Beer Marketer's Insights
Celsius Holdings has been revving up its marketing engine, for first time setting event series that it owns even as it progressively broadens product range. Latest initiative on Celsius brand activation front is launching of 11-city Live Fit Tour, harnessing co’s trademarked slogan for series of popup fitness events featuring local personal trainers and endorsers. Setting up shop in each market for 2 weeks surrounding event, Celsius intends “to take guerrilla sampling to the next level,” as prexy/ceo John Fieldly told us this morning, with view to dispensing 300K samples along way. As supporting members of cast, CELH has been enlisting partner brands for tour like Gold’s Gym fitness chain and unidentified players in segments like athleisurewear and high-protein ice cream.
Live Fit Tour ups ante beyond outside franchises that brand has latched onto to reach active-lifestyle types, including Tough Mudder races and, more recently, esports, as official energy drink partner of Echo Fox gaming league – the latter a move abetted by position of key Celsius investor, the Hongkong tycoon Li Ka-shing, as investor in gaming hardware maker Razer. Live Fit Tour will commence on Sep 7 in NY, where Celsius teams are already working market to build upon signing of NA power Big Geyser as DSD partner and expansion of brand footprint to nearly 100 7-Eleven stores as well as corporate accounts like Goldman Sachs and Bank of America. (As NASDAQ-listed stock trading as CELH, Celsius will make sure to include ads and sampling activation in Times Square, where exchange is based.) The other tour cities, set based on factors like DSD partners and key accounts, are Boston, Seattle, Portland, SF, LA, San Diego, Phoenix, Dallas, Miami, Orlando and Tampa. Among retailers who’ve come aboard have been CVS, Target and recently Kroger. Tour was idea of outside agency and put together under recently hired marketing chief Matt Kahn.
Tho Celsius launched as calorie-burning entry, lately it’s been enthusiastically riding the wave of so-called performance energy brands led by Bang Energy, even as it scrambles to broaden range into new functional areas. A nootropic line has launched in Europe, and Fieldly today said co is readying entries in categories like protein as logical extensions for brand. By now it’s got 3-year pipeline of new entries but hasn’t set a public timeline on when they’ll get green light. Latest into mix is carbonated BCAA, using 2.5 g of the branched-chain amino acids that are key feature of performance energy entries, along with tart cherry, vitamin D3 and electrolytes. The entries, packed in 12-oz slim cans, are line-priced with core brand at $2.39 and are going out in Tropical Twist, Tart Cherry Lime and Blood Orange Lemonade. With modest 100 mg caffeine dosage, they’re intended to expand usage occasions for Celsius loyalists in endemic channels like nutrition, fitness and specialty stores, where line initially is being offered. Gold’s Gym chain already has committed to entire line, John reported. The new line, getting its official kickoff at Mr Olympia fitness expo in Las Vegas in mid-Sep, may be made more broadly available at retail next year as performance warrants.
Until now, closest entry in Celsius line to performance entries was another fitness-targeted line, Celsius Heat, with 300 mg of caffeine. Given the surging popularity of the mega-caffeine entries like Bang, Reign, C4 and other performance plays, CELH had been pitching it to c-stores but has pulled back on effort in light of ferocious pricing battle that’s erupted there between Monster’s Reign brand and Bang, both offering bogos in recent months. “Racing to the bottom on pricing” is how Fieldly describes situation, saying CELH will wait it out until pricing is back in more rational place. Meanwhile, core Celsius brand continues to make inroads in that channel, and ceo is hopeful Heat will find a warmer welcome as retailers get around to expanding their performance energy sets.
Under increasing pressure from consumers and legislators, big companies represented by Business Roundtable last week offered new mission statement, amid considerable skepticism, that says that benefiting shareholders no longer its members’ sole commitment, but also serving customers, employees, suppliers, communities and shareholders. In full-page ads in NY Times and other pubs, Certified B Corp reminded consumers and investors that it’s been there for a while and urged Roundtable ceo’s to take their newfound commitments further.
