Beer Marketer's Insights
It may become common development in bevs: deep-pocketed cannabiz, seeking leg up in launching infused bevs, takes shortcut of simply acquiring an incumbent bevco. This time it’s San Jose-based Caliva, newly fortified with $75 mil via Series A round, swooping in with acquisition of longtime acai player Zola, in recent years positioned as broader plant-based bev play. The deal, for undisclosed terms, gives major vertically integrated cannabis player access to Zola’s plant-based platform, retail base of 7K+ stores and seasoned bev team led by founder Chris Cuvelier, who’s staying aboard. Deal also would seem to mark exit of private-equity player KarpReilly, which acquired Zola 3 years ago (BBI, Feb 10 2016). “Consumers are looking for trusted CBD solutions in their beverages,” said Caliva ceo Dennis O’Malley in statement. “We couldn’t be more excited to team up with Zola and Chris to bring Caliva CBD beverages to a supermarket near you.” Cuvelier was tied up in meetings and unavailable for immediate comment.
Privately held Caliva hopes to ride Zola’s trade presence to what it calls hCBD (hemp-based CBD) entries into categories that may include sparkling water, functional shots, functional powders, teas, cold-brewed coffee and sports drinks, per announcement. Caliva is major grower in San Jose, where it also operates dispensary, and moves its items thru outside dispensaries in rest of Calif. Yahoo Finance site indicates that Caliva brought in $75 mil via Series A funding round in Jan, with former Yahoo prexy Carol Bartz and retired NFLer Joe Montana listed as lead investors.
As noted, with valuations high and capital abundant, cannabis players are in position of being able to acquire their bev expertise thru outright acquisition rather than recruiting seasoned team to build base inside co. So Vermont cannabis retailer Ceres acquired TreTap as step toward playing on bev side, then in much bigger deal Tilray acquired Manitoba Harvest (BBI, Feb 6 and Feb 25). A coupla months ago cannabis investor SOL Global took 8% stake in Jones Soda (BBI, Mar 27).
FINANCE: KDP Will Broaden Public Float to 20% as Acorn Agrees to Ease Out of Further Holdings
Keurig Dr Pepper should enjoy slightly broader public float to its shares after Acorn Holdings acquiesced in its request to ease off on its holdings, move that increase liquidity to tune of 20% float by year-end. Currently that float is 15%, tho Acorn had previously agreed to sell 47 mil shares, resulting in 18% float. “Except for this increase to approximately 20% of the public float, Acorn does not intend to sell any additional shares of KDP in the foreseeable future,” KDP advised shareholders. Consumer Edge’s Brett Cooper noted that KDP didn’t have many other options, considering that Mondelez, the #2 holder after JAB, has indicated it’s not likely to sell in short term, and KDP mgrs holding shares don’t turn over much. Meanwhile, KDP has set next Thurs for public groundbreaking of new hq facilities in Frisco, outside Dallas.
If it’s looking for its “Impossible to hate” campaign to gin up quick awareness for its Pressed coconut water extension, Vita Coco seems off to flying start. New campaign, which aims to get nastiest-sounding raters to deem Pressed acceptable as way of overcoming ingredient’s continuing stigma among some consumers (BBI, May 15), seems to have unleashed social media frenzy as it engaged with heavy Twitter poster and outspoken coconut-water-scoffer Tony Posnanski. He rejected overture to try Pressed by saying, “Save that nasty shit for someone else. I would rather drink your social media persons piss than coconut water.” Vita Coco’s response, which immediately started making online rounds, was to post photo shot in rest room of staffer holding VC-branded jar containing ample amount of yellow liquid, along with the request, “Address?” That seemed to momentarily stun Posnanski, who tweeted, “What the fuck is wrong with you?” before eventually coming around to acknowledging “this is extremely funny.” “I just became a @zicococonut customer,” chimed in Octopus/Caveman. “I think you might be terrible at your job.” “Terrible or a genius,” assessed PhD student in Japan who goes by Kaiju University. “My money is on the latter.” Trade paper Ad Age took conventional brand-association view on what it headlined as “pissing match” by writing that “Vita Coco is apparently so desperate for attention that it is linking its product to urine. Really.” Mashable offered kinder take, opining simply that “”Brands uh, really are going for it these days” and offering play-by-play commentary. Recall, too, that this is brand that once survived episode dubbed Squidgate in which customer found odd gunk in pack by assuring consumers that brand is “squid-free.” (If you go in for that kind of thing, you can see photo here.
