Beer Marketer's Insights
VPX Sports’ Bang Energy continues to ignite at retail, on track to becoming the most explosively growing energy brand ever, but its legal challenges also are mounting. A class-action suit filed vs Florida-based company over its ingredient claims this month has brought total to as many as 6 suits, even as co struggles to make case for validity of a disallowed patent in oral arguments before US Patent & Trademark Office. And as earlier reported, it’s also fending off lawsuits by energy giant Monster, which questions whether its drinks have any creatine despite being branded as containing “super creatine,” and by Thermolife, which accuses VPX of infringing on patent it maintains as licensee of Russian group whose patent VPX was ruled last year to have duplicated, prompting revocation by USPTO. Among remedies it’s seeking, Thermolife is seeking to have VPX disgorge all of considerable profits it’s made selling Bang to date. VPX has publicly dismissed validity of various legal claims without addressing details, and in turn has tried to paint Monster as marketer of dangerous products.
In latest suit reported this month by Top Class Actions, consumers in Calif and Penn are arguing that Bang bevs don’t contain sufficient amounts of “brain & body-rocking fuel” (Super Creatine, caffeine, Ultra CoQ10 and BCAAs) to make meaningful difference. “Defendant advertises and markets Bang in a uniform and systematic misleading manner designed to lure consumers into purchasing Bang by misrepresenting that Bang contains ‘potent’ ingredients, when in reality, they are present, if at all, in minimal doses which are so low to be ineffective or not capable of delivering the claimed benefits,” suit brought by Levin Sedran & Berman in US District Court for southern district of Florida alleges. That follows suit filed last Nov, also in Fla, by Harke Law LLP and Barnow & Associates PC on behalf of consumer named Shirley St Fort-Nwabuku. Plaintiff in earlier suit in Calif claims she was hoodwinked by marketing promises that Bang could cure Alzheimer’s and Parkinson’s syndromes. There may be as many as half dozen suits all told that VPX has to address, along with the ones filed by rival Monster Energy and patent holder Thermolife that are progressing thru discovery process.
Meanwhile, Thermolife owner Ron Kramer tells us that in oral arguments he attended for VPX’s patent appeal before USPTO, company is arguing that, if its owner/ceo Jack Owoc can no longer claim to have been inventor of Super Creatine, then it was he who discovered that ingredient is stable at high and low pH and room temperature for 90 days. Kramer thinks that’s a stretch, on grounds that you can’t patent properties of known compounds, and anticipates decision in next month or so. He acknowledges that even with adverse ruling, VPX can likely take appeal to federal circuit and maintain legal process for another 2 years. That would seem to make it smooth sailing for Bang for quite a while longer. That may be why Monster Beverage’s counsel, in statement to outlet called USA Herald earlier this month, sought to warn that distributors and retailers who’re aware of the legal challenges could themselves be on the hook for damages. “What is interesting to me is whether retailers will become liable now that they are aware of the alleged issues with Bang’s ingredients,” said the attorney, Marc Miles of Shook, Hardy & Bacon. But lotsa brands get hit with class action and other suits without getting discontinued by trade partners and, so far, DSD distributors seem to be embracing Bang, not dropping it, as promising new way into lucrative energy category that had seemed to be locked up by Monster and Red Bull.
Monster Beverage this week is shipping new Dragon Tea line that offers more tea-forward approach than the noncarb Rehab line that yielded initial Dragon sku. New line, which should filter out to store shelves next month, is among raft of new products that co heralded recently at its investor day in NY, including Bang challenger dubbed Reign and flavor extension to Java Monster called Swiss Chocolate (BBI, Jan 18). Tho none are necessarily viewed as game changers, they fill in underserved consumption occasions and allow brand and its distribution partner Coca-Cola to block out more space in energy door.
As we've learned more about new items, there are a couple of interesting twists. Some in trade had wondered whether Dragon Tea might represent MNST’s initial foray into “clean” plant-based segment that might finally be ready to ignite. It turns out, from our info, that co has opted to stick with traditional energy blend, including ingredients like taurine that may be a turnoff to some younger consumers who’re opting for brands like yerba-mate-based Guayaki and guayusa-based Runa. So if Corona, Calif-based co is exploring that segment, it hasn’t yet revealed intention. As for Bang challenger Reign, it seems Monster has opted not to include creatine in formula, perhaps on cost and flavor grounds, while offering far heavier dosage than Bang of other active ingredients, branch chain amino acids (BCAAs) and CoQ-10. That would be its solution to dilemma of countering brand whose claim of ample dosage of “super creatine” has been questioned in lawsuit filed by MNST. If assertion is true – suit is still only in discovery stage – then Monster Bev would have been at disadvantage in trying to wrestle meaningful amount of creatine into Reign formula. It should be noted that Reign may not be MNST’s last word on so-called workout energy segment, with ceo Rodney Sacks telling investors last month that co may opt to proceed with Monster-branded entry down the road.
Dragon Tea Dials Up Tea Identity, Dials Down Calories Dragon Tea, with official launch date of Mar 25, represents expansion of single sku within noncarb Rehab line, where its tea identity tended to get lost. So now it becomes its own 3-flavor line, adorned with Chinese-style dragon interwoven into Monster claw to make its tea identity unmistakable. Each can contains 160 mg of naturally sourced caffeine and comes in below 50 calories, compared to 220 calories for Monster brand’s core “green” can. As noted, some had wondered whether restage offered chance for Monster Bev to tiptoe into plant-based energy realm that may finally be ready to ignite, but if co is pursuing that direction, it opted not to do so with Dragon Tea, which uses energy blend similar to that of its core energy sku’s.
New line is launching in White Tea (with white tea, black tea and dragonfruit), Green Tea and Yerba Mate flavors, all containing some coconut water-based electrolytes and coming in at less than 50 calories per 15.5-oz can. We haven’t yet gotten gander at ingredient panel to offer more specifics. (Existing Rehab White Dragon Tea sku employs energy blend comprised of glucose, taurine, caffeine, L-carnitine and inositol.) New line is intended to balance morning tilt of Monster’s core entries by hitting afternoon occasions as refresher and pick-me-up, while also scratching itch of so-called Gen Z consumers age 18-24 who overindex in tea consumption, per Mintel data compiled by Monster for pitch deck we viewed.
The move leaves what’s now called Rehab Energy Iced Tea as an entirely black-tea-based line offered in Tea, Peach Tea, Raspberry Tea and Orangeade flavors, with the Dragon entry to bleed out of market as consumers purchase it off the shelf. Rehab’s richly colored cans contrast with white backgrounds employed for Dragon Tea.
Reign Omits Creatine but Includes 1,000 Mg of BCAAs Meanwhile, Reign brand, tho clearly a response to insurgent Bang Energy brand and its “super creatine” formulation, apparently eschews any use of creatine in favor of significant 1,000 mg dose of pharma-grade branch chain amino acids (BCAAs) along with 300 mg of caffeine, similar dosage to Bang. At investor day, MNST brass had touted that entry carries 5X the BCAAs and CoQ-10 of Bang, but said nothing about creatine. “We believe our product will deliver on its claims in the workout category,” ceo Sacks declared at time. Monster execs so far haven’t offered much detail about strategy or shown ingredient panel, and we’ve detected signs they’re a bit uncomfortable both with elevated caffeine level – out of worries that it could create controversy that tars broader category – and with dilemma of how to counter Bang formula they contend contains no actual creatine. As noted on investor day, a separate team has been set up within MNST to handle marketing for Reign, which like Dragon Tea is due on shelves next month.
Swiss Chocolate Delivers for Chocoholic Consumers As for Java Monster’s addition, Swiss Chocolate, premise there seems straightforward: tho Monster already offered Loca Moca, for that consumer target it apparently wasn’t chocolatey enough to be viable alternative to chocolate flavor of rival Pepsi/Starbucks entry. So Swiss Chocolate dials up intensity beyond even Loca Moca.
