Beer Marketer's Insights
It’s the subtlest of things that can sometimes change a brand’s growth prospects. Ask the mgmt team at Talking Rain, which has been riding a back-to-basics approach and subtle positioning and liquid tweaks back to a torrid, double-digit performance for its Sparkling Ice brand after having seemed to be on a plateau a couple of years back. Nor is ceo Chris Hall letting the blood rush to his head after Ice’s latest bout of success. “We’re going at the pace we want to go, not super-fast,” he told us yesterday, in phone conversation that also included Nina Morrison, vp of community & customer relations.
As noted, much of the trade had seemed to regard Ice as due to flatten out after the heady run of prior years put it on the national map as a new-age take on diet sodas. That coincided with period of unaccustomed turbulence at Seattle-area co that saw abrupt departure of prior ceo amid sexual assault claim even as co failed to produce portfolio-expanding acquisition that had been promised. Elevated to top spot, longtime sales exec Chris Hall aborted “Be Not Bland” campaign that was budgeted at $37 mil for 2017 but produced more head-scratching than enthusiasm in the trade, and drove back-to-basics approach that included some subtle packaging and formulation tweaks and tilt entirely to digital and social media as marketing vehicles.
Foremost among changes was shift to natural colors and flavors (tho line continues to employ sucralose as sweetener and sodium benzoate as preservative) and packaging tweak that now has put “naturally flavored sparkling water” at center of front panel. Since there’s no natural form of green, Talking Rain had to convert Lemon Lime flavor to clear liquid, a la 7 Up or Sprite, and that spurred double-digit gain for flavor that had long underperformed. Similar move of Kiwi Strawberry from green to pink liquid also spurred spike in sales of flavor. Who knew? Meanwhile, caffeinated entry has been restaged from 17-oz straightwall PET bottles of core line to 16-oz cans more at home on c-store glide rack; more on that below.
The changes have inspired new wave of growth for 16-flavor core line. Recent Nielsen data reported by Wells Fargo Securities had Sparkling Ice up 18.6% in $$ over latest 4-wk period, in line with 19.7% gain of 12 weeks and accelerating 52-wk trend of 10.7% growth. Meanwhile, unsweetened rival La Croix slipped 5.2% in $$ growth. Tho Ice’s 13.3% volume share of sparkling flavored water lagged La Croix share of 17.3%, positions were reversed on $$ side, where Ice held leading 21.3% share to La Croix 17.8%, roughly half-bil $ apiece at retail. So while Ice may sometimes be seen at 10 for $10 price in larger-format stores, it’s still way more premium than La Croix. A surging Polar seltzer brand was a distant third, at $200 mil or so. Since Ice hasn’t increased distribution during this period, Hall emphasized that it’s all been organic growth. A former Navy sonar technician aboard nuclear subs, Hall had served a decade in sales roles at Talking Rain before getting bump to ceo post exactly a year ago after co concluded the new ceo it was seeking already was in the house.
Marketing will remain entirely focused on digital, POS and PR as well as in-store efforts after ambitious TV-centered campaign, “Be Not Bland,” under prior ceo failed to resonate. (Newfangled digital world is a learning process, Hall and Morrison readily acknowledged: simple change to background color can double or triple click rate, Chris marveled.) Back for fourth year, kicking off a week ago, has been brand’s commitment to Honor Flight, offering multipacks of top-selling flavors that swap pink and purple packs for red, white & blue. Talking Rain promises $50 donation to cause for each 250-case display erected at retail. According to Ice sales materials, program has raised $200K to support Honor Flight while juicing variety pack biz that amounted to $33 mil in sales over past 52 weeks. “Help Heroes Take Flight,” is slogan emblazoned on retail displays. Specific details of honor flights carrying war vets from Seattle to DC will be released next month.
Also key to the mix are limited-time offers. Last year, What the Flavor mystery flavor promo (WTF – get it?) energized things in summer and Cranberry Frost added relevancy during winter season when bottled waters might otherwise make way for baked goods in retail displays. So those will be back, with tropical-themed mystery flavor due to hit stores next week. Last year’s mystery flavor, revealed in Aug as Passion Fruit Punch, delivered as many units per store as 4 top-selling flavors, drawing 250K consumers to sweepstakes and introduced 2 mil first-time buyers to brand, per selling materials we picked up Fri at event hosted by NY distributor Big Geyser. Those who try to guess this year’s mystery flavor get shot at winning Holland America cruise along with 500+ lesser prizes.
