In contrarian stroke, BevNet has awarded Product of the Year to GT's Kombucha, citing "fierce loyalty" brand commands among fans - loyalty that was tested, and conspicuously on display, as industry went thru massive recall this summer on grounds some brands contain too much alcohol. "Even the potential for regulatory action that forced the removal of kombuchas from store shelves over the summer only served to show us how important GT's has become to its consumers," said BevNet founder/prexy John Craven. "GT's fans hunted for the product far and wide, and not just for novelty value. They are a fully realized group of customers at the tip of organic, natural and functional trends." In heralding co, which didn't send rep to awards dinner on Mon, BevNet also cited numerous way it breaks from industry norms, "including its staggering 27 varieties, its required refrigeration, complicated fermented flavor, low level of alcohol, probiotic content, price point, and its exceptional packaging and taste." It added: "GT's also leaps over 'need states' as product that consumers are drinking, en masse, at almost every time of day. That's something that products in many other categories, such as CSDs and energy drinks, have struggled to do." Zico Coconut Water founder/ceo was named Innovator of the Year (and his PET bottle cited as packaging of year). Extensive list of other winners is at bevnet.com. 

Neuro, much anticipated functional line that has mainly stayed out west so far, has signed Pepsi Bottling Ventures to work Long Island territory. Move confirmed at BevNet Live conference by sales dir Ken Tenace extends sole East Coast territory, NY, served by Honickman Group, also a major Pepsi force, and it's presumed LA-based co is at least discussing move to Honickman and PBV in some of their other territories. For Honickman that includes metros south of NY, including Philadelphia and Baltimore/Washington, while PBV is force in Delmarva area. As reported, Tenace recently pitched brand to NIDA group of indie wholesalers in Northeast, to considerable interest (BBI, Nov 22), tho no word from Ken on whether any deals are close in their territory, primarily New England.  

PepsiCo purchase of Wimm-Bill-Dan Foods was not surprise to everyone, according to SEC, reported Bloomberg. Agency has filed suit vs unnamed buyers of securities in the co for what it calls "highly profitable and suspicious purchases," just before PEP announced it was taking majority stake in Russian dairy/juice biz. These "unknown purchasers" picked up 400,000 American depository receipts in WBD between Nov 29 and Dec 1, "when there was no public information available concerning the contemplated acquisition," sez SEC complaint. After deal was announced, WBD's ADRs increased 28% in value, yielding profit of around $2.7 mil. Purchases were made thru acct with SG Private Banking (Suisse) SA, subsidiary of Societe Generale Bank & Trust, per Bloomberg. In describing deal in notoriously freewheeling Russian economy, PEP had taken pains to cite WBD's progressive corporate governance.

While Sun Drop citrus soda has just 2 share of citrus soda segment, its tiny group of rabid drinkers (primarily in South) will be pleased that Dr Pepper Snapple's giving brand national distribution in 2011, reported Wall Street Journal. Decision is part of DPS plan to dip deeper into roster of 50+ brands and grow interest in flavored sodas. Sun Drop will get makeover in Jan via DPS collaboration with MTV's Scratch marketing and will be featured on MTV programs such as The Real World, as it targets 15- to 17-yr-olds, noted WSJ. Turns out when collaboration between DPS and MTV began in Jun 09, it gave network choice of Hires Root Beer, RC Cola and Mistic Juices too. "After a quick taste test" with folks on streets of NYC, it decided to go with Sun Drop, noted Scratch evp Ross Martin. The marketing agreement between DPS and MTV calls for revenue sharing, tho partners declined to say what split is, only telling WSJ it is based on sales volume.  

Sunny Delight Beverages has reached deal to sell its Western European Sunny Delight juice drink biz to Suntory Group's Orangina Schweppes unit, enabling it to wipe out its debt and invest $70 mil+ in its 5 N Amer juice plants. Cincinnati-based marketer of brands ranging from Sunny D to Elations and Bossa Nova didn't disclose sale price, but said proceeds "will enable SDBC to be debt-free and to focus its resources on growing its much larger and more diversified North American business." Co still is awaiting regulatory approval for deal.

As part of deal, co is acquiring from JM Smucker a plant in Sherman, Tex, where it has been leasing space since 04 for production of core line. Deal, to be eased by incentives being negotiated with local economic development authorities, will enable Sunny D to take over plant once Smucker concludes production of Folgers coffee there next Apr.

Ellen Iobst, svp of manufacturing and technology, said upgrades will include intro of no-touch robotic warehousing at each site and adoption of upgraded packages that require less material and energy to produce. Besides Sherman, Sunny D produces in Anaheim, Calif; Atlanta; South Brunswick, NJ, and Littleton, Mass.

