Beer Marketer's Insights
AriZona Iced Tea marketer Arizona Beverages formally opened giant Production, Manufacturing & Bottling Facility in Woodbridge, NJ, at ribbon-cutting ceremony on Oct 20 by Mayor John McCormac. The new plant, years in development, occupies 621K sq ft on 37 acres at Federal Business Center in city’s Keasbey Industrial Zone, My Central Jersey reported . . . Longtime beer distribution power Reyes Group may not carry many NAs on its beer trucks, but it suddenly became a force in NAs by winning major swaths of Coca-Cola territory in Midwest and in Calif/Nev in recent years.
At Listen Bar last Thurs night they suggested people would be dancing on tables by 1 AM conclusion of karaoke party celebrating first anniversary of popup space in NY’s Greenwich Village nabe, not far from route of city’s raucous Halloween Parade, and closeout of Sober October, which seems to be becoming a thing. Listen Bar, recall, is effort by entrepreneur named Lorelei Bandrovschi to show that full range of social occasions can be enjoyed without need for alcoholic refreshment (BBI, Oct 24 2018). “For the past year, we’ve broken through every misconception about the role of alcohol in our social lives,” argues Lorelei, who’s been in hunt for permanent space via crowdfunding and other efforts. “Think you need alcohol on a first date? Our speed-dating night sold out in less than 24 hours. Think a booze-free bar is just for sober people? Two-thirds of our guests are regular drinkers. We’ve stepped into every iconic part of New York City’s nightlife, from World Pride to New York Fashion Week, and the response has always been, ‘this is a breath of fresh air.’” We popped in early in evening for Dollar Slice drink devised by mixologist Aaron Polsky (Seedlip Spice, tomato, Tabasco sriracha) and unattributed Actual Sunshine (Seedlip Grove, mango, Pilot Turmeric Kombucha, Kin Euphorics) at $11 apiece, maybe a tad below prices of alcoholic cocktails at local bars.
Sweet Reason Beverage, which markets more female-skewing glass-bottle CBD sparkling water, has enlisted new-age bev vet JW Fischer as vp sales, with Coca-Cola and Aquahydrate vet Hal Kravitz picking up advisory role. Not quite a year old, Sweet Reason was founded by Canadian entrepreneur Hilary McCain, operating out of NY, where it’s trickled out to estimated 200 retail accounts (BBI, Apr 5). After multi-year runs at Snapple Beverage, Rogo Distributors and Honest Tea/Coca-Cola, Fischer lately has cycled thru quick stints at Vita Coco, Owen’s Craft Mixers, Avitae Caffeinated Water and Kitu Life Super Coffee, per his LinkedIn profile . . . Reed’s said its cfo, Iris Snyder, has decided to pursue opportunity at privately held food co and will be succeeded on Nov 22 by Joann Tinnelly, who’s been serving as vp/controller since Jul 2018. Tinnelly brings 30 years of finance and accounting experience, mainly on industrial side. Snyder is not related to recently recruited coo Norm Snyder.
Effort to adopt standard of identity for kombucha has proved tortuous process in US, with trade group Kombucha Brewers Int’l having to navigate warring constituencies over what qualifies or doesn’t qualify under description. So, last month, it was Brazil that became first country to publish such a standard, with assist from KBI, the group announced last week. The standard there requires that kombucha labels declare whether item has been subjected to pasteurization, clearly state alcohol content but refrain from making unauthorized functional and health claims. Only bevs made from tea can be declared to be kombuchas, in contrast to standard being proposed in US by KBI, which allows for substrates such as coffee, herbs and yerba mate, KBI noted. Brazil has a well developed kombucha market, with 100+ commercial breweries, about 50 of which are members of trade group whose Portuguese acronym is ABKOM. Brazilian Ministry of Agriculture, Livestock & Supply (MAPA) published the new standard on Sep 18, with producers given a year to get into compliance.