Stevia grower and marketer Pure Circle, pushing rapidly ahead with its next-gen Reb M and Reb D offerings, has drastically boosted sales staff, with the additions to be supported via increased scale efficiencies. Chicago-based co said it’s brought in trio of execs to support chief commercial officer Stephane Ducroux, a former Naturex exec who came aboard last year. Aymeric De Gartes, a former colleague at Naturex, has signed on as vp biz dvlpmt. Chris Tower, founding prexy/ceo of natural ingredient supplier Layn USA, is vp for North America region.
Imposition by city of Berkeley, Calif, of tax on sugared beverages in 2014 led city residents to cut their consumption of those drinks by 52% by 2017, according to study released this week by UC Berkeley, per San Francisco Chronicle. Survey included just over 1,500 city residents. Surveys in nearby Oakland and San Francisco, which included about 3,700 residents, found “beverage sales held steady,” noted paper. “The research certainly suggests that taxes continue to have huge potential as a public health tool,” said Dr Kristine Madsen, senior author and faculty dir of Berkeley Food Institute at UC Berkeley’s School of Public Health. Tho California has since voted to impose no new sugared bev taxes til 2030, no doubt local politicians will take these results as signal to keep pushing for other measures such as “a statewide fee on sugary drinks, along with measures that would prohibit sales of extra-large sodas, add warning labels on sweet beverages packaging and ban soda displays near checkout counters,” noted Chronicle. In response, ABA spokesman William Dermody pointed to regressive nature of such levies in continuing lobbying group’s call for less-taxing solutions. “America’s beverage companies believe there is a better way to help people reduce the amount of sugar they get from beverages than a tax that hurts working families and small businesses the hardest.”
In wake of earnings blowup last week that included staggering $15 bil writedown and 36% dividend cut, Kraft Heinz has hired Credit Suisse to “review options” for its Maxwell House supermarket coffee brand, CNBC reported, citing usual “people familiar with the matter.” It cited roughly $400 mil in cash flow at unit, auguring potential price in “billions,” tho it also cautioned that interest may be tempered by slippage mass drip brands like Maxwell House and Smucker’s Folgers brands have suffered at hands of specialty brands.
Deal announced last week by which Canadian cannabis giant Tilray is acquiring hemp products marketer Manitoba Harvest reflects outsize resources the CBD segment brings to locking in production and distribution infrastructure. Under deal announced last Thurs (which only rippled out more broadly in media over weekend), Tilray is paying up to $316 mil ($419 mil Canadian) to take out investors led by Compass Natural for full ownership of Manitoba Harvest’s parent FHF Holdings. Manitoba is pioneering marketer of hemp-based items like Hemp Bliss hempmilk and Hemp Yeah granola and protein powder, and had announced plans to enter CBD segment this summer with Broad Spectrum Hemp Extracts and Hemp Yeah wellness bars. Tilray, which is controlled by Seattle-based Privateer Holdings, is aligned with Anheuser-Busch InBev via $100 mil jv announced in Dec focused on bev sector, area where Manitoba’s expertise should prove beneficial. Tho its sales barely exceed $30 mil, Tilray enjoys market cap exceeding $7 bil amid burgeoning cannabis sector that has investors frothing at mouth with excitement. Manitoba Harvest acquisition is anticipated to close in 30 days, Tilray said.
Deal gives Tilray access to Manitoba’s 16K points of US distribution, including chains like Walmart, CVS and Kroger, and production plants in Winnipeg and Manitoba. Tilray ceo Brendan Kennedy suggested to Seattle Times that it will be looking to build in US, too, likely to comply with local mfg regs that still govern CBD. “It’s very likely that we will deploy capital in the US to take advantage of the opportunities presented through the farm bill at some point in the next 12 months,” he said. “This is an important first step.” Two decades old by now, Manitoba Harvest also is trusted supplier, operating in hemp segment awash with newbies. Its ceo Bill Chiasson, who’ll continue to operate co as indie unit within Tilray, views that as key advantage as CBD looms on horizon. “Retailers are seeing hemp mania, it’s one of the fastest-growing products right now,” he told Seattle paper. “All of them are looking at bringing on products that contain CBD into their portfolio and every one of them has come to us and said they see us as a natural partner.”