Those who’ve been around bevs a while likely have a pretty good sense of the many quirks of National Beverage, publicly traded collection of value brands that’s run out of Florida like a family fiefdom by Nick Capporella and his son Joe, with employees banished from the offices for extended periods if they contradict the leadership and ceo Nick self-penning exclamation-point-flecked quarterly earnings releases that has many homilies about La Croix, life and America as actual info on brand performance. (“Our Way Is Tastefully . . . Sparkling!!”) For those not already immersed in FIZZ’s unique corporate culture, there’s recent Bloomberg takeout that makes for highly absorbing read, even as it tries to get to root of why La Croix brand that was breakout performer of recent years has suddenly gone flat. (Its main theories, palate fatigue among consumers and underdeveloped DSD distribution, are same ones we’ve frequently heard, along with ill-advised price increase just as array of new rivals was coming to market.)
Article describes how Pennsylvania-born Caporella, whose struggling family lived above coal ash dump, parlayed construction biz into stewardship of big telecom co Burnup & Sims, which had acquired his firm and which he was running as ceo within 10 years. He diversified B&S with purchase of drive-in movie chain and soda bottling plant. As Bloomberg recounts, he created National Bev by purchasing Shasta brand from Sara Lee, in part as vehicle to acquire B&S shares and blunt progress of corporate raider Victor Posner. He added Faygo, Big Shot and other sodas and, when purchaser of sleepy La Croix brand from G Heileman Brewing went bankrupt, swooped in to pick that up, too.
Story details steps co took to turn La Croix into juggernaut of past few years, along with punishing corporate environment build around “Cult of Caporella.” Per Bloomberg’s sources, Nick “almost never shakes hands; upon greeting people, he clenches his fist and offers a ‘pinkie shake.’ Employees preparing to meet him for the first time are coached not to speak to him unless spoken to first. Multiple people describe a man who could explode at any moment, berate anyone who crossed his path, and veer into what some describe as verbal abuse . . . Anything short of adoration for one of Caporella’s new package designs could result in being excluded from future meetings. Disagreement could be met with a stern reminder that LaCroix was ‘M-I-N-E.’” (Key exec insists to Bloomberg that “I’ve never heard him raise his voice,” but story’s description certainly matches what we’ve heard consistently over the years.) Along the way, story travels some anecdotal byways like how Caporella took personal stake in struggling craft beer pioneer Smuttynose in NH and dispatched key FIZZ execs to turn it around, only to see it fall into foreclosure. Article can be accessed here.
Pumpkin mania is happening earlier than ever among bev marketers. A week after Dunkin’ released its pumpkin plethora, Starbucks today is extending its gourd activation by adding to the mix a Pumpkin Cream Cold Brew, its first new pumpkin drink in 16 years, as Market Watch pointed out. It joins fall perennials Pumpkin Spice Latte (PSL) and Salted Caramel Mocha. New entry augments cold-brew coffee with vanilla, pumpkin cream cold foam (Starbucks’ alternative to more fattening cream) and a dusting of pumpkin spice topping. It breaks today in US and Canada. As MarketWatch noted, PSL first made it to stores on Oct 10, 2003, and has arrived earlier and earlier as the years have progressed, with 200 mil sold just over first decade. Also in mix are Pumpkin Cream Cheese Muffin and Pumpkin Spice Madeleine . . . Meanwhile, among altbev players, Laird Superfood of Sisters, Ore, is back with its own counterprogramming. “Love your PSL . . . but hate the calories?” its marketing asks. The answer is return of Pumpkin Spice Superfood Creamer, at just 10 calories per teaspoon serving. The creamer offered in 8-oz packs blends coconut milk powder, coconut sugar, extra virgin coconut oil and pumpkin spices, bringing consumers full range of MCT oils (C6, C8, C10 and C12) . . . Philadelphia-based root beer marketer Hank’s Gourmet Beverages has added Hank’s Caribbean Recipe Ginger Beer to the lineup, dressing up its amber longnecks with textured linen look intended to look at home on bar back. It’s launching in 24-unit cases of single bottles with 4-packs to follow.