STRATEGY: San Antonio’s Element Kombucha Adds Botanical Line, Edges into CBD, Explores Cans
Element Kombucha, small brand breaking ground for segment in San Antonio, Texas, has augmented its tea-forward line with herbally inflected entries as well as first CBD entries, even as it continues search for larger production space to support expansion into rest of Lone Star State and beyond. It’s also setting stage for first move into canned format.
Element, recall, was founded nearly 5 years ago by artist and videographer Kevin Rayhons in collaboration with Russian-born friend named Tim Trofimenkov who grew up drinking kombucha, operating out of restaurant and cocktail bar called Alchemy Kombucha & Culture before closing the restaurant out of need for bigger production space (BBI, Jan 8). They were pursuing their first outside capital with plan to relocate to larger space a coupla miles away; the small round came in, but issues with developer have left company still in hunt and trimming back expansion ambitions for now, Kevin reported on Fri. He’s hopeful 6K-sq-ft space he’s now targeted will pan out.
Eschewing the juice employed by some rivals, the partners have focused on producing kombuchas using premium teas and herbs under names like Air and Earth. Those have since evolved to less opaque names like Lavender Spearmint, Jasmine Hibiscus and Mountain Oolong, which have been available in key retailers like HEB. In recent weeks the co has quietly debuted a more functional subline under the names Mind & Balance (with ashwaganda, tulsi, rhodeola), Skin Vitality (rose, hibiscus, moringa) and Seasonal Allergy (eucalyptus, peppermint, cayenne, addressing an issue Rayhons himself struggles with). They’re line-priced with core entries. Some of the new entries are posted in the shopping section of website at ElementKombucha.com.
Element also is gingerly stepping into CBD realm, first with extension of its Lavender Spearmint entry, then with new flavor called Summer Vibes containing 10 mg of CBD isolate from regional lab. (Rayhons credits Austin’s Wheatsville Co-op with pushing Element to be rigorous about sourcing and analyzing ingredient.) After running out of Summer Vibes, influential Thom’s Market chain in Austin requested CBD extension of Mind & Balance, which it’s now serving on exclusive basis.
Working with local beer co, the partners recently did test run of canned version of Element, seeing good pickup of new canned entry in Austin under Greenbelt name (BBI, Apr 15).
Particularly with production capacity still confined, expansion has been gradual. For its core territory in San Antonio and Austin, co has enlisted small distributor called Farmhouse Delivery which brings vegetables and meats to farm-to-table-style restaurants and has taken over servicing Royal Blue gourmet c-store chain. Encouragingly, Element seems also to hold its own in more conventional c-stores in Austin, Kevin said. Houston and Dallas have been “tricky” to penetrate, so he’s in hunt for distributor who can help in those more remote markets.
Kids who watch TV – particularly on Nicktoons, Nickelodeon, Discovery Family and Cartoon Network – are continuing to receive a barrage of ads for unhealthy foods & bevs, a new analysis by Center for Science in the Public Interest has found. CSPI’s analysis of 72 hours of kids’ TV programming last year found no decrease since its last such study in 2012. “Virtually all the food and beverage advertisements captured during CSPI's analysis were for unhealthy products, as defined by nutrition standards developed by a federal interagency task force,” CSPI said in announcing results today. “The lack of progress comes despite the implementation in 2013 of uniform nutrition standards by an industry self-regulatory group.”
Some 23% of ads during 6-hr block tracked by CSPI were for foods/bevs, up from 14% in 2012, with restaurants the biggest category (35%), then candy (22%), breakfast cereals (12%), bevs (10%) and snack foods (6%). Fully 99% of the food/bev ads —362 out of 364— were for items that wouldn’t have met now-abandoned standards developed by Obama administration’s Interagency Working Group on Food Marketed to Kids. The industry did only somewhat better in living up to standards of Council of Better Business Bureaus’ Children’s Food & Beverage Advertising Initiative (CFBAI), with 65% of food/bev ads not in compliance. (Among big bevcos participating in CFBAI, Coca-Cola has pledged not to direct any ads at kids while PepsiCo, Danone and Nestle committed to using nutrition criteria in the ads they run.) Among bev brands in heavy rotation in survey were Capri Sun and Kool-Aid Jammers.
