Building on sales momentum, Bai Brands is lookin’ to broaden its appeal with launch of stevia-sweetened carbonated line dubbed Bai Bubbles, even as several bev sources in recent weeks say it’s been out on street undertaking $30 mil capital raise at co valuation in $300 mil range.  Moves attest to ambition of Princeton, NJ-based maker of coffee-fruit-based bevs that seems to have garnered position as pleasing, good-for-you refresher that Vitaminwater once claimed.  Contacts in several parts of country say brand is showing clear momentum.

Bai Bubbles, for which co filed for trademark in Oct 2013, launches in NY in coming weeks in 11.5-oz slim cans in 7 flavors whimsically named for coffee-growing regions, such as Bolivia Black Cherry or Waikiki Coconut.  Sweetener blend melds organic stevia and erythritol.  If all goes well in NY, line will roll out early next year. 

Line is aimed at capitalizing on consumer discontent with conventional diet CSDs, per statement from Bai founder Ben Weiss, as Sparkling Ice has done, tho taking all-natural route.  But it carries some risks for brand that’s widely perceived to offer one of best-tasting stevia-sweetened noncarbs with its core Bai5 bottled line: CSDs are considerably more challenging to get right with stevia, and any taste degradation could taint consumers’ perceptions of core line.  That said, other marketers, such as Honest Tea, have made similar migration from noncarb side without apparent consumer backlash.

Brand moves thru Dr Pepper Snapple distribution network, tho DPS doesn’t own piece of co and its ceo Larry Young seemed to dismiss possibility of investment on last conference call, when he decried lofty valuations being sought by unnamed allied partners, whose ranks include Vita Coco, Neuro and Body Armor.  “Some of those multiples out there are ridiculous . . . we love all these young entrepreneurs, but they want to be the next Glaceau,” he said then (BBI, Jul 24).  Still, new round, which co seems to be orchestrating without investment banker, appears to be drawing considerable interest, per BBI contacts on investment side of biz.  With brand believed to be doing in $25-35 mil sales range, reported multiple is in 10X sales range.  No comment from Ben on capital raise.

Energy drink volume increased 5.5% in convenience stores last 4 wks thru Aug 30, per Nielsen figures reported by Wells Fargo Securities’ Bonnie Herzog.  That’s almost same as 5.8% gain last 12 wks but just half gain pace for segment over last 52 wks.  Avg prices were up 0.3% last 4 wks, in line with category pricing over prior 12 wks.  Red Bull volume rose 6.2% on slight price decrease (-0.2%) last 4 wks while Monster gained 3.6% on 0.6% price increase.  Rockstar trends turned worse with 9.7% volume drop last 4 wks vs 5.2% drop last 12 wks.  Rockstar volume off nearly double-digits even with avg 2.7% price decrease.  As we reported last week in Nielsen all-outlet data, Coca-Cola energy brands (NOS, Full Throttle) were also up big in c-stores.  KO energy volume gain accelerated to +27.5% (vs 23.8% gain for 12 wks) even with avg price increase of 3.8%.  PepsiCo energy brands were also up double-digits (+16.9%) but that was with price dip of 3.5% over last 4 wks. 

CSD Pricing Remains Solid   CSD volume slipped 5.5% in c-stores last 4 wks, slightly better than category’s 12-wk trend, while pricing remained up solid 4%.  PEP gained 1.7% on avg price increase of 3.6% while KO CSD volume slipped 5.6% on avg 4.3% price hike.  Dr Pepper Snapple CSD volume (-3.3%) and price (+2.9%) trends last 4 wks were in line with its 12-wk performance in that impulse channel.

 Rogue announced expansion of its craft soda business, CNBC tuned into Appalachian Brewing Co's growing soda biz (different than Appalachian Mountain, above) and our sister-pub Beverage Business INSIGHTS looked in on Portland, Maine's Urban Farm Fermentory, producing small-batch kombucha, cider, mead and more, all within the last week. It certainly ain't just beer anymore. Rogue plans to expand production of its 3 soda brands, all created from ingredients the co grows on its farms, focusing distribution just out of the co's Oreg Public House and website. That's as Appalachian Brewing has diversified its biz of 7 brewpubs with larger and larger amounts of its 3 soda brands in Pennsy and beyond. Up in Maine, UFF not working under brewing license, so not looking to go there, but currently letting yeast work away on hard ciders, mildly alcoholic kombuchas and meads, plus possibility for cheeses and other foods too. The co operates in so-called Food Hub that locals have started calling yEast Bayside, home to both Rising Tide and Bunker Brewing, Maine Craft Distilling and pair of coffee roasters. MC houses Pine State Trading in Me and Burke and Merrimack Valley in Mass already distributing the ciders (including hopped variety, natch) and kombucha.