Cannabis player Cannabiniers, whose Two Roots THC-infused non-alc beers have made some noise in Nev and Calif, is ready to make modest pushes into flock of additional sectors, including non-infused NA beers and infused teas and sparkling waters while eyeing first move into CBD realm too. And while talks on alliance with unidentified top-10 craft brewer have sputtered out, another craft-brewer acquisition in Great Lakes region is due to be announced in next week or two, following acquisitions of Helm in Calif and Dad & Dudes in CO earlier this year. Recall that Lighthouse Strategies ceo Michael Hayford had cited 2 letters of intent on brewer acquisitions as well as the talks with bigger craft brewer when he spoke in mid-Jun at cannabis conference sponsored by BevNet (BBI, Jun 18). Such deals offer way for Cannabiniers and its parent Lighthouse to comply with current regs that require THC purveyors to have mfg footprint in states in which they sell without having to outfit their own plants. Deal with top-10 craft partner might have shortcut that process, but Hayford told us it “stalled out” for reasons that aren’t clear to him, possibly because prospective partner decided to go it on its own in segment.
On new product front, bigger move is non-infused NA beer line, breaking in 2-3 weeks in all 145 stores operated by BevMo in Calif, in 5 styles. Hayford said that while non-infused alc beers would have needed to traverse extended approval period in crowded segment, the NA beers were greenlighted within a few business days of Lighthouse sending a mixed 6-pack to BevMo, which placed 700-case initial order. The lower-calorie line is fortified with vitamin B12 and electrolytes, making it comparable to flock of new sports-oriented beers like indie Athletic Beer and Boston Beer’s marathon-themed 26.2. The lineup includes core lager, IPA and wheat entries plus seasonal Mango Dango and Straight Drink, the latter obtaining a cannabis-like flavor matching that of its THC counterpart via use of natural terpenes. (That’s move we’re seeing elsewhere too – say, at recent Oregon Brewers Fest, where Coalition Brewing replicated cannabis flavors in non-infused beer called Color Me Kush.)
Recall that THC-infused Two Roots launched in Nev dispensaries, where it holds prominent share of THC bevs, and added Calif about 4 months ago, where early signs are promising, Hayford said. The entries are consistently dosed at 5 or 10 mg of THC boosted with B-vitamins and electrolytes, coming in at 80-110 calories per 10-oz can, in major craft categories styles under names like Enough Said, New West and RCG (Rich Creamy Goodness). Using nanoemulsion technology, the infused beers (which by law must be non-alcoholic) are claimed to have onset in minutes, dissipation within 90 minutes. Two Roots also offers non-infused alcoholic beers in venues like Las Vegas Lights soccer games where the THC entries can’t be sold.
In conversation yesterday, Hayford cited flock of reasons to move ahead with the non-infused NA beer, from surging demand among retailers to cash flow to continue brand building for Two Roots, just as non-infused alcoholic beer has done when sold at Lights games in core Vegas market. Those non-infused alc beers also are slated for geographic expansion in coming months.
Meanwhile, tho co is releasing few details, Cannabiniers finally is moving ahead with first non-beer THC items. Recall that exactly a year ago, Cannabiniers had said infused coffee and tea offerings via unit called Just Society Tea & Coffee were imminent (BBI, Aug 28 2018), but those haven’t been seen yet, and Just Society website remains under construction. Also in mix were to be sparkling waters via unit called Creative Waters. Michael said development work has been proceeding, with Creative Waters recently commencing production with intention of hitting Nev in 30 days in 3 flavors and Calif right behind it. (“Coming Soon” section of Cannabiniers website lists as flavors Cucumber Soda, Sea Breeze, Greyhound and Screwdriver, but doesn’t seem to be entirely up to date.) As for Just Society, the coffees proved impractical in Nev because their acidity would run afoul of regs pertaining to pH levels, so co is starting with teas, including Black Mango Tea that tested well in spring and got first full production run in early Aug, augmented by Honey Green Tea. The teas are 50 calories or so per serving, the waters more in 10-20 calorie range, Hayford said. Both lines have started at Lighthouse’s own dispensary ReLeaf in Nev to gauge consumer reaction and will expand from there. Co also has been gauging consumer reaction to non-infused versions of the teas and coffees at Two Roots’ Ocean Beach, Calif, taproom.
