Beer Marketer's Insights
It doesn’t seem to be case of buyer’s remorse, since United Natural Foods insists it’s still committed to its $2.9 bil acquisition of Supervalu last Jul. But UNFI has unleashed multi-pronged lawsuit vs its financial advisor in deal, Goldman Sachs, aiming “to recoup what UNFI believes are the Bank’s ill-gotten gains stemming from its improper conduct” in advising the distributor on the deal. Its various claims seem to add up to $200 mil or more that it’s seeking to claw back. “While positioning itself as UNFI’s trusted advisor on the one hand and its counter-party lender on the other, Goldman Sachs consolidated its command over all aspects of the transaction in order to extract millions in unjustifiable interest, fees and other damages suffered by the Company and its shareholders,” UNFI charges, at time Goldman already is suffering severe reputational damage for role in massive fraud in Singapore. A Goldman rep told Reuters that UNFI suit has no merit and it will vigorously defend itself; a rep for Bank of America, also named in suit, had no comment.
At Least 3d Buy by Pepsi/Beer House Bernick’s in Last 2 Yrs; Acquires Northwest Bevs in Wisconsin
Minn-based Bernick’s has struck again, buying 3 smaller MN and WI distribs in just last couple of yrs, including just- announced purchase of Northwest Bevs in Superior, Wis, our sibling newsletter Insights Express reported. Most of its biz in MN, with hq in Waite Park, facilities in Bemidji, Brainerd, Duluth, Twin Cities and Willmar. Also has facility in Dresser, WI, it said. Bernick’s also bought Rohlfing in Duluth last yr and Needham in Stillwater yr before that. Needham just 250K cases. Bernick’s is a 5th-generation family biz, selling MC, imports and craft in many locations. Its website also sez it’s 7th-largest indy Pepsi bottler in US.
After 12-year run at Dr Pepper Snapple Group, Lain Hanvcock is departing its successor co Keurig Dr Pepper to take role as chief supply & ops officer at Dallas-based auto battery marketer Interstate Batteries. Move, noted by BevNet earlier this week, would appear to leave his colleague Ken Kurtz as key scout for potential partner bevs. As reported, Hancock and Kurtz had been given those duties last summer while also continuing to run Bai Brands following quick departure of founder Ben Weiss (BBI, Oct 10). Hancock’s most recent title was chief strategy & emerging brands officer. As for Kurtz, he’d had long runs at Gallo, Boston Beer and Fiji Water prior to landing as key member of Bai team, helping grow biz to point where DPS paid $1.7 bil to acquire it . . . Gregg Tanner, who presided over Dean Foods after that co’s ceo Gregg Engles opted to ride with WhiteWave Foods spinoff, has passed away at age 62, per announcement from Sam Adams marketer Boston Beer, where Tanner was one of longest-serving board members with 11 years of service. He’d retired from Dean in 2017.
Longtime NFL sponsor PepsiCo is demonstrating both tact and ingenuity as it invades rival Coca-Cola’s home turf in Atlanta for Super Bowl this Sun. Atlanta Business Chronicle described “détente” in which Pepsi is orchestrating #ColaTruce hashtag to donate meals to the needy via tie-in with @UnitedWayATL. It’s also erected a bronze statue of its founder, Caleb Bradham, near Coke’s statue of founder John Pemberton outside World of Coca-Cola on Millennium Park, explaining that “the founders’ raising glasses toward one another could signal a ‘Cola Truce’ while the companies shared the city.” It even launched a limited-time peach flavor of Gatorade called Peach Blitz in and around city. Coca-Cola has offered graceful response, replying via Twitter, “#TogetherIsBeautiful always. Welcome to ATL!” The rivals both will ply their wares inside Mercedes-Benz Stadium, with Coke working its regular concessions and Pepsi items available at 8 branded kiosks within stadium, Biz Chronicle reported. Those who view classy collusion as too namby-pamby are welcome to tune in a coupla days later to president’s State of the Union address and Democratic rebuttal to enjoy tone more likely to resemble the cola wars.
