Beer Marketer's Insights
Under Trinity Springs name, bottled water brand from majestic Idaho source was center of lurid financial soap opera in years past. But native Idahoan is seeking to revive aquifer producing pure, fluoride-heavy water under Rising Springs name via bag-in-box offering sold almost exclusively as direct-to-consumer item for past 2 years. Encouraged by results, entrepreneur Grey Hecht now has purchased used bottling line with view to bringing 750-ml glass pack to market by summer or fall. He’s begun capital raising effort to fund launch.
Operating as Rising Springs SPC, Hecht and his wife Nicoya source the water from 2.2 miles below Sawtooth National Forest and package it in 5-liter bag-in-box sold 2 for $30 online. It’s naturally alkaline at 9.4 pH and silica-rich, with consumers urged to ingest three 8-oz servings daily (each box contains 21 servings). “The only natural source water in the US packaged as a natural mineral supplement – whole, live and mineral-rich,” promo material states.
Lotsa unusual aspects to this project. For one, the liquid emerging from aquifer under Rising Springs name (and Trinity Springs before it) can’t be called a water or marketed with phrases like “hydrate,” “refresh” and “quench” because of high level of naturally occurring fluoride, too high to be compliant with DSHEA regs. So it goes out as dietary supplement, making for highly differentiated offering but one that creates marketing challenges. For another, founder Hecht is committed environmentalist, a board member of Water Keepers stewardship org founded by Bobby Kennedy Jr and one who grapples intently with implications of packaging choices, all of them flawed in one respect or another. Current bag-in-box seemed most benign, until Trump administration trade dispute with China cut off outlet and effectively rendered the plastic bags non-recyclable.
As for supplement issue, Hecht views that as “the ultimate irony,” as it may be purest water in North America. But while he feared fluoride might prove to be issue with LOHAS (“lifestyle of health & sustainability”) consumers he’s targeting, “most understand” its value, he came to realize.
Hecht is native Idahoan who built career as green-homebuilder, green farmer and board member of Water Keeper. Last year he launched what he says is Costa Rica’s largest organic farm. Not surprisingly, he’s structured Rising Springs as B Corp and is using carbon offsets to minimize environmental footprint. So far it’s been funded by friends and family. Operation is located in area that’s been ripe with activity lately, from Allegro (coffee co acquired by Whole Foods a few years back) to Proud Source, offering sourced water packed in metal bottles (BBI, Oct 14).
With his brother Hecht purchased the spring in Nov 2018, tore out the plastic-bottling equipment in order to go more sustainable route via bag-in-box offering. At time he rejected glass as “very scary” because of environmental footprint due to high weight as well as cost of installing bottling line. So 2 years ago he launched bag-in-box as DTC play, initially aiming to reach spread-out group of former Trinity Springs users. Did he see any value in trying to bring back Trinity Springs name? As he cleaned up past legal and financial mess – in process getting sued by various parties left in lurch by prior owners – Hecht concluded that brand’s dwindling equity didn’t warrant going thru agony of securing rights to name. “Not enough to scale around,” he said. “It’s an amazing source that doesn’t need to be burdened with a toxic legacy.”
So far, Rising Springs has made little effort to penetrate retail channel, getting on shelf at Erewhon natural chain in SoCal as much for marketing exposure as for actual sales. Since bag-in-box is not particularly retail-friendly format, brand hasn’t worked that well in chain so far, Grey readily acknowledged. For now, he’s investing in back-end fulfillment with view of driving most consumers to subscription model. But Hecht, who’s being advised by former Mountain Valley Spring and Evamor ceo Breck Speed, believes there’s rich potential at retail, particularly in western states. “We want some of Mountain Valley Springs’ share out west,” he declared. Tho undertaking has proved arduous, he added: “I wouldn’t be here 2 minutes if I didn’t have something real to sell.”
