Beer Marketer's Insights
Laird Superfood reported soft conclusion to 2022 but pointed to plenty of sprouting green shoots after new mgmt team dropped self-manufacturing, overhauled branding & formulation and weeded out inefficiencies in core DTC engine, as it aims for eventual profitability. Speaking to investors late yesterday afternoon, ceo Jason Vieth reminded investors that when he accepted job a year ago, LSF was burning cash at rate that wouldn't last a year. But efficiencies ferreted out by his new team have stockpiled enough capital for another year of operation before having to go out to market again by mid-2024, presumably with a better story then that should elicit better terms. Still, its Q4 performance missed revenue targets and shares slid in trading today in bear session. Its market cap stands at $8.4 mil, below even its Q4 sales level.
Oatmilk giant Oatly this morning said it's landed $450 mil in new money that should carry it all the way to profitability next year even as it's resolved its production snarls enough to return its retail fill rates to 90%+. That, OTLY execs indicated this morning, has left Swedish co on solid-enough footing to be able to restart its marketing machine and go hunting for bear. (Well, vegan gummy bear, anyway.) "We're well-positioned to start playing offense in 2023," ceo Toni Petersson declared to investors this morning. Co will turn on promos again soon and will be "unleashing the creative department" in late Q1 or early Q2. That means lots more of those cheeky "It's like milk but made for humans" and "Go ahead, eat like a vegan" ads that have been in storage while store shelves weren't fully stocked.
We’ve never been entirely clear about why we should care about semiotics and meta stuff in general, but controversy being stoked by news outlets in NY certainly seems to be taking us down that path. Issue is affixing of JetBlue sign to iconic Pepsi-Cola sign that’s been preserved as historic element in recently opened Gantry Plaza State Park in NYC’s burgeoning Long Island City nabe along East River. With air carrier dropping longtime bev supplier Coca-Cola in favor of PEP, new partners decided to celebrate alliance by affixing JetBlue logo to bottom of 82-yr-old red-curlicued “Pepsi-Cola,” move that was quietly approved by Landmarks Preservation Commission, which had cited it as one of “most endearing and recognizable icons on the Queens waterfront” at time it conferred designation in 2016.
Chicago Tribune recently offered sobering story about challenges facing drug chains, tho those challenges also underlie reasons they’re creating opportunity for innovative bev brands as they’re forced to upgrade their merch offerings. “Changing consumer habits have emptied malls, sent department stores into bankruptcy and transformed grocery stores,” story opens. “Now it’s the drugstore’s turn.” Story riffs off recent announcements that Walgreens would be closing 200 US stores, even as CVS Health will slow pace of openings. After opening stores at rate of 300 for several years, CVS said it would open just 100 this year and 50 next year, even as it closes 46 underperforming stores. Story describes how the drug chains are investing in more elaborate medical and health services that might make individual stores more of a destination, requiring fewer overall stores. “Meanwhile, competition from Amazon and other bricks-and-mortar retailers has slowed sales of drugstores’ other merchandise, like personal care products, household goods, and food and beverage items,” story reports. “Most people still buy those items in stores, but drugstores haven’t invested enough in the retail side of their businesses to keep up with what consumers want,” per GlobalData Retail managing dir Neil Saunders. Tho story doesn’t tease out implications for bev sector, that’s clearly what’s been driving their deeper push into healthy and natural brands more in synch with health mandate and offering greater differentiation and higher margins.
With Cumberland Farms Deal, EG Group Now Is Big C-Store Player in US UK’s EG Group may not have been familiar name to many in US retail space a coupla years ago, but it’s been aggressively growing presence in c-stores. Now, with binding agreement to acquire Cumberland Farms chain, it will vault into top 5 behind 7-Eleven, Couche-Tard/Circle K, Speedway and Casey’s General Stores, per Shelby Report. In Europe EG operates nearly 5,400 stores in 9 countries, but it had no presence in States until its acquisition of Kroger’s 700+ c-stores. Since then it’s gone on acquisition jag, adding Minit-Mart, FasTrac and Certified Oil. Cumberland, whose stores are concentrated in Northeast and Florida, brings EG’s total US footprint to nearly 1,700. All the Cumberland stores will continue to sport that banner, and some Cumberland-branded items may make their way out to other EG-owned stores in this country, Shelby reported. On bev side, Cumberland offerings include Sparkling Sno, Cumberland Farms Spritz and Chill Zone sodas and spring waters. US arm of EG operates out of Cincinnati, where Kroger is based.
