Coffee Fest NY has been running from Sun thru Tues at NY’s Javits Center, where it’s co-located with Int’l Restaurant & Foodservice Show of NY and smaller Healthy Food Expo.  Here’s some of what we saw after popping into Coffee Fest yesterday afternoon.

Coffee Shop Trends: Serving Sizes Dropping; Energy Drinks Rising; Kombucha Everywhere    Seattle-based Barista 22 brand development dir named Anna Gutierrez who spends her time trying to coax her co’s syrups into indie coffee shops offered illuminating look into trends percolating up at indie channel, including inroads being made by energy drinks and draft kombucha and swinging of pendulum back toward smaller serving sizes.  Barista 22 is independently operating unit of Dillanos Coffee Roasters, where Anna had 9-year ride earlier in career.  Like many in this biz, she did stint as Starbucks barista early in career.

Among major categories of products are frozen/blended bevs, even in cold-weather regions like Alaska, driven in part by blender advances that reduce the noise and disruption of offering that class of bevs.  Lattes, including flavored ones, remain popular, touching people’s sweet tooth.  And mochas, including those made from white chocolate, also do well, tho often outsold by vanilla lattes. 

Among newer categories that can’t yet be quantified are inroads of energy drinks crafted in-store, under brands like Red Bull (story below) and Lotus, plant-based concentrate play that targets cafes.  Healthier drinks using only natural ingredients, notably kombucha, also are making big strides.  During recent café crawl in Seattle, Anna said, nearly all were serving draft kombucha, sometimes as base for signature drinks.  And turmeric and ginger were among ingredients that are increasingly turning up in café recipes. 

Serving sizes also are in flux.  When Gutierrez started in biz in 1997, the go-to sizes were 8-oz, 12-oz, 16-oz and 20-oz, but over years Big Gulp-size 24-oz and 32-oz servings got traction, particularly in stores servicing commuters or truck drivers.  The 8-oz option faded out; Starbucks dropped it from menu, tho it would still pour it on request (often at same price as larger size, in BBI’s experience).  Now 8-oz is making a comeback as are 5-oz Gibraltar glasses and even 4-oz pours as consumers opt for more concentrated drinks or simply aim for portion control on health grounds.  The 16-oz size has subsided to point where half of all volume is via 12-oz, she said.

As in other venues, consumers are looking for short lists of natural ingredients in their drinks.  That should provide further encouragement to café owners not to “overcomplicate” their offerings with items that are challenge to baristas and slow down service.  At Barista 22 booth a couple of aisles over, for instance, co was pouring Italian soda with mandarin orange and almonds with topping in which canister of whipped cream was infused with just 2 drops of rosemary oil to striking effect.  As simple an addition as sprig of mint can customize a draft kombucha offering.  Ingredient with health aura like turmeric powder, honey and black pepper are doing well, and of course alt-dairy is skyrocketing.

Humankind Adds Outside Brands to Compact Distribution Operation in Philadelphia/DC   Honickman Group it’s not.  But small cause-driven bottled water and tea/lemonade brand called Humankind has been selectively adding outside brands to its pair of self-distribution routes serving coffee shops in Philadelphia, eastern Penn, Baltimore and DC.  Brochure at show indicated that Boylan Soda, Waterloo sparkling essence water, Nooma electrolyte bevs, Nantucket Nectars and Caskai cascal RTDs as well as coffeehouse standards like Monin and Torani syrups and Pacific Foods dairy alternatives, working out of warehouse in Mt Joy, Penn.  Humankind started as plastic-bottle water brand about 6 years ago by founder/ceo TJ Foltz, youth pastor whose global travelers revealed how many people lack access to clean drinking water.  So he launched brand promising 100% of net profits would go to well-building and water-filtration projects in areas like Africa, Caribbean, India and S Amer.  About a year and a half ago, working with Ethan Frey, whose family operates Turkey Hill c-store and CPG items, co created line of organic glass-bottle teas and lemonades that promise that each bottle sold will fund 50 gals of clean water.  Those brands mainly have focused on Mid-Atlantic region, where Giant grocery chain just picked them up to augment their focus on coffee shops. 