With less than a week to primary Day in Philadelphia, new study reports that sales of sweetened bevs plunged 51% in city since it adopted 1.5-cent-per-ounce tax in 2017, Philadelphia Inquirer reports. Study by researchers at Univ of Penn, Harvard Univ and Johns Hopkins Univ, found bev sales in areas outside city “increased,” so when you factor in folks traveling for cheaper soft drinks, the tax “resulted in an overall reduction of 38%.” So it’s not like consumers didn’t substantially cut back on sugared bevs, as policymakers intended, even tho some dodged tax by shopping outside city boundaries. “Part of this is not at all surprising,” observed lead author Christina Roberto, asst prof of medical ethics & health policy at Penn’s Perelman School of Medicine. “There’s a mountain of literature from economics that if you raise the price of something, people will buy less. We’ve all been curious how beverage taxes actually play out in the real world.” Tho there’s been lotsa spin from advocates on either side of issue, this was one of only peer-reviewed studies on Philly tax, Inquirer noted. While results of study will be viewed as “a good outcome” by public health advocates, retailers won’t be pleased. And critics are sure to point out that study, which appeared in Journal of American Medical Assn, was funded by outspoken bev-tax supporter Bloomberg Philanthropies.
NA bevs had another good year in 2018, per preliminary tally from Beverage Marketing Corp, growing 2.2% by volume to 33.9 bil gals and 3.8% in retail dollars to $180 bil. Both represented acceleration over 2017 performance in what Beverage Marketing terms “liquid refreshment beverages” (LRBs), up 1.8% by volume, 2.4% by $$. Buoyed by brands like Essentia, the value-added water segment surged 15.5% by volume, +16.6% by $$, far outpacing core bottled waters, up 4.9% by volume, +7.3% by $$. Both energy drinks and RTD coffee enjoyed close to double-digit growth, with energy category up 8.6% by volume, +8.4% by $$, and coffee up 8.8% by volume, +7.9% by $$ off smaller base. In sports drink segment, volume growth of 2.8% was outpaced by $$ growth of 4.9%, reflecting at least in part the inroads being made by premium-priced Body Armor. Iced tea was off a tad by volume, -0.3%, but up 2.7% by $$, as superpremium tier comprised of brands like Teavana and Pure Leaf Teahouse Collection exerted impact. Thanks to Big 3’s efforts to offer smaller-size packs and maintain price realization, CSDs enjoyed 2.4% $$ gain even tho volume sagged 0.4%. Fruit bevs, not in a happy place in recent years as consumers try to avoid sugar, declined 3% by volume, 1.2% by $$. By $$, that was only segment to be down.
After initial launch in coupla eastern US regions, Anheuser-Busch has rolled out sparkling extension of its bottled Teavana tea, in process adding a 3d flavor to lineup. Sparkling Blood Orange Mango White Tea joins Sparkling Blackberry Lime Green Tea and Unsweetened Sparkling Peach Nectarine Green Tea, line-priced with core noncarb line at $2.39 per 14.5-oz glass bottle. Recall that sparkling extension broke in Northeast and Midwest last year (BBI, Jun 14), augmenting line created in partnership with Starbucks, which owns trademark. Partners say they’ve sold over 15 mil bottles of Teavana so far.
In era where flock of hardware “platforms” like Keurig and Nespresso are promising convenient way to upgrade consumers’ at-home coffee consumption, serial tinkerer named Josh Wilbur is offering defiantly unmechanized alternative: teabag-like “filters” called Steeped that require no equipment and, in being fully compostable, resolve sustainability taint dogging discarded coffee pods. After hacking out idea intermittently over 8-year period, the Santa Cruz, Calif-based entrepreneur has begun selling the Steeped bags online, enlisted dozens of 3d-wave roasters like Counter Culture and Victrola as partners, and begun to crack hotels and retailers with elegantly simple items. “Coffee in a teabag is a far cry from a new brewing method,” he told us last week, contrasting Steeped Coffee with highly engineered platforms whose sustainability issues seem to be of increasing concern to consumers. Tho solution appears simple, it took extensive experimentation, given commitment to sustainability that’s so deep that Wilbur sought to avoid using glue, staples, even the soy-based inks that pass muster as sustainable in some circles.
