Beer Marketer's Insights
RETAIL: NY's 'Drug Store' Is a Front - for Dirty Lemon Detox Drinks; 'Txt Us 917 588 0640 X'
NY is ever-unfolding panorama of retail stunts meant to promote brands, sometimes overtly, sometimes stealthily. Enter The Drug Store, a compact storefront on hipster-meets-Chinese-food nexus Elizabeth Street on Manhattan's Lower East Side, in so-called NoLiTa nabe ("north of Little Italy"). Small space is dominated by salvaged art-deco neon sign screaming DRUGS behind bar at which energetic mixologist named Tess was making from scratch a range of 6 "hand-crafted elixirs" at $10 apiece: Detox (fresh-squeezed lemons, muddled ginger, dandelion root, activated charcoal), Skin + Hair (fresh-squeezed lemon, shavegrass, red clover, chili, marine collagen), you get the picture. BBI ordered Matcha (fresh-squeezed lemon, matcha, rhodiola, vanilla, cardamom). Space contained 7 stools at bar and 3 high tables each with complement of 4 stools. At each serving place was white napkin on which had been scrawled in felt-tip pen: "Txt us 917 588 0640 X." So what gives? It's popup for detox brand called Dirty Lemon, whose black and white bottles were available for sale out of discreet cooler in back. Floating array of DJs, celeb mixologists and the like will keep it humming. But Drug Store is brand's only retail account: the rest of its biz is conducted entirely online, with consumers invited to text message their orders in. As Tess noted to us gleefully, it's the only product besides illegal drugs that you can purchase via text.
Tsamma Opens Ind Production Facility to Serve Expanding Retailer Base; QSR Tests Under Way, Too
WTRMLN WTR may get most of the ink, but another watermelon-based bev entry is revving up lately: Tsamma brand, launched by Midwest's Frey Farms around 3 years ago. Co based in Keenes, Ill, on Mon opened production facility situated on watermelon farm in Poseyville, Ind, near Evansville, about 15K-sq-ft including cold-storage space, to serve rapidly expanding retailer base that now includes Publix, Harris Teeter, Shnucks and entire Fresh Market chain, said founder Sarah Frey. (All already were buyers of co's watermelons.) In addition, Tsamma has been gearing up foodservice push, with tests proceeding in pair of well-known quick-serve restaurant chains that she declined to identify. And co is building biz as supplier of juice to retailers for their private-label efforts, too.
In reporting departure of Zx Ventures global mgr Dai Truong a few days ago we listed diverse array of deals he's conjured for parent Anheuser-Busch InBev on NA and low-alc sides in his short run with co: Kombrewcha kombucha, Owl's Brew tea-based mixers, GoLive dispense-cap probiotic line. He also was on front line of discussions with Hiball energy drinks and sparkling waters which led to outright acquisition by ABI. Now we're hearing there's another one that's entered the mix of A-B's venture arm: Up Mountain Switchel, colonial-style drinking vinegar marketed by pair of entrepreneurs out of Brooklyn. Zx hasn't announced any of its investments and its partners are instructed not to talk, so it's no surprise we haven't heard back from Up Mountain cofounder Garrett Riffle. Like the other investments, it's a bit far-sighted insofar as Up Mountain in its current guise is refrigerated brand that wouldn't be compatible with most Bud wholesalers' non-refrigerated fleets. But sour-tasting Up Mountain taps into sector whose embrace by consumers has surprised many observers, much as embrace of sour beers and saisons initially was surprising on alc side. As reported this past spring (BBI, May 11), Up Mountain recently intro'd more approachable sparkling version called Swizzle that started hitting shelves around Memorial Day.
Starbucks last night reported another record qtr in Q3 but backed off its full-year growth projections and watched its shares skid nearly 10% in trading so far today. Seattle-based roaster also said it's taking drastic step of shutting down entire 379-unit Teavana chain after seeing no way to restore those primarily mall-based stores to growth, tho Teavana-branded drinks will remain key part of Starbucks store offerings and co remains bullish about bottled line recently launched in collaboration with Anheuser-Busch. As recently as a year ago, SBUX evinced no apparent evidence that chain was in trouble, but it also had been conspicuously silent for some time about its performance. So Teavana joins ranks of other concepts that brilliant merchant hasn't been able to ignite at retail, including acquired but now-shuttered La Boulange bakery chain and retail component of Evolution Fresh juice brand.