For decades identified almost exclusively with squarish plastic bottles, Teas’ Tea marketer Ito En offered slight shock at last month’s Expo West: tucked away on shelf in expansive display were a pair of RTD cans. The new format was added to co’s Oi Ocha iced green tea line, in 12-oz and 16-oz sizes, as part of effort to crack the growing ranks of corporate customers like LinkedIn that have become averse to plastic bottles in their on-campus offerings (story above). Co’s top seller in home market of Japan, Oi Ocha has cultivated ardent following in Silicon Valley, making it good candidate for cans, given rising resistance to plastic among tech customers. While squeeze on can and canning capacity have kept some marketers away from format, that wasn’t issue, Ito En North America prexy Jim Hoagland said, on account of co’s sourcing product in Asia, where Ito En is major player. Ito En has previously employed 5- to 6-oz cans behind Matcha Love and Oolong shots but this was rare US foray into full RTD size.
Also at recent show, it was clear Ito En has been devoting considerable attention to its matcha offerings. It tweaked Matcha Love branding for more authentic look that might drive greater millennial appeal, said marketing exec Harris Goldman, and broadened flavor range of Matcha Love bagged teas, adding Blueberry + Lavender and Tumeric + Yuzu, to lineup of Green Tea, Apple + Ginger, Lemon Verbena + Peppermint and Peach + Cinnamon. The items, which all combine regular green tea with powdered matcha green tea, go out in boxes of 10 teabags.
On RTD side, Ito En also is ready to step things up with Milk Teas that were devised expressly for US market and debuted a few weeks earlier at Fancy Food show in SF. With first run having sold thru, mainly into endemic Asian-oriented accounts, co now will broaden push behind line out in matcha-based and black-tea-based versions.
It seemed like existential threat to bottled water a decade ago: seemingly broad green backlash had hi-end restaurants conspicuously announcing that they were dropping bottled water even as financial crisis forced many consumers to scrutinize whether such expenditures were necessary. If it was perfect storm, as many said back then, it sputtered out into a few isolated rain showers here and there, even as bottled water went on to eclipse soda as #1 bev category, despite a few holdouts like Mom’s Organic Market chain that refuse to carry bottled water. So while bevcos have steadily announced lightweighting and other efforts to ease stigma of PET bottles, the more apocalyptic predictions haven’t been heard much lately. But as Earth Day rolls around today, it seems fair to wonder whether this is bubbling up as big issue again, not just for bottled water but for NA bevs in general. There are increasing signs that progressive bastions like Calif and NY are becoming inhospitable to plastic bottles, with corporate and college campuses dropping them in favor of fillup stations, SF’s airport banning PET water bottles and major NY corporate accounts likewise putting up “Not Welcome” signs. Bev marketers are responding, either by easing some products into more acceptable formats like cans, as Ito En is doing with its bottled Oi Ocha line (story below) or by launching new brands in cans or glass – even tho capacity for both is tight, and their usage requires other tradeoffs. Of course, cans as packaging option seem to riding cultural wave, too, as format has become cool for craft brewers and La Croix sparkling water spawned legion of imitators.
“I’ve heard the pushback for decades and always assumed it was a bigger issue, and it never was,” said former Mountain Valley Spring Water ceo Breck Speed, who’s consulting for several cos after most recent stint running Evamor Water. (Mtn Valley was among few American cos to build significant base of glass-bottle biz.) “Consumers say one thing and they act differently.” But the anecdotal evidence is mounting that it’s coming back as a serious issue, Breck said. That was borne out by what he observed at last month’s Natural Products Expo West, when many innovative bevcos were launching in glass or cans. He said that was true of all the new sparkling brands he encountered and quite a few still brands, too, despite there not being a lot of capacity available for either format.
Meanwhile, confusion is rampant, even among those who think they should be able to do well by doing the right thing environmentally – or those who feel they’re being punished for selling a nutritionally preferential product in a kind of plastic that fits right into current recycling stream. “What I don’t fully understand or isn’t consistent is, does it mean the plastic lining on Tetra Pak boxes is OK or not? For some it is. For other it is not and hence aluminum bottles or glass are the only options,” said bottled water marketer who’s encountering increasing resistance from corporate accounts to his PET-packed brand despite it being among the healthiest hydration options available to their employees. He added, “This is all about perception and not reality of options and true recyclability. Our bottle is fully and easily recyclable if it makes it into the right bin.” Complex issue is proving similarly confounding for environmental activist involved in launching Rising Springs brand (story below).
