Beer Marketer's Insights
“The Future Is Sweet. Savory Is to Come,” headlined NY Times story on Sun heralding launch of Soylent Squared square-shaped nutrition bars. Beyond basic details which we’d reported, story contains interesting insights about broader marketing initiatives at outside-the-box co. One involves filling perceived gap in gig economy by stocking RTD bevs in fridges in Lyft driver hubs, offering sampling oppty as drivers come in to fill out paperwork or just hang, as brand marketing vp Andrew Thomas explained.
Sugar-Free Kids Line Hapi Water Is $100K Winner in PepsiCo’s First Nutrition Greenhouse Class
Austin-based sugar-free kids bev called Hapi Water has most successfully navigated PepsiCo’s first North American Nutrition Greenhouse program, winning $100K grant to augment the $20K it got when entering program. Parent co Hapi Drinks, run by Karsten Idsal, offers 8-packs of 6-oz pouches of flavored water sweetened with erythritol and stevia in Grape D’Vine, Apple Joy, Pure Punch and Strawberry Kiwi flavors. Brand was created in 2011 by dentist KB Parkes, who in late 2014 coaxed former army infantry officer Idsal from Wall St job to honcho retail launch in fall 2015. It’s since expanded beyond Texas into middle and eastern parts of US, including chains like HEB and Walmart, per availability map on website.
Tho PEP tends to be low-key about Greenhouse activities since launching biz optimization program last Nov, it noted in announcement today that the 10 food/bev cos involved in latest 6-month class grew revenues by avg 200% and several added product lines and launched digital campaigns. PepsiCo also was a winner, noted PepsiCo Ventures Group managing dir Daniel Grubbs, who attested that “the program has provided a very unique leadership experience for our colleague-mentors, who all feel energized by the agility, speed and creativity that the entrepreneurs have embodied. They are excited to apply this entrepreneurial spirit to their day-to-day work at PepsiCo.” Other participants in class from bev side were Remedy Organics of Englewood Cliffs, NJ, Torii Labs of Calabasas, Calif, and Yofiit of Toronto. Half the 10 companies include females among their founders, PEP has pointed out. Greenhouse picks up on initiative launched in 2017 in Europe.
Heirs of Bob Marley are known for keeping tight control over brand associated with late reggae legend. So they must like what they’re seeing from New Age Beverages, because partners have now extended licensing agreements for additional decade, thru Mar 31 2030. Revamped deal includes agreement by which Marley family will “more directly support the marketing and awareness and building of the Marley brand,” which NBEV has revamped since acquiring rights in mid-2017. Line is currently comprised of Organic Marley Mate and Marley Cold Brew with Marley Mellow Mood + CBD heading to market this year too. Recall that prior licensee at one time built extensive DSD network behind relaxation-oriented Marley’s Mellow Mood but brand failed to ignite to support investments, even as One Drop RTD coffees struggled to garner traction in years before cold-brew arrived on scene to lend category a jolt of energy. Now NBEV is takin’ it from the top, lately with enhanced commitment from Marley family.
It worked once for Rolling Rock beer, but can it work for Poland Spring? Nestle Waters North America for first time is moving iconic bottled water brand beyond its Northeast footprint under Poland Spring Origin moniker, positioned as “the first leading American premium bottled spring water” and playing on what seems like new protected source it’s tapping at White Cedar Spring in Maine. New line packed in 12-packs of recycled-PET 900-ml bottles is going out via Amazon, NWNA’s Ready Refresh home & office delivery system and into retail in Texas and Florida, with full retail rollout anticipated for next year. NWNA vp/cmo Yumiko Clevenger-Lee says it’s response to years of requests from consumers all over US that brand be made available nationwide. (Recall, NWNA instead has targeted each US region with separate brand, under names like Zephyrhills, Ozarka and Deer Park.) “With the launch of Poland Spring Origin, we are excited to delight consumers throughout the entire USA,” Yumiko said in announcement today.