Cascal-Based Caskai Readies First Flavor Extensions; Sched Slipped Due to Glass-Bottle Crunch in Europe Caskai, cascal-based RTD line launched by former Red Bull exec Joel Jelderks, this summer will add its first flavor extensions, Mint and Hibiscus.  Summer-oriented flavors seen as fitting well with coffee ingredient’s tea-like taste was intended to break in May but has suffered from massive glass-bottle shortage in Europe, where its 9.3-oz packs are produced, as strictures on plastic have prompted stampede back into glass by bevcos there, Joel told us.  Brand has been making steady progress focusing on indie coffee shops as most receptive channel, just signing New Coffee Supply to work Wash/Ore market and employing Humankind in Mid-Atlantic (story above).  It’s also dipped toe in natural grocery, Joel said.  NY is still serviced directly but he’s looking to find DSD partner there soon.  Brand goes out thru broadliner UNFI via that co’s Next program for early-stage brands.

Red Bull Teams with Torani to Invade Indie Cafes   Red Bull North America might not be playing in burgeoning coffee segment – at least not yet – but it’s making inroads into indie coffee shops, starting on West Coast, via alliance with syrup maker Torani that’s pushing iced infusions that harness the 2 brands.  At show, co was pouring likes of Mermaid (Green Apple and Blue Raspberry Torani flavors, Torani White Chocolate Sauce and Red Bull) and New York Punch (Strawberry Torani and tangerine-flavored Red Bull Orange Edition).  “Like Italian soda, but with Red Bull,” one booth staffer explained to visitor.  Sell sheet pitches them as way to get healthy margin on $4.99 drink that might reach café visitors who don’t feel like coffee on that occasion.  So far push has mainly focused on West Coast markets but RBNA’s presence here indicated it’s stepping things up on East Coast too.

High Brew Coffee has brought in another high-profile investor, altpop icon Halsey, who augmented her multiplatinum record career with recent stints as performer and host on Saturday Night Live. Austin-based cold-brew RTD, which boasts Keurig Dr Pepper as investor and distribution partner in shelf-stable coffee portfolio that also includes Peet’s-branded and Forto-branded items, sees singer as in synch with its focus on dynamic “doers” needing to fuel their highly productive lives. She enters investor mix that includes former pitcher Huston Street, rockers Kings of Leon, Austin cyclist Lance Armstrong and chef Tim Love. Amount wasn’t disclosed.

Brands Within Reach has picked up distribution of Illy RTD coffee as another reclamation project of brand that failed to thrive within Coke system, after last year restaging Nestea brand that similarly fell out of favor in red system. As first reported here (BBI, Aug 31 and Oct 7), Illy was quietly dropped after over a decade in hands of Coke, which first dissolved joint venture with Italian parent Illycafe, then pulled brand out of bottlers, as it turned its attention to newer efforts under brands like Dunkin’, McCafe, Monster and most recently Costa. BWR picks up all-natural line packed in slim cans in 6.8-oz and 8.5-oz sizes, in flavors like Unsweetened Café and beet-sugar-sweetened Cappuccino, Caffe Latte and Mochaccino. It will be sampling line at upcoming Natural Products Expo West, along with the now “flash brewed” Nestea line. Illy co has been highly coveted by global coffee players but has insisted it intends to chart independent course. BWR, based in NY suburb of Mamaroneck, has carved out trusted role as partner both of large, established brands seeking firmer footing in US, like Evian and Volvic waters, and of earlier-stage brands like Belvoir elderflower drinks.