Among corporate accounts that have taken animus toward PET are LinkedIn on tech side and JP Morgan and Morgan Stanley among established cos that have banned plastic from corporate cafeterias. At San Francisco airport, Zero Waste Plan inaugurated last year prohibits sale of bottled water as way of encouraging use of reusable bottles. On beer side, Diageo announced it’s spending $20 mil to swap recyclable and biodegradable cardboard for plastic used in multipacks of Guinness and other beers, as CNBC reported.
“None of us could see plastic retreating this quickly,” said Grey Hecht, green entrepreneur who’s reviving source formerly called Trinity Springs in Idaho, starting with bag-in-box and adding glass bottles under Rising Springs brand. “Consumers are grabbing glass.”
Not everyone involved with plastic seems spooked enough right now to move beyond incremental steps already under way. “We’re seeing very little backlash,” per text msg from top exec at popular PET-packed sparkling brand. “There is a push for more use of rPET (recycled PET) and reduction of materials carbon footprint. We've developed a sustainability program/pledge.” Nor is it an issue that looms high on radar of investors and acquirers of brands, said Mike Burgmaier, whose Whipstitch Capital advisory is heavily involved in deal flow. Asked whether it’s consideration in valuations or buy or don’t-buy decisions, he said, “The issue of whether a brand uses plastic or not is pretty much a non-issue. It really comes down to revenue, growth rate, velocity, gross margin and brand extendability/white space.” If it does become an issue, “you can always change format,” he added.
For its part, Int’l Bottled Water Assn heralded Earth Day with lengthy release describing bottled water as “an ideal healthy hydration option” and outlining “the importance of consumers having easy access to safe and clean drinking water for protection against diseases, obesity, dehydration, and contaminated water.” But it made no mention of packaging until last few words, urging users to “always recycle empty containers.”
Meanwhile, PepsiCo, having recently closed on acquisition of SodaStream, which has made sustainability a key part of its marketing, today announced new “tech-enabled hydration ecosystem” – brand name still TBD – that melds countertop dispenser, smartphone app and QR-stickered reusable bottles to customize individual consumers’ drinks (tho the options don’t include Pepsi CSDs, Fortune noted). It’s “exciting step in the PepsiCo Beyond the Bottle innovation pipeline,” per Scott Finlow, cmo of PepsiCo Foodservice. “We’ve addressed a number of trends we’re seeing resonate with consumers, including the increasing concern for the environment, preference for refillable bottles over single-use plastics, and finally choice and personalization whenever possible.” And PepsiCo’s SodaStream unit launched the Proud to be Green Challenge to highlight ways its gizmo can help avg family cut more than 3,700 bottles and cans from its use.
Busy spring calendar is bringing lotsa reasons to head to Chicago, starting with Beverage Forum on Tues Apr 30 and Wed May 1 at Windy City’s Swissotel, with agenda that includes Body Armor cofounder/chmn Mike Repole, Bang Energy creator Jack Owoc, Coke’s N Amer chief James Dinkins and buyers from Walmart and Bristol Farms chains moderated by LA Libations’ Danny Stepper. Lotsa speakers from alc side of biz, too, at pow-wow produced by Beverage Marketing Corp and Beverage Industry mag. Info at BevIndustry.com/beverage-forum .