Phoenix-based Tea of a Kind has come up with unusual method to cut down on plastic-bottle waste: it's offering so-called Eco 4-Pack that contains one half-liter bottle of the tea along with 3 nitro-pressurized bottle cap refills dubbed Vessl. "Once the initial bottle in the Eco 4-Pack has been consumed, the consumer simply refills the bottle with water and reuses it by twisting on a tea-filled Vessl refill, transforming the water into another bottle of antioxidant packed Tea of a Kind," per the co. New packaging configuration launched by founder/ceo Walter Apodaco will initially make its way into retailers AJ's Fine Foods, Bashas' Supermarkets and Fry's Food Stores in its home state, which are serviced by DSD house Hensley. Hensley NA dir Jeff Somers exulted that "aside from the environmental benefits, shipping Vessl refills instead of heavy bottles will save space in the warehouse, on trucks, on the shelf, and will improve our overall efficiency." Zero-calorie line sweetened with monk fruit and stevia is out in Peach Ginger Black Tea, Pomegranate Acai White Tea and Citrus Mint Green Tea varieties.
Count Sweettauk Lemonade as latest brand to make a pivot away from sugar, at time full-fledged panic over ingredient seems to be setting in among some consumers. Brand launched out of Montauk, at east end of Long Island, has moved to no-sugar-added recipes that contain just 1-5 g of sugar, thanks to an assist from hint of stevia. "It's absolutely fresh and delicious and maintains our tart flavor profile," maintains cofounder/prexy Deb Aiza. "And as always, 100% organic and non-GMO project-verified as well as fresh-squeezed and cold-pressed." Bill Sipper, principal of consultancy Cascadia Managing Brands, which has been assisting Sweettauk, and an investor in co, said sales in Whole Foods have already seen a bump from first few weeks in market. Tho brand has mainly focused on NY metro, including high-end retailers like Gourmet Gourage, Fairway, Eataly and Toby's Estate coffee chain, it's also available in Whole Foods up and down eastern seaboard.
Dr Pepper Snapple Group turned in another strong performance on CSDs, even as slower-than-anticipated start to Bai caused it to boost ad spend and accelerate promos, diluting core earnings by 7 cents per share to $1.25, flat with prior year. (So those 3 for $5 deals proliferating in groceries ain't goin' away any time soon.) Unlike its bigger rivals, DPS continues to grow some of its diet CSDs, like Diet Dr Pepper. And while it shocked Wall Street by quickly backing off aggressive sales growth projection for Bai shortly after $1.7 bil acquisition closed this spring, prexy/ceo Larry Young and cfo Marty Ellen offered no new surprises on brand for which they insisted they retain full enthusiasm. Bai now accounts for 4.5% of total revenue and is underpinning a "meaningful and positive shift in our portfolio," in Marty's phrase, to higher-margin and faster-growing items. Brand has boosted overall gross margin by 125 basis points. "Our early results are encouraging and we are excited about the future of this brand," Larry maintained.
He was only in place a year and a half, but Zx Ventures global mgr Dai Truong seemed to get lotsa deals done on behalf of parent Anheuser-Busch InBev, including investments in bev players like Kombrewcha low-cal kombucha, Owl's Brew tea-based mixers and GoLive probiotic drinks, not to mention playing role in just-announced outright acquisition of Hiball sparkling energy and water co. (Those are just deals we know about; A-B hasn't formally announced any of its minority investments made via Zx and Truong himself wasn't much available to talk.) But word in recent weeks was that energetic exec, not yet 30, was moving on, and he's turned up as founder/ceo of co called Upside Talent that aims to serve as "marketplace for companies to find executive recruiters best-fit (geography, industry, role, etc) for their hiring needs," per Dai's recently updated LinkedIn profile. Like Zx, Upside is based in NY. Dai had relocated to NY from Austin-based software co to take Zx job.
PepsiCo is continuing to push hard for greater price realization, informing key customers earlier this month that it intends to inaugurate 3-4% price hike effective Sep 5. Letter dated Jul 5 from Derek Lewis, svp/gm for Pepsi North America field operations, promises further details from field reps by end of month. "While we recognize that price increases can be challenging for retailers, these price moves will enable us to continue our investments in growing your business through world class marketing, the highest quality products, and exciting brand and packaging innovations," Derek wrote. It's not clear to us whether those details have hit market yet. Letter was shared with us by exec at rival player in CSD space.
Coca-Cola turned in solid performance in 2d qtr, particularly in light of unstable political and economic situation in many overseas markets, and surprised some Coke watchers with robust 6% revenue gain in core N Amer market. "We are encouraged by KO's results against a challenging global backdrop for mega caps," wrote RBC's Nik Modi, comparing it to weaker performances by Kimberly-Clark and Colgate-Palmolive over past week. It marked reassuring debut by recently elevated prexy/ceo James Quincey, tho of course most positives in report built on initiatives put in place by prior ceo Muhtar Kent, now chmn.

