Building on relationship with music star Flo Rida, Fla-based Celsius Holdings has launched in GNC chain a pre-workout powder called Flo Fusion with MetaPlus.  Berry-flavored item goes out at SRP of $49.99 per 40-serving canister and builds on broad-ranging alliance inked in Mar with Flo Rida, who’ll flog new entry to his 20 mil Facebook fans and other social-media followers.  Like core Celsius bev line, Flo Fusion is positioned as offering clinically backed healthy-energy boost while helping burn 100 calories or more per serving.

Tho fast food is associated with nation’s obesity problem, legion of small but rapidly growing regional chains is lookin’ to offer healthier alternative, with enticements like grass-fed beef, organic produce and seasonally changing menus, NY Times reported on Sat.  Pegged to last week’s reported strong profit growth at Chipotle Mexican Grill, story spotlights eateries “that are coming up fast behind Chipotle and its peers, and taking its ‘food with integrity’ mantra even further.”  Among those highlighted are Veggie Grill, Tender Greens, LYFE Kitchen, SweetGreen, Dig Inn and Native Foods.  “Despite the higher costs and prices,” reports story, “all are thriving and planning national expansions, some directed by alumni of fine dining or of fast-food giants like McDonald’s.”  Tho Times story doesn’t delve into bev offerings at these cos, quick Internet check indicates they’re offering natural items like home-made Cucumber Mint at LYFE Kitchen (fresh cucumber juice with mint, lime and agave, priced at $2.99) and Dig Inn’s Serious Green and Watermelon Juice cold-pressed juices at $9.79 and Vanilla Mint Rooibos Iced Tea at $2.12 (along with “bottled drinks from Dig Inn-approved third parties” like Harmless Harvest coconut water, Grady’s Cold Brew Coffee and Kombucha Brooklyn Straight Up.)  No surprise that those that serve alcohol, like LYFE Kitchen, tilt toward craft beer and biodynamic wine.  As noted above, MetaBrand sees opportunity for private- or controlled-label brands at fast-casual chains like Pret a Manger that are seeking natural or organic items with premium ingredients . . . Long takeout in NY Times Sun biz section on “Street Fight for Shelf Space” between coconut water rivals Vita Coco and Zico won’t offer any revelations to those who spend their days in bev trenches, but represents unusual deep dive by mainstream media into street warfare as rival sales forces woo retailers while tearing down each other’s POS.  Tho Vita Coco cofounder Mike Kirban and Zico founder Mark Rampolla are main focus, cameos are made by familiar figures like Vitaminwater vet Michael “Goldy” Goldstein, leading troops for Vita Coco.  Founders confess to various dirty tricks and psychological warfare – as when Kirban would place bottle of Zico next to sleeping derelict and send foto to Rampolla.  Referring to taste challenge of segment, Big Geyser prexy Lewis Hershkowitz acknowledges that upon first encounter with Zico, “I thought it was disgusting.”  One key theme of story: for all its formidable resources, Zico owner Coca-Cola has managed to steadily lose ground to still-indie Vita Coco.  Story at http://www.nytimes.com/2014/07/27/business/for-coconut-waters-a-street-fight-for-shelf-space.html?_r=0

“Nearly two-thirds of Americans say they avoid soda in their diet,” found recent Gallup Poll of just over 1,000 adults across US.  “Americans have become increasingly wary of drinking soda since Gallup began asking about their dietary choices in 2002,” noted Gallup.  This year, 63% of those polled said they “avoid” drinking soda, up from 41% back in 02.  Another 13% don’t think about whether they consume soda or not while 23% still include it in their diet.  Back in 2002, 36% of respondents included soda.  While nearly a quarter of those polled still drink soda, Gallup noted that studies of “adverse health effects,” tax proposals and banning large soda sizes “have apparently raised Americans’ consciousness about drinking it.”  Americans are also becoming more concerned about their sugar intake, as Gallup found more than half (52%) actively avoid it compared to 43% back in 2002.  By contrast, attitudes on salt have changed little, with 46% avoiding it this yr vs 45% in 02.  

