Beer Marketer's Insights
"The honest answer is the [tax] situation in Philadelphia and the early days in Chicago is a mess," said Coca-Cola evp Sandy Douglas, who runs N Amer, at Barclay's Global Consumer Staples Conference yesterday. "You have a tax that's taxing everything with sweetener in it" in bev form but leaving other products like powdered drinks out, and that's unfair in his view. Taxes in those cities have "materially reduced our business" and also the biz of "retail customers" and restaurants, added Sandy. "It's cost jobs. Even the jobs that are still there, the commissions of the route drivers" are down. "So it's a complete disaster." These taxes are "ironic" given that stated goals "are often about health" and yet "consumers are changing" habits on their own, with sugared and non-alc RTD bevs down 20% since 2000. "All of that growth that we've been talking about tends to be in lower- or no-calorie or no-sugar beverages," noted Sandy. While this is "a good American debate," he pointed to cities like Santa Fe, NM, that voted down a proposed tax by 2-to-1 margin in hopes that "common sense will prevail." "There's got to be a lot of different ways to achieve revenue increases for governments and health for people," he concluded.
Coca-Cola continues to add to its growing roster of RTD coffee brands, now teaming with McDonald's on bottled entry dubbed McCafe Frappe breaking early next year in Caramel, Vanilla and Mocha flavors. Surprise move adds to portfolio that already includes Dunkin' Donuts and Gold Peak-branded entries, along with forthcoming coffee entries from strategic partner Monster Beverage. McD's offered no details on new line, tho image of "Caramel Coffee Beverage" entry depicted full-wrap plastic bottle in 13.7-oz size touting Frappe's "deliciously smooth taste" and "100% Arabica beans." Calorie indicator shows 260 calories. KO has yet to make its own announcement of entry, which may be on view at NACS c-store show next month. Move prompts question as to whether it reflects lessening of faith in KO Dunkin' and Gold Peak entries as mainstream offerings, or whether KO intends perhaps to put it out there as more of a value play. McCafe Frappe launch was announced as part of more extensive upgrade of fast food king's McCafe platform, which launched in Australia in 1993, hit US in 09 and has progressively migrated in upscale but value-priced direction that makes it ever closer challenger to core entries of Starbucks. By now, McCafe brand has become $4 bil annual business for McD's, including at grocers via suite of whole bean, ground and single-serve coffee.
RETAIL: 'Finnish Funguys' at Four Sigmatic Open Shroom Room in Venice, Calif, as Fungi Showcase
Count Four Sigmatic among brands that are taking retail route to build awareness. Marketer of functional mushroom powders has opened The Shroom Room on Abbot Kinney Blvd in Venice, joining other cutting-edge bevcos like Bulletproof and Matchabar operating stores in influencer-infested western LA. Store will be site for daily sampling of mushroom chocolate, smoothies, lemonade or hot coffee made from mushrooms like chaga, reishi, cordyceps and lion's mane, co said. "We are building a community for people to experience the brand, hang out with others and learn more about these fascinating fungi," said founder/prexy Tero Isokauppila, who's among group of "Finnish Funguys" (get it?) who launched co in 2012 and claim to be operating in 55 countries now. They launched in US in 2015.
NY-based Superleaf LLC has added pair of flavors to its Detoxwater Bioactive Aloe Water organic line while moving to bring in estimated $2-3 mil in growth capital in Series A round led by investment fund associated with Chicago's influential Crown family.
Juicero, the lavishly funded startup that aimed to revolutionize the fresh-juice biz but devolved into being a much-ridiculed example of elaborate technology in search of a real problem to solve, has thrown in the towel. "Today, after selling over a million Produce Packs, we must let you know we are suspending the sale of the Juicero Press and Produce Packs immediately," said note that was posted on Sep 1 on Juicero.com website. After month-long effort to find ways to reduce the cost of the countertop devices and ingredient packs, "it became clear that creating an effective manufacturing and distribution system for a nationwide customer base requires infrastructure that we cannot achieve on our own as a standalone business. We are confident that to truly have the long-term impact we want to make, we need to focus on finding an acquirer with an existing national fresh food supply chain who can carry forward the Juicero mission." After Bloomberg expose prompted much ridicule by showing that expensive press could be replaced simply by consumer squeezing a juice packet with his or her own hands, it's not clear who would want to opt into investments required to get platform to critical mass. It debuted in Mar 2016 but will ship its final produce packets this week, with buyers offered full refund if they apply by Dec 1.