Terms of deal call for Tilray to pay C$277.5 mil at closing comprised of $C150 mil in cash and C$127.5 mil in Tilray shares. Six months after closing Tilray will pay C$92.5 mil comprised of C$50 mil in cash and C$42.5 mil in Tilray shares. In addition, should Manitoba Harvest meet performance milestones, it has chance of further earnout of up to C$49 mil.
Coca-Cola continues to show it’s no longer reluctant to tinker with its core brands, now adding first new flavor to core trademark – Orange Vanilla Coke – since Vanilla Coke Zero 12 years ago. Launch in full-calorie and Coke Zero Sugar versions is effort to capture greater share of flavored soda category, still-growing CSD segment that over the years has enabled Keurig Dr Pepper to outgrow its larger competitors. KO marketing exec Kate Santore told Advertising Age that Coca-Cola brand’s Cherry and Vanilla extensions account for just 9% of sales but are driving 18% of growth, so this further enriches portfolio via creamsicle touch. TV ad via agency Wieden & Kennedy Portland that “looks like it was ripped from an episode of Starsky & Hutch, funky music and all,” per AdAge, shows Coke sidebay truck drag careening down city streets alongside truck full of oranges and ice cream truck, with presumed collision at end yielding canned item that unintimidated crossing guard picks up from street and pops open. Launch comes at time that KO has been going crazy on Diet Coke, reversing brand’s longstanding skid via restage that added out-there flavors, most recently the new age mainstays Strawberry Guava and Blueberry Acai. AdAge has posted new ad here.
An uncommonly well-resourced effort to bring South Africa’s rooibos red tea into RTD mainstream under Bos brand name lately has been building out extensive exec team and now is readying sparkling extension for launch at Natural Products Expo West in Anaheim, Calif, next week.
Bos (styled BOS in logo and graphics) is USDA-certified organic brand that melds rooibos tea, cane sugar and natural flavors in brightly colored 12-oz slim cans in Berry, Peach, Lime & Ginger, Lemon and Yuzu. With about 15 g of sugar (70 calories), it’s meant to appeal to young, active types who’re reached by sponsoring surfing contests and local bands. Due for launch at Expo is completely unsweetened Bos Sparkling line targeting the more calorie-conscious yoga and Pilates crowd, in culinary flavors Pineapple Coconut, Blueberry Jasmine and White Peach & Elderflower. So far, previewing line to retailers, co is batting 1.000, said James Moss, former Dr Pepper exec who’s heading US operation. SRP for both is $1.99. Tho some consumers will be aware that rooibos is antioxidant-rich, it’s not positioned as functional entry, James emphasized in discussion last week.
The South African-born Moss is former exchange student at Univ of Colorado who decided to stay, along way serving thru varied posts at what was then Dr Pepper 7 Up and parent Cadbury’s UK operations before moving over to private equity side via stints at Maveron, venture fund of former Starbucks ceo Howard Schultz, and Emil Capital, where he mainly focused on Goodbelly probiotic investment, run by another South African, Alan Murray. He agreed to mastermind Bos’ US push last Jun but only, he said, after being assured that resources would be committed to adequately support what he well knows to be vast, challenging market.
Brought aboard last Sep to run sales was Steve Davis, a former colleague at DPS who’d helped build US presence of Bundaberg Aussie soda brand to point where PepsiCo picked it up for distribution, as well as Fentimans and Germany’s Afri Cola soda line, which he’s been importing as personal project. More recently Bos has fleshed out marketing team, in Dec recruiting as global cmo Montse De Rojas, whose resume includes brand mgr on iced teas and sports drinks at Coca-Cola, roles at Lactalis’ Dairy Products group and then decade of marketing roles at Diageo on brands like Tanqueray and Gordon’s gins, Johnnie Walker scotch, Zacapa rum and Don Julio tequila. Supporting her on brand marketing side since last month is Jeff Donaldson, who spent 6 years operating Atomic2O agency before heading to Skratch Labs for 3 years, where he moved sports powders from online play into retail.