Recall that co was formed via spinoff of underperforming Procter & Gamble biz, and is run mainly by its ex-P&G managers. It's primarily owned by Boston-based private equity firm JW Childs Associates.  

First Beverage Capital, whose profile just rose dramatically when core investment Activate drew substantial commitment from Tata Group, is ready to think small, too: it's hanging out shingle of bev-incubation fund that will make investments from $250K to $1.5 mil in promising bev concepts, providing bridge between angel level and private-equity shops that typically want to deploy $3 mil or more. And to better capitalize on distribution-centric focus - issue cited by nearly every BevNet speaker as new-brand bottleneck - co also is venturing into consulting with The Beverage Intelligence Group, with beer wholesalers looking to move into NAs among prospective clients. Here are details offered to BevNet Live crowd by First Beverage chmn/ceo Bill Anderson:

First Beverage Incubation Launches in Jan Unit will move into operation in Jan - don't send plans quite yet, Bill pleaded to audience filled with capital-starved early-stage entrepreneurs. It aims to fill problematic gap between friends/family and angel investors, at small end, and institutional investors who typically need to deploy capital in multimillion-dollar chunks. Fund is starting with $10 mil raised from current and former distributors and will be seeking 10-15 targets to receive equity checks in $250K to $1.5 mil range. Fund aims to address situation of founders who may have started with $300K from parents but find themselves unable to land institutional round on favorable terms, just as they're seeing encouraging proof of concept. It also will seek to employ its industry expertise to help startups operate more efficiently, say by encouraging them to share back-office functions.

Consulting Unit Will Emphasize Distribution as Strategic Issue Beverage Intelligence Group launched 3 mos ago and currently numbers 5 unidentified clients. Unit also draws on recently announced alliance with Bump Williams Consulting, and has distribution-centric focus, addressing key strategic issue that, as Bill described it, too often gets short shrift from early-stage entrepreneurs. In acceding to request to carry brand by 1 distrib, for instance, they may not realize that it carries implications for markets across country - say, if same family operates houses elsewhere.

First Beverage Capital Background Tho First Beverage Capital is still relatively unproven in segment, over 16 mos of its existence so far it's perused 200+ biz plans and held face-to-face meetings with 60 entrepreneurs, giving it broad insight into bev sector. Its first investment was cap-activated Activate line, new twist (literally) on enhanced waters that's drawn lotta interest. Co recently helped with $6 mil round that included $3 mil from Indian tea giant Tata, which made follow-on commitment of $15 mil more. It also has taken stake in Thomas Kemper Sodas. It's also active in alc sector. Why so few investments so far? "A number of not-so-great business plans" out there, replied Anderson. He likes to see sound management team, differentiated product and well-thought-out distribution plan, often based on nailing core region before expanding. "We're not a big fan of going thin and wide," Bill observed. Certainly, Activate has followed region-by-region plan, starting in LA.

In contrast to other PE shops working space, which may have broad consumer packaged goods focus, or at least segments like food/bev, pharma and services that can be grouped as "healthy lifestyle" subset, First Beverage only looks at bevs, with special emphasis on distribution issues. Brain trust includes execs who formerly had substantial distribution responsibility at Coors and Anheuser-Busch; tho it's lighter on NA vets, operations expert Joth Ricci was gm at multisector powerhouse Columbia Distributing and for a spell ran Jones Soda. Related operations within LA-based group include First Beverage Realty Partners and First Beverage Financial, which recently orchestrated sale of Southeastern wine/spirits distributor to McLane, potentially ushering in new chapter in convergence of NAs and alc bevs. 

Here's more evidence that this ain't the Coke we all used to know: as bev giant prepares to close on acquisition of Honest Tea in Feb, it's created special share structure that will enable founder/ceo Seth Goldman to retain some equity even as co becomes wholly owned unit of KO. Seth confirmed move in passing during presentation during recent BevNet Live conference in Santa Monica, Calif, saying he'll "continue to be a shareholder" after KO exercises option to buy rest of co. That's not foregone conclusion yet but considered highly likely, given brand's relatively smooth integration into system and success in giving Coke entrée into growing natural food channel. As for Seth, he's previously made it clear he'd like to stay on at KO to pursue organic, Fair Trade mission while helping KO with innovation initiatives. "We can really make something happen here on a grand scale," he told BevNet audience.