Indie stores in cutting-edge nabes in Brooklyn important for your brand? That's the purview of small DSD shop called Gold Coast Distributors that's been accumulating impressive roster of premium and superpremium brands, many on refrigerated side, for sale in early-adopter nabes like Greenpoint and Sunset Park. Operated for 15 years now by bev lifer named Mitch Suslak, Gold Coast's roster includes likes of Revive Kombucha, Wandering Bear and Grady's cold-brewed coffee, Maine Root craft sodas, Uptime, Joe Tea, Invo coconut water, Sap, Pure Green, Giving Tree Moringa Tea and Sweet'tauk Lemonade. It's also sub-distributor for bigger Rainforest house, helping on brands like Health-Ade Kombucha and Temple Turmeric. House handles some Coke items, including refrigerated Odwalla, Simply, Fairlife and Suja brands and shelf-stable Smartwater.
New Age Beverages is building distribution for its Marley-branded organic yerba mate line, in part filling void left by category pioneer Guayaki as it moves to self-distribution in some markets. Brand has signed up Haralambos Beverage in LA, in SoCal market where Guayaki has done more than $3 mil in biz per month, as well as powerhouse Hensley house in Ariz, along with Folsom and Palmentere in Midwest, all believed to be existing distribution partners of brands under New Age umbrella. More announcements are likely imminent, said brand dir Zach Ross, Denver-based exec who came aboard in Jun after working field marketing for Health-Ade Kombucha. Zach also works on New Age brands like CocoLibre and Bucha Kombucha.
For bev distributors plying streets of NYC under sometimes colorful names like Big Drop Distributors and Bronx Bull Beverage, it's been arduous but effective route to prosperity over the years: work an indie route for Big Geyser and ride success of brands like Fuze, Vitaminwater and Monster Energy to nice living and rising resale value of route. Lately, tho, group of 33 current or past route owners seem to be having second thoughts about advantages of operating their own route. So they've taken Big Geyser to court, contending they're really no different from BG employees in areas like Long Island who're directly on distrib's payroll. Suit filed this week in US District Court for Southern District of NY asks for damages and such remedies as having distributor agreements and associated promissory notes and guarantees rescinded. It's not clear from details of suit what end game, exactly, the route owners are pursuing: is it just about the money, or do they want to sell back their routes? Their attorney, Bleakley Platt & Schmidt LLC of White Plains, NY, indicated to BBI that it would have no comment beyond what's contained in publicly available court papers.
Campbell Soup shares skidded to 2-year low in trading yesterday after co further tamped down expectations just weeks after sending out similar message at investor day event in Jul. For its fiscal Q4, net sales sagged 1% to $1.66 bil and earnings before income taxes rose 11% to $282 mil, excluding one-time items. Americas Simply Meals & Beverages, where CPB pools its mature shelf-stable soups and juices, performed according to its portfolio role, the co said, recording 3% sales decline to $815 mil in line with weakness in those segments, but notching 4% operating earnings gain to $198 mil. Campbell Fresh unit built around Bolthouse Farms fresh juices continued its rebuilding effort, scoring 1% sales growth to $225 mil on strength of Garden Fresh Gourmet sauces and soups but suffering further declines on bev side as recovery and expansion effort continues after disastrous year in which co issued voluntary recall of protein bevs and tightened up quality controls. Last year's $8 mil operating profit swung to $8 mil loss on account of higher carrot costs and expansion/QC steps. Other key segment, Global Biscuits & Snacks, was flat at $624 mil, also a disappointment.
Big warm-weather holiday weekends ain't entirely like they used to be, judging by some grocery flyers we've been inspecting. Case in point: current Target flyer, heading into Labor Day weekend, features expected layout of mustard-decorated hotdogs on buns and grilled steaks, just above 2 for $5 offer on single bottles of Humm Kombucha and KeVita probiotic drinks. Elsewhere in that flyer, tho, and at rival retailers like Walmart and Jewel-Osco, there are hot deals galore on traffic-driving mainstays like CSDs, sports drinks and bottled water, particularly casepack tap water brands. (Another noteworthy touch on Target's nationally posted digital flyer: notes that shoppers in Cook County, Ill, should check local stores for prices, a nod, undoubtedly, to recently enacted soda tax in Chicago area.) But outside traditional loss leaders, discounting seemed restrained. Here are some highlights from our perusal of select retailers' offerings: