Tho Monster Beverage's investment-and-brand-swap deal with Coca-Cola still has to clear regulatory hurdles, MNST exec in charge of distribution is telling Bud houses that she anticipates cutover will happen next Mar. In memo dated yesterday and addressed to "Our Valued Anheuser-Busch Distributor," N Amer sales vp Emelie Tirre anticipates closing of transaction early next year and "thereafter, we expect to transition distribution rights and are currently targeting a March 1, 2015 date" for move to Coke system. "In the event that the (regulatory) approvals are granted sooner, the transaction may close earlier," she adds. With Monster brands thus expected to be in limbo for 6 months or more, Tirre also includes warning in memo that Bud houses that don't continue to perform to high standards will jeopardize their buyouts. "Please note that any severance payment that may be due to you is conditional on there being no breach of the Distribution Agreement by you," she writes. Among activities that MNST will frown upon, memo indicates, is "distribution of competitive brands," even tho some Bud shops may understandably be in hunt for energy plays to replace fleeing Monster.  

Closing arguments are expected to be heard today by NY State Supreme Court Judge Timothy Driscoll in valuation hearing on AriZona Beverage Co. Is co worth around $500 mil as co-founder Don Vultaggio's legal team has argued over past several years or is it worth the $3-4 billion that co-founder John Ferolito believes it is? Decision from judge could come by Columbus Day, reported Wall Street Journal, which speculated depending on value of co and buyout facing Don, valuation ruling may "pave the way for Coca-Cola Co or another drinks company to buy a stake." "He's not a seller. He's never been a seller," said attorney Louis Solomon of Don (who also goes by Dom), adding that his children are active in biz too. But if judge agrees value of AriZona is well north of a billion or so, "Mr Vultaggio might have to seek outside investors for help," wrote WSJ. That "could finally reopen talks between Arizona and several companies."

(BBI editor Gerry Khermouch sorted thru some of these tradeoffs in BevNet Magazine column this summer.)  

Private equity shop Castanea Partners - not seen around bevs since its exit from Fuze Beverage nearly a decade ago - has surfaced as lead investor in private placement by Essentia Water, along with First Beverage Corp, as leading alkaline-water play gets ready to accelerate its transition from natural channel to groceries and even c-stores. Seattle-area co wouldn't say how much it pulled in via round orchestrated by Silverwood Partners, tho it's believed to be well north of $10 mil that co is believed to have sought in initial stages. (BBI had heard there might be role for Coke's VEB incubation unit, but that didn't prove to be case, not individually nor via VEB's alliance with First Beverage, which is going in solo via First Beverage Ventures arm that numbers Purity Organic, Project Juice and Health-Ade Kombucha among its holdings.) As part of transaction, Castanea installs partner Troy Stanfield on Essentia board. Citing SPINS syndicated data, Essentia claims to hold 40 share of alkaline water segment populated by brands like Aquahydrate and Eternal Water, and is up 66% in sales so far this year.

Essentia founder/ceo Ken Uptain said both Castanea and First Beverage offer significant value beyond the checks they are writing, Castanea on social-media side (its holdings include cos in fast-moving fashion space) and back office capabilities, and First Bev via such bev vets as partner Tom First, who launched career as cofounder of Nantucket Nectars and has worked closely with investor's portfolio cos. Essentia vp of strategy and brand development Neil Kimberley noted that Essentia preferred at this stage not to forge any strategic partnerships with big bev players out of fear that might restrict co's ability to grow biz. Co will use proceeds to expand DSD footprint, broaden channel availability and intensify marketing under vp marketing & innovation Paul Curhan, who's been working yoga, pilates and other self-actualization activities via field-marketing force of "hydration specialists." NY-based Giannuzzi Group acted as Essentia's legal counsel in deal. Note that it's unusually active period for LA-based First Beverage lately, having managed sale of Xyience energy marketer to Big Red and other deals in works, possibly in craft beer.  

No longer out to make big splash, Nawgan is content to operate under radar these days, refining the 2 brands within its portfolio and allowing them to take patient, organic path to growth, founder Rob Paul told BBI in recent interview.

