Beer Marketer's Insights

Beer Marketer's Insights

Lotsa minus signs when looking at volume trends for top regular and diet CSDs in 2016. Six of top-10 regular brands and 8 of top diet brands lost volume over 52 wks ended Dec 31 in Nielsen all-channel data reported by Well Fargo Securities' Bonnie Herzog. In regular CSD segment, KO's Fanta was outperformer, up 14.2% last 52 wks. Sprite (+2.6%) also gained for KO, while DPS' Canada Dry gained 5.8% last 52 wks. Only other gainer was Dr Pepper, up 2.6%. Top 3 brands were all down in 2% range last 52 wks: Coke (-1.6%), Mountain Dew (-1.9%), Pepsi (-2.3%). Other drops to note include 7 Up (-2.6%), Sunkist (-5.4%) and IBC, which tumbled 21.7% last 52 wks. IBC was down over 23% in latest 4 wks.

Kuli Kuli, marketer of shots and bars using moringa plant first encountered by founder Lisa Curtis as Peace Corps volunteer in Niger, has pulled in Series A capital round that reps initial investment by venture fund set up by CPG giant Kellogg last year. Kellogg, via Eighteen94 Capital fund that it set up with Touchdown Ventures (BBI, Jun 21), led $4.25 mil Series A round that also included pair of socially oriented funds, InvestEco and S2G Ventures. It reps one of first times that Fortune 500 co has invested in a so-called benefit corporation that places sustainability and social impact on same plane as profits, exhalts Curtis. It also reps considerable distance traveled by Oakland, Calif-based co since it drew $53K from 800 folks via crowdfunding site IndieGoGo in 2013 to fund first production run for its Moringa Superfood nutrition bars; that was followed by another crowd-funding round in 2015 to get Moringa Green Energy shot off the ground. Proceeds of Series A round will be used to expand retail base that currently numbers about 3K stores, many of them in natural channel, per TechCrunch. Besides bars and shots, product mix these days includes moringa teas and powders. Coincidentally, just yesterday we highlighted another Oakland co, Numi Tea, that's drawn investment from CPG giant, JM Smucker, for bottled tea line (BBI, Jan 10). Other bev players making waves out of East Bay include Ripple Foods, which offers milk alternative made from peas.

In story Fri about departure of coupla key sales execs from Coca-Cola's Honest Tea unit, BBI phrasing was a bit too telescoped in referring to cofounder and "tea-EO" Seth Goldman having "moved on" from co a year ago. Seth reminds that's he's only moved on from day-to-day role, but he's still spending half his time engaged in efforts "to build, guide, steward Honest Tea as well as support broader innovation efforts at Coke." As noted last year by BBI, day-to-day has been in hands of Coke vet Ami Mathur.

Christine Perich, who until recently served as prexy/coo at Fat Tire brewer New Belgium, has segued to NA side with appointment as ceo of fast-growing Wtrmln Wtr, which is fresh on heels of bringing in another $7 mil in capital and recruiting Beyonce as investor/endorser. "It was time for new leadership that has experience growing brand," cofounder Jody Levy told BevNet, which reported move. Perich succeeds former Pepsi and Coors exec Rob Paladino in role. At New Belgium, based in Colo, Christine had progressed thru jobs as auditor, cfo and finally coo, growing with the co, per her LinkedIn profile . . . Long Island Iced Tea is beginning to generate some traction for its recently revamped core iced tea line, reporting preliminary results that indicate it more than tripled sales in year's final qtr to $1.59 mil. As reported, co currently markets non-alc RTD tea and recently acquired Alo Juice brand, and plans down road to enter alc segment too . . . Starbucks will confine its alcoholic bev offerings to its more elevated Starbucks Reserve stores, removing those bevs today from 439 conventional Starbucks stores, Puget Sound Biz Jnl reported. Dubbed Starbucks Evening, the alc offerings were intended to boost traffic during what can be slower daypart at coffee shops, with co predicting in 2014 that wine & beer eventually would be offered at thousands of its stores, PSBJ reminded. SBUX told Jnl it's pausing that formal rollout, yanking it from company-owned stores, tho 9 licensed stores may continue with program. Otherwise, alcohol will be confined to co's Roastery units and Reserve stores, offering another differentiator for higher-end retail tiers.