Among other initiatives will be nautically themed summer promo pushing Ice as alternative to caloric sodas and lemonades in summer. Locally themed promos include text-to-win effort in NY offering pair of tix to any entertainment or athletic event at Barclays Center in Brooklyn. Also a factor in brand’s success has been continued rapport with female consumers; this month, it won Women’s Choice award as brand that’s highly enticing to females, with 9 out of 10 surveyed women saying they’d recommend brand to friends.
Tho core brand is humming again, Talking Rain is hoping to get meaningful lift from major push behind caffeinated extension that’s been revamped to become more c-store-friendly energy drink alternative. The 5-flavor line in 16-oz cans carries 70 mg of caffeine but, as with core line, no sugar and zero calories. It’s priced at $1.89 – a bit under Monster Energy – and promoted at 2 for $3. Hall allowed that co underestimated the need for customized package for c-store channel by initially going with 17-oz straightwall plastic bottle of core line for caffeinated entry; the new 16-oz cans fit in glide racks and are more in synch with energy brands that are staple of channel. New line is getting into c-store spring resets as well as Kroger and Safeway groceries nationally.
At this stage of brand’s development, multiserve packs might be logical next stage, and Hall said co is analyzing potential of 1-liter bottle, with no commitment set at this point. More immediately, tho, it’s been optimizing its 12-unit cases for retail, enhancing outer packs with colors and flavor info, knowing that retailers covet chances to trade up shoppers to $9.99-13.99 price from La Croix 8- and 12-packs that command half that on per-unit basis.
Tho rivals like Hint essence water brand have done very well with direct-to-consumer biz, that’s not been a focus for Talking Rain, which boasts robust DSD coverage across US that lessens need for DTC channel. That DSD network is largely set, aside from adjustments that must be made as consolidation proceeds within ABI and MillerCoors networks, Hall said. As noted recently from Expo West (BBI, Mar 12), Talking Rain’s own fling at an unsweetened essence water didn’t pan out, so that effort has now tilted to co’s Talking Rain brand, via new line that’s moved from brand’s Pac NW stronghold down West Coast into Calif, with co monitoring reception with eye to further expanding it.
Grass-fed protein shake maker Iconic has gone national within Whole Foods chain, which is picking up its 3 core bottled entries, in Chocolate, Vanilla and Café flavors. In addition, over past week brand has started getting its 4-packs of Tetra Pak product out to 800+ Target stores around US . . . Celsius Holdings said that a successful test in 500 stores of unidentified drug chain that we believe to be CVS has won expansion to 7K+ new locations. Together with placement in 3K stores of another drug chain, similarly undisclosed, that means channel is becoming highly significant for Boca Raton, Fla-based CELH.
It’s a tale of 2 retailers: online power Amazon continues to struggle with its private-label offerings even as bricks-&-mortar giant Kroger is riding wave of momentum. That’s word from Private Label Mfrs Assn’s E-Scanner newsletter, which cited study from Marketplace Pulse that found that, while Amazon had more than 130 proprietary or private-label brands plus 422 brands sold exclusively on Amazon.com, “the evidence is that most Amazon-owned brands aren’t appealing to shoppers yet.” Study examined 23K items from Amazon-owned or exclusive brands and concluded that a few brands, like AmazonBasics and Pinzon bedding brand made up bulk of sales, with sales of the thousands of other brands rated as negligible. To date, Amazon’s PL biz accounts for just 1% of its total retail sales, the co has indicated, and E-Scanner cited press reports that online giant has significantly scaled back promos of its PL items in recent weeks, at time of increased regulatory scrutiny of tech giants.
Story couldn’t be more different at Kroger. Cincinnati-based retailer reported that unit market share for its store brands climbed to all-time high of 30.5% in Q4. It claims that Simple Truth is largest natural/organic product line in US, at $2 bil in annual sales last year. Kroger added 1,022 store brand items in 2018, with Simple Truth sales rising 15%.
Early hemp player called MetaCan Inc that’s built up significant supplement biz is getting closer to launching its first RTD bevs, eyeing entries into sports drink and protein shake categories later this spring under core HempFusion brand. Co is building on substantial base it’s built thanks to whole-food hemp extract that avoids many of legal and regulatory uncertainties that are dogging nascent category, as well as sophisticated blend of value-added ingredients and seasoned team with experience in supplement, cannabis and now bev spaces. As sign of broad ambitions of co, it’s been testing its HempFusion supplements in Plaid Pantry c-store chain in Pac NW since last spring, and has also cracked such mainstream banners as Kroger’s Lucky’s banner.