One area where Cannabiniers has been quiet so far is CBD, but Hayford said co has formulated all its products for both THC and CBD and that CBD samples of the teas and waters are being produced ahead of move to gauge interest among c-store retailers, even as greater regulatory clarity is anticipated later this year from FDA and state of Calif. (States like Nev and Ariz allow dispensaries to sell CBD-only items, but Calif currently does not.) Cannabiniers will tailor trade dress to requirements, meaning items could be labeled as CBD- or hemp-based as needed.
Tho co must move its non-infused alc beer thru 3d-party distributor in Nev, Cannabiniers is still up in air on DSD in general, with BevMo a direct-ship customer. Inquiries have been coming in from national and regional distributors interested in both the NA beers and non-infused alc beers, and figuring out path forward will be mandate of unidentified bev vet who’s coming aboard in coming weeks to oversee manufacturing, distribution and sales, Michael said. Looking at broader environment, he suggested that volatility in cannabis shares has prompted Lighthouse to take its time bringing in additional growth capital, even as continued pressures in craft brewing mean those assets will continue to be available at affordable prices. So, even tho co in Jun thought it would be further along, there’s been no need to undertake frenzy of deals.
Heather Howitt, who intro’d many Americans to chai tea style when she founded Oregon Chai in 1993, is back in bevs with effort to upgrade quality of Thai-style tea offered in foodservice. This time she’s offering Thaiwala-branded concentrate that offers less time-consuming way for foodservice customers and consumers to make Thai tea, without recourse to artificial ingredients. Thaiwala, whose name riffs on Indian chaiwala style, is made from blend of organic black tea from Thailand, cocoa powder, caramel, vanilla and organic Thai herbs to which users just add milk or dairy alternative.
Over the years as he’s struggled to build Icelandic Glacial water to meaningful scale, Jon Olafsson has had Midas touch when it comes to fundraising, pulling in over $100 mil in equity financing for still-modest-sized bottled water brand. Now the Icelandic marketing and media exec who founded brand with his son Kristjan has done it again, pulling in $35 mil in debt from BlackRock and $31 mil in equity from existing investors, as Icelandic Water Holdings prepares to juice its sales & marketing efforts to build on recent momentum behind portfolio that it’s been broadening to include sparkling and flavored variants. No details were offered on financing, including terms of debt from BlackRock or whether one key investor, Anheuser-Busch, which distributes brand nationally, was among participating equity holders. In anticipation of new funding, co has been in process of recruiting marketing specialists, marking renewed marketing effort after boldest earlier effort depicting “epic life” about 7 years ago was quickly pulled back for lack of adequate financing. Among notes new campaign will strike is contrasting Icelandic’s natural alkalinity vs that of waters that are engineered to be high-pH, thanks to its source at Iceland’s Olfus Springs. As part of new round, Icelandic Water Holdings has named Dan Worrell, managing dir at BlackRock US Private Credit, which extended financing, to its board.
In discussion this afternoon, Jon said he feels time is right for Icelandic Glacial to become #1 premium brand, at time Fiji has lost volume after departing KDP network, Evian has continued to slip even after joining KDP network and Voss has struggled to regain momentum. So co is aiming to push its ACV from 28% currently to 80% as it aims for $100 mil in sales in a few years. (Jon wouldn’t discuss current sales but they’re believed to be approaching $30 mil.) Just coming off national sales meeting last week, co is tweaking package to make it bolder on shelf while retaining Icelandic cues, while adding taller 500-ml bottle that shaves a millimeter off diameter so it fits into cupholders even of older car models. Marketing campaign including outdoor in LA and other markets and social media is imminent; one thrust will be to carve distinction between Icelandic Glacial’s naturally occurring alkaline properties and those of engineered brands like Essentia and Aquahydrate. It’s adding Lemongrass and Blood Orange to flavor range. And after focusing heavily on retail, Icelandic’s LA-based ceo Reza Mirza is building its on-premise team.