Inspired by coach's homemade bev fed to her son's wrestling team, Pittsburgh-based former Sam Adams sales exec has created RTD honey bev under name Blume Honey Water that purports to offer hydration and spike-free energy lift. Hotfill line is packed in 10-oz full-wrap PET bottles with short ingredient list of "100% bee-friendly honey" and natural flavors. It's breaking in 3 flavors: Ginger Zest (using fresh ginger juice produced via commercial press she's installed at Castle Co-Packing), Wild Blueberry (with dried blueberries and rosemary, black peppercorn and grapefruit) and Vanilla Citrus (with grapefruit and wild orange). Calorie counts range from 70 to 100 cals per bottle. Vanilla Citrus currently contains 3 different wild honeys, but Michele said mix will be constantly varying. SRP is $2.49. Line is produced at local Castle Co-Packing, whose owner Brian Dworkin also is coming aboard as an investor.

Former Glaceau marketing exec Rohan Oza - who's about to reap 2d big exit at Bai Brands, all while hobnobbing with likes of Justin Timberlake, Bai's new "chief flavor officer" - has become fodder not just for biz writers but for style writers, too. NY Times profile in Sunday Style section titled "He Stirs the Drinks for Celebrity Endorsements" drops in on 45-year-old investor's "palatial house" in Beverly Hills (he also has luxe apt in NY's Tribeca nabe and house in Hamptons) for $2,500-a-ticket Children Matter event he's hosting, with guests such as Kiss bassist Gene Simmons, actress Kristin Wiig and singer Ne-Yo. Ro famously put Vitaminwater together with 50 Cent to create flavor that helped ignite brand while reaping rapper a rich reward believed to exceed $50 mil when Glaceau sold out to Coke for $4.1 bil. Oza has continued to play that game as investor in brands like Bai, Health-Ade Kombucha and Wtrmln Wtr, whose cmo, Jeff Rubenstein, recalls Oza as "an anomaly" at Coke, his first employer after biz school. "Sensing trouble, Mr Oza left for Vitaminwater," to refrain of "Good luck with that" from Coke colleague, Times story recounts. (Having first met Oza in early 2000s when he was Powerade brand mgr at Coke, BBI editor can attest to "anomaly" observation.)

It's unusual tack for a ginger ale: Dr Pepper Snapple Group's venerable Canada Dry has broken campaign that edges in on tropes more often associated with sports drinks via positioning as product that helps users "Work Hard. Play Hard. Relax Harder." TV ads that broke on ESPN and NBC Sports programming yesterday, backed by Wiz Khalifa tune "Work Hard, Play Hard," offer slice-of-life storyline that quick-cuts among young people at work welding or operating lab and those engaged in strenuous activities like soccer, mountain biking and sparring, to conclude with shot of bikini-clad woman lolling in inflatable pool or guy reading a big fat book while floor robot delivers him a fresh can of Canada Dry. Campaign from McGarry Bowen reps sharp swing away from efforts depicting ginger farms, in what had seemed to be response to flock of artisanal ginger ales and ginger brews that have been making headway in segment. Key consumer insight was that broad references to relaxation run up against reality that most consumers have to work at relaxing, since they spend long hours at office, are always on their smartphones and neglect to use all their vacation days. "We want to help consumers achieve ideal relaxation, using the calming qualities and real ginger taste of Canada Dry," said Chanda Ridley, dir of mktg/content for brand. "Relax harder with the real ginger taste of Canada Dry," is tagline. Final shot of ads does retain glimpse of ginger fields, to maintain product cred. Ads are backed by parallel digital and social effort from Richards Group.