Recall that co was founded by noted Washington Univ neuroscientist in St Louis with backing by Japanese giant Kirin, which views co as platform to showcase functional ingredients like Cognizin that it's pitching to other food and bevcos. Some former Anheuser-Busch execs also were among initial investors. Co enjoyed heady run for a while, relocating to San Diego to facilitate staff recruitment and building extensive staff before recognizing that brand wasn't going to enjoy explosive pickup by consumers and retreating in face of heavy capital burn. Audaciously, with Nawgan brand struggling, co earlier this year launched 2d brand called On Powered Refreshment that uses another Kirin ingredient, amino acid ornithine, for refreshment-oriented take on energy category.

These days, with Paul deeply involved in new Missouri Institution of Mental Health, he's turned day-to-day reins over to evp Corey Blick, former FRS marketer who'd originally come in with narrower role of marketing dir. (At FRS, Blick had similarly wrestled with challenge of popularizing arcane ingredient, quercetin.) Kirin remains committed to project, and both brands are growing, at drastically reduced capital burn compared to headier early days, Paul indicated.

On core Nawgan brand, "it's taken us a while to figure out who the consumer is," Rob said. "We took a year to listen again" to consumer feedback, rather than aggressively pushing growth. Co learned that Nawgan brand offers very organic connection to younger working professionals and college students, who're quick to understand functional benefits and adopt brand into their regimens. "That's clearly not where I started the brand," Rob acknowledged, and he's now content to let brand develop a following with greater patience, rather than trying to force growth with heavy marketing and distribution spend, as in past. So brand has been cultivating campus bookstores and micro-kitchens at hospitals and large corporations and focusing marketing spend and message there, in highly efficient way. Line continues to be available nationally via Vitamin Shoppe, and St Louis is its sole remaining immersive market, where it moves via DSD to broad range of channels with strong results - encouraging sign for whenever brand is deemed ready to return to broader availability. Marketing message via Blaze pr shop has evolved from "What to drink when you want to think" to sleeker, cooler-sounding "Get your think on." Co recently concluded 2d clinical trial, this time with cognitive testing component, and results offer further confirmation that Nawgan and its Cognizin ingredient allow people to perform better. That will be woven into marketing messages in coming months. Tho focused on digital space, latest campaign has included some local TV in St Loo, where brand continues to be embraced by local pro teams, migrating from baseball to football now, tho co is not signing any expensive formal endorsement deals with star players.

With learning from Nawgan brand fresh in mind, On Powered has adopted measured, "surgical" approach from start, Paul said, moving so far into specialty/natural channel on West Coast and just a smattering of retailers on East Coast. It's just making move into broader grocery channel now. As reported (BBI, Feb 11), brand launched at Natural Products Expo West in Mar, with striking computer on-button motif on packaging and functional blend of ornithine, tea-sourced caffeine and B vitamins to offer refreshing alternative to conventional energy drinks that offers great focus. 

Coca-Cola's Venturing & Emerging Brands incubation unit, possibly in concert with financial ally First Beverage Group, is reportedly among investors coming into new capital round at Essentia Waters, several sources said. As reported a few weeks earlier, Essentia had been out seeking $10 mil or so in growth capital, but as alkaline water play with greatest momentum has found itself oversubscribed, with transaction expected to come in at considerably higher amount. Announcement of new round may be imminent.  

Coca-Cola's relationship with Keurig Green Mountain continues to heat up, now with move to put some of KO's noncarb brands into K-Cups on hot-brewing side, starting with Honest Tea. Move reps expansion of initial deal forged last Feb that has cos collaborating on development of Keurig Cold at-home bev system. "As we began to collaborate with The Coca Cola Co on the development of their brands for our Keurig Cold system, the opportunity to incorporate certain Coca-Cola brands, like Honest Tea, into our Brew Over Ice selections for our Keurig hot brewing system became an exciting possibility," said Mark Wood, Keurig's svp for global hot systems. Partners are starting with Honest Tea's unsweetened Just Green and Just Black iced teas, which will be certified as Fair Trade and organic just as core bottled line is. Note that KO's point man on collaboration, Deryck Van Rensburg, for years oversaw Honest Tea as prexy of Venturing & Emerging Brands incubation unit, before being named prexy of Coca-Cola/Keurig Ventures.  