 High-end coffee and oatmilk have turned out to be a perfect match.  So maybe it’s no surprise that players in one are grabbing a presence in the other.  That’s what’s happening with Stamford, Conn-based cold-brew producer Rise Brewing and Elma, NY-based Elmhurst 1925, per announcements from both cos in advance of splashes they plan to make at Natural Products Expo West in Anaheim, Calif, this week.  Rise, which painstakingly created its own organic oatmilk for a canned oatmilk cold-brew when it didn’t like the available options, is launching a multiserve Rise Organic Oat Milk, while Elmhurst is teaming with Aussie-style roaster and café operator Bluestone Lane to offer single-serve RTD line called Bluestone Lane Cold-Pressed Coffee with Oat Milk.

Rise, recall, began a few years ago as line of nitrogenated cold-brewed coffees available only in black formats, extending into then-novel citrus expressions before founding team would consider creamed versions.  When it finally acquiesced to some consumers’ preference for creamed entry, it couldn’t find organic oatmilk, so it painstakingly went about creating its own, using just 4 ingredients: organic oats from Finland, organic sunflower oil from France, water and sea salt (BBI, Jun 22).  That entry quickly became #3 flavor overall behind black and mocha entries – and likely #2 were it not for some retailers who preferred Classic Latte as their only Rise creamed sku, said cofounder/ceo Grant Gyesky, now based in Bend, Ore, to support fast-growing Pac NW biz.  So Rise now is offering the oatmilk as standalone item, its first divergence from cold-brewed coffee.  Line produced in Europe will go out at $5.99 per 1-liter Tetra Pak carton, available on brand’s website this week and in stores this spring.  Grant allowed that there’d been vigorous internal debate on whether a barista blend should be in mix but prevailing view was not to risk losing out on consumers who use oatmilk for their cereal or other non-coffee uses.  A barista entry and mocha/chocolate flavor is likely a bit further down the road, he said.

Meanwhile, Elmhurst – which has built a diverse alt-dairy biz on remnants of now-shuttered Elmhurst Dairy – has teamed with coffee roaster and café operator Bluestone Lane on RTD Bluestone Lane Cold-Pressed Coffee with Oat Milk in single-serve resealable aseptic boxes.  It employs method called HydroRelease to separate components of nut, grain or seed with just water before reassembling them as a creamy emulsion, enabling finished product to carry full nutritional payload without use of gums or emulsifiers.  Partner Bluestone Lane, founded by group of Australian expats, attempts to replicate Melbourne café experience with network of stores that’s grown to 37 by now after starting with single unit in NY.  As part of alliance, Bluestone Lane is making Elmhurst its exclusive purveyor of almondmilk and oatmilk for the cafes. 

Rise Adds Hensley to DSD Network; Says It’s Closing in on SoCal Partners   Gyesky told us co has just signed big Bud house Hensley in Ariz as partner for its shelf-stable cold-brews.  Co also has sewn together patchwork coverage in Fla with help from Andy Stallone’s SAS consulting arm.  Grant said co is close to figuring out SoCal landscape, and NorCal also is a key target.  Recall that co had originally gone to market in refrigerated format but changed strategy after successful DSD test of shelf-stable can at Columbia Distributing in Pac NW.  By now brand has solid DSD coverage on East Coast from DC north to Maine and is aggressively trying to build presence along West Coast.

This won’t come as a shock: after recently confirming it won’t be building any more of its Trader Joe’s-like 365 stores, Whole Foods seems on path now to convert the dozen units it’s got to the core brand by year-end, per several media reports starting with Yahoo Finance. They will be blended into current regional structure of core Whole Foods stores, Supermarket News believes. Whole Foods hasn’t been commenting on reports. In memo to employees last month, WF ceo John Mackey argued that 365 stores’ rationale no longer existed now that Whole Foods stores themselves have been lowering prices.

Eric Berniker, who’s enjoyed lucrative rides with Glaceau and then Core Nutrition, which exited to Keurig Dr Pepper for $525 mil last fall, is hanging his hat at Roar Organic Electrolyte Infusions, also in cmo role. Eric joins revamped mgmt team at Huntington, Long Island, marketer that recently recruited Chef’s Cut Real Jerky and Popcorn Indiana vet Bart Silvestro as prexy/coo to support founder/ceo Roly Nesi in building brand.