Move offers chance of further price realization in highly promoted category, even as emphasis on source in glacial sands of White Cedar Spring could help counter rumblings – and occasional class action suits – that question source of core Poland Spring line. (Suit contending Poland Spring employs ordinary ground water was recently allowed to move forward – BBI, Mar 29). Meanwhile, each regional brand, including Poland Spring, has been aggressively touting sparkling entries via campaign that spoofs lifestyle marketing of other brands, in separate initiative that seems to be attaining success in elevating image and price (BBI, May 9 and Aug 24 2018).
Since the water likely isn’t much different than what goes out broadly in Northeast in half-liter casepacks at highly promotional prices, strategy seems reminiscent of Rolling Rock beer back in 1990s, when Conn-based marketing team at Labatt USA adeptly adopted lifestyle positioning and intriguing references to “glass lined tanks of Old Latrobe” to turn brand into premium icon in urban centers, in stark contrast to brand’s position as shot-&-a-beer mainstay in core market in western Penn and Ohio.
To burnish environmental credentials, NWNA is ensconcing Origins in bottles made from 100% food-grade recycled plastic while also investing in the conservation efforts of the Bluesource-Baskahegan Improved Forest Management Project in Maine. It’s not clear whether NWNA intends in future to add to mix glass packages that more clearly denote premium bottled waters.
As word trickles out about launch, bottled water vets are spying a few disconnects in strategy. As one contact noted to us today, White Cedar Spring “is a new source so ‘Origin’ doesn't refer to some heritage.” Further, it’s neither the “first premium spring water” in US nor first bottled spring water (Saratoga Springs, NY, gets nod for first offering those). “It’s certainly not the oldest company. What kind of narrative are they trying to weave? Maine ‘origin’? I sure wouldn’t use plastic if I was trying to be either premium or authentically ‘original.’ Recycled plastic doesn’t exactly scream heritage.” So it will be interesting to see how this one unfolds as more elements of push come into view.
Coca-Cola isn’t only one taking greater liberties with its core trademark these days. Now PepsiCo is introducing 3 new flavors that, for first time, include a smidgen of juice in recipes with aim of offering “bolder flavor experience that will bring a fruity delight to your day.” Pepsi Mango, Pepsi Berry and Pepsi Lime, each containing 1% juice content along with “other natural flavors,” are breaking in 12-packs of 12-oz cans at large-format chains thru Jun 14, when they’ll add 8-pks of 12-oz slim cans at Walmart and Target. They join existing flavor lineup of Pepsi Wild Cherry and Pepsi Vanilla, which get a reskinning to put them in synch with look of new flavors, whose can graphics carry large splotch of color at top to denote flavor. Unusually, the Berry sku incorporates blueberry as well as raspberry, per fruit imagery on front panel. Extensions come at time KO is claiming good pickup of Orange Vanilla addition to core Coca-Cola trademark, after so far successful reinvigoration of Diet Coke with expanding range of exotic flavors like Blueberry Acai.
Online publication Bustle did a little delving into Pepsi brand’s past to point out that “calling them ‘new’ flavors isn’t entirely accurate: all 3 of them have existed in some form in the past,” whether as part of new Bubly canned sparkling water line or as earlier Pepsi-branded entries like Pepsi Raging Razzberry and Pepsi Strawberry Burst, from earlier febrile era of experimentation in 1991. Further, Bustle noted, Pepsi Lime launched in 2005, tho it’s only been available overseas in recent years, and mid-calorie Pepsi Next including Paradise Mango flavor in 2012. Still, big bevcos’ and beercos’ willingness these days to extensively tinker with core trademarks represents sharp departure from past, when relying on flavor extensions for growth used to be derided as “lazy marketing” by former Coca-Cola “ayacola” Sergio Zyman.
Persistent Calif assemblyman who’s tried 3X to impose soda tax has shelved most recent measure, saying he’s biding his time until next session. The bill’s author, Richard Bloom, said AB 138 measure will remain in Assembly Revenue & Taxation Committee for remainder of legislative year with plan to move forward next year, CNBC reported. Citing link between consumption of sweetened bevs and chronic conditions like diabetes, obesity and heart disease, bill would impose tax of 2 cents per ounce on sweetened bevs like CSDs, iced teas, sports drinks and energy drinks, with proceeds used to fund anti-diabetes and other health programs.