Tart-cherry play Cheribundi has seen pair of key departures from its c-suite, with ceo and cmo exiting in recent weeks after effort to sell money-losing co didn’t pan out and controlling shareholder Emil Capital Partners decided to tighten up operations. Departing as ceo is former Odwalla exec Steve Pear, high-profile exec who spent heavily to tilt brand to sports orientation in his 5 years with co, who’s been succeeded by coo Mike Hagan. Also leaving recently was cmo Michelle Grech, a former Coke exec who ran her own sports & entertainment agency called MELT and joined less than 2 years ago. Among c-level execs, cfo Bill Brophy, like Hagan a former National Beverage exec, remains in mix.
Move comes after Pear’s team exploded topline for co operating as CherryPharm from $3 mil to $30 mil over past 5 years by focusing on recovery properties of tart cherries, but losses continued to be heavy, with co going thru $40 mil in capital over past decade or so from what we hear. With no clear path to profitability for CherryPharm, prospective buyers balked when approached in past year. Reached by phone today, Pear described himself as “ready for a new challenge” after 5 years, saying that after unsuccessful sale effort, Emil is “retrenching and significantly shrinking the biz.” He noted that co’s self-production out of upstate NY plant placed punishing capital demands on the biz, beyond the usual expenses of trying to scale a new brand.
In email we received at press time, Hagan confirmed overall outlines of what we’d been hearing. “We are resetting the business from one that was focused primarily on growth to one that exhibits a more acceptable equilibrium between top and bottom line performance and will provide a greater return for the shareholders of the company. Our shareholders are supporting this direction with more resources that will enable us to expand into other areas of positive contribution,” Mike wrote. He added, “We are also slightly tweaking our brand positioning to a lifestyle choice and engaging consumers in a more personal way. We continue to enjoy servicing all of our customers and consumers with the best tart cherry juice available whose attributes make a meaningful difference in their daily lives.”
Latest developments would seem to place Cheribundi among ranks of struggling single-ingredient plays, a concept, one contact close to co told us, that’s easier to succeed with if you control your acreage, as Ocean Spray or POM Wonderful do, but becomes more challenging if you must source fruit from outside growers as Cheribundi does. “So the economics almost never work,” he said. Calculated gamble under Pear to juice topline in hope of wooing strategic acquirer didn’t work, at time strategics are showing more interest in cash flow and income, so now it’s time to retrench.
Cheribundi’s new ceo, Hagan, is well-traveled hand whose background includes solid runs at CCE, Coca-Cola Philadelphia and PepsiAmericas’ Puerto Rico operation, followed by stints at National Bev, Trinidad bevco SM Jaleel and Ginny Bakes in Fla, per his LinkedIn profile. He joined Cheribundi 4 years ago.
Emil Capital Partners, based in Greenwich, Conn, manages money of Tengelmann grocery fortune, deploying capital in outside investments that notably include Goodbelly and Cheribundi on bev side as well as Tcho chocolate and its own chain of 2 Beans coffee-&-chocolate “parlours.” Steve’s brother Brian had shorter run at Emil overseeing pair of its other investments, Balance Water and Sipp organic sparklers, both of which have cut back in recent years, with Balance retreating almost entirely to its core Australian market.
