Beer Marketer's Insights
Spring beer seminar scheduled for May 27-28 in Chicago by BBI parent co Beer Marketer's Insights is latest gathering to be pulled during uncertainty surrounding pandemic virus. So aside from BevNet Live conference still set to go on in Jun, key bev biz networking opportunities will remain minimal until fall season brings events like Expo East in Philadelphia and NACS c-store show in Las Vegas.
How Restaurant-Reliant Barfresh Food Group Sped Twist & Go School Smoothie to Florida Schools
Barfresh Food Group, which has considerable exposure to foodservice channel, is aiming to rapidly build out biz in schools and military channel even as it recruits new restaurant chains for later in year when pandemic may be on wane. In investor update yesterday, ceo Riccardo Delle Coste and prexy Joe Cugine (a former Pepsi hand familiar to BBI readers from run at Argo Tea) fleshed out development process of brand they'd announced last week in terse statement (BBI, Apr 17).
New Age Beverages said it's riding out COVID-19 pandemic so far anticipating healthy revenue increase and improvement in gross margins. In preliminary outlook for Q1, whose formal results won't be released until mid-May, Denver-based co said it anticipates revenue will come in between $62 mil and $64 mil, up 6-10% from year earlier. After past year in which gross margins eroded from 66% to 54%, margin should widen again to low to mid-60s."We are seeing accelerated growth in multiple aspects of our business and in a majority of our markets," per statement from ceo Brent Willis. "China and the US Direct businesses were up double digits and we also saw renewed growth in Japan. Our North America Retail and Direct Store Distribution Divisions also saw double-digit growth. Driving growth has been the launch of Noni+CBD in Japan, the launch of our intermittent fasting product, Te Mana Shape in several key markets, and consumer interest in our immunity strengthening products, 'Nhanced Cell Defense and Tahitian Noni." Note that statement didn't include mention by name of brands like Marley, Xingtea and CocoLibre that once were considered another engine of growth, but which NBEV recently moved to wind down or shed as too small compared to bigger opportunity on multilevel marketing side via noni and other items (BBI, Mar 16). It took $45 mil charge in making that announcement. Those brands' diminished role might also account for healthier margin picture. However, New Age DSD operation in Denver continues to be robust performer and still central to co's plans. New Age also continues to serve as marketing/distribution partner to allied brands like Volvic, Nestea and Illy, tho fit is less logical as co winds down its participation with its own RTD brands, so there may be more shoes to drop there.
SCANNER TRENDS: CSDs, Waters, Sports Drinks Still Surging but Pantry Loading Slowing Down
"Covid-19 stock up consumption continued to drive strong growth for beverage names, although this has decelerated in the last 2 weeks of the period as pantry-loading tapered," Morgan Stanley's Dara Mohsenian wrote this morning based on mid-cycle scans report. CSD volume accelerated further, up 16.5% for 4 wks thru Apr 4 in Nielsen all-channel data. That's up from +12% for prior 4-wk period. CSD pricing getting weaker tho, down 1.7% for 4 wks compared to +1.3% for 12 wks, +3% for 52 wks. Coca-Cola CSD volume increased 13.9% (up from +3% for 12 wks) while its avg price fell from +2.8% to -0.3% in latest 4-wk period in all-channel. PepsiCo CSD volume gain accelerated to +15.1% with lift from avg price decrease of 4.4% last 4 wks. Keurig Dr Pepper rolled to a 23.9% gain (up from +7.5% for 12 wks) on an avg price discount of 2% last 4 wks. Private-label brands scored double-digit gain as well, up 11.8% (vs +2.3% for 12 wks) with 2.3% price gain.