DISTRIBUTION: Kill Cliff Enters Walmart; Now Running Co, COO Timar Is Keeping Expansion Controlled
Functional brand Kill Cliff, which has added retail stores at more deliberate pace than some rivals, is among those that have won a role in Walmart’s new performance bev sections, entering 1,900 stores in 46 states, Atlanta-based co said. It joins wide-ranging set of brands from Hiball and Hellowater to C4 and Marley Mate that megaretailer has been easing into its sets as it seeks to revitalize bev offerings (BBI, Apr 8). Kill Cliff coo John Timar, former Navy Seal and tech entrepreneur who’s been running Navy Seal-founded co since quiet departure of ceo Joe Driscoll late last year, said entry doesn’t represent any divergence from co’s go-slow approach, but capitalizes on snug fit between core demos served by both brand and retailer: military, law enforcement, first responders, Main Street and Hispanics. Walmart will be shipped directly; Kill Cliff currently doesn’t have any DSD distribution partners and will continue to weigh entry carefully at time its ecommerce biz is nearly tripling and retailers served directly or by broadliners like KeHe also are growing quickly. Among other banners to recently come aboard are Cobourns, HEB, Ingles, Jewel, Lucky’s Market and Sprouts. All told, Kill Cliff now claims 4,500 retail doors along with 1K military accts, where brand does particularly well thanks to its active support of causes like Navy Seal Foundation and orgs assisting homeless veterans and former military people and athletes looking to reintegrate into civilian society.
Walmart win comes at time of transition at Kill Cliff. Timar arrived as chief sales officer in early 2018, then got bump up to coo in Oct, just ahead of Driscoll’s departure the following month, for reasons that co hasn’t disclosed and that John declined to discuss. He’s running day-to-day, augmented by help from investment partners, which include Sunrise Strategic Partners. Tho he doesn’t bring bev background to Kill Cliff role, Timar said he’s done 5 startups in 5 different industries and is intent on avoiding overexpansion that’s undone cos he’s observed in his other stints. Driscoll, a General Mills vet based in Twin Cities, had come in when Kill Cliff founder and former Navy Seal Todd Ehrlich was eased out of role. His nearly 3-year run ended in Nov; he recently landed at local co called Pearson’s Candy, per his LinkedIn profile.
Laird Superfood is entering kombucha category with kegged line offered in 3 flavors made from organic ingredients: Pineapple-Ginger with Turmeric & Black Pepper, Berry-Ginger with Lemon & Honey and Lemon-Honey. Co founded by surfer Laird Hamilton and based in Sisters, Ore, will start shipping the items later this month to inaugural accounts like the corporate customers serviced by Belmont Coffee Services in Portland, Ore . . . Kids mainstay Tampico has finally made the move into zero-sugar category with Mango Punch and Citrus Punch flavors that have been rolling out to retailers in Texas, Ariz, Illinois and parts of Nev and NM, with broader rollout occurring later this year. Entries contain just 5 calories per serving; co didn’t initially disclose sweetener used. As with core line, it contains vitamins C, A and E . . . Gregory’s coffee chain, which by now has expanded to 30 locations in NY, NJ and DC, is getting more adventurous in its in-store offerings. Chain launched by Gregory Zamfokis has debuted hydration-focused entry called HydraFuel that submerges coffee brounds in organic coconut water rather than plain water, as way to add antioxidants, natural sweetness and more nutrients. It goes for $5.50. Also entering mix is Glow Up, which melds collagen peptides with beet root powder and macadamia nutmilk into bright pink concoction aimed at making skin supple. It goes for $5.75.
Coca-Cola turned in a strong performance in 2019 first qtr, notching 6% organic revenue gain as it keeps innovation engine revved with recent launch of Coca-Cola Energy and pending intro of first RTD coffees under Costa brand. Report today came as ceo James Quincey, proving adept steward so far of sprawling co, is rewarded tomorrow with addition of chmn’s title held by prior ceo Muhtar Kent, who’ll step down at KO annual meeting.