Classic Distributing & Beverage Group, the prospective buyer of LA’s Haralambos Beverage Co, will nearly double in size from 7.5 mil case equivalents to 14-15 mil range, triple its customer base and extend far beyond its beer footprint via deal anticipated to close on Oct. 11. Tho it’s still navigating supplier approval process, it looks like most major brands within HBC portfolio are likely to make transition, including million-case entities like Sparkling Ice and Essentia Water, tho there’s a chance Snapple brand will transition to company-owned DSD operation of Keurig Dr Pepper, which owns brand. These brands join NA portfolio that just got a boost in Jun with pickup of Jarritos Mexican sodas, Eternal Water and beer brands like Karl Strauss, Hangar 24 and Ninkasi from the non-A-B footprint of Ace Beverage, which is retreating to its core beer territory. Classic also has begun working small-format retailers for La Croix as National Beverage seeks to grow sparkling brand beyond its large-format base. These additions plus HBC vault Classic into becoming significant NA player in key early-adopter market where many brand innovators are based.
As reported (BBI, Aug 1 and Aug 14), deal marks end to 85-year-old HBC distribution operation in LA, one that played instrumental role in incubating such familiar brands as Snapple, Vitaminwater and Bai. In letter to employees that he shared with us, Classic prexy CJ Sanchez duly paid obeisance to HBC, citing the “great respect” Classic always held for rival and noting that pending acquisition “opens many doors for us in terms of expanded territory, access to world-class brands, and great employees to help us along way.” In his own letter to suppliers, HBC prexy Tony Haralambos had indicated that all his employees from sales chief on down would be transitioning to new owner and he would consult for a year. Tony’s hanging onto co’s main warehouse and Alta Brands operation, so he won’t be exiting bevs, and his nephews are joining him there rather than accepting invitation to transition to Classic. As earlier reported, HBC had recently hived off its small beer portfolio to Classic.
In discussion this afternoon, CJ discussed long, fruitful run his co had once enjoyed on Monster Energy brand, which it retained thru several distribution strategy shifts until final move into Coke system a few years ago. Along way, he said he built brand’s share in Hispanic channel to 85-90% range. Coming at a time of challenges on core beer side, Monster “saved our ass. It always reminded us what non-alc could do.” Now he gets to make decisive move, expanding territory by two-thirds as co starts servicing Orange County and Inland Empire. He said timing worked out well, as pickup of Jarritos on Jun 16 enabled Classic to begin establishing infrastructure to service enhanced NA portfolio, for which co will be adding more extensive planning operation than HBC did. So far, he believes major HBC brands like Essentia Water and Sparkling Ice are inclined to make transition, and if Snapple does too that would get Classic to high end of that 14-15-ml-case estimate. “But we modeled the deal with or without them,” CJ assured us. HBC sales chief Steve Juarez will take new post of marketing vp for NAs at Classic.
In its employee letter Classic also offered assurance to its beer suppliers. “We love the beer business and remain committed to the highest level of retail execution with our beer brands,” his letter states. But HBC deal transforms Classic “into a true beverage distributor with the acquisition of a world-class non-alcoholic portfolio.” Unstated in letter is that deal offers hedge vs vagaries of challenged MillerCoors beer portfolio; also in mix are Heineken, Guinness, Four Loko and High Brew’s Hemptails hempseed line. Or course, broader reach that comes of Haralambos buy should enhance Classic’s performance on beer side, particularly in servicing regional chains.
Inaugural $100K award celebrating the late Odwalla and Califia Farms cofounder Greg Steltenpohl has gone to founders of ethically sourced ingredients co Simpli. The wife-&-husband team of Sarela Herrada and Matt Cohen founded Simpli 3 years ago with view to building broad pantry of single-origin, regenerative-organic-certified retail and foodservice packaged food sourced directly from growers in Peru, where Herrada grew up, Greece and other countries, per announcement. Broader mission is to address international supply chain that's wracked with fraud over purportedly organic ingredients. The couple was named Greg Steltenpohl Pragmatic Visionary Award winners at ceremony held during Expo West last week after vetting process going back almost to Labor Day last fall (BBI, Sep 6 22). Effort is chaired by Greg's son Eli, a former sustainability exec at Califia Farms who now sits on its board. He noted that when couple was interviewed for award last month, they were visiting producers in Andes with their newborn in tow.