After period where it may have lost its way a bit and sales plateaued, Coca-Cola’s Honest Tea brand is entering 2019 with renewed momentum, broadening presence of its higher-end glass bottles, garnering strong retail reception to forthcoming tween-targeted line and promising burst of innovation at Natural Products Expo West in a few weeks. This is capping 2018 in which US revenues surged by 28%, said gm Clare Verdery and cofounder Seth Goldman in discussion this morning, even as brand continues to expand in Canada, Mexico and overseas to markets like Chile, Peru, UAE and Singapore. In Europe, where brand last year went out with both teas and coffees (BBI, Mar 28), this year will bring first concerted launch into grocery channel. It’s not out of question that brand might even launch in Asia in coming year – highly demanding market where co sources its teas. So Honest is well on way to becoming global platform for KO, even as there’s still work to be done building awareness of organic brand in home market.
Coming year will see continued reshaping of portfolio. As reported last year (BBI, Sep 17), success of Honest Kids line prompted development of tween-targeted Honest Organic Juice Drink line offered in 6-packs of 10-oz bottles in 3 flavors; on call today Verdery (Clare Koller when she joined the brand) and Goldman reported that they’ve nailed authorizations totaling thousands of stores, with specific retail partners to be IDed around time of official debut at Expo West in early Mar. On debit side, particularly with Body Armor having entered KO portfolio via recent acquisition, Honest Tea will be cutting back its Honest Sports line entering 2019, and phasing it out entirely toward midyear, decision that Seth said actually predated KO’s move on Body Armor, as Honest team faced facts that it just wasn’t able to muster enough support to attain liftoff. “It did well in natural (channel) but that wasn’t enough,” Seth said. Meanwhile, tho zero-sugar Honest Fizz natural soda line isn’t coming back, reception to still and sparkling lemonade line in Europe has been encouraging enough that there are discussions about possibly bringing it to American shores, meaning Honest could get back into sparkling game.
By now, gm Verdery has fully staffed her team and is promising to unveil bout of innovation at Expo West in a few weeks, after period in which creativity had seemed to be going flat. As reported last year, Clare is former entrepreneur herself (via stationery biz) and decade-long Coke vet who’s based in brand’s Bethesda, Md, hq rather than operating remotely from Atlanta as her predecessor did. That seems to have boosted both morale and agility at independently operating unit. Cofounder Goldman, who’s scratching entrepreneurial itch via heavy involvement in Beyond Meat brand, still plays direct role in guiding Honest Tea. They’re staying mum on new stuff until closer to Expo.
Among key initiatives of past year, migration of glass bottle to Coke’s red trucks (BBI, Jan 8) proved fruitful, yielding 20%+ growth in both conventional and core natural channel, which had been leveling off earlier. Tied to activation surrounding brand’s 20th anniversary, as well as cooler program at Whole Foods, what’s always been core platform for brand enjoyed new burst of energy. Recall, for years after Coke came into picture a decade ago, glass bottles stayed focused on natural channel where brand first ignited, while smaller flavor range of PET bottles went aboard Coke trucks. In what could be viewed as sign of continued premiumization of tea, the glass bottles have been enjoying greater presence in foodservice and even in convenience, with plastic and glass bottles sometimes seen side by side on shelf. Best-performing partner in c-stores, Wawa chain in Mid-Atlantic, is among those boosting presence of glass entries this year. This at time that real-brewed teas in glass bottles like Pepsi’s Pure Leaf Teahouse Collection and Starbucks/Budweiser collab on Teavana are enjoying solid growth, riffing off concepts Honest pioneered years earlier.
Among milestones last year was TV buy for ad featuring Goldman ambling thru tea gardens of India, echoing familiar trope of co’s online and social media marketing efforts in past (BBI, Mar 28). With that succeeding in reinforcing brand’s cred as lower- or no-sugar Fair Trade organic bev, the plan for 2019 is to broaden message to show how small choice of purchasing an Honest item can bring broader well-being both to consumer and to communities in which co sources its ingredients. As a brand that’s taken socially conscious stance since its founding 2 decades ago, that’s a space Honest Tea should own, Verdery and Goldman believe. They’re still figuring out media plan, so TV may or may not be back in mix.