Marketers of OWYN bevs have argued that their aces in the hole are plant-based protein blend and lack of "Big 8" allergens that manage to afflict 1 in 3 Americans, by some counts. Those attributes are standing NY-based brand in good stead as pandemic unfolds, in contrast to energy drinks, coffees and enhanced waters that shoppers are judging to be more expendable, said prexy Mark Olivieri today. For those who're lactose- or gluten-intolerant, it's not like availability issues are likely to drive them to alternative products that contain those allergens, he said. As for protein, "that's here to stay," as Americans find a way to stay fit even when confined to their own homes and neighborhoods, he's betting. So Amazon now has classed OWYN as "essential" products, even as A-list musicians and athletes like Cardi B have begun to distribute bottles to hard-hit communities as philanthropic gesture, bringing further burst of awareness and goodwill. OWYN, recall, was developed by husband-&-wife athletes who sold control to Halen Brands; name is acronym for "only what you need."
It's official: tho not scheduled until late Jun, the summer edition Specialty Food Assn's Fancy Food Show in NY has officially bit the dust, latest event to become casualty of pandemic. Show scheduled for Jun 28-30 was victim "of events outside SFA's control - notably the national and global response to the COVID-19 pandemic, including travel restrictions, and the Javits Center's critical service in fighting the pandemic that impacts the facility's availability." SFA is promising "seamless and efficient process" for offering refunds and credits to exhibitors. SFA had earlier warned that conversion of Javits Center to field hospital was complicating planning for event (BBI, Mar 26). Among other major events on horizon this spring, BevNet Live conference in NY on Jun 10-11 remains on the books, at least for now.
Keurig Dr Pepper's RTD bev biz "should be able to reliably grow sales low-single digits in a normal environment with share losses relative to the broader non-alcoholic beverages industry owed to company structure," Consumer Edge Research's Brett Cooper wrote investors today. But given COVID-19 situation in country right now, "our expectation is a weak 2Q for the RTD beverage business."
Looks like Dean Foods bankruptcy process will be claiming one venerable name in West Coast dairy biz: Bay Area's 110-year-old Berkeley Farms, which found no bidders during recent auction that divvied assets among Dairy Farmers of America and others, while springing free Uncle Matt's Organic OJ co to buying group led by founder. The Hayward-based dairy will be closing at end of this month, at cost of several hundred jobs, according to reports on KTVU, SF Gate and other local outlets. The dairy, founded in 1910 by French immigrants John and Mary Sabatte, was NorCal's largest indie dairy producer at time Dean acquired it in 1998, per local accounts. At one time there were reports that buyer had been lined up for Berkeley Farms, but apparently no serious bid materialized.
With stevia continuing to make inroads as natural sweetener, Chicago-based ingredient giant Ingredion has reached deal to acquire 75% stake in PureCircle, including its portfolio of 214 stevia-related patents and 300+ patents pending. Deal, for undisclosed terms, is anticipated to close in 2d half following approval by PureCircle shareholders and regulatory go-ahead. PureCircle, also based in Chicago, boasts unusual degree of integration, including big Malaysian plant that was expanded 3 years ago, and has supplied bev giants like Coke as they've explored ways to move their CSDs into ingredient (BBI, Jun 15 2018).
The warnings have been trickling in past few days: with makers of basic industrial inputs like ethanol and ammonia shutting down as coronavirus spreads, compressed-gas companies can't get enough of the carbon dioxide residue that they provide to their own customers, food and bevcos. Suddenly, bev producers are finding a new chink in their supply chain, with some small and mid-tier copackers beginning to report that they're being forced to choose which clients to produce for as allocations of CO2 kick in. CO2 is crucial not just in carbonating cold-filled sparkling bevs like sodas and energy drinks but also in squeezing out oxygen in thermal production processes like retort processing. Last Wed, Brewers Assn advised its craft-beer members to review their contracts with local CO2 suppliers to gauge how vulnerable they are. "Preliminary data show that production of CO2 has decreased by approximately 20%, and experts predict that CO2 production may be reduced by 50% by mid-April," the BA said. "A shortage in CO2 would impact the U.S. availability of fresh food, preserved food and beverages, including beer production." So that's latest supply chain concern, along with those tied to ingredients sourced in China, including citric acid and stevia, and ongoing can and can-filling crunch we reported on last week (BBI, Apr 7).