It’s become a mainstream media special: lengthy features on outsized potential of non-alcoholic beers, shift in generation Z drinking habits, trend towards health and wellness. Two more appeared overnight, 1 in Financial Times, the other on Bloomberg. “Beer That Tastes Like Beer But Doesn’t Get You Buzzed is Booming,” headlined Bloomberg, featuring UK co called Nirvana. “Brewers throw their weight behind non-alcoholic beer,” headlined FT. “Supermarkets in Paris and Amsterdam now have entire shelves devoted to non-alcohol beers … and their low alcohol cousins,” reported FT. “In the UK, Ocado and Tesco sell roughly 20 types online.” NA beers jumped 18% in last 5 yrs in Western Europe, FT wrote, citing Euromonitor. Growth “even stronger in the UK.” But chart shows that in US, NAs have by far least share of beer mkt compared to any mkt shown. Will $50 mil spend on Heineken 0.0, tests of Bud Prohibition or any other combo of entrants change that? In available data, NAs growing so far this yr, $$ up solid 9%. But it’s a modest pop for NAs following big time launch of Heineken 0.0, as BBI’s sibling publication, Insights Expressed noted yesterday.
In unusual move among energy players, Nutrabolt’s C4 performance energy brand is mixing up its pack size as it offers first natural entry, C4 Energy Natural Zero, setting smaller size and less in-your-face branding that seem more attuned to female consumers who’re not likely a big part of current brand franchise. The new entry is packed in 12-oz slim can in white hue rather than 16-oz can in bright yellow of core brand, and sports pink band at top. It comes in flavors like Strawberry Coconut, Blueberry Lemonade and Cherry Lime. As for recipe, it replaced muscular performance ingredients like beta alanine with cognition-enhancing ones like Cognizin Citicoline (Kirin-owned ingredient that once was basis for Kirin-funded Nawgan focus brand, among others). Gone are artificial flavors, and caffeine dosage has been dialed down from 200 mg in core line to 120 mg. “Natural caffeine from Coffeeberry,” can copy states. That makes it well suited to mid-day occasions when consumers might be seeking mild energy lift and greater mental focus . . . Soylent Nutrition has headed into nutrition bar space with Soylent Squared, 100-calorie mini-meal bar containing 5 g of protein, 36 key nutrients and dose of probiotics. It’s going out in boxes of 30 bars. Co envisions consumers grabbing 1 or 2 for healthier snack, or 3-4 for meal replacement along lines of its powders and RTD bevs.
As broad-ranging formulation and prototype production house with relatively long history in space, MetaBrand has been eager to dive into burgeoning CBD realm, but so far it’s distinctly unimpressed with what it sees. In fact, nearly all of more than 2 dozen liquid and powder samples on which it’s performed tests have failed to deliver on some key measures, as prexy/coo Craig Fortin and Nick Andlinger, who’s running CBD push, made clear in conversation yesterday at MetaBrand’s new digs in Edison, NJ.
Speaking in development lab, alongside lab bench carrying container of samples (one of them in foil packet with hand-written label), they noted that 3d-party tests often find core ingredient doesn’t contain amount of CBD claimed. Solubility also is an issue, particularly for the lighter, effervescent formulations that have been the basis for many new bev brands. Scalping – the proportion of ingredient that clings to mixing container or bev package – can run as high as 70% in losses. (If you run your finger around inside bottle wall and it emerges with sludge on it, you can be pretty sure scalping is running high, Fortin noted.) Bev recipes containing many ingredients give the CBD more to grab onto and tend to be more reliable in averting issue. Further, ingredients presented as CBD-only often are revealed to contain other terpenes, and those positioned as non-THC ingredients lacking the psychoactive component have so often proved to contain THC that “we no longer do CBD testing in the morning,” Nick joked. As a result, MetaBrand so far has only greenlighted 3 CBD products, with 4th on the way.
This has confirmed to MetaBrand team it needs to operate with rigor, and it recommends that others do so too. Before moving ahead on any project, Andlinger said he performs evaluation to validate that “it is what the client says it is and it works in a beverage.” As noted, so far most prospects are flunking that test. Fortin added that MetaBrand treats CBD items with same rigor as supplements, performing efficacy and validation testing on incoming ingredients and post-production tests as well. “We don’t just shove CBD in a can. We have a rigorous process we do not deviate from. We don’t shortcut things.” That’s been incurring sizable third-party lab analysis expenses for brands that often don’t work out as clients, adding to challenges of operating in space that MetaBrand helped pioneer on bev side. So this is further reason for caution, as we’ve been urging at BBI.
