Beer Marketer's Insights

Beer Marketer's Insights

Heineken’s mystery partner on a hard seltzer? We teased it Fri and several BBI readers put their finger on it quickly. It’s AriZona Iced Tea marketer Arizona Bev. Deal goes well beyond US, our sibling newsletter Insights Express understands. Long in works, close to fruition, Heineken USA cmo Jonnie Cahill seemingly referred to Arizona at recent regional HUSA meeting with distribs when he said Heineken “really close on announcing a major partnership in the seltzer space” with a “killer brand” from the “the world of non-alc,” promising more within weeks (BBI, Oct 25). No one commenting officially yet, however. Alliance is interesting on several fronts: Arizona already did deal with MillerCoors on Arnold Palmer flavored malt bevs, and it seems to be getting ready to launch seltzer-like low-cal non-alc option called Santa Fe Sparkling Water (BBI, Oct 22). It’s not clear whether the hard seltzer would adopt the same or a different brand name. Once Heineken USA gets in the game, each of top 8 US beer suppliers will have seltzer entries, with just Yuengling and FIFCO USA not yet participating. With partner like AriZona, Heineken brass would have no concerns over getting grabby packaging and distinctive flavor profiles. For AriZona, of course, it offers another growth avenue at time that consumers’ sugar backlash has begun to affect its core sweetened teas and juices, even in once-unassailable inner-city markets.

Struggling megabrewer Molson Coors today announced details of “revitalization plan” under new ceo Gavin Hattersley, including name change to the Molson Coors Beverage Company “to better reflect its strategic intent to expand beyond beer and into other growth adjacencies.”  What’s that mean, exactly?  Well, Pete Marino named prexy of Emerging Growth, “which will include our craft business, our cannabis business and more,” Gavin wrote to distribs.  The “more” part could mean bigger push into NAs too. So far Molson Coors has nibbled around the fringes with investments in niche categories via involvements with Bhakti Chai and Clearly Kombucha, a refrigerated brand that appears to be getting onto some MillerCoors trucks.  Still, it seems to have had eye on broader categories, and we’d previously reported discussions (now apparently off) with Argo Tea and co’s name lately pops up among suitors for bigger brands like Essentia Water.  The company itself hasn’t confirmed any of these reports.  (Of course, as regs stand now, all cannabis entries will also be non-alc.)  And wine & spirits might be another growth area targeted by co.  Marino is familiar face at co, for past 2 years having served as prexy of craft/import arm Tenth & Blake as well as chief communications officer for many years.

Among other initiatives, Molson Coors “plans to unlock approximately $150 million in savings by simplifying its structure,” closing Denver office (TAP hq) and designating Chicago as North American operational hq.  Molson Coors will be “streamlined” to 2 biz units, North America and Europe and existing Int’l team will “reconstituted” reporting in to 1 of those 2 units.  All told moves will cost 400-500 jobs.  Importantly, “there will no longer be a president of the US business.”  Those changes become effective Jan 2020.  At end of 2019, Pete Coors “will retire as the company’s chief customer relations officer, stepping back from his day-to-day duties at the company.”  He’ll remain as Molson Coors vice chmn. 

“Our business is at an inflection point,” said new ceo Gavin Hattersley. “We can continue down the path we’ve been on for several years now, or we can make the significant and difficult changes necessary to get back on the right track,” he added.  “Our revitalization plan is designed to streamline the company, move faster and free up resources to invest in our brands and capabilities,” Gavin said.  A key part of revitalization is to “expand beyond beer without having to sacrifice support for larger brands in the company’s portfolio,” he added. Bigger push into NAs by archrival Anheuser-Busch InBev has been mixed bag, with Teavana jv with Starbucks rating as a clear success but Hiball acquisition faltering and other investments and partner brands playing only minor roles so far.   Rumor mill has had ABI in at least preliminary talks with likes of Bang Energy, Essentia Water and former partner Monster Beverage, tho that’s not to say any deals are on immediate horizon.

Two women who’ve enjoyed decade-long marketing runs at MillerCoors have hung out their shingle in Chicago as latest to enter lower-cal sparkling bev game, with enhanced entry called Heywell that’s fortified with schisandra and L-theanine. It’s been trickling out in recent weeks into local foodie-oriented haunts like Foxtrot c-store chain (which we profiled on May 2 2018) and Goddess & Grocer along with local yoga studios, per profile in American Inno innovation blog. Founders are Britt Dougherty, who spent a decade at MillerCoors as marketing vp for insights & engagement, and Ashley Selman, whose near-decade there included range of roles capped by brand marketing vp job.