MetaCan, recall, comes out of development activities at food/bev consultancy MetaBrand of Edison, NJ (BBI, Sep 21 2015), tho it’s taken some twists and turns since then. As a principal at MetaBrand alongside Craig Fortin, Debbie Wildrick helped MetaCan with strategy, capital raise and sales, before leaving in Feb to go full-time at MetaCan as evp. Debbie, who’s based in Colo, joins senior team led by cofounder/ceo Ian deQueiroz, who’s joined on board by naturopathic doctor and former Country Life Vitamins exec Jason Mitchell as cofounder/prexy, chief technical officer Andrew Oliver, general counsel Scott Gates, of longtime Starbucks law firm K&L Gates, and Rick Andlinger, operations specialist at MetaBrand whose late father Gerhard was key backer of co. Last month MetaCan brought aboard as cmo Ashley Grace, Boulder, Colo-based exec formerly of cannabis plays Charlotte’s Web, BDS Analytics and Stillwater Ingredients. Ryan Griffith is gm. MetaCan’s hq and fulfillment center are in Roswell, Ga, while Ian is based in Sebastopol, Calif. Debbie updated us on activities recently in wake of presence co mustered at Natural Products Expo West in Anaheim, Calif.
As supplement HempFusion is out in capsule form in Sleep (with pharma-grade GABA), Stress (with ashwaganda) and Digestive entries in 30-unit bottles, all using HempFusion’s latest 5.0 ingredient, as well as 2-packs of Energy capsules using earlier HempFusion 3.0 ingredient and guayusa. The 3.0 ingredient also anchors baseline Full Spectrum Hemp Extract, while 5.0 anchors Extra Strength version. Separate professional lines under MetaCan brand name target health care providers. Many of the recipes include hemp extract, clove and black pepper for their terpene content, and hemp seed and sunflower oils for their Omega fatty acids, yielding complex functional heft.
Debuting imminently are Twist water enhancer in flavors like Ginger Citrus, Key Lime and Peach Mango, along with enhanced-strength versions of best-sellers and skin items. Later this spring we should see bottled CBD Electrolyte Beverage with sea minerals in flavors like Strawberry Lemonade and Pomegranate, as well as bottled Superfood Shakes in Chocolate and Vanilla and related canisters of protein powders.
By now, Wildrick said, HempFusion line has entered 2K+ stores, including Fresh Thyme chain, Kroger’s Lucky banner, Earth Fare, Fresh Market and Vitamin Shoppe. Amazon and Thrive Market also are in the mix. Overall, while rival brands Charlotte’s Web and Plus CBD also show up in scanner data as key players in supplements, Wildrick noted that HempFusion is only one without CBD on label, enhancing prospects of broad distribution at this stage. The c-store test running since last Jun at Plaid Pantry, via distributor CoreMark, has had all 104 stores offering Original Hemp Extract 5.0 and Stress, Sleep and Energy functional entries in 2-capsule packs. Results so far have Wildrick, a former 7-Eleven buyer, encouraged that c-stores will prove a fruitful channel down the road. On distribution front, MetaCan is partnering with Denver-based CBD distributor MarketHub.
At time many distributors and retailers are skittish about entering category, Wildrick argues that HempFusion represents safest bet. For technical reasons having to do with brand’s longstanding presence in food supply, MetaCan items have been NDI-exempt and never received regulatory letters or been pulled off retailer’s shelves, she said. “We have secured an exclusive on a one-of-a-kind raw material that is actually a compliant whole food ingredient,” as presentation deck in connection with capital raise assures would-be investors. The ingredients, produced via solvent-free CO2 extraction method, are signed off by US Customs and Homeland Security after testing at Navy Labs in Annapolis, Md. MetaCan published No Observed Adverse Effect Level (NOAEL) study in Feb and completed self-affirmed GRAS (generally recognized as safe) that month, too. It’s hoping for formal GRAS certification soon. Info at MetaCanGroup.com
Fairlife LLC, which has parlayed its lower-sugar, lactose-free milks into lucrative partnership with Coca-Cola and rapid growth, said it’s committing over $200 mil to new production and distribution plant in Phoenix suburb of Goodyear. The 300K-sq-ft plant will augment production of co’s ultra-filtered milk, Core Power protein shakes and Yup! bevs at core plant in Coopersville, Mich, near Fairlife’s Midwest base, and was driven in large part by local dairy farmers’ willingness to follow Fairlife's animal care and sustainable farming practices, the co said. Operation is anticipated to commence in late 2020 and create estimated 140 jobs. Chicago-based Fairlife has built big biz by capturing the best nutritional benefits of milk while minimizing the sugar and removing the lactose via cold-filtration process that concentrates the natural proteins, nutrients and minerals of cow's milk, making it a natural base for items like Core Power protein shakes, which move thru Coke system as potent rival to PepsiCo’s Muscle Milk.