Ambitious natural-bev incubator MetaBrand has added potent new leg to its business: private-label, both for burgeoning ranks of better-for-you fast-casual eateries and for conventional grocers.  Edison, NJ-based co founded by natural foods vet Eric Schnell broke into biz with trio of Pure Pret iced teas it debuted in past 3-4 weeks at Pret a Manger fast-casual chain, and is following that up with 5 iced teas that will hit 1,500 Kroger stores in first week of Oct, Eric told BBI.  (He said he couldn’t yet ID which Kroger in-house brand will be employed.)  Also under development are line of nutritious bevs for Target chain for 2015, and bag-in-box sodas for unidentified NY-based fast-casual chain.  

Activity caps private-label push undertaken about 6 months ago with relationship quietly forged with PL powerhouse Daymon Int’l, which was seeking greater expertise on bev side.  Schnell said MetaBrand has assigned dedicated staff to initiative, which is being overseen by coo Craig Fortin and recently recruited operations vp Joe Plasha, and for right clients will even finance inventory, as other PL purveyors like Cott and US Beverage often do for their clients.  Schnell said initiative allows natural/organic specialty house to tap into burgeoning interest among mainstream retailers in segment, while balancing portfolio against preponderance of early-stage bevcos who comprise major part of client roster.

Overture for Pure Pret line came from fast feeder’s broker Glas Water, Canadian co which specializes in serving needs of hotels, restaurants and nightclubs, and just about a month into it is already proceeding to 2d production run, Eric reported.  Line is comprised of Hibiscus herbal, Black Tea with Lemon and Half & Half, which melds black tea and lemonade – “each made with Pret a Manger's famous dedication to natural ingredients,” as retailer touts on its Web site.  It’s packed in half-liter PET bottles and is lightly sweetened, with Hibiscus flavor, say, coming in at 15 calories per 8-oz serving.  Sweetener is listed as organic cane sugar.  It commands premium price: BBI editor paid $2.59 at Pret unit in Midtown Manhattan last week.

IFF’s Midrano Now Aboard at MetaBrand    Point people on PL initiative, Fortin and Plasha, are longtime collaborators: Fortin once was operations vp at Skinny Nutritional, while Plasha was vp of contract mfg at Skinny’s copacker, LiDestri Food & Beverage.  Also newly aboard at MetaBrand is Tracy Midrano, former Int’l Flavors & Fragrances exec who signs on as chief creative officer with responsibility for overseeing Meta’s formulation activities.  At IFF she served as chief of operations for global R&D.  Eric said Meta payroll has now surged to 24 staffers, 16 of them full-time, since he occupied current Edison digs less than 2 years ago.  Other clients have run gamut from Runa Guayusa to Fit Pro and Uliv, new line from entrepreneurs who’re collaborating with style maven Martha Stewart. 

New York’s biggest indie DSD house, Big Geyser, is lobbing a grenade into area’s fiercely competitive seltzer market with launch of its own premium brand, Hal’s New York, that’s being priced $2 to $8 per case below rivals like Schweppes, Seagrams, Canada Dry and Polar.  Line named for Big Geyser’s larger-than-life founder, Irving Hershkowitz, who went by Hal Irving, is going out in 20-oz PET bottles targeting cold boxes, in range of 7 natural flavors: Original, Lemon, Lime, Orange, Raspberry, Black Cherry and Vanilla Cream.  Big Geyser will sell it to its indie route owners at $11.50 per 24-unit case, for price to retailer of $13.50, compared to major brands that go out at $15.50 to $22 per case.  That means Hal’s is likely to appear in cold boxes at delis and bodegas as low as 99 cents, vs $2 and up for bigger brands, which are often line-priced with sibling tonics, ginger ales and orange flavors.  With CSDs in continuous decline despite relentless promotion, “we’re going after the most profitable category for all our competitors,” said BG prexy Lewis Hershkowitz, Hal’s son, who created brand with his brother Steven via separate co that sells brand to Geyser.  Existing seltzer players “have been robbing the retailers for all these years.”  In essence, core strategy is to make product that’s “better than the competition, and sell it for a hell of a lot less.”  Hal Irving, recall, started out as spirits super-salesman before founding Big Geyser in 1986 and building it with his sons into major house whose brands currently comprise likes of Vitaminwater, Monster Energy, Sparkling Ice, Sunny Delight, Nesquik and Honest Tea.  He passed away in fall 2011.