Tho Honest Tea has gone out thru red system for some time now, one exception had been its core NY market, where its distributor from inception, Big Geyser, had remained partner until this past fall, as KO shifted several brands to new local franchisee operating as Liberty Coca-Cola. As BBI has noted, Big Geyser responded by picking up Honest Tea rival Sweet Leaf Tea and cramming it into the Honest-branded coolers it’s deployed all over town. Asked whether there’s been erosion, Goldman said it’s still transition period and he can’t judge whether execution has gotten better or worse, but praised passion for brand he’s seen at Liberty. He said he’d tried to manage shift respectfully and professionally, and last month paid former distributor an appreciation visit, after transition was completed. Of course, with thermometer dipping to single digits, there’s probably not a lot of iced tea being sold and any decisive judgment on performance likely must wait until summer selling season rolls around.
Dahlicious, maker of India-style bottled lassis made from grass-fed milk, is tilting from 32-oz multiserve packs to 7-oz single-serve units, even as it broadens product range to include plant-based yogurt line in solid and drinkable versions. The lassis, drinkable yogurt style that's become increasingly popular as Americans get more attuned to Indian food, is offering 7-oz versions containing 7 g of protein in Field Strawberry, Mixed Berry, Wild Blueberry and Alphonso Mango flavors, said Casey Berg, former Califia Farms sales exec who joined Dahlicious a few weeks ago as vp of DSD and foodservice. They’re touted as being slow-cultured and containing 15 bil live probiotics per bottle. They will be getting emphasis now, tho co is maintaining 32-oz multiserves in line, in Alphonso Mango, Wild Blueberry, Field Strawberry, Golden Turmeric and Grassland Plain flavors.
Dahlicious also is building presence in plant-based world via almondmilk-based yogurt made from dry-farmed Valencia nuts sourced from Spain. Besides being available in single-serve cups, they’re out in 28-oz bottles in Alphonso Mango, Mixed Berry, Wild Blueberry, Field Strawberry, Orchard Peach and Pure & Plain flavors, and in 7-oz single-serves in same flavor range minus the Pure & Plain. Each 7-oz bottle contains 5 g of protein and 15 bil probiotics.
Dahlicious is based in Portland, Ore, but produces out of its own facility in Leominster, Mass. Tho it moves to retail mainly thru broadliners like UNFI and KeHe, it boasts a few DSD partners, including Rainforest in NY, and Berg said he’s in talks with others. What until now had been core line, the 32-oz lassi, so far is available in Whole Foods’ New England, NorCal, SoCal and Rocky Mtn regions.
China is tempting marketing for American marketers thanks to its consumers’ burgeoning affluence and love for trendy Western brands. But it’s also money pit, given its size, logistical challenges, cheaper-priced local rivals and, more recently, tapering off of economic growth. That’s made investors a bit skittish about efforts by cos like Starbucks and Monster Bev to penetrate massive market. Now Celsius Holdings is taking a bit of money off the table in its own attack on market by shifting to licensing model with partner Qifeng Food Technology (Beijing) under which Qifeng gets exclusive license to manufacture, market and commercialize Celsius-branded items in China in return for $6.9 mil fee for first 5-years that converts to royalty fee once brand is presumed to be generating meaningful volume there.
CELH prexy/ceo John Fieldly described deal this way: “It enables Celsius to continue to expand its footprint in the very important China market while significantly mitigating our risk and eliminating the need for additional investments, which allows Celsius to focus its working capital on the US and other emerging markets. Under this model, the investments Celsius has made in China to date will also be returned over a 5-year term, and further investments will be made directly by Qifeng, providing revenue and growth opportunity to Celsius.” Qifeng will be incented to grow brands via sliding scale that calls for 3% royalty if sales come in below 3 bil cans in 2024, 2.5% up to 6 bil cans, and 2% if sales exceed that. And CELH’s investment into Mainland China to date will be returned to co over 5-year loan deal at 5% interest rate on outstanding principal up to $5 mil and 2% on outstanding principal over that amount.
On heels of what looks to have been $5.6 mil capital raise last month, alt-sports-drink marketer Roar Organic has brought in some seasoned c-suite talent with recruitment of Chef’s Cut jerky ceo Bart Silvestro as prexy and coo, overseeing plan to pivot brand’s target from young jocks to millennial moms, per local paper Newsday. Silvestro will work with founder/ceo Roly Nesi, now 34, to build out mgmt team of Huntington, NY, firm.