Announcement by Fairlife comes just weeks after local development authorities disclosed another major bev investment, 700K-sq-ft plant in Glendale, from team of Red Bull, European copacker Rauch Fruit Juices and Ball Corp, which recently opened plant in Goodyear that will supply the Glendale plant (BBI, Mar 14).
Flying Embers, the hard kombucha launched by KeVita creator Bill Moses, continues to be embraced by major DSD houses. After launching via Reyes in Southern Calif, Flying Embers has entered Bay Area via Matagrano, as well as Pac NW via Columbia, Ariz via Crescent Crown, NY and Mass via Sheehan Family and Texas via Ben E Keith. Also picking up Ojai, Calif-based brand are Mancini Beverage in New England and Penn Beer in Philadelphia . . . Phocus canned enhancement bevs, building out from Louisville, Ky, base, will be adding regional Kroger stores to its retail base in Jul as well as Fresh Thyme chain around Indianapolis, founder John Mittel told us Fri at Big Geyser expo, where brand was kicking off most significant DSD partner to date (BBI, Apr 5).
Rowdy Mermaid is among latest kombucha players to get into cans, going with 12-oz aluminum packs for its Lion’s Root, Flower Grow, Strawberry Tonic and Living Ginger that could be available on grocery shelves by late spring. The cans will allow co to extend entries’ shelf life to 48 hours at ambient temperatures compared to its existing glass bottles, allowing items to ride on unrefrigerated DSD trucks, while expanding usage occasions beyond those supported by glass and conferring range of sustainability benefits, from shipping to recycling. Boulder, Colo-based co will be seeking the right DSD distribution options as cans become available, founder/ceo Jamba Dunn told us at recent Natural Products Expo West in Anaheim, Calif. The Lion’s Root entry unveiled at show will be unique to the canned format, offering caffeine-free, focus-enhancing entry made from pineapple, fresh turmeric and lion’s mane mushrooms, a natural nootropic. Jamba told BBI that brand’s focus will remain on western US thru 2019, with East Coast not likely in cards until 2020.
Purity Organic, whose coconut water entries recently were consolidated with core juice entries at NY house Big Geyser, has debuted bottled line in Original, Espresso, Chocolate and Pineapple flavors as exclusive to NY so far. Recall that Big Geyser had picked up the coconut waters after Coca-Cola-owned Zico Coconut Water departed house for local Coke bottler, prompting stepped up investment by brand in key market. At Big Geyser’s suggestion, Purity created the half-liter PET line, eschewing organic status of core juice and coconut water entries in interest of going out at $22 per case, for more accessible price on street. The new entries were being sampled at internal expo hosted by Big Geyser in Uniondale, Long Island, this past Fri at which distributor also unveiled array of brands filling gap of now-departed Monster Energy brand (BBI, Apr 5).
Sport Water, an electrolyte-infused “performance H2O” that caught lotsa trade notice with eye-catching plastic bottle with silhouette of popular S’well reusable bottle, has been seeking investment to restart engine after big layoffs late last year, capped by resignation in Feb of prexy Bob Miller. After dalliances with coupla strategics diverted focus from need to refuel capital tank, brand has been “limping along,” Bob readily acknowledged when BBI reached out today to ask about trade rumors that brand has been inactive. He said after 2 rounds of layoffs in mid-Sep and mid-Dec eliminated 18 jobs, his resignation in Feb had left a single exec handling flow of orders, tho he’s also informally helping out on sales side while fielding offers of investments or to acquire IP. Miller said brand is still available at some accounts, with brand premise of offering substantial electrolyte dose that’s 5X as big as in some more popular alternatives, and he’s hopeful new investors will emerge to exploit opportunity, at time high-end waters are growing briskly.
Post Holdings has taken another step to spinning off its Active Nutrition biz via an IPO, submitting draft registration that doesn’t yet specify # of shares and price and thereby offer insight into valuation being sought. Recall that last Nov the St Louis-based co had announced plans to put Active Nutrition on indie footing, in part as way to enhance its ability to do deals within space including plant-based items (BBI, Nov 16). At time it had said it envisions spring timeframe to advance plan. Active Nutrition, approaching $1 bil in annual sales, offers RTD protein shakes and other bevs, protein powders and nutrition bars under brands like Premier Protein, Dymatize, PowerBar, Supreme Protein and Joint Juice. As indie co it would be based in St Louis like Post and operate mainly out of Emeryville, Calif.