Launch is notable on a # of fronts.  It seems certain to roil 6-mil-case NY seltzer segment that’s been rare respite for big soft drink bottlers from relentless declines of CSDs, and which has drawn newcomers like New England’s Polar and Canada Dry in recent years as consumers migrate to sparkling category that’s unsweetened.  So far this year, seltzers in city are up 32% even as CSDs continue to slide.  Hal’s also represents first time in BG’s 28-year history that distributor is launching its own brand, after not even having played in sparkling segment until it picked up Sparkling Ice a year ago.  In that sense, it will be echoing other distributors who’ve created successful brands, including Denver’s New Age, with its Xingtea iced tea line, and local beer-and-bev house SKI, with its Ralph & Charlie’s juice drinks.  “This is a day 30 years in the making,” Lewis declared at formal kickoff this morning at distributor’s monthly sales meeting.  (Unusually, reps from other Geyser suppliers were invited into room to hear plan, on theory that new brand that makes house stronger will benefit them too.)  “Guys, this is a big day in this company’s history.”  Also unusually, co is avoiding 1-liter bottles for now, staying away from most intensely price-competitive pack in groceries, in favor of 20-oz oriented to up-and-down-street biz where brands are built and Geyser is very strong.   If brand does well, then Big Geyser will consider other package configurations, as well as extensions into related categories like tonics and ginger ales.

Brand bottled in nearby NJ offers several cues intended to position it as a notch above the major brands, Big Geyser coo Jerry Reda pointed out.  Unlike some seltzer brands, it employs only natural flavors, contains no sodium and is certified as OU kosher.  Brand name is printed on cap.  Branded shipping trays are produced in Staten Island from 100%-recycled paper from NY.  It uses proprietary glide racks.

Hershkowitz said co was driven to launch its own seltzer after it couldn’t land deal with existing brands on terms it deemed acceptable.  If you can’t join them, you may as well beat them, he reasoned.  “The only thing seltzer needs (to succeed) is distribution, and we have the best distribution system in New York,” he said.  Tho Big Geyser is active member of Northeast Independent Distributors Assn, Lewis said co had no plans to pitch brand to them or to other wholesalers until it’s confirmed that brand, packaging and pricing strategy work.  Even as brand hits streets for first time, some tweaks already are being planned to give label greater shelf impact.  Until today, co has treated launch as hush-hush matter, even tho brand appeared on back cover of co’s latest sales brochure several weeks ago and co began actively pitching retailers 2 weeks back.

Out of the frying pan and into the fire?  It’s hard to say what PepsiCo public affairs exec Alan Hoffman is facing with move to supplement maker Herbalife, which is facing FTC investigation over allegations that it’s pyramid scheme, but whose severest detractor, short seller Bill Ackman, proved to have nearly empty quiver in put-up-or-shut-up presentation to investors early this week that provoked relief rally in HLF shares.  Hoffman, former aide to Vice President Joe Biden who came to PEP in Nov 2012 as svp for global public policy, steps into HLF slot being vacated by Barbara Henderson, 67, who’d told co last year she wanted to retire.  He gets broadened role, tho – evp for global corporate affairs, with responsibility for public policy, corporate commns, government affairs, community relations and philanthropy, vs Henderson’s title of svp of global corporate commns.  At PEP, of course, Hoffman would have had hands full dealing with headwinds toward sugar-sweetened bevs, but nothing on order of charges Herbalife routinely must weather over efficacy of products and whether it’s pyramid scheme that particularly preys on uneducated Latinos.  As noted, HLF got one break this week when anti-HLF crusader Acker failed to produce promised smoking gun at presentation, provoking 25%+ rally in HLF shares.

Week thick with earnings reports from major bevcos showed sharply diverging trends in share prices, with Coca-Cola (-4%) and Dr Pepper Snapple       (-1%) trading lower over past 5 days while PepsiCo popped 2% on stronger-than-anticipated report.  Monster Beverage has languished thru most of week on heels of new suit filed vs co late last week and slowing energy trends in latest scanner data, while weeklong 3% run-up in Starbucks shares reversed itself this morning after co last night moderated its outlook for rest of year.   All except Monster reported their 2d-qtr earnings this week; Monster hasn’t yet announced its release date, likely in early Aug. 