Roar is among flock of purportedly better-for-you, coconut-water-infused sports drinks that are making moves now that igniting Body Armor brand has revealed some chinks in previously impregnable Gatorade armor, with Chicago-based Coco5 bringing in former MillerCoors exec David Kroll as ceo just a few weeks ago (BBI, Jan 9). As reported, Roar girded for upcoming push with capital seed round last month led by NY-based AccelFoods (BBI, Dec 13), which financial docs indicate to have totaled $5.6 mil. Silvestro, 48, is accustomed to working fast: as vp sales/ops he helped reverse $27 mil loss at Popcorn Indiana in just a year, then helped take Chef’s Cut from $1 mil to national availability and $47 mil in sales in 3 years, per Roar’s announcement. Roar Organic line launched in 2016 boasts no added sugar or artificial sweeteners and preservatives, in new-age-ish flavor range of Strawberry Coconut, Pineapple Mint, Georgia Mint, Cucumber Watermelon, Mango Clementine and Blueberry Acai. It claims about 3K retail accounts, including Safeway and CVS’ new healthy-bev sets.
Deep, deep dive into Constellation’s cannabis play with Canopy − over 3,300 words in Globe & Mail on Sat − filled in lotsa details of the story and added insight into how it’s developing. Turns out Constellation execs met with futurist Faith Popcorn back in early 2017, looking for “next big thing.” She told ’em they’d be “missing the boat” if they didn’t think about pursuing cannabis oppty. “We kind of got our heads around the fact that she was right,” incoming ceo Bill Newlands told paper. Popcorn’s not alone in pushing the oppty, which financial analysts have pegged to be between ultimately $200 bil and $500 bil global revs. (As is nature with disruptive trends, no one knows.) Faith calls it “one of the biggest movements of our time.” Euromonitor’s Spiro Malandrakis acknowledges Constellation made “big gamble,” and STZ share price has taken a big hit since. But Spiros also sez it would be “extremely risky” not to pursue cannabis and believes “downside risk of not getting into it is far too big to ignore.” Indeed, he likens alc bevcos’ skittishness about cannabis to “huge mistake” big brewers made by missing out on craft beer oppty. In Faith’s view: legalized cannabis “positioned to be a disruptor. Millennials would rather smoke weed than down a brew and we expect Generation Z to stay on that preference path.”
Turns out, Constellation set up test lab in Toronto in late-2017 to start working on cannabis bevs. (Edibles/bevs on tap to be legal in Canada this fall.) Subsequently, that lab folded into Canopy. Current cannabis bevs “terrible,” in Canopy ceo Bruce Linton’s view. They taste lousy, are opaque and/or brightly hued, take too long to take effect and “ruin” drinker for hours. Canopy’s developed clear bevs with lemon and other flavors, lower doses that take just 7-12 minutes to “onset” and have no calories. Consumers want to know what the bev is and what response they can expect, sez Bill. “This is where brands and trust and authenticity become critical elements.” Flavor, consistency and expectations are “some of the capabilities that we can help Canopy with,” he adds. Then too, Constellation has plenty of experience dealing with gov’t regulators.
How biz will evolve, in US and globally, not clear, and many bumps in the road so far (see slow retail rollouts in Calif and Canada), or as Bill puts it: “it’s tough to tell at this point.” Still, Bill and Constellation view this as once-in-lifetime oppty: “Nobody knows the exact answer other than it’s going to be big. What we realized was the most efficient and effective way to win was to put everything behind Canopy.” In effect, Constellation built “war chest” for Canopy to build global leadership position “for a long time to come,” sez Bill. (This summary of Globe & Mail story was picked up by BBI from our sibling publication Insights Express.)
Forto Coffee Shots, aligned with Keurig Dr Pepper system, is off to brisk start at retail this year, with its full lineup of licensed coffee shots rolling into Walmart chain on national basis, with Donut Shop so far the best seller. Pharma chain Walgreens also is picking up spinoff from Forto-branded shots. Also picking up early momentum is new 11-oz Forto RTD, already in most Walmart units and due to enter Meijer chain later this qtr, said founder Neel Premkumar. Parent co Dyla Brands offers Forto coffee entries as well as Stur natural water enhancers.