Energy drink volume slowed to 1.4% gain last 4 wks thru Dec 31 in Nielsen all-channel, per Well Fargo Securities' Bonnie Herzog. (Morgan Stanley didn't include segment in its own report, above.) That's down from 4.2% gain for 12 wks, 4.3% gain for 52 wks for energy category. While bev category overall "finished the year on a low note," Bonnie noted there was "particular weakness" in c-stores, the key channel for energy drinks, "likely due to lower consumer spending as a result of weaker consumer confidence, higher gas prices and rising health care costs." Monster Energy slowed from 5% gain for 12 wks to 1.5% increase last 4 wks, even with avg 1.7% price decline. "While we are broadly encouraged by MNST's innovation, we continue to have concerns given decelerating weekly sales trends for Mutant," wrote Bonnie. (MNST will shed light on 2017 outlook on investor call Thurs afternoon.) Red Bull held on for 0.6% gain last 4 wks (vs +3.2% for 12 wks) on avg 1.1% price decrease for 4 wks. For 52 wks in all-channel, Monster volume was up 4% vs 2.3% gain for Red Bull. Rockstar gained 2.6% (matching its 12-wk gain) on avg 2% price drop last 4 wks. PepsiCo (Amp, Kickstart) fell from flat for 12 wks to 3.7% decline last 4 wks on 2.2% price increase.

So much for going out on a high note. Trends slowed markedly in Dec in bev categories across the board. CSD volume declined 2.3% last 4 wks thru Dec 31 in Nielsen all-channel data reported by Morgan Stanley's Dara Mohsenian. That's worse than 1.2% decline for 12 wks and matches CSD drop for 52 wks, meaning yearlong slump continued. Avg price increases slowed to +0.3% for 4 wks vs +0.6% for 12 wks, +1.5% for 52 wks, so big players didn't get a lot of their much-touted price realization either. CSD brands took losses across board as full-calorie brands slipped 1.8% and low-calorie dropped steeper 3.6% for those last 4 wks. Coca-Cola CSD volume sagged 1.1% (vs 0.6% gain for 12 wks) on modest 0.2% price increase last 4 wks. PepsiCo volume dropped 4.7% (was down 4.1% for 12 wks) on avg 0.5% price increase for 4 wks. Dr Pepper Snapple gain pace slowed to +0.7% (down from +1.7% for 12 wks) with avg price decrease of 1.3% last 4 wks. Private-label CSDs dropped 7.2% in Dec with 1.1% price increase, generally in line with 12- wk trend. As possible theories behind slowdown, Dara suggested cold weather in much of country, or perhaps shifts to non-scanned on-premise sales, but those are just hypotheses.

It's highly unusual development in world of Red Bull distribution: outside wholesaler apparently has decided to walk away from lucrative brand. MillerCoors house Andrews Distributing last week gave Red Bull North America 30-day notice that it plans to drop energy brand in its 38-county footprint in North and South Texas, including Dallas/Ft Worth market, with RBNA moving by early Feb to self-distribute the 1.5 mil cases currently handled by Andrews. Andrews execs weren't commenting and RBNA brass never discuss these transitions, which co regards as internal matter, but internal memo signed by Andrews prexy Mike McGuire writes that, "after careful consideration, we made the decision to no longer distribute the Red Bull portfolio in our North and South Texas markets . . . This was a tough and thorough decision-making process, but the decision allows us to move forward with a 100% focus on our core beer business," which includes not just MillerCoors portfolio but Pabst, Four Loko, Mike's Hard Lemonade and craft/import brands like Heineken, Fat Tire, Stella Artois and The Bruery. Move reps exit of Andrews from NA side, as Red Bull was sole remaining non-alc brand after house lost Muscle Milk to Pepsi bottling system some years earlier. Tho Andrews isn't commenting, the tradeoff would have been maintaining premium in growing, hi-margin segment vs investment demands of RBNA and contract that offers no buyout even for termination without cause. Andrews apparently has concluded, given its abundant beer opportunities, that Red Bull no longer is worth investment requirement given the contract house operates under.