Shares of SodaStream Int’l closed yesterday with 9.4% gain to $31.63 after Bloomberg reported co was in talks to sell to private equity firm that would then take SodaStream private.  Possible deal was valued at $40 per share, which Barron’s noted would be 38% above co’s closing price.  Tho possible alliances with Coca-Cola or PepsiCo seem “increasingly unlikely to us,” Barron’s still pointed out “we can see why private equity might be interested,” given “still-robust outlook in our view for the at-home carbonation category.”  Citing reports from Stifel Nicolaus and Deutsche Bank, blogger at Motley Fool was skeptical any deal is in works.  “The visibility of its future cash flow is weak, which would be a concern for any potential private equity investor, as well as for lenders that would finance the deal,” wrote MF. 

Same MF report also noted that while SodaStream shares jumped after Bloomberg report, “it appears 1 investor may have received the news prior to its public dissemination and put it to use, earning a 3,000% return” on 1-day trade.  SODA shares are down 1% to around $31.30 mid-day, but still up since report surfaced, suggesting traders are by no means discounting possibility of deal.

Starbucks as refreshment beverage company?  That was a key theme that emerged from last night’s investor call, as Seattle coffee roaster touted success of its Teavana Shaken Iced Tea and Fizzio handcrafted soda in unlocking new refreshment-oriented consumption occasions and reinforcing SBUX’s stepped-up food program.  “It’s clear to us that we have a significant opportunity in the need state of refreshment,” chmn/ceo Howard Schultz told investors.  “And Shaken Teavana Iced Tea and Fizzio has reaffirmed that, and we see that as just the beginning of both afternoon and evening opportunities.  And we are bullish on all things tea, and we are excited about what’s happening with the introduction of Fizzio.  It’s just the beginning.”

Those broader occasions and resulting heavier store traffic contributed to 3d qtr in which operating income soared 25% to record $769 mil, on sales gain of 11% to $4.2 bil, another quarterly record.  Same-store sales advanced 6%, including US comps up 7%, 2 points of that driven by growth in food sales.  “Starbucks’ record Q3 results demonstrate both the power of our innovation and the opportunities for growth, globally and in the US, that lie ahead,” said cfo Scott Maw.  Those innovations spanned new bev categories, limited-time offers like Café Espresso Frappuccino, new store designs and My Starbucks Rewards continuity programs.  That said, shares headed downward in trading today because co expects next year’s growth in earnings per share to come in toward lower end of anticipated range.  Here are most bev-pertinent ones, as discussed by Schultz and his team.  No mention whatsoever, by the way, of canned Starbucks Refreshers coffee-berry-based energy line.  (BBI got assist from SeekingAlpha transcription service in backstopping call.)

Refreshment Occasions Boosting In-Store Occasions   Still not addressed, as far as we can see, is whether any of these refreshment opportunities will move to RTD side, perhaps via longstanding Pepsi relationship that’s produced winners like bottled Frappuccino and Iced Coffee and canned Doubleshot coffee/energy entries.  The Teavana Shaken Iced Tea limited-time offering has been in stores since May and “significantly up-leveled our tea offerings,” said coo Troy Alstead.  Also strong have been returning Peach Green Tea Lemonade and new Blackberry Mojito Tea Lemonade.  “These innovative beverage offerings, along with our new lunch sandwiches, are part of our bigger initiative to consistently grow across all day parts, including afternoons, which have shown the strongest comp growth over the last few quarters,” he said.

Teavana Tea Bars Expand to 5 Units Currently   Schultz continues to be bullish on tea category, which accounted to insignificant 0.5% of store sales prior to Teavana acquisition.  Key Q3 intros, Teavana Oprah Chai licensed from talk show host Oprah Winfrey and Teavana Shaken Iced Tea have attained “tremendous customer response” and offered incremental sales in stores.  SBUX is making headway on bricks-and-mortar front too, opening 4th new Teavana tea bar on 3d Ave at 63 Street in Manhattan, and continuing to broaden in-store experience from mall stores Teavana exclusively operated before acquisition.  Upping ante to more cutting-edge crowd, SBUX will open another Teavana tea bar in Greenwich Village, at Broadway and 9th Street.  “These innovations are emblematic of the future vision we have for Teavana, and have drawn attention to the tea category, elevated the Teavana brand and these new, innovative beverages have driven incrementality in both Starbucks and Teavana stores,” Schultz declared.  “Teavana Oprah Chai, Teavana Shaken Iced Tea and Fizzio are providing us with highly differentiated, handcrafted beverages that attract customers during afternoon and evening dayparts and drive increased food attachment.”  With opening of store in LA, too, Teavana currently is operating 5 of its elevated Teavana Fine Teas + Teabars, along with scores of conventional retail outlets that represented Teavana model prior to SBUX involvement.