Dallas-based CBD player Right On Brands said it debuted 3 hemp-infused sparkling teas and 5 energy bars at recent sales meeting of its key distributor, Lipari Foods. The infused items now are going out under brand name Humbly Hemp, representing rebrand from former effort harnessing core ENDo brand under ENDo Water moniker. That line offered lineup of plastic-bottle entries in flavors like Watermelon and cucumber with 10 mg of hemp extract, while new item in 12-oz can contains 200 mg of hempseed extract in erythritol-sweetened flavors like Peach Mango, Raspberry Hibiscus and Watermelon, priced at $40 per 12-pack, per website. Lipari, which apparently had role in refining proposition, predicted that Humbly might prove “one of the largest brand launches in the history of Lipari’s specialty grocery division,” in words of specialty grocery vp James Lipari. Mich-based distributor services 13K retail locations operated by 6,300 customers mainly in Midwest. Right On, which trades publicly as RTON, markets range of items under ENDo Wellness trademark, too, and just opened first licensed ENDo Wellness Center in Dallas suburb of Lewisville that includes a Humbly Hemp café.

Santa Cruz, Calif-based LifeAid Beverage has made its first significant move into team-sports athlete game, enlisting local player Kevon Looney of Golden State Warriors to be face of its FitAid entry in Bay Area via forthcoming out-of-home, radio and digital campaign.  We’re hearing he’s among flock of athletes, several of them hoops players, who’ve entered mix via recent financing round, tho cofounder Aaron Hinde declined to comment in brief discussion last night.  He said campaign being developed over next month or 2 is intended in part to buttress DSD network that co has assembled in Bay Area behind portfolio led by FitAid, co’s most endemic product, which launched in CrossFit niche but has broadened out to team sports.  Warriors will have access to brand at their new training facility.  Co rep said creative effort is being undertaken by in-house team, which in past has shown adept hand in marshaling video and other content behind such athletes as CrossFit athlete Sara Sigmundsdottir, whose recovery from serious injury was extensively chronicled (BBI, Apr 6 2018).

Tho a reconfigured Golden State isn’t the slamdunk to make the finals as in past years, Aaron said defensive standout Looney had phenomenal run in playoffs last year and made FitAid part of regimen in recovering from hamstring injury during preseason.  (Unfortunately, the injury has recurred amid concern that it might reflect broader neuropathic condition.)  A week ago “super-gracious” Looney participated in 4-hr photo shoot in support of push, Hinde told us.  Too early to say what specific theme of campaign will be, he said.

With a nudge from American Beverage Assn, the Big 3 bevcos have come together for first time today to back coordinated effort to reduce plastic use and increase recycling rates.  Initiative dubbed “Every Bottle Back” will initially be funded with $100 mil from industry, tho that could grow to as much as $400 mil “through matching grants, municipal funds and private investors,” noted AP.  Fund will be distributed thru Virginia-based Recycling Partnership, and NY-based Closed Loop Partners to work with local governments as well as improve recycling facilities.  The World Wildlife Fund will monitor progress of the initiative, noted ABA.  Those outside partners are “sorely needed,” noted AP, as US recycling “is a hodge-podge, with 20,000 local governments deciding how best to provide the service.  Only 53% of US households have curbside recycling,” and still there are 6% of households that have no recycling options available at all.  “Consumers in many cases like the convenience of our plastic bottles, but they are rightfully frustrated when they see a bottle on the beach or in a trash can,” said ABA prexy/ceo Katherine Lugar.  “It’s clear that our recycling system needs big improvements, so consumers know their efforts are going to make a difference.”

“Every Bottle Back” will also seek to improve recycling rates by educating more consumers via a media campaign that reminds them bottles and caps are recyclable, and also connect with consumers and drive that message with messages printed directly on bottle labels. 

Coca-Cola is aiming to have 50% of its plastic bottles made with recycled materials by 2030, PepsiCo is looking to get to 33% by 2025 and KDP wants 30% of its pkg from recycled materials by 2025, reminded AP.  Hitting those targets “will be difficult,” as Wood Mackenzie, a consulting firm in oil & gas industry, projects recycling rates “would have to rise 38% by 2025 and 78% by 2030,” to meet those goals.  AP notes too that past efforts gained little traction.  “In the early 1990s, Pepsi promised to phase out virgin plastic in its bottles by 1994.  It never happened.  In 2007, Coke invested $60 million in a bottle recycling plant.  The plant closed in 2014.”Indeed, we’d often heard that issue was source of friction with bottled water giant Nestle Waters North America, which was bearing brunt of plastic backlash and wanted more aggressive approach but eventually left group. 