Filling perceived void for bev mfrs seeking small runs of new items, NJ bev consultancy MetaBrand is a manufacturer now, up & running with integrated facility at its new hq location in Edison, NJ, with plans in works to open similar operation next year on West Coast, likely in LA area. Aim is to be not just a development arm that hands off production to outside copacker but the “Swiss Army knife for the industry,” as prexy/coo Craig Fortin has enjoyed phrasing it since unveiling vision a year and a half ago (BBI, Sep 18 2017). Visit yesterday to recently opened plant revealed operation built more on ingenuity and speed than cash outlays that’s able to run wide range of products, both carbonated and noncarbs, in glass, cans and plastic. At time of BBI visit yesterday, 8 different brands were queued up for filling, even as development team helps with formulation and positioning of dozens more. During visit, Fortin and client development dir Nick Andlinger, who’s spearheading CBD biz, offered some pungent comments on fledgling space, saying most of what’s brought to them by potential clients is not remotely ready for prime time (article below). Recall that under founder Eric Schnell, MetaBrand was one of first to take serious interest in space, 5+ years ago, and MetaBrand recently spun off intriguing cannabis play called MetaCan that we profiled just a week ago (BBI, Apr 9).
Some background, first. MetaBrand was founded in 2012 by longtime natural foods entrepreneur Schnell, who moved on in 2015 and now operates incubator called Beyond Brands with his wife, the organic apparel pioneer Marci Zaroff. MetaBrand launched related fund, which made significant investment in Runa, among other brands, carved out private-label biz serving clients like Kroger and Pret a Manger, launched its own products under I Am name and was early entrant into cannabis sector. Since Schnell’s departure, MetaBrand has cut back what once was substantial staff base, exited ingredients biz as fostering conflicts of interest, and tilted toward mfg to fill void in market. In process, co has moved from significant losses to profitability over past few years, tho it moved back into investment mode last year during relocation and mfg buildout, Fortin indicated. He hopes MetaBrand is back in black this year.
Among learning picked up along the way, MetaBrand came to realization that it’s hard to build equity as just a consultant, should its investors want exit down the road. The pivot into mfg offers one solution to that issue, at time that newer players have been frantic to find capacity for their modest initial runs. MetaBrand fills that void, tho Fortin was careful to note that if demand warrants, co will move to offering more substantial production runs, too, rather than always handing brand off to larger copacker. Currently, MetaBrand will do runs as high as 100K units, he said, but it’s turned down larger projects (say, one from current NBA player) as too distortive.
The relocation took MetaBrand from home of former partner Reliance Vitamin to plant previously occupied by Allen Flavors, occupying nearly 13K sq ft, including fully stocked main lab for development and formulation use, with first rights on 25K ft of space in adjacent bldg to support future expansion. Space was well configured to get running quickly, tho infrastructure items like chillers and fridges often needed replacement. “Joey gets his money’s worth out of anything he buys,” Fortin noted drily of Allen Flavors founder. Plant was up and running just 4 months after 2d-hand equipment was purchased, with essentially no outside engineering assistance, Fortin noted proudly.
Current plan is for setup in Edison to be replicated at 60K-sq-ft operation of ally in Lancaster, Penn, who’ll perform acceptance testing, then break it down for shipment to location being sought outside LA, likely between El Segundo and LAX airport. Fortin won’t rule out an additional site next year, too, in synch with original vision expressed a year and a half ago of opening network. Tho the plants on 2 coasts will mainly mirror one another, there will be some specialization: retort capacity may be offered only in Edison, while low-acid products like nutmilks go to LA only. (MetaBrand is doing low-acid product development in Edison but can’t produce those items there.)