How’s Monster Beverage weathering Bang assault? It’s early days for its Bang fighter, Reign, but astute analysis by Wells Fargo’s Bonnie Herzog suggests Reign certainly is holding its own when compared to growth curves of earlier launches like Ultra – which proved a major hit – along with Mutant and Hydro. Reign’s roughly $8 mil per week at retail significantly outranks sales volumes of Ultra, Mutant and Hydro at similar point in launch cycle thanks, Bonnie believes, to strength of KO system and Monster’s own elevated execution levels compared to past launches. And while extensive bogo’s deployed to seed product drew lotsa attention, those seem to be getting dialed back, with Reign $$ sold on promo subsiding a bit to 55.3% for most recent 4-wk period in Nielsens, vs 58.7% over 12-wk period. That said, those $8 mil in weekly sales are occurring at time brand’s ACV has surged to 72.5% from 47.5% just 2 weekly periods earlier, likely because of Walmart rollout, so that bears watching as cautionary sign. Meanwhile, as noted in our scanner report yesterday, Monster’s core “green” can remains under pressure, as Herzog noted, with sales inching up just 1.8% for latest 4 wks. As for Bang, while it’s seeing growth rates taper off, VPX-owned brand still managed 306.8% growth in latest 4-wk period, off a base that’s by no means trivial, at $801 mil for past 52 wks, per Nielsen.
Self-styled “biohacking supplement co” in LA called More Labs that’s quickly ignited on both sales and fundraising fronts has broadened its range beyond its initial Morning Recovery hangover shots to hydration realm with Aqua+ “hydration with benefits” powder packets. Addition comes as co founded by Tesla and Uber product mgr Sisun Lee is building out and upgrading DSD distribution for core glass-bottle line based on DHM ingredient that’s popular in Asia as antidote to hard-drinking culture that supports recovery drink biz estimated at $200 mil just in South Korea, Lee’s home country, where idea was inspired. But as Aqua+ launch this week suggests, More Labs has intention of offering products in broad range of categories that it rethinks.
Just 2 years old now, More Labs has moved quickly. After Lee teamed with DHM specialist at USC’s pharmacy school, Dr Jing Liang, to incubate shot line, co pulled in $1 mil in sales in first 3 months and raised $8 mil Series A round at $33 mil valuation within 8 months, Sisun told us when we encountered him Mon evening at Holiday Hosting media event in NY. That’s been augmented by more recent bridge round. Among investors are Altos and Slow Ventures. To date More Labs has pulled in $13 mil in revenue on premise of building items “to tackle modern-day stressors slowing you down, such as stress, pure sleep, hangover, dehydration,” per mission statement on website. More Labs joins ranks of cos like Soylent that were devised and funded by folks from tech rather than food/bev community, using legion of new online tools available to generate insights and build out supply chain, tho by now More has brought aboard its first bev-specific expertise in form of retail leader Josh Groff, who’d been advising co for past year while still working as sales vp at Brew Dr Kombucha.
Enterprise was inspired by plethora of detoxing supplements that Lee encountered one night at 3 AM in Seoul convenience store “after an amazing night out” in his native country, as he recounts in blog. Unexpectedly, “I woke up the next morning and was operating at 110%.” Deep dive taught him about DHM, derived from Japanese raisin tree, and he teamed with USC expert on ingredient, Jing, to launch initial version of Morning Recovery via co then called 82 Labs (for the area code of Seoul, tho it’s also play on words for “party” in Korean language). By 2017 he was ready to leave Tesla to go full-time with idea. Also entering mix as cofounder was Toronto-based design vet Misha Frolov, who’d been leading team at Uber devising cash-collection processes, to handle creative chores. Masterminding retail buildout is Groff, who joined in Mar after varied bev career at cos like Jones Soda, Starbucks, First Beverage Group, Niagara Bottling, Stumptown Coffee and Brew Dr. He just relocated from Bay Area to LA, close to co’s Koreatown offices. R&D is led by Dr Fu Chen, most recently a senior scientist at Smucker. USC is partner on double-blinded clinical research being undertaken at cellular level to support products’ efficacy, including DHM (dihydromyricetin), which speeds breakdown of toxins, and GABA substantiation.