 Auction of all brewery and restaurant supplies from Waltham, Mass's Watch City Brewing late last week turned up a pair of brewery plans along with a story likely to be repeated over time. One group of bidders who insisted on remaining anonymous picked up Watch City's brewing equipment "in its entirety" for $41K to bring to their Barre, Mass farm, according to the Waltham News Tribune. That's as another planned brewery "had already signed on with the landlord" to take over the now-vacant space in Waltham. Recall, the brewpub closed its doors earlier this summer after the owner owed about $120K to the state Dept of Revenue (see Jul 28 issue). Elsewhere in New England, downtown Stamford, Conn location of small brewpub chain Southport Brewing Co closed last month after 14 years in business. Three other Southport brewery-restaurants remain unaffected, reported the Stamford Daily Voice.

 Surprise surprise; just one week after Hop Valley Brewing reached settlement with Oreg distribs - Bigfoot & Summit - to switch brands to Columbia Dist, co announced plans to ramp up capacity big time, and begin expanding footprint into new states and territories. All in, co will up capacity 75% spending $675K on 8 new tanks by end of 2014, and $2 mil on a new bottling and canning line in early 2015, reported the Register Guard. That'll allow production to more than triple to 25-30K bbls in 2014, and double again to 50-60K bbls in 2015, Hop Valley partner, Walter Macbeth told paper. Expansion will allow co to push footprint "westward to the coast [of NorCal] and back north into Oregon," as well as to Boise area, Idaho, and Wash state starting with Seattle area via new partner, Columbia.

Another Asheville Facility To Open Late 2015: Wicked Weed Another brewery in Asheville, NC area plans to open a new facility around same time as New Belgium, in fall 2015. Wicked Weed Brewing announced plans to build new $5 mil 40K sq-ft brewery that could produce up to 50K bbls per yr once completed. On top of new production facility, Wicked Weed recently opened its 2nd downtown barrel house and tasting room, dubbed "Funkatorium," that'll store up to 1,000 bbls of sour, barrel aged beer. Net-net: within 5 yrs co expects to add 82+ jobs, and have total of 200+ employees. Wicked Weed currently has no plans to distribute outside NC but suggests "potential for distribution outside of the state down the road" with more capacity comin'. For now co will continue self-distributing thruout NC and "investing in high quality refrigerated trucks to transport our beer." Wicked Weed shipped 2800 bbls in 2013 according to Brewers Assn.

Saint Archer Ups Capacity +45% to 30K Bbls/Yr In SoCal, Saint Archer announced plans to up capacity 45% to approx 30K bbls/yr by this summer "with more fermentation tanks, a centrifuge, two new grain silos and a new spent grain silo." That'll "help us keep up with demand and put us in a better position for sustainable growth over the next few years," sez president and founder, Josh Landon. Last yr Saint Archer produced 4151 bbls according to BA. Gotta note, both Saint Archer and Wicked Weed are less than 2 yrs old and already taking on sizable expansions.

 Wisc's Lakefront Brewery "has dropped its tentative plan to develop a second brewery in Milwaukee's Menomonee Valley," reported Milwaukee Journal Sentinel. Recall, a little over 1 yr prior, Lakefront picked up option to purchase 9.3 acres of land at 841 Canal St to "explore" possibility of building 2d facility there. "Cost estimates to build and equip the brewery were higher than expected," and "I don't have enough money to say 'yes'," owner Russ Klisch told paper. Last yr Lakefront grew 21% to about 40,500 bbls, and has nearly quadrupled production since 2008. But "you have to go three to four years out and while I think we'll grow another 20 percent next year, when you go out a few more years that's where it gets kind of dicey," he told Milwaukee Business Journal separately. Russ "still has a few other locations in mind," and "hopes to make an announcement by the end of the year." And "it's not like we're not spending money"; next week Lakefront breaks ground on $1.2 mil, 6900 sq-ft add-on to its 23K sq-ft warehouse to "roughly double…cold storage space," Russ told Journal Sentinel.