Best channels – and most improved as well – were PBS and Univision, getting A grade from CSPI for airing no food/bev ads during study period. That reversed PBS’ D grade in 2012 and Univision’s F grade. CSPI allowed that more studies are needed to assess nutritional bona fides of food/bev ads running on streaming media, which are harder to monitor given their microtargeted ads. Complete analysis can be found here new analysis of 72 hours of children’s television programming.
Coming up on 2 years since acquiring Garden of Life, Nestle finally is ready to extend natural food and vitamin brand into RTD space with pair of protein lines: a plant-based line offering 21 g of protein and a grass-fed dairy one offering 26 g. The plant-based entry, Organic Protein, uses protein blend made mainly from peas and rice and also offers 5 g of coconut-based MCTs, using erythritol as sweetener for 190 calories per 11-oz plastic bottle. The dairy one, dubbed Garden of Life Sport Protein Drink, is sweetened with blend of erythritol and stevia for 120 calories per 11-oz bottle. Tho it contains some organic ingredients and is certified as non-GMO, that line is not certified as organic, representing some divergence from original Garden of Life mission. Its core powder-based protein lines, marketed under brands like Raw Protein & Greens, Organic Grass-Fed Whey Protein and Raw Organic Meal, all had been certified organic. Both lines are available in Vanilla and Chocolate flavors.
Dunkin’ Brands rode strength in premium offerings like espresso and cold-brewed coffee to its best quarterly sales in nearly 2 years, which prexy/ceo Dave Hoffmann positioned as vindication of Blueprint for Growth that’s seen the coffee chain upgrade its espresso offerings and add draft-bev bars. Revenues rose 1.7% to $355.9 mil and operating income advanced 7.8% to $126 mil. Dunkin’ US same-store sales rose 1.5% thanks to higher register rings fostered by higher-priced espresso and cold-brew items, despite traffic decline and cost of traffic-driving promos like PM beverage break featuring such deals as medium espresso drinks at $2. Baskin-Robbins’ US operations advanced 3.6%. Franchise fee growth was affected by incentives offered to franchisees to build out the so-called NextGen stores.
With past year’s $100 mil revamp of espresso-based drinks bearing fruit, next key frontier for innovation will be drip biz in 2020, Hoffmann promised investors, without offering any details yet. “Espresso shows us that we can get into other areas that speak to coffee adventurers,” ceo indicated, “not only around hot but we have the best credentials in the industry around ice,” where it’s biggest player in biz. So co will be “heavily focused on beverage innovation.” Innovation will focus on signature lattes and flavors, as well as limited-time holiday offerings. By now, espresso accounts for about 10% of the biz, pulling in younger consumers and more females.
No mention at all, either in presentations or Q&A, of RTD coffee line undertaken with Coca-Cola as partner. Latest investor deck shows $700 mil in retail sales for Dunkin’ and Baskin-branded CPG items, per IRI data, including $120 mil in bottled RTD iced coffee. (As reported from NACS, partner Coca-Cola is expanding line, including with more lower-sugar items not packed in plastic – BBI, Oct 2.)
NextGen Stores Head Toward 500th Opening by Year-End Co is bullish on NextGen stores featuring draft bars, front bakery display cases to stimulate impulse orders and expanded pickup areas for online orders. Co just opened 400th unit in Penn and is on track for 500 by year-end, including new stores and remodels. Those units have resonated best in urban markets. Franchisees are on board and units garner higher satisfaction scores than other stores, Dunkin’ execs said. Among other features that have delivered are high-volume coffee equipment that ease task of crews as well as new technology to help with labor scheduling and management of staff.