Core entry is 3.4-oz (100-ml) glass-bottle shot called Morning Recovery that melds DHM with electrolytes and lemon flavor to alleviate symptoms of heavy drinking. Also in blend are liver-enhancing milk thistle and prickly pear. Entry is available in regular version and and xylitol-sweetened Sugar Free version. “For when you drink,” front panel copy explains forthrightly. They’ve lately been augmented by beta-testing nutropic entry called Liquid Focus (“Get more done”) with productivity-boosting ingredients like Mucuna Pruriens seed, L-carnitine, L-theanine, caffeine, yohimbe and panax ginseng, tho it’s currently back in lab for rethink. Shelf-stable line goes out at $5.99.
Following by-now-familiar model of brands like Soylent, Morning Recovery started as online play, building up array of consumer data that’s been used to guide retail and distribution push. By now it’s got base of 150K active online users, Groff told us. That data led to focus on LA as well as Silicon Valley, where founders’ tech backgrounds had lent intrigue to project. Chicago was more of a surprise, but since that’s what the data pointed to, that’s where the brand went. Tho co may opportunistically add other territory later this year if chain authorizations come thru, particularly in fertile markets like Pac NW and Las Vegas, intention is go the proverbial mile deep and inch wide, Josh said, citing his years in trenches in bev biz.
Co has been expanding and refining its DSD network, mainly via MillerCoors beer houses. In core LA market, it got off to brisk start with Sheehan Family Cos Craft Beer Guild but more recently moved on to Classic Distributing, augmented by Beauchamp. (Classic is said to be buying LA rival Haralambos Beverage, tho no official announcement has been made yet.) In Bay Area, DBI viewed brand as complement to its beer biz and accepted Morning Recovery in its SF branch, Groff said. In center city Chicago, brand moves thru wine & spirits house Heritage, augmented by MillerCoors house Euclid in western suburbs. By now brand has entered some local 7-Eleven, CVS, Bristol Farms and Total Wine stores in regions where it’s playing, but has mainly been working to build velocity story at indie stores. (Urban Outfitters is brand’s only NY acct, Sisun told us at NY show.) Judging by what he said were 5 consecutive record-breaking sales months from Mar to Jul, Groff said $5.99 price is working, with unanticipated benefit that some store operators merchandise pricy item right at checkout counter, where they can keep a better eye on it. As greater scale reduces input costs, co will follow price curve down, while inaugurating more value-oriented 4-packs at large-format stores.
The brand-new Aqua+Immunity entry, strictly a DTC item for now, offers 8 electrolytes and vitamins B, C, D, with cane sugar as sweetener in Watermelon flavor. Its flanker entry, Aqua+ Probiotics, contains Lactobacillus Rhamnosus and Bifidobacterium Animalis strains along with 8 electrolytes and cane sugar, in Strawberry Lemonade flavor. Both are packed in 30-unit boxes at $38, $32.30 to subscribers. Groff said those items are very much at tinkering stage, with co planning to harness feedback to continually refine them as needed before any commitment is made for retail push. College campuses serviced by likes of Vistar might be one early option for retail test, he indicated.
Founder’s Blog Offers Tutorial on Online Resources Available to Incubate New Brand Blog written by Sisun Lee offers what’s effectively a tutorial on web-based resources available to build a brand. Lee crowd-sourced ideas at TheHangoverDrink.com, driving traffic via Facebook ads, then ran $30 ad on Fiver site seeking freelancers who could help with actual buildout, generating list of 20 copackers in Korea and Vietnam that might do the job. Posting on ProductHunt.com site ignited interest, with Morning Recovery immediately racing to #3 spot, yielding bounty of media coverage and pair of investors willing to invest $450K within 2 weeks, per Lee’s account. And branding agency Launchpop helped co devise month-long Indiegogo campaign that hit goal by factor of 10 and sold $250K of product along way.
In face of weak dairy sector, sales continued to erode for kefir maker Lifeway Foods, dropping 14.6% in Q2 to $23.15 mil. LWAY tipped into operating loss of $66K vs modest $333K profit a year earlier. For 6 mos sales are down similar 14.5% to $47.77 mil and operating loss of $467K, reversing $484K profit a year earlier. That was still better showing than Q1, which ceo Julie Smolyansky assured investors in statement “highlights the significant progress we’ve made to position Lifeway for long-term, sustainable growth.” Recall that LWAY shares had spiked to $4 range in late Jun when co announced its plans to enter CBD biz via its Plantiful plant-based brand, but they’ve given back most of gains since then, trading around $2.50 so far today.