Wilbur tells us friends know him as “mad inventor who can’t stop coming up with fixes and new ideas,” including fee-less transaction payment system called PayStand and, at analog end of scale, well-crafted version of biblical literature called Bibliotheca that eschews clutter of chapter and verse numbers in favor of presentation more like a novel. The germ of Steeped was his conviction that “it should be easier to have a really good coffee at my in-laws at Thanksgiving” rather than bringing his preferred Verve beans and apparatus with him. He ordered various alternatives online but concluded none “came close to representing what a cup of coffee should be.” The coffee appliances in particular appalled him, given expense, clutter, indifferent coffee quality that comes of “forcing water at high pressure for 30 seconds through plastic” and problem of where the used pods end up. Breakthru came on flight to visit grandmother in Fla while involved in PayScan project, when he “journaled the entire plan,” only to shelve it again as Kickstarter-based Bibliotheca effort took off. Once that was completed, he returned to what would become Steeped.
Steeped offers promise of freshly ground, nitro-sealed specialty coffee in guilt-free packaging, made using renewable and compostable materials, as marketing materials say. Users are urged to submerge what co refers to as “full-immersion filter” or “Steeped bag” in mug, slowly add 8-oz of hot water, dunk bag for 15 seconds until crema appears, then leave it in for another 5 minutes to steep. “No machines, no special equipment, no plastic pods, no waste – just fresh, ethically sourced, micro-batch coffee.” Nitro-sealing process protects freshness so that, when consumer opens pack, aroma fills the room.
The co currently offers 5 blends under its own Steeped brand: Sunrise (light roast), California (medium), Odyssey (dark), Driftwood (French roast), all from Colombian beans, and Eventide single-origin Swiss water process decaf from Ethiopian beans. They go for $15 per 10-unit box online, with subscriptions available. But Steeped has also been enlisting indie roasters seeking guilt-free option for convenient at-home prep. So far it’s recruited over 60, including NC-based Counter Culture, Passion House and Metric in Chicago, Cat & Cloud in Santa Cruz, Pilot in Toronto, Victrola in Seattle, Honest Coffee in Tenn, Dark Horse in San Diego and handful of overseas partners. (Wilbur says partner listing at SteepedCoffee.com will go live soon.) Steeped has been picked up by on-premise partners like Waldorf-Astoria Las Vegas and hotels in Calif wine country, while Victrola got its version into Thompson Hotel in Seattle. Co is targeting retailers now.
For its 3d-wave partners, Steeped serves as hedge vs take-home bags of ground coffee that must be discarded if they haven’t sold within a week or so. Co asks that these 3d-party items be branded in some way as using Steeped method, but “we give a ton of leeway” to partners on specifics, Josh told us.
Co also is setting up another arm of biz offering the proprietary Steeped bag format to CPG players. That packaging, which eschews fasteners and uses water-based inks, is fully compostable and recently was upgraded from 3 layers to 2 layers while maintaining 6-month “best by” date, Wilbur told us. He’s taking steps to relocate supply chain to US.
After self-funding initial stages, Wilbur recently closed seed round that included faith-based group in Redding and just opened up new round. Serial entrepreneur plans to take conservative tack, raising funds as needed, not ahead of growth. Staff has grown to a dozen, 10 of them in Santa Cruz, and co has won certification as a B corp. Among advisors helping founder navigate quirks of bev biz are LifeAid cofounders Aaron Hinde and Orion Melehan.
National Beverage shares skidded 5.4% yesterday after UBS report showed that sales of its La Croix sparkling water slipped 1.2% over 4 weeks ended Jan 26, in category up rousing 16.1%, MarketWatch reported. “We see ample room for Coca-Cola and Pepsi’s sparkling water brands to expand distribution, while the La Croix brand is bound by limited reach to the c-store channel," analysts wrote, referring to La Croix’s very limited use of DSD distributors. “We believe both Bubly and Topo Chico brands are seeing accelerating velocities as a consequence of the La Croix slowdown.” (Bubly is Pepsi brand, Topo was acquired by Coke.) Shares recovered a bit today .