 Seattle's Fremont Brewing has announced plans to build a 2nd facility solely focused on production that could reach capacity of up to 100K Bbls a yr, reported Puget Sound Business Journal. The 80K sq-ft building located just a block away from original Redhook facility (among a handful of others in the area) is expected to be ready to go by winter 2015. Fremont will hold on to its current 25K bbl/yr cap brewery and use it for "small-batch" brews such as seasonals and "other specialty beers," sez Washington Beer Blog, including new line of brews in the works that'll use all organic Washington state ingredients. Announcement of expansion comes as Fremont experiencing "phenomenal growth and acceptance by the community," founder Matt Lincecum acknowledged to Puget Sound. In Wash, "Interurban IPA and its seasonal beers are the No 1 and 2 best-selling craft beers, at QFC grocery stores statewide, and 'we hold a similar position at Whole Foods and PCC,'" sez Matt.

Last yr Fremont was already 11th largest craft co in Seattle foodstores tracked by IRI, ahead of Lagunitas and Stone, and just behind Gambrinus, gaining half a share of total beer there. Co more than doubled sales in IRI Multi-channel + C-Store (MULC) nationwide in 2013. As recently as Apr 2014, that growth rate "slowed" to +49% in IRI MULC. Last yr, Fremont nearly doubled production to 13K bbls according to Brewers Assn, and will likely reach regional brewery status in 2014.

 Wisc farmers, working closely with state brewers, plan to expand production of barley for malting in the state, just as craft brewers across the US have become much less averse to stepping outside the barley box. A Monroe, Wisc farmer moved 80 acres of soybeans over to barley this year, grown specifically with the hopes it'll meet quality standards for malting and end up in a locally-brewed beer, the Wisconsin State Journal wrote this week. For decades, that switch from one crop to another has been the reverse, with much land once devoted to barley moving over to soybeans or maize/corn, the country's largest cereal crop. But just as malting companies and brewers alike have worked with farmers to grow more high quality barley needed for brewing, "corn" is no longer "a four-letter world" for many brewers, per the Washington Post. And with the new craft brewery definition being used by the Brewers Assn, brewers that have seen great success with brands that use corn, like Founders All Day IPA and a growing group of others, don't have to limit creativity and can look to the grain's history in American brewing to recreate traditional styles or bend current style guidelines.

A pair of grower-owned hop merchants announced a new joint company that will combine equity, assets, employees and operations of both companies, effective as of Aug 1st. Craft-focused hop supplier Hopunion LLC, in which larger global supplier Yakima Chief Inc has held an equity stake since 2006, will retain brand and customers but will now be one arm of newly-formed Yakima Chief-Hopunion LLC. Not a merger, the formation of the new company allows current contracts to continue on current timelines, new prexy/coo of YCH Steve Carpenter explained to CBN. Coming over from position of ceo at Yakima Chief since early 2008, Steve told us that the majority of customers will continue "working with the same folks that they'd been working with" when the co's operated separately. Now, the "bigger company, with more resources to be able to dedicate" to joint operations, can satisfy the hop needs of "customers of all sizes across the globe." Interestingly, Steve has been hearing "more inquiries about extract" and "modified extract products" from craft suppliers. At the same time, we've watched how large brewers, thru acquisitions or line-extensions, have been changing up their hop usage and hop needs. Furthermore, the "larger grower-ownership group," now at 11 growers from Wash and Oreg, "should put us in a position of meeting the procurement challenges" of a fast-growing craft market and shifting needs even outside the segment and "meet those needs a little more efficiently," Steve said. Existing strict quality control standards and similar levels of "traceability and transparency" as hops move thru the supply chain can now be applied to this larger group of growers by the single combined company.  

NC's publicly traded Appalachian Mountain Brewing (HOPS) announced it "has hired two groups to audit its financial statements, the next step towards filing regulatory reports with the Securities and Exchange Commission (SEC)," reported Winston-Salem Journal. Once reviews are completed, "Appalachian plans to file a registration statement with the SEC by Sept 30." Recall, last December "shareholders provided $3.5 million of stock" to acquire publicly traded natural energy company, North Carolina Natural Energy Inc., (NCSE) added paper. Thru Q1 Appalachian Mtn raised "$610,000 in financing from accredited investors" that allowed co to slightly expand fermentation capacity (by 120 bbls), and purchase a cask and canning system. Currently Appalachian Mtn only provides draft and growlers, tho also plans to produce 22-oz bottles starting this yr depending on how much capital they can raise.

In addition, co expects to launch Hard Mountain Cider division by year's end, using 4,000 sq-ft intentionally set aside during May expansion, paper noted. This is next step in becoming an all-around "craft beverage company" as founder Sean Spiegleman called it back in Jan when he announced plans to eventually add "hard ciders, liquors, sodas and restaurants" to their repertoire (see vol 5, no 2.). Still mum about federal license to distribute liquor, acquired from NCSE purchase, tho that may come into play later on. Appalachian Mtn currently trading at $3.75 per share.