Move shows Coke continues to evolve thinking about how to retain and motivate entrepreneurial talent once it closes on innovative brand. Other outside talents, including Planet Java's Larry Trachtenbroit, Glaceau's Darius Bikoff and Mike Repole and Fuze's Lance Collins, all moved on, tho KO later invested in Larry's NY-based bev incubation co, Brain-Twist, and Lance has continued to discuss opportunities with Coke. There had been rumblings KO might try novel approach to keep Goldman more financially incented to see Honest Tea make it to billion-dollar-brand status and that's now been confirmed. Seth noted he had close role model of entrepreneur who's stayed active in acquired biz: mentor, investor and board member Gary Hirshberg, who remains at helm of Stonyfield Farm organic yogurt co, years after it moved under Danone umbrella. As with Coke/Honest Tea, Danone started with 40% stake to road-test partnership before expanding stake to 85%; Stonyfield is "still a very mission-driven company . . . great model for how to run a business," Goldman said. (The 2 execs also share same cute gene: Seth styles himself the tea-eo of Honest Tea; Gary's his yogurt co's ce-yo.)

As for Honest Tea, which is trending to $70 mil in sales in 2010, it continues to build staff and operate independently out of Bethesda, Md, per 3-year plan just submitted to Coke. Seth showed evidence - such as million-dollar tea-brewing tower in Mass - that Coke isn't dumbing down ingredients, process or otherwise compromising values as it scales up brand. Converting all teas to Fair Trade "is not the cheap way to do things," he offered.

Trims Back Yerba Mate Line; Kombucha Recall Cost $1 Mil Tho co continues to broaden array with such recent launches as tulsi-based bev, it doesn't hesitate to cut those that don't sell either. Latest casualties: some of brand's yerba mate sku's, Seth said. He also confirmed that move to drop recently relaunched kombucha subline was driven by fear that alcohol regulator TTB is moving toward harsher stance, regarding segment as alcoholic on grounds that it has potential - say, if left unrefrigerated - to turn alcoholic (BBI, Nov 18 and 30). "If that's the standard, that's not where we wanted to go," he said. Kombucha line "was performing, that's the sad thing." Segment-wide recall requested by Whole Foods in Jun, when issue first surfaced, cost Honest Tea $1 mil, Seth disclosed. Big hit to financials, he allowed. 

In surprise - perhaps head-scratching - move, Fiji Water has acquired well-regarded Bordeaux-style vintner Justin Vineyards & Winery of Paso Robles, Calif. Move orchestrated by Fiji parent Roll International will offer another high-end line that can be sold by Fiji Water's global sales force, perhaps key reason for addition, at time Fiji volume is way off peak and margin may be about to take a hit following big tax hike in Fiji. "Justin's winemaking knowledge and exceptional team coupled with Fiji Water's outstanding global sales force offers an opportunity to carefully achieve mutual growth and success for both brands," said Fiji Water prexy/coo John Cochran.  

Building on its recent acquisition of wine distributor Quench Fine Wines, which gave it presence in Tucson market, powerful Ariz Bud house Hensley Beverage is expanding its NA presence into that market. Following mos of reports that it's been recruiting slate of NA brands, many of them within Hensley's Phoenix footprint but servicing Tucson via Finley Distributing, Hensley has confirmed that it's opening Tucson office and warehouse on Jan 10, using 11,000-sq-ft unit to service Pima and Santa Cruz counties with range of NA and alcoholic bevs. Lineup includes Xyience energy line, Xingtea, Dad's Root Beer and snack brand Popchips, as well as spirits lines such as Hammer & Sickle vodka, High Spirits brands and 3 Amigos Tequila. Quench's wine brands will also relocate to new facility, which initially will employ staff of 12. Not so long ago an exclusive Anheuser-Busch operation, Hensley, run by McCain family, has been fast expanding into craft beers, spirits and NAs, to point that in its core operation it now manages 700+ brands, with big boost from wine deal. Tucson push put several NA brands on spot, given solid job that Finley is credited with doing in NA realm. But most appear to have made move to what is state's largest bev distributor. Arizona Republic paper recently pegged Hensley's overall sales at $350 mil. 

Continuing busy new-product activities, Sambazon is ready to re-enter RTD protein segment that it was early participant in before suspending effort so as not to obscure core acai lines. Co-founder Ryan Black said new entries will hit in Jan in chocolate and vanilla varieties and feature robust protein content, including whole food and hemp, as well as acai, at price point in $3.49 range. Ryan noted that, far from being newcomer to protein segment, co had solid entry in its earliest days, but grew concerned that when on-shelf inventory of acai sku's got depleted first, consumers might incorrectly assume co was primarily protein-drink purveyor. Separately, San Clemente, Calif-based co is ready next year to proceed with long-anticipated plan to open retail operation that would encapsulate brand and its values. Location has been chosen in beach community Cardiff-by-the-Sea, in San Diego County.