 CSD volume edged up 0.4% (up from -0.4% for 12 wks) with an avg price increase of 1.9% for 4 wks thru Oct 19 in Nielsen all-channel data reported by Morgan Stanley’s Dara Mohsenian.  That’s softer CSD pricing compared to avg increases of +2.8% for 12 wks, +4.9% for 52 wks.  Coca-Cola avg prices were flat over last 4 wks and volume gain accelerated to +4.5% in mid-cycle update. PepsiCo CSD avg price gain of 2.8% last 4 wks was down from +4.3% for 12 wks.  That helped slow its volume decline to -3.8% for 4 wks vs -4.6% for 12 wks.  Keurig Dr Pepper avg price increase was lower as well but still up solid 3.7% for 4 wks with 0.9% volume drop.  Private-label prices rose a modest 1.2% and suffered 1.1% volume drop. 

Energy Volume Gain Slows; Price Gains   Energy drink volume increased 5.4% (down from +6.5% for 12 wks) while avg prices increased 3.6% last 4 wks.  That matched 12-wk pricing gains for segment.  Monster Energy prices still holding, up avg of 4.9% last 4 wks while volume dipped 1% in all-channel.  Red Bull volume was up 6.4% on flat pricing last 4 wks.    Note there is no breakout for red-hot Bang Energy trends in this mid-cycle update.  Rockstar volume was down 10.7% on avg price increase of 1.4% last 4 wks.  PepsiCo cut decline of its energy volume in half to -2.1% with an avg price decrease of 1.4%, but remember its brands like Amp are a far cry from what they were even a couple of years ago.

Body Armor Drivin’ Sports Surge   Sports drink volume gain accelerated to +8.2% (up from 4.6% gain for 12 wks) with avg price increase of +4.4% last 4 wks.  PEP’s Gatorade volume improved from +4% for 12 wks to +5.5% on avg price gain of 2.8% last 4 wks.  KO’s Powerade swung up from 5% decline to 2% gain last 4 wks with assist from avg price drop of 2.7%.  Body Armor volume gain ramped up to +81% (up from +66% for 12 wks) on avg price decrease of 2.3%.  Body Armor at 11 share of segment dollars vs 71% for PEP (Gatorade), 17% for KO (Body Armor’s sibling Powerade brand).  Private-label sports drinks are a tiny part of segment, but volume jumped 161% despite 15.4% price hike last 4 wks.  

Rising Water  Bottled water volume was up solid 7% (vs +5.1% for 12 wks) with small (-0.6%) avg price decrease last 4 wks.  Volume trends improved for each of the top 3 suppliers.  Nestle Waters volume was up 0.5% (up from -1.2% for 12 wks) with 0.5% avg price drop last 4 wks.  Coca-Cola water volume went from flat to a 2.2% gain on avg price increase of 2% for 4 wks.  PepsiCo volume was up 0.7% (vs 1% decline for 12 wks) as its avg price increase came down a bit to +3.2% last 4 wks.  Private-label volume posted solid 12.8% gain on avg price drop of 1.8% for 4 wks.

What does CBD retail look like in the Big Apple?  Interesting play called Come Back Daily (initials: CBD) has drawn considerable buzz since opening flagship on lower Broadway, 2d location in East Village and popups in Harlem and in Turnstyle subway food hall at Columbus Circle.  Dubbed “the world’s first educational CBD hub,” it offers array of tinctures, oils and RTD bevs in expansive space with “discovery bar” up front and “zen lounge area” in rear that oscillates between being coworking space and hosting guided meditation, yoga, cryotherapy and presentations from visiting doctors and other experts to get word out about ingredient.  (This evening, Ojai Energetics is hosting a product demo; tomorrow brings cacao ceremony with Lock & Key Remedies, and Wed is a “yappy hour” dog costume party.)  Founder Steve Phan is transplant from SF who missed easy access to informed cannabis purveyors in home state.  “The difference was that back there I went into a store to buy my cannabis, I could ask questions, and they would tailor their service to my needs,” as he told Civilized Life earlier this year, at time of opening.  At earlier job at Natural Xtract, Steve missed opportunity to interact with customers face to face rather than thru substitutes like live chat, so this remedies that shortcoming.

We popped into main location this morning on break from jury duty nearby.  Floorstanding cooler featured array of familiar and not-so-familiar bev brands, including Recess, Vybes and Sprig, among those more widely available in city, along with Cloud Water, The Hemp Division and newcomers like Aurora from Portland, Ore, and Brooklyn Hemp Co.  Wide range of non-bev offerings included infused oil, tinctures, bath products, Kickback ground coffee, Oleo tea extract, pet items and topicals.  Website at ComeBackDaily.co is searchable not just by category and brand but also by extraction method (broad spectrum, full spectrum and isolate) and “situation” (chill, pain, sleep, etc).  Young staffer there told us bev clientele is across the board, with some purchasing single item for immediate consumption and others buying 20 at a time.  Recess and Vybes seem most popular.  Asked about any effects of Health Dept CBD crackdown that began earlier this month, he said there’s been none, since store doesn’t identify itself as a restaurant, café or other food location.  (That crackdown doesn’t seem to have much affected brands labeled as hemp extract, but those labeled as CBD may have been in for confiscations and other enforcement activity.)  Still, staffer credited Recess brand with shrewdest branding, consigning info like hemp dosage to small print on rear of can, as opposed to rivals that display their milligram levels prominently on front panel, potentially inviting hassles.