Olipop digestive health bev is initial investment of Boulder Food Group’s BFG Fund II, which came in oversubscribed at over $100 mil, the co said yesterday. It joins a portfolio that already includes Barnana, Caulipower, 4th & Heart and Birch Benders. BFG also was investor in Chameleon Cold-Brew before its exit to Nestle. Founded by EVOL Foods alum Tom Spier in 2014 and maintaining offices in Boulder, Colo, and LA, BFG targets “disruptive, better-for-you consumer brands” like Olipop, which offers canned line of clinically supported sparkling bevs said to aid the microbiome. Oakland, Calif-based co was founded by Diageo vet David Lester and Ben Goodwin, a vet of Kombucha Botanica and creator of electronic music hub FWD.DJ. Both earlier were involved with Obi Probiotic Soda. Olipop brand name is portmanteau of oligosaccharides complex carbohydrates and soda pop. It launched last summer, melding ingredients like chicory, cassava and kudzu root that support prebiotic and fiber formation, in recipes with less than 3 g of sugar per 12-oz can. It’s out in flavors like Cinnamon Cola, Strawberry Lemon and Ginger Lemon.

With federal ban on marijuana still in place, it has made pot biz “a rare industry in which Canada has an edge over its more powerful neighbor,” wrote Wall St Journal. Marijuana cos in US are already on their “back foot” trying to compete and “the longer the US federal ban on the drug is in place, the harder it will be to catch up.” Canadian cos have “deep pockets” and US cos are being “taken out by cash-rich Canadian rivals,” added WSJ. These deep-pocketed cos are poised to “dominate CBD products,” which “are of interest to some of the biggest consumer companies, including Coca-Cola,” noted paper. In 2018, Canadian weed cos bought out 57 related bizzes in US, more than double the 20 or so they purchased in 2017. US cos are handcuffed by stock exchange regulations because of fed ban while NYSE and Nasdaq “allow operators from Canada” oppty to “tap deep US capital markets.” Biz in US also “more dispersed and burdened by higher costs,” as cos can’t transport across state lines and are paying for multiple production facilities. Even if fed ban were to be lifted tomorrow, WSJ points out, “it would take time for the US to develop national standards and supply chains to rival Canada.” And unfortunately for US, “many of the best targets may be gone, or fetch higher valuations, by the time US cannabis businesses can get access to more cash.”

Snoop Dogg, welcome Martha Stewart to the WEED family.  Cannabis giant Canopy Growth, which trades under WEED symbol, has recruited Martha Stewart to help in “developing and positioning a broad new line of product offerings across multiple categories,” starting with pet-oriented items that circumvent FDA’s continuing skepticism about human-edible items.  “As soon as you hear the name Martha, you know exactly who we’re talking about,” said Bruce Linton, chmn/ceo of Smiths Falls, Ont-based co that already numbers among its allies alcoholic bevco Constellation Brands and pot patriarch Snoop Dogg, who cohosts a show with Stewart.  “Martha is one of a kind and I am so excited to be able to work alongside this icon to sharpen our CBD product offerings across categories from human to animal.” Stewart, who operates via NASDAQ-traded co called Sequential Brands Group in NY, represents local tie for co that’s moving ahead with hemp industrial park in NY State in which it’s announced intention to invest $100 mil or more.

Stewart has previously played in bevs via functional coffee brand called Uliv Java that failed to ignite, but many of her other ventures have thrived.  And while today’s announcement cited Stewart’s identity as Emmy Award-winning TV host, entrepreneur, lifestyle expert, teacher and author of 94 books whose “brand” reaches 100 mil consumers each month, it didn’t mention her conviction and brief imprisonment a decade ago on charges of obstructing justice and lying in connection with well-timed stock sales; it’s unclear whether status as former felon will constrain her activities in nascent legalized cannabis biz.  (She’s able to serve as chief creative dir and board member at Sequential.)  There were reports last year that President Trump may pardon her.