The deal mania of recent months continues, this time with smallish transaction that heralds new player on scene: former Pabst ceo Kevin Kotecki has acquired RTD white-tea pioneer Inko's, as first of what may be series of investments in bevs and related spaces. Founder Andy Schamisso will stick around as consultant for next 3-4 months to continue operating co as Kotecki gets his hands around new NA world and assembles team.

Terms weren't disclosed but Inko's is small co, drawing revenues in $3-5 mil range from its bottled teas and canned all-natural Inko's White Tea Energy, and Kevin said he funded deal out of his own pocket, with view to building some momentum and credibility before eyeing potential other deals via investment fund he's set up in Burr Ridge, Ill, called Braintrust Investments. Kotecki is familiar figure from beer side for long runs at Coors and Pabst, where he was prexy/ceo, and shorter run at Mike's Hard Lemonade marketer Mark Anthony, but his resume also includes P&G (peanut butter and canned coffee), Brach's (hard candy) and Conagra (meats). He told BBI yesterday that it will be pleasure for once to be playing in segment that's growing. "I never worked in a growth category in my entire career until now," he noted.

Some may recall that Kotecki actually part of a group that sought to acquire Pabst from owner Dean Metropoulos, so this deal is several orders of magnitude smaller. But he said he was attracted to brand because in nearly decade-long run it's maintained quality and premium positioning and built consumer following even with little in way of resources to support brand (Schamisso says he's only raised $1 mil over course of brand's run). Brand has maintained hi-quality ingredient list, includes unconventional flavors like Honeysuckle, Apricot and Honeydew, and contains less sugar than many rival brands. Tho brand still has only modest availability, in retailers where it has presence its velocity compares favorably with other tea brands, feat attained without the frequent price promotion of some rivals, Kevin observed. Recall that at time Inko's launched, white tea was still exotic variant, tho most major RTD iced teas by now have incorporated ingredient into their lines, taking away some of initial distinctiveness of Inko's, which has remained committed to doing only white teas.

Kotecki said he's recruited team with mix of beer and NA experience, at big cos and smaller entrepreneurial outfits, and will identify them once they've disentangled themselves from current affiliations. He'll continue relationship with production partner Brooklyn Bottling, but step up marketing and innovation and, as brand builds momentum, offer other investors chance to participate. Given Kotecki's success in nurturing once-woebegone Pabst as relevant brand among younger drinkers, it may be interesting ride to watch. As for Schamisso, who's had varied career, he said he'll be working hard on Inko's in coming months but intends to get back into game with new idea outside tea category in future.  

At the tail end of yet another wild and wooly year in the beer biz (our 45th), we send our seasons greeting and warmest best wishes to all of you. We also want to reflect on the wonders of writing about beer for all these years, and our gratitude for what continues to be a pretty great gig. We're still having a ball.

Sure, the industry is divided, but what else is new? In part that's only natural. We're going through an incredibly dynamic and fast-paced period in the industry's history. Such ceaseless change can be wrenching at times, but it's also exciting. And we feel lucky to be part of this great industry and writing about all this action. Thankfully, the industry appears to be improving. Let's hope that lasts.

At Beer Marketer's INSIGHTS too, the pace keeps picking up. We go to press about 500 times a yr between 6 different publications, mostly electronically. That's a long way from the original BMI, a twice-a- month print newsletter. We also have two conferences a year, where it is a great pleasure to see many of you. Interacting with the people in the beer biz remains one of the most joyful aspects of the job. There are a lot of fantastic characters in beer, and a whole lot more that are just plain good folks and fun to be around. Some of you ask about our founder Jerry Steinman. He's doing remarkably well in all. He's 90 years old. He has a girlfriend. And he drives. At night. He also sends his best.

This is the time to take a break from the day-to-day whirlwind, spend time with your family and loved ones and remember what really matters and all that has gone right. Enjoy this quiet time, because it's for sure going to be another crazy ride in 2015. Here's wishing you and yours a very Merry Christmas and a Happy New Year.  

Recent comments from top beer execs (Luiz Edmond and Tom Long about US) and a financial analyst (Redburn's Chris Pitcher about emerging mkts) regarding interplay of beer pricing and per capita consumption sent us back to the numbers. These folks (and others) have suggested that more aggressive beer pricing in recent years, not so coincidentally at the same time as AB InBev and MillerCoors created, played role in declining beer per capita consumption. Five and ten-year trends support that notion.

