletes has demonstrated good connection with consumers in its first full year of retail availability in 2019. Mark cited SPINS data that OWYN now generates the most sales per SKU of any protein RTD brand in natural channel and is top driver of $$ growth for protein RTD category in specialty channel. On Amazon, it’s top vegan protein RTD. And at its key DSD partner, Big Geyser in NY, OWYN will hit a case depletion threshold that rivals some of house’s water brands – no mean feat given that most consumers drink fewer protein bevs than waters or other hydration items. Olivieri cited consumers’ high social engagement with brand and repeat frequency. With brand responding to DSD in NY, he said OWYN will build out network in NJ and New England in first qtr of 2020.
Among authorizations due next year are 5K CVS coolers containing 3 facings – first plant-based protein to get national Plan-O-Gram, Olivieri said. That goes live in April. Albertsons/Safeway’s Vons unit in SoCal comes aboard in Jan, followed in Apr by grocer’s NorCal stores. In markets served by DSD, Target has committed in Jan to place OWYN in open-air coolers. Fresh Market chain comes aboard in Jan, and Publix tests waters that month starting in about 100 stores. Key partner Whole Foods will augment SKU count with Cookies & Creamless nationally late in Q1.
Brand finally is ready to look overseas, too, planning move into Australia and UK, initially via ecommerce channel.
SCANNER TRENDS: CSD Volume Slides on Higher Pricing; Energy Weakens; Body Armor Continues to Surge
CSD volume declined 2.6% (down from -1.1% for 12 wks) as avg price increases rose half a percentage point to +3.4% for 4 wks thru Nov 16 in Nielsen all-channel data reported by Morgan Stanley. In this mid-cycle update, “there does not appear to be much impact from an earlier Thanksgiving last year,” noted equity analyst Dara Mohsenian. Coca-Cola CSD volume diminished from 1% gain to 2.7% decline for 4 wks as its avg price increase more than doubled to +4.6%. PepsiCo CSDs were down 4.9% (vs -4% for 12 wks) on avg price gain of 2.3% last 4 wks. PEP avg price increased +3.2% for 12 wks, +4.5% for 52 wks. Keurig Dr Pepper CSD volume was off 0.6% on avg price increase of 3.6% for 4 wks. Private-label brands had slight (-0.2%) decline with avg price increase of 1% last 4 wks.
Weaker Energy Trends Energy drink volume rose 4.8% on avg price increase of 2.1% for 4 wks in all-channel. Volume up 5.7% on higher avg price increase of 3.2% for 12 wks. Monster Energy volume was flat even while avg price increases were substantially lower at +2.5% for 4 wks. Red Bull volume was up 4.1% (+6.1% for 12 wks) with a very small avg price gain of 0.2%. Red Bull prices have been around flat for 12 wks and off 0.3% for 52 wks. Unfortunately, in this set of data there’s no breakout for red hot Bang Energy drink. Recall when we reported scanner trends earlier this month, Bang volume had more than doubled, up 122% for 4 wks thru 11/2. Even with big volume gains, Dara noted that Bang market share was “7.7% in the last week of data, below 8.1% at the end of the prior four-week period.” Rockstar volume dropped 11.4% on avg price gain of just 0.6% for 4 wks. PEP energy brands, which are at just 3 share of segment $$, were up 0.5% with small 0.3% avg price increase for 4 wks.
Sports Drink Volume Accelerates, Mainly on Body Armor Gains Sports drink volume gain improved to +7.8% (up from +5.9% for 12 wks) on avg price increase of 4.1% last 4 wks. PEP’s Gatorade trends improved last 4 wks with volume gain of 5.3% (vs +4.4% for 12 wks) and avg price gain of 2.4%. KO’s Powerade improved to flat (vs -2.5% for 12 wks) with lift from avg price decrease of 3.9% for 4 wks. Body Armor volume gain accelerated to +88.2% (up from +75.9% for 12 wks) as its avg price decrease more than doubled to -4.1% for 4 wks.
Private-Label Driving Water Growth Bottled water volume increased 5.6% (up from +4.7% for 12 wks) with small avg price drop of 0.7% last 4 wks. Private-label waters, which account for nearly 1/3 of segment $$, grew volume 10% on 1.3% avg price discount. Nestle (at 26 share of $$) had 2.9% volume decline on 1.5% avg price gain last 4 wks. Coca-Cola water volume improved half a percentage point to +1.9% with avg prices up 1.3% for 4 wks. PepsiCo water volume was flat for 4 wks as its avg price gain was down to +1.4% vs +3.6% for 12 wks.
“CBD has the potential to harm you, and harm can happen even before you become aware of it.” That’s among sobering observations made by FDA in updated consumer guidance issued last night that punctured any hopes it would adopt softer stance that moves segment toward greater regulatory clarity. Far from greenlighting edibles like CBD bevs, FDA made case that, given paucity of research to draw upon, clinical trials might need to be undertaken first, given stance agency took in approving Epidiolex epilepsy treatment that CBD is a drug. So agency refrained from offering verdict that CBD is “generally recognized as safe” as food/bev additive, as many in space have been hoping. Bottom line: “It is currently illegal to market CBD by adding it to a food or labeling it as a dietary supplement.” Among our contacts, some had been anticipating that FDA might be moving to greenlight CBD entries within certain allowable limits as a precaution, but it’s taking much more stringent approach, to the approval of skeptics like Center for Science in Public Interest. “As of now,” CSPI declared, “given the gaps in the research noted by FDA, CBD makers have an uphill battle on their hands.” As if to assure observers that it’s not kidding, FDA separately issued barrage of warning letters to 15 CBD players (none of them RTD bev marketers, to our eye). FDA said it’s still planning in coming weeks to provide roadmap on “potential pathways” to legality, but yesterday’s update make its clear agency is unwilling to take chances where consumer health is concerned.
The update today rocked cannabis shares that had already been under pressure as cos spent heavily ahead of a market that’s taking longer than anticipated to materialize, yielding massive losses even as toplines remain modest. Tho Canadian market has disappointed so far, most big players have regarded it as dress rehearsal for the bigger show south of the border. That horizon may have just receded last night. “Balloon-bursting” is how analyst Bill Kirk of MKM described language of updated guidance in this context, as reported by Yahoo Finance. Of course, in Trump administration that’s taken anti-regulation stance across range of areas from finance to environment, FDA remains an outlier. “The FDA is committed to setting sound, science-based policy,” it assured consumers yesterday. In issuing assessment it cited concerns about issues ingesters might not notice, including liver injury, interactions with other drugs and “male reproductive toxicity” seen in animal-based lab experiments. Among those that consumers will detect are sleepiness or insomnia, gastrointestinal distress and mood changes such as irritability and agitation. “We encourage consumers to think carefully before exposing themselves, their family, or their pets, to any product, especially products like CBD, which may have potential risks, be of unknown quality, and have unproven benefits,” FDA urged. Update can be accessed here. Warning letters are here.
In Fri story discussing first earnings release of recently spun-off BellRing Brands, we fumbled name of protein powder and shake line Premier Protein, key brand in portfolio that also includes Dymatize, PowerBar, Supreme Protein and Joint Juice. BRBR was spun off from Post Holdings a few months ago. We apologize for error . . . Cannabis player Mood33 slightly missed Oct ship target we reported earlier this fall for its Hemp Infused Herbal Teas (BBI, Sep 13), but 6-flavor line employing 33 mg of sustainably sourced full-spectrum Evo Hemp has now gone live, due for formal debut at upcoming BevNet Live conference in Santa Monica in Dec.