IRI scanner data that’s been shared with us is showing some surprising RTD coffee trends in Northeast, with flat overall category masking some wildly divergent performances among specific brands. Each of top 5 incumbent unit leaders is markedly off: leader Starbucks Frappuccino -8.7%, #2 Dunkin’ -15.8%, #3 Starbucks Doubleshot -22.8%, La Colombe -13.6%, Starbucks -5%. Among other familiar brands, Starbucks Cold Brew plunged 24.7%, High Brew dropped 8.5%. (Starbucks entries move thru Pepsi system, Dunkin’ thru Coke and High Brew thru KDP.) So who’s on upswing then? Java Monster (Coke) grew 6%, Caffe Monster (Coke again) grew 31.9% and McCafe (Coke yet again) popped 51.3% off small base. Forto (KDP) was up 17.9%, also off small base. But Sunniva Super Coffee brand (recently rebranded as Kitu) has come out of nowhere to claim #4 spot, 344K units sold, for 9 share. Its velocity of $244K per sku handily leads category (only Dunkin’ and Frap are close, at $222K and $193K respectively, and they’re lately declining). Compared with other unaligned brands, Super Coffee’s velocity is 8X that of La Colombe, 14X Bulletproof, 20X High Brew. Super Coffee, launched by 3 college athletes, DeCicco brothers now based in NY, harnesses recipe much like Bulletproof with coffee, dairy and MCT oil, and has lately enlisted DSD partners like Big Geyser in NY and Polar in New England. They’ve been heralding data in flyer they’re sending around to trade partners. Some other coffee brands we often see on local stores shelves, like Rise, Picnik and Heyday, aren’t in scanner database, we’re not sure why.
Tough nuts to crack? Coconuts, for sure. But also rater-haters, who begrudge even a single star to the targets of their enmity. Believing its fast-growing Vita Coco Pressed extension can finally overcome resistance to coconut water still harbored by sizable share of consumers, NY-based All Market has enlisted some of the most vituperative raters it could find for new campaign breaking today that posits Pressed as “Impossible to hate.” New 30-second videos heading to streaming-TV and digital media sites like Hulu, YouTube, Amazon and Spotify Sessions along with paid social media bring rave reviews like “It’s OK,” from woman who rated Grand Canyon a “big dumb hole,” and “It’s doable,” from burly guy who warned local launderette that “I’ll be contacting my attorney.” Also in mix are audio spots on iHeartMedia and Spotify, and out-of-home ads all over NYC, LA, Chicago, SF, Dallas, Denver and Boston thru summer. “Surprise! You like coconut water now,” informs one. Another depicts Donna, who posted that Central Park “is mostly dumb trees . . . She says that Vita Coco Pressed is actually OK.” There’s a money-back guarantee, too.
As reported, All Market has consolidated its entire summer ad spend behind Pressed, believing coconut-forward liquid formulated with 2% coconut puree holds potential to get brand back on brisk growth trend, overcoming reluctance of consumers who find coconut water polarizing even as they gravitate to more overtly coconut-y flavor of bevs like La Croix’ coconut flavor (BBI, Mar 11 and May 6).
To set up campaign, brand dir Allison Finazzo oversaw devising of algorithm that might ID some of most difficult people to impress, judging by stream of invective they’ve unleashed in negative reviews of positively reviewed entities like Central Park and Grand Canyon, along with sheer volume of their negative reviews and sentiment analysis. That yielded a bounty of nearly 1 mil “people of interest” who’d posted over 40 mil reviews on tens of thousands of forums. Among hardest nuts to crack were luxelex0380, the rater who derided Grand Canyon as “big dumb hole.” “She called her local hairdresser ‘a butcher,’ and her local butcher ‘a criminal,’ and about Chicago, ‘don’t bother,’” as voiceover states in one video. “So when we wanted to prove that new Vita Coco with Pressed Coconut is impossible to hate, we asked her to try it.” “It’s OK,” she deadpans, dismissively.
As for Alp_85, the launderette hater who also called a diner “disturbed” and a bookstore “disgusting,” Pressed is able to get the “doable” praise out of him. Working with Finazzo, a 5-year Vita Coco vet who returned to fold a year ago after 3-year diversion at Anheuser-Busch InBev a few blocks away, was creative agency Interesting Development (formerly Office of Baby), whose clients have included Google, Etsy, Siggi’s and Zulily.
As for the rater-haters, if you can think of a reason to want to get to know them, they’re profiled in Youtube video that can be accessed here. “It’s a harsh world, and it takes a lot to impress me,” luxelex defends herself. (So Pressed “is not as good as I want it to be, but it’s good enough.”) “I would drink this, if someone gave it to me,” allows HeyitsIrene9.
Vita Coco Lands Original, Pressed in Life Time Cafes Also on marketing front, Vita Coco said it’s inked partnership with Life Time fitness chain to carry Vita Coco Original and Pressed entries at all 130 in-house cafes, which it calls LifeCafe. 