The brand’s founders are Grant Rushmere, South African entrepreneur with extensive experience in Silicon Valley, and organic rooibos grower Richard Bowsher, who operates farm called Klipopmekaar (“one rock on top of the other”) in Cederberg area of country where all rooibos is grown. They launched Bos tea in 12-oz can in Cape Town in 2010, quickly adding rest of country, under “Go Bos!” slogan riffing on local idiom for going wild. Three years ago they ventured into Amsterdam, where awareness of rooibos is high given country’s colonial history in S Africa, and Paris. By now company claims to have 70 employees on payroll, per website. Key investor is Invenfin, venture arm of Remgro Ltd that counts confectionery makers De Villiers Chocolate, Joya Brands and Le Bonbon among its other CPG investments. Also in Bos’ investor mix is family of legendary Manchester United skipper Sir Alex Ferguson.
US operation under Moss has been set up as separate P&L with resources adequate to task of building new brand using ingredient whose awareness is still spotty. In conversation, he was well aware that several standalone rooibos tea plays under brand names like Rooibee had failed to break out in US over the years, but noted that few had enjoyed the resources that Bos is committing to task. Moss said he insisted on hiring finance, operations, marketing and sales execs with experience in US market, with dedicated feet-on-street and backoffice setups. Brand broke in San Diego early last year and has since been expanded throughout West Coast, enlisting such DSD partners as LA Distributing and Lenore in San Diego, with NorCal partner expected to be named soon. Also in mix are Reliant for foodservice and West Central to reach hotels, cruise ships and similar opportunities. Key part of strategy is to target influencer “micro-markets” like Newport Beach and Laguna Beach with the field teams. Line is copacked at Nor-Cal Bev and AZ Pack, and relationships with both Crown and Ball have enabled co to avoid getting squeezed by can capacity crunch, James said.
For now, co plans to continue to focus on western US, adding heartland areas like Rocky Mtn region, Austin and perhaps Chicago for summer and not considering East Coast until next year, Moss indicated. Core investor Invenfin is “acutely aware” of the education burden that will be needed and is willing to allow brand to grow organically rather than via aggressive geographic expansion, James said. Info at BosBrands.com.
Campbell Soup took a step toward dismantling Campbell Fresh unit that once represented future of company, agreeing to sell refrigerated soup plant in Everett, Wash, to affiliate of Seattle private investment firm Joshua Green Corp for undisclosed terms. CPB has been shopping the components of C-Fresh unit built around Bolthouse Farms as it abandons refrigerated food/bev biz that proved a severe challenge in favor of move into shelf-stable snacks via recent acquisition of Snyder’s-Lance. The 225K-sq-ft Everett plant had been part of co’s acquisition of Garden Fresh Gourmet, which was folded into Bolthouse/C-Fresh unit. Sale is expected to close in Q3. Still on block is Bolthouse, including massive Bakersfield, Calif, plant, with former Bolthouse chief Jeff Dunn said to be among those who’ve kicked tires. Also being shopped is Campbell Soup’s Int’l businesses as it aims to pay down debt incurred in Snyder’s-Lance acquisition.
Highly unusual take on flavored bottled water called Szent has pulled in $2.2 mil capital round from same investors who funded $1.5 mil initial round in 2017 as brand enters its first full year in market. Principal investor has been FirstMark Capital co-chmn Gerald Poch, who said new capital influx was warranted by strong market response to launch. Szent obtains natural flavor profile via ring affixed to neck of bottle that exudes natural oils to create a scent – hence “Szent” – that tricks the palate into thinking it’s drinking flavored water, when what’s actually in bottle is plain reverse-osmosis H2O. Brand is packed in straightwalled 20-oz plastic bottles in Tangerine, Passionfruit, Tropical, Pineapple and Mint flavors, priced at $2.25. A sparkling line is due this year. Line is produced at Unix Packaging in LA. Info at DrinkSzent.com.