Tho funded mainly by wealthy Andlinger family to date, MetaBrand is undertaking soft capital raise to prep for next phase of expansion, Craig indicated. Tho we had to sign NDA on brands we spotted there, Sound Tea’s Sound Tea-Infused Sparkling Water canned line was among those we’re allowed to disclose. And it’s not all small startups: while MetaBrand’s long-running contract with Hain Celestial has run its course, co apparently has several other strategic partners in wings for which it will serve as fast-moving incubation and development arm, balancing biz between well-funded CPGs and scrappy startups. Tho teeming aisles of recent Natural Products Expo West may have made it seem most innovation opportunities have been tapped, on MetaBrand’s production floor and lab we were shown quite a few brands heading to imminent launch that offer fresh vision; we hope to profile them as their founders are ready to speak.
MetaBrand team anticipates that there’s sizable biz to be had from legions of craft distillers looking for easy way to put their core spirits into canned cocktails. It’s awaiting state approval for alc production, with explosion-proof room reserved for alcohol blending. Craig claims craft distillers are lined up waiting for him to get green light.
Among key assets are 4-head canner procured from Heavy Seas Brewing in Baltimore and drawing from pair of 10-bbl tanks, all up & running in 3 days. Line can run 40 cans per minute in standard and sleek 12-oz formats as well as 10.5-oz sleek, with Red Bull-style 8.4-oz sleek can anticipated by end of May. Already MetaBrand has pushed 200K cans thru since line began operating in Jan, Fortin indicated. Among other assets, a 14-head hotfill/coldfill line can do broad range of plastic and glass items, from shot-size to 20-oz, including glass-bottle CBD shot line about to start running. (Line boasts some beer history, being first installed at Dogfish Head Brewing in Delaware, Fortin noted.) Chiller picked up from Sagamore Distilling should eliminate need to do overnight cooling. With significant production commitment looming, it’s been dropped right on production floor, with move up to roof level deferred to later. In similar DIY mode, co is building its own tunnel pasteurizer because currently available commercial units are way too big. And it’s not hard-piping anything, keeping configurations flexible until workflow is established and it’s ready to make more permanent commitments. Compact Allen-Bradley programmable controllers seen mounted on walls are occasionally joined by far larger, clunkier-seeming ones. Sure, those were made in 1992, Fortin allowed, but you can’t argue their price of $50 for 26 of them at recent auction. Given abundant documentation attesting to quality of each run, he’s not worried that the antiques will spook strategics coming for inspection.
Among key team members, Andlinger came in as ops specialist but now serves as dir of client development while overseeing CBD activities and keeping hand in minutiae of equipping and operating plant. As reported recently, another principal, Debbie Wildrick, has been transitioning out to MetaCan spinoff. To replace her expertise in biz development planning and sales & marketing, Fortin is relying in part on outside stable of consultants.
PRESS CLIPS: Food, Not Supplements, Is Right Way to Obtain Nutrients, New Study Concludes
New study in Annals of Internal Medicine concludes that consumers should rely on their regular diets rather than supplements to obtain their nutrition. “Taking dietary supplements will not extend life . . . and taken in large quantities may even be harmful,” as NY Times summarized study this week. Study relied on repeated interviews with nearly 31K men and women age 20 and older to suss out consumption of supplements over prior 30 days, finding that slightly more than half took supplements and about one-third took multivitamins.
Brew Dr Kombucha will be playing to rabid soccer fan base of its Pac NW home with official sponsorship of National Women’s Soccer League mvp Lindsey Horan, who plays for local Portland Thorns team as well as on US national women’s team entering World Cup competition later this spring. Brew Dr has already been sponsor of Thorns for several seasons. Born in Golden, Colo, Horan says she’d never tasted kombucha until visiting Portland, where she’s played since 2016 after several years playing in France at Paris Saint-Germain . . . Alkaline Water Co said its Alkaline 88 brand will serve as exclusive bottled water provider at 9 of DC Wonder Woman 5K runs and marathons this year. Event built around Wonder Woman Consumer Products unit operated by DC Comics and Warner Bros. The 8.8 pH water will be dispensed at finish lines, and logo will appear on runners’ bibs and in local marketing materials. WTER has option of renewing deal in 2020.