Australian co called Harris Farm Markets has won regulatory approval from local health authorities for Made by Cow milk and kefir brand that eschews pasteurization in favor of HPP, offer nutritional benefits of raw milk while protecting most of natural enzymes. In period of decline for dairy biz, process more often associated with cold-pressed juices offers a way to harness growing interest in raw milk while allaying regulators’ safety concerns. Made by Cow is offering Cold Pressed Raw Milk as well as Cold Pressed Raw Probiotic Kefir in unflavored and flavored varieties, so far just in Australia, following approval by New South Wales Food Authority. Made by Cow uses milk from single herd of free-ranging Jersey cows that’s bottled same day it’s milked, then HPPed the day after. “Our milk hasn’t been heat pasteurized, homogenized, separated, blended, diluted or standardized,” website informs users. “Our milk isn’t sourced from multiple farms, stored in vats for multiple days or pumped through multiple pipes extensively.” Co is aiming for organic certification down the road. Info at MadeByCow.com.au.
Mass merchandiser Target has set natural private-label line called Good & Gather that’s bringing 650 new sku’s to store shelves on Sep 15, with full panoply of 2K+ items due by late next year on way to becoming flagship store brand. “The Good & Gather products range from dairy and produce to ready-made pastas, meats and more—all with no artificial flavors, synthetic colors, artificial sweeteners or high-fructose corn syrup,” said Shelby Report. Effort, a year and a half in development, aims to make Target primary grocery shopping choice for customers, role that rival Walmart’s superstores long have held, rather than venue for occasional add-on and impulse purchases. Minneapolis-based retailer intends to eventually phase out Archer Farms and Simply Balanced brands while cutting back Market Pantry line as part of overall reformulation and upgrade of its food/bev offerings. Edward Jones analyst Brian Yarbrough estimates that Walmart derives 50% of its revenues from food/bev to Target’s 20%, tho latter is “in a much better spot than they were 4 or 5 years ago,” as CNBC quoted him. Good & Gather will include core offerings along with several sublines: Signature line for those with most discerning palates, and Seasonal, Kids and Organic lines. Merchandising vp Amanda Irish said effort intends to bring to shoppers “that same level of excitement and that thrill of discovery” that they get shopping other areas of store that once defined cheap-chic notion. So far, we can’t offer specifics on bev selection, tho overall look of Good & Gather brand can be viewed at this online gallery of 5 items.
CSD volume sagged 1.2% but avg prices rose 3.4% for 4 weeks thru Aug 10 in Nielsen all-channel data reported by Wells Fargo Securities’ Bonnie Herzog. Avg price gains still solid but a bit softer compared to +4.7% for 12 wks, +5.3% for 52 wks. Coca-Cola CSD volume improved to +2% (up from +0.3% for 12 wks) as avg price increases came down a few percentage points to +1.7% for 4 wks. Coca-Cola’s low-calorie brands were up 4.2% for 4 wks, likely driven by Coke Zero gains. PepsiCo CSD volume dropped 4.6% but avg prices almost offset that with 4.5% increase last 4 wks. Keurig Dr Pepper CSD volume was down 2.7% while avg prices were up solid 4.7% for 4 wks. KDP’s low-cal brands eked out 0.5% volume gain even with 3.3% avg price increase. So rational pricing remained the word, with Big 3 all finding ways to prosper in overall declining CSD category.
Energy Volume Gain Continued; Pricing Down Slightly Energy drink volume (including coffee & tea hybrids) increased 7.3% last 4 wks in all-channel, in line with 12-wk gain pace. Avg prices were up 3.1% for 4 wks, down from +3.7% for 12 wks. Monster Energy volume edged up 1.6% on solid avg price gain of 4.2% last 4 wks. No percentage figures, of course, on MNST’s brand-new performance energy entry Reign, tho data has it doing not-shabby $137 mil yr-to-date vs Bang’s 52-wk $801 mil. Core “Green” Monster entry, Zero Ultra and Java Monster each suffered volume decline, but Green and Java netted sales gains on strong pricing. Red Bull volume rose 4.6% on very small (-0.2%) avg price decrease last 4 wks, very similar to its 12-wk trend in all-channel. Bang rolled to a 289% gain with avg price increase of 4.5% last 4 wks. Prices matched 12-wk trend while volume decelerated from +352% for 12 wks. Rockstar continued to fade, with volume declining 15.3% (down 16.6% for 12 wks) on avg price increase of just 0.8% last 4 wks. North American Coffee Partnership (Starbucks RTD brands like Doubleshot) soared 16.4% with avg price increase of 2.4% last 4 wks, nearly identical to 12-wk trends. PepsiCo energy brands slowed declined to 7.5% as avg price increase was halved to +3.2% for 4 wks.