Hint Water no longer is just hintin’ that its bottled essence waters taste like real fruit. It takes over-the-top approach via quirky ads from Funworks agency that would have you believe that the unsweetened waters taste more authentically fruity than the pies at a county fair or the fresh fruit at a farmer’s market. In one of videos directed by The Cornershop’s Peter Martin show, for instance, 2 food-splattered guys competing at pie-eating event licking the pie fillings off each other’s faces to verify that their bottles of Hint actually taste more authentic than the pie fillings, as Advertising Age reported. “You know blackberry Hint Water tastes more like blackberries than the blackberries in my pie,” as one notes. “Water, with a touch of true fruit flavor,” is tagline. Funworks agency, situated across bay from SF-based Hint in Oakland, followed usual creative process in which client’s principals – in this case founders Kara and Theo Goldin and cmo Terrence Sweeney – are brought together with improv comedians and customers “to generate concepts, strategies and content.” Among other executions is one set at farmer’s market in which city slickers want to know “How do you farmer wizards make all this fruit taste just like Hint Water?” Well, sarcastic farmer responds, “we triple-irrigate our fruit with Hint Water in the world’s largest biosphere, which modifies the DNA to taste exactly like Hint Water.” In third spot, “a jolly raincloud pours watermelon Hint Water down upon picnic-goers who splash around with tongues out to catch the sweet drops,” as AdAge summarized. No info on where and how heavily ads have been running. Ads can be viewed here. Hint cmo Sweeney, btw, came aboard in Apr after career spent in marketing roles primarily on tech side, most recently at Flint Mobile and BBVA’s New Digital Businesses unit, per LinkedIn profile.

Ojai Energetics, which is looking to carve out key role in burgeoning cannabiz as supplier of organic, highly bioavailable water-soluble CBD, is fortifying its bev expertise with pair of vets boasting decades of experience apiece.  Naked Juice and Monster/Coca-Cola vet Tom Hicks has joined as chief commercial officer, while co also has recruited consultant Jim Tonkin to its advisory board.  Named for hq town in Calif, Ojai Energetics positions itself as a “cannabis IP technology company” active in supplements, medical tech, biotech and industrial segments. 

Tom is coming off nearly 3 years as evp sales & operations at broker Impact Group, after solid run at Monster Beverage as svp sales & operations, from which he transitioned with non-energy brands to Coca-Cola for year-and-a-half stint.  (Tho Hicks is known to have a renegade streak, said he found KO’s VEB unit to be a congenial workplace because “You get to use big words you really don’t understand like . . . ‘entrepreneurial’” and “Marketing team has more brand managers than brands,” among top-10 list he assembled as he got ready to leave – BBI, Sep 23 2016.)  He confirmed move, but we weren’t able to reach him for more extended discussion on ambitions at Ojai, which is both a supplier of hemp/CBD and also markets consumer products under its own brand.

The Ariz-based Tonkin, joining advisory board, grew up in family of Bay Area bottling operator and by now claims 46 years of food/bev experience, tho announcements like this one somewhat undercut his recent assertions that he’s cutting back scale of involvements.  He operates Better Brand Builders, which has helped incubate brands like Fiji Water, Icelandic Glacial, Nawgan and Suja, and sits on 7 boards and 10 advisory boards.

Founded by ceo Will Kleidon, Ojai offers under its own brand entries CBD Coconut Oil, Full Spectrum Hemp Elixir and CBD Sports Recovery Gel, all made from hemp grown in Colo.  (It’s located just a few blocks from Casa Barranca organic winery operated since 2001 by Bill Moses, who went on to found KeVita and Flying Embers kombucha brands.)  Ojai Energetics has taken outspoken stance on vagaries of current CBD supply chain, posting 3d-party lab assays of its products on website as gesture of transparency.  This past spring, Ojai joined with consortium of local ag interests called SoCal Farms to open first hemp farm in LA County, planting 650K plants on 100 certified-organic acres in Antelope Valley.  SoCal includes local alfalfa, cotton and onion growers seeking new crop not as affected by area’s increasing water restrictions.