Fizzio Soda Proving Customizable Platform, Like Frappuccino – or Freestyle   Recall that last month SBUX intro’d Fizzio bevs in about 3K US stores, more than 1/3 of US total, following strong response in tests in Austin and Atlanta.  After strong test in Japan and Singapore, handcrafted sodas will head overseas too in coming qtrs.  Careful tests made it clear that “we were creating something that had a daypart opportunity and a refreshment need state that was beyond and accretive to Starbucks’ core products and core morning dayparts,” as well as complementing enhanced food offerings, Schultz offered.  Interestingly, it’s proving customizing draw to some consumers, kind of higher-end experience than via Coke’s Freestyle fountain unit and Pepsi’s Spire unit.  “It’s a proprietary machine,” Schultz noted.  “I think our customers really like the fact - and this is something we saw in test and we’re seeing it play out – that in addition to the 3 Fizzio flavors, not unlike almost everything we do at Starbucks, our customers are now responding on their own and creating their own customizable carbonated beverage that’s not even close to anything we’re offering.”  In other words, as with core Frappuccino coffee offering, Fizzio is proving it can be leveraged beyond initial flavor profile.  “It’s exciting, and we’re just giving it to the customer and let them be in control.  And that’s benefitting Starbucks,” Schultz said.

Evolution Fresh: Deep in Weeds with Dannon, but No New News    Oddly, not a word in earnings release or execs’ prepared remarks on Evolution Fresh, Starbucks’ venture into cold-pressed juice biz.  Brand is now in 12K points of distribution, from Starbucks and Evolution Fresh stores to retailer partners like Whole Foods.  Silence may be due in part to fact that a lot is cooking behind scenes, notably alliance with yogurt player Dannon.  During Q&A, Schultz only said, “A while back we announced a relationship and a partnership with Dannon.  And in calendar 2015, you’ll see the benefits of the partnership of Dannon, which will be integrated into Evolution products in yogurt.”  Not spoken yet, but Dannon could also offer DSD solution for refrigerated Evolution line.  More to be said for sure down the line.

Catching Up on Coffee Innovation   With state of coffee art having bypassed Starbucks for a spell, co has been industriously looking to recapture credibility at cutting edge.  That’s meant expansion of so-called “micro-lot” rare and exclusive reserve coffees, amounting to 20 so far this fiscal year.  Due in Sep: micro-lot reserve coffee that’s first developed on co’s own farm in Costa Rica.  “Expect to see an expanding and evolving portfolio of proprietary coffees under the Reserve brand from our coffee farm in Costa Rica and around the world in the future,” promised Schultz. 

Sizzle Stores Aim to Burnish Brand    Co also is moving rapidly to diversify from cookie-cutter look thru addition of flagship stores around world intended to burnish Starbucks brand.  Notable additions in recently concluded qtr included technology-forward company-owned store at Walt Disney World in Fla, and 2 flagships in China, including co’s first 24-hour store, in Beijing.  At same time, co continues to segment its stores, adding geekier units that showcase Clover, pour-over and other more demanding brewing techniques to counter so-called Fourth Wave shops like Stumptown, Intelligentsia and countless indie operations.

One sign a new segment has arrived: the gadget makers start to clamber aboard.  That seems to be the case with cold-brewed coffee, with Kaufmann Mercantile now offering reusable DIY Cold Brew Coffee Sets employing mason jar plus 100% organically grown, untreated cotton for filter.  “Whether you're prepping for a long day in the office, or relaxing poolside, our reusable DIY Cold Brew Kit creates the perfect cup,” states come-on.  Used daily, reusable cotton filter should last nine months to 1 year before replacement.  It’s available in 2 sizes: 32-oz at $14.95, 64-oz at $18.95.  Cold-brew kits are startin’ to pop up at retailers and their online catalogues, too: Anthropologie is carrying CoffeeSock Co’s 64-oz cold-brew kit and Williams-Sonoma is carrying Toddy Cold Brew Coffee System.  But we didn’t spot any sign yet of similar offering at Hammacher Schlemmer, amid its caffeine-infused slimming tank tops and Caffeine Craver’s Colossal Coffee Cup (whose 10-in diameter makes it serviceable as a planter, too, catalogue notes).