Summer Bounce for Gatorade Sports drink volume swung up from 2.3% decline for 12 wks to 3.2% gain last 4 wks with solid avg price increase of 4%. PEP (Gatorade) volume improved from -1.4% decrease over 12 wks to grab 5.4% gain last 4 wks. Avg price increase was modest 0.7%, half its avg increase for 12 wks. KO (Powerade) continued to struggle as volume fell 11% (-13.7% for 12 wks) on avg price gain of just 0.6% last 4 wks. No breakout was included of KO’s fast-rising Body Armor in this data set.
Water Volume Improved; KO, PEP Raise Prices Bottled water volume improved to 4% gain (up from +1.7% for 12 wks) on tiny (+0.2%) avg price increase last 4 wks. Nestle Holdings water volume slowed its decline to -1.7% (vs -5.5% for 12 wks) on modest 0.4% price gain last 4 wks. Coca-Cola water volume was off 2.7% as avg price increase edged a bit higher to +3.7% for 4 wks. PepsiCo water volume declined 1.5% but avg prices were up hefty 5% for 4 wks, up from +3.5% for 12 wks. Roll Global (Fiji Water) swung from 2% decline to 3.6% gain for 4 wks as avg price decrease went steeper to -6.5%. (Recall, Fiji has been navigating move away from DSD distribution.) Private-label waters, which hold 50 share of volume and 28.6% share of $$ in all-channel, were up 10% on flat pricing last 4 wks.
Steady Sparkling Summer Sparkling flavored water volume was up 4.9% on avg price gain of 3.9% last 4 wks, matching category trends for 12 wks in all-channel. Talking Rain Co’s Sparkling Ice continued to grow double digits with volume up 15.8% on small avg price increase of 0.9% for 4 wks. (That suggests aggressive deals we’ve occasionally spotted – lately, $7.99 for 12-bottle variety pack at Safeway/Albertsons – are mainly outliers.) Ice is now trending at $510 mil at retail over past 52 wks. National Beverage Corp’s LaCroix volume plunged 16.6% even with flat prices last 4 wks. Nestle fell 7.3% on hefty 11.3% price jump for 4 wks while Polar Corp volume jumped 24.9% on 5% price cut. In $$ Polar is now trending at $190 mil for 52 wks, but Bubly-riding PepsiCo is closing gap, now running at $180 mil.
Among Indie Water Brands, Hint, Good2Grow, Spindrift Soar Among indie brands broken out in data, Hint Water continues to ignite among still waters, with some help from pricing. For brand now doing roughly $50 mil at retail over past 52-wks, volume more than doubled in latest period, +117.3%, accelerating gains of 94.7% over 12 wks, 75.7% over 52 wks. But pricing has been aggressive too, -11.3% over past 4 wks, vs roughly 9% for 12- and 52-wk periods. Also enjoying brisk growth in segment was InZone Brands, which markets Good2Grow kids’ waters featuring character heads as tops. Volume grew 25.7% in latest period, off a tad from 33.7% for 12 wks, 45.7% for 52 wks. That’s with 5.5% bump in price.
On flavored sparkling water side, the $30 mil Spindrift brand continued to rack up torrid gains, +112.2%, tho a bit off the pace of 12- and 52-wk periods.
Coke Sags in Coffee Again; AriZona Flat in Teas Pepsi/Starbucks stayed steady in segment defined as liquid coffee, continuing pattern of 5% increases and retaining two-thirds of market by volume, three-quarters by $$. Despite mustering arsenal of brands Coca-Cola continued its recent weakness, declining 17.6%, -20.2% for 12 wks, leaving growth at just +0.8% for 52 wks for once fast-rising player. Indie co Califia Farms, trending at $40 mil in category, scored 13% gain. On tea side, leaders Pepsi/Lipton ($1.57 bil at retail) and AriZona ($740 mil) were flat, while KO edged down 0.9% and Keurig Dr Pepper sagged 3.9%. Its Snapple brand, which once defined natural RTD tea, holds mere 6.1% share these days. Refrigerated Milo’s Tea brand continued rapid growth, +16.2%, for run rate of $170 mil at retail, per Bonnie’s Nielsen data.