For opening period of year, net operating revenues grew 5% to $8.02 bil. On organic basis, excluding negative impact of 1 less selling day and positive impact of European bottlers building inventory as hedge vs Brexit chaos, revs grew 6%. Operating income ignited by 29% to $2.34 bil. In core N Amer biz, revs edged up 1% to $2.68 bil despite 1% decline in case volume, thanks to disciplined price/pack mgmt (with mini-cans up 14%), gains in categories like juice and value-added dairy (read that as Fairlife), continued growth in Coke Zero and strong reception to new Orange Vanilla flavor, which drove trademark up 6%. Asked on CNBC appearance later in morning about acquired Topo Chico sparkling water brand, Quincey described it as “really on fire.” For Q1, operating income advanced 16% to $586 mil in N Amer.
Among other key regions, Europe, Middle East & Africa (EMEA) enjoyed 5% revenue growth to $1.77 bil while income rose 7% to $978 mil. Asia Pacific saw 2% decline in revs to $1.19 bil; income eased off 4% to $542 mil. Global Ventures unit, augmented by closing of Costa Ltd coffee acquisition, grew to $585 mil in sales vs $194 mil; that segment includes Monster alliance as well as Innocent juice.
Much of Wall Streeters’ focus was on UK’s Costa Ltd coffee co, whose acquisition by KO was concluded in early Jan, well ahead of schedule. First RTD entries are due later this qtr, starting in Europe, where Costa already has retail base, with future markets to be determined as so-called synergy plan nears completion. Quincey wasn’t ready to share details yet.
Willingness to Experiment with Where Coca-Cola Trademark Can Stretch On call today, in context of discussions of Coca-Cola brand’s forays into coffee and energy spheres, Quincey offered take on category-blurring opportunities, noting that while in developed countries fully three-quarters of what people consume already is available as a commercial bev, that % drops to just one-quarter in developing countries. That’s lot of white space available to expand into, and Coca-Cola trademark often has heritage and credentials to be the vehicle. Thus, Coca-Cola Coffee started in SE Asia as antidote to afternoon slump, without detracting from more directly coffee-related drinks under brand names like Georgia in that region. Along way it’s evolved to 2.0 recipe and further evolved to suit needs of specific markets, tho Quincey was careful to emphasize KO has no intention of eventually offering different version in each of 200 countries KO serves. Now Coca-Cola Coffee is set to roll out to 25+ markets by year-end. (Among interesting takes on coffee BBI has encountered was one sent over a few months ago from corporate in Atlanta that seemed to inaugurate series of Coca-Cola-branded “Batch Blends” produced by Coke Amatil in Australia: numbered 01, it was Coffee & Chocolate flavor “made with real coffee from Brazil” and packed in 250-ml slim can.)
Energy similarly serves as “another logical extension,” fitting into some of wide spaces where energy category isn’t well developed, Quincey said, without reference to energy partner Monster, which has bridled at launch of Coca-Cola Energy as violation of contract. James noted that Coca-Cola brand has credentials and some of origins to work to solve some energy need states, and proposition will be refined as market learning comes in. Just hitting several European countries, Coke Energy seems to have resonated well but it’s far too early to draw any definitive conclusions, James told questioner. No word on call about status of arbitration to resolve issue, which originally was anticipated to conclude this month.
Dubious on CBD In appearance on Bloomberg TV this morning, Quincey was asked again about CBD potential, given category’s heading toward legal status in Canada later this year and potential that FDA eventually may come around to blessing those products. Quincey responded by reciting “simple 3-step rule for ingredients”: Is it legal? Is it safe? And is it consumable? As bev marketer, KO wants it to be consumed every day. Currently, “I think it’s a long way from crossing all 3 of those variables.”
PRESS CLIPS: In Ominous Note, SPINS Warns Kombucha Producers that Retail Velocity Is Tailing Off
SPINS exec offered some possibly ominous info to kombucha makers gathered in Long Beach, Calif, late last week for annual KombuchaKon powwow: velocities have moved into significant decline. Per report in FoodNavigator USA, sales of refrigerated kombucha and other fermented bevs (incl apple cider vinegar and hard kombucha) rose 21% to $728.8 mil in measured channels, but “velocities were down fairly sharply.” At confab hosted by Kombucha Brewers Int’l, SPINS sales dir Bobbi Leahy reported that while sales growth tailed off to just 4% in natural channel where segment was birthed, and just 6.5% in specialty gourmet.