Key context: last time per capita beer consumption rose significantly in US was way back in 1970s. During that decade beer per capita consumption increased nearly 30% while consumer price index for beer significantly lagged inflation, by over 1/3 in fact. That was then. Look at last 5 and 10 years. From 2003-2008, beer per caps relatively flat, dipping by less than 1% while CPI for beer lagged inflation. During same period, wine and spirits pricing lagged inflation by even more than beer. Their per caps rose 8-9% each. Over last 5 yrs, as beer prices rose 11%, about 1/3 faster than inflation, per caps fell off much more sharply. Down 9%. During same period, spirits prices rose at rate about 60% less than inflation and wine prices basically flat. Per caps for spirits continued up another 8%. Wine didn't see same size growth, but continued up nonetheless. For the decade, wine and liquor prices up less than inflation and less than half of beer CPI: liquor per caps up 18%, wine per caps up 12% while beer down almost 10%. Ouch. Net-net: lotsa factors affect interbev trends: economics (who's working, who's making more or less money); cyclical pendulum swings; mktg/sales tactics (spirits got much more aggressive in mktg); state/local laws (liquor's been steadily gaining access); brand dynamics (not drinking dad's beer); and demographics (liquor and/or wine got more traction with women, multi-culturals and millennials), to name some drivers. But price matters too.  

Capping off a yr of what at times seemed chaotic personnel changes at AB, especially in its mktg and sales depts, here came kicker at yrend: AB is moving core of its mktg and sales depts to NYC where it will open a new US Commercial Strategy Office, headed up by mktg veep Jorn Socquet and sales veep David Almeida. They don't even have office yet, but ultimately this NYC office will swell to as many as 250 people, including most of the brand teams. AB has also decided to move its hi-end unit to NYC, just a few mos after making big deal of announcing it would move it to Chi. Hi-end unit never took office space in Chi. So what changed and when did it change? Hard to know. Meanwhile, new AB prexy Joao Castro Neves will reportedly have his main office in St Lou, tho he will be back-and-forth a lot, notes another source, as will many others.

Moving to NYC likely to be quite expensive and disruptive in short-term. Expensive is not typical for AB, but unavoidable here as nearly everything in NYC is expensive. And disruption could temporarily add to AB challenges, at time when AB sales still relatively soft and earnings under pressure. This new office will be separate from existing global office in midtown. Some of rationales for move are obvious; in many respects, NYC is still where the action is. Move puts key personnel closer to ad agencies, sports leagues, entertainment cos, etc. ABI has long been enamored of NYC, source sez, as global center of capitalism and also as magnet for attracting talent. Mgt "thinks shifting jobs to New York will help it recruit new employees and retain top marketers and sales executives," wrote WSJ, citing "sources close" to co. But it will be interesting to see how many folks make move from St Lou to NYC. Recall, AB just underwent another wrenching round of layoffs, including quite a few in mktg. Will move to NYC lead to even more departures? No doubt. Mktg and sales folks will soon be told whether their position is moving and if they are offered position. After that, reportedly not much time to decide.

Then too, in 2014, AB initiated one of the most radical revampings of a mktg dept at a major brewer that we can recall. In less than 1 yr since he became mktg veep, Jorn Socquet has changed top personnel (Bud Light veep, vp of media planning) as well as many others, plus both the agency and campaign for Bud Light. AB has outsourced media planning and buying to Mediacom, decimating long-running Busch Media Group and really ramped up its emphasis on digital. It also re-focused Bud media exclusively at millennials and much, much more. Now even hot Michelob Ultra ad account under review. As for sales, AB has changed 4 region veeps in last couple of mos, eliminating 1 region and bringing in 3 execs without any US field sales experience.

Such incessant change makes continuity more of a challenge. And the loss of institutional memory is not without consequence. "Nobody talks to anybody," said one source who deals with AB frequently. "Nobody knows anybody. They have their own dysfunctional silos." Others echo similar concerns. But ABI has always marched to its own drummer. And these latest moves reportedly long in the making. "They have a plan. And St Louis is in the rear-view mirror," said another. Yet St Lou is still hq for US co. ABI clearly going further along its own path. Key question: will it lead to improved results in US? When?