“Growth at scale” has been Starbucks’ mantra for ability to keep growing now that it can no longer pretend to be some little niche player out of the Seattle boonies. Closing books on fiscal Q4 and full year, SBUX demonstrated yesterday that it’s up to the job, scoring 7% gain in net revenues to $6.74 bil, with core Americas biz up 9.2% to $4.65 bil and int’l biz up 5.5% to $1.57 bil. Key growth market, China, delivered 5% comparable-store growth on 2% traffic growth, a reassuring signal to investors who’ve been concerned about growing local competition. And continued innovation in cold bevs seems to be succeeding in getting customers into the stores in the afternoon, in the past a slow daypart for roaster. For full year, Starbucks delivered record net revenues of $26.5 bil, up 10%, including 5% global comps. The data for a while today sent shares briefly soaring before they subsided in trading around mid-day. “We believe SBUX’s ongoing focus on its cold beverage platform, evolution of its digital ecosystem and initiatives to enhance the customer experience should continue to drive benefits across all dayparts,” wrote Credit Suisse’s Lauren Silberman, as reported by Yahoo Finance.
9% Revenues Gain in Americas Led by Cold Coffee, Teavana Refreshers, Iced Teas In core Americas segment, comparable-store sales growth came to 6% and there were 3% in net new store openings over past 12 months, breaking the 18K mark. SBUX attributed the progress to improved in-store experience, strong bev lineup driving 5 of the 6 points of comps and increased digital engagement. Most of growth was driven by cold bevs, which helped distribute sales gains across all dayparts, led by cold coffee, “refreshment” (Teavana) and flavored iced teas. Roz Brewer, coo/group prexy for region, cited heavy promos on the flavored teas in early July, first national ads behind Nitro Cold Brew in Aug as that platform was completing rollout to company-operated stores, followed by promos for fall bev lineup. That seasonal lineup was driven by pumpkin items like Pumpkin Cream Cold Brew, along with cold coffee and Nitro. A rollout of Mastrena espresso machines should be completed within 12 months or so, Roz said. Those units allow pulling of a triple shot in one pull while their lower profile enables staffers to maintain eye contact with customers. They also send telemetry data on every shot to support center so that any deviations are spotted quickly and tuning or maintenance ordered and plug into DeepBrew AI engine so that preventive analytics can flag pending maintenance issues. SBUX opens its 6th, final and largest Starbucks Reserve Roastery in Chicago next month. Active Starbucks Rewards membership soared 15% to 17.6 mil in US.
Nestle Alliance Now Comprises 28 SKUs over 4 Platforms A year after setting Global Coffee Alliance with Nestlé as key CPG vehicle, partners have launched 3 coffee platforms in 30+ new markets: Starbucks by Nespresso, Starbucks by Dolce Gusto and Starbucks-branded roast & ground coffee. Further, 4-flavor Starbucks Creamers launch in North America this qtr reps another platform (BBI, Jul 23), with int’l plans already being set. All told those 4 platforms currently include 28 sku’s. Alliance also offered avenue into at-home and foodservice channels in China. By next spring, partnership will be in 50 markets. Earnings call occurred as Nestle brass was visiting with SBUX execs to hash out right pace of product additions for 2020. Nestle, recall, is successor to Kraft as main CPG partner.
No word in earnings release or on conference call on RTD efforts with PepsiCo on coffee side or Anheuser-Busch InBev on tea side (Teavana), which are folded into Channel Development segment dominated by Nestle partnership and other items. (We got assist from SeekingAlpha transcript in assembling this story.)
Danone’s Horizon Organic unit has intro’d enhanced whole-milk extension called Growing Years that delivers pediatrician-recommended nutrients to kids age 1-5. Developed in partnership with baby docs, Horizon Organic Growing Years contains DHA Omega-3 acids to support brain health (50 mg per 8-oz serving), choline to transport DHA in the body, prebiotics that feed good bacteria and vitamin D and calcium for bone development. Non-GMO entry is ultrapasteurized and offered in half-gal gabletop packs .

