Beer Marketer's Insights
Speaking at Beverage Forum on Fri, Coca-Cola's N Amer prexy Sandy Douglas offered glimpse of new style to be expected from recently ascended ceo James Quincey, as well as unvarnished view of how KO evolved from unhealthy reliance on volume growth to current emphasis on revenue realization. Exec also offered his take on range of key issues from refranchising push to belated embracing of Mexican Coca-Cola. (Along way, 29-year KO vet evinced unusual willingness to discuss archrival by name, agreeing with earlier speaker Indra Nooyi, PepsiCo's ceo, that CSD sector provides opportunity as well as threat, and citing both KO and PEP for having built "tremendous" customer mgmt systems.)
SCANNER TRENDS: Pricing, Easter Timing Lift CSDs; Sports Drinks Soft; Pepsi's Energy Brands -21%
CSD volume shot up 3.9% last 4 wks thru Apr 22 in Nielsen all-channel data reported by Morgan Stanley's Dara Mohsenian. Soft drinks benefited from Easter timing, as holiday wasn't in this period a yr ago. That's big swing for CSDs, which were down 1.4% prior 12 wks, but avg prices fell from +0.7% avg for 12 wks to -1.8% last 4 wks. Lower prices and holiday lifted both full-calorie and diet brands to 3.9% volume gain for 4 wks. Coca-Cola volume went from flat performance for 12 wks to 7.6% gain for 4 wks on avg price cut of 2%. PepsiCo CSD volume increased 1.6% (vs -3.6% for 12 wks) on steeper price decrease of 4% last 4 wks. Dr Pepper Snapple CSD volume gained 5.7% (up from +0.8% for 12 wks) on avg price drop of 2% for 4 wks. Private-label brands sagged 7%, in-line with 12-wk trend, while avg prices were up modest 0.8% for the 4 wks.
Peet's Coffee is moving forward with anticipated expansion of its proprietary DSD system for RTD bevs, setting up dedicated unit called Coldcraft to mastermind push from its NorCal base into Southern Calif and future expansions. In departure from owner JAB's propensity to let its divisions operate entirely separately, Coldcraft will pick up distribution in that market of its sibling Stumptown Coffees Roasters' RTD and kegged cold-brew. Seven-year Peet's vet Tiffin Groff, who's been Peet's vp/gm, has been tapped to run Coldcraft. General plan had been disclosed to BBI early last month by Peet's ceo Dave Burwick, who said he anticipated having fleet of 35-40 trucks plying Golden State by year-end (BBI, Mar 2), tho Tiffin declined to put any specific # on it, saying it will be function of how quickly brands win new retail accounts. She anticipates being in 2K accounts by summer, including range of non-conventional accounts beyond grocers and coffee shops. Still to be determined as biz plays out is at what point co may take on outside brands seeking refrigerated DSD, tho Grof reminded that Peet's will only consider items that qualify as craft. "Not yet," Grof said, "but who knows?" As for expansion beyond Calif, she noted that state is rich market, accounting for more than 20% of nation's cold-brew consumption, so Peet's "will be focused on California and go from there." Brand is claimed to own 30 share of SF market for RTD cold-brew.
PEOPLE: Long Island Iced Tea Recruits Allied Domecq, Daymon Vet Morris to Run Sales, Marketing
Long Island Iced Tea has recruited from spirits exec Virginia Morris to serve as chief sales & marketing officer, working with ceo Philip Thomas on brand mgmt, channel strategy development and product innovation. She comes from 8-year run at private-label giant Daymon Worldwide, lately as vp global consumer and innovation strategy, following 6 years at wine/spirits marketer Allied Domecq, working on Kahlua and Stolichnaya brands. She earlier worked at Diageo and British American Tobacco. Meanwhile, co's first employee and investor Peter Dydensborg, segues from coo role over past 4 years to vp of market development & sales. Long Island Iced Tea is publicly traded under LTEA symbol.
Jammin Java Corp, which has had troubled ride over past few years in its biz of selling whole-bean coffee based on Bob Marley license, is hoping RTD sector might provide respite. It's teaming with High Performance Beverage to create line that will include cannabis entry for Colo markets, sugar-free and lower-cal offerings for national distribution and coffee/energy hybrids. "This new line will be significant as we transition from traditional coffee roasters to the cold coffee drink market," said Chris Plant, ceo of Jammin Java, which does biz as Marley Coffee. "Because we are an already established coffee company, we will have several distinct advantages in the marketplace as we introduce our new line of coffee beverages, some of which will be first to market. Developing a premium taste associated with our brand will be our main priority." The cannabis line will include both THC-based and CBD-based entries. Plant, who just joined Jammin, has been working to ease heavy debt load while getting infusion of new capital to support restage.
In absorbing Q&A at this week's Beverage Forum in Chicago, PepsiCo chmn/ceo Indra Nooyi fleshed out her views on innovation, M&A, stevia as sweetener, other key issues in bev world. Conference is sponsored by Beverage Marketing Corp and Beverage industry mag; lots more coverage coming in upcoming issues of BBI.
Starbucks' new ceo, Kevin Johnson, had humble debut last night as voice of giga-roaster to financial community, presiding over Q2 earnings call in which he had to retreat on full-year profit target on plateauing growth in US. Despite reporting records in sales and operating profit for period, SBUX shares were slammed 5% in early trading today, recovering to 2% decline at market close. Among noteworthy developments, after being quiet on performance of acquired Teavana tea chain, co brass finally acknowledged that it's encountering severe sledding, prompting thorough reevaluation.
BBI contact has shared some aggressive-seeming pricing activities at Public chain in Southeast, per flier that goes live tomorrow: Gatorade and its G2 sibling are going for 88 cents per 32-oz bottle, even as challenger Body Armor is out there with 10 for $10 deal on its 16-oz bottle. Same ad has Bai doing a buy-1, get-1 deal that brings per-bottle price down to $1.15, per our informant.
PepsiCo turned in another reliable performance in first qtr of 2017 against significant economic headwinds, even if its sales growth in N Amer flagged a bit. "Solid execution in challenging 1Q," offered Goldman Sachs' Judy Hong. "Results were uneventful, as softness in N Amer volumes were already broadly anticipated."
Dr Pepper Snapple Group again outgrew broader CSD category in first qtr of 2017, but it also sharply trimmed back its growth ambitions for Bai Brands unit from anticipated 80-90% range to 40-50% range, sending seeming tremor thru analysts who follow co and had rooted on its recent acquisition. Snapple brand suffered 6% volume hit, tho some of that was timing issue. And disclosure that Rockstar Energy brand had exited some Calif territory served as reminder of risks of co's allied-brand strategy in which - Bai aside - DPS doesn't take majority control of its brand partners. "There's a risk when we don't control brands," cfo Marty Ellen readily allowed, adding: "But now we control Bai."