In latest data from Symphony IRI Group for food/drug/mass merch (excluding Walmart) and c-stores, the non-alc bev industry "posted the second best performance in terms of YoY volume growth and the best underlying or 2-year average growth rate since mid-2008," reported Bill Pecoriello of Consumer Edge Research. Key driver was "largely stable c-store trends," as well as CSDs "posting continued improvement," added Bill.

CSDs Down but Improving CSD volume declined 2.1% last 4 wks thru Oct 31 in F/D/Mx/C-stores compared to a 2.9% decline over last 12 wks. Pricing gains for CSDs accelerated to 3.6%, up from 2.7% avg for 12 wks. Higher pricing (+4.9%) last 4 wks dragged Coca-Cola CSD volume down 4%, which is in-line with KO's 12 wk trend in these stores. PepsiCo was only top-3 CSD supplier to post gain last 4 wks as co was "lapping high-single digit volume declines" from a yr ago. PEP volume up 0.7% with avg price up 1.8%. PEP volume still off 2.6% last 12 wks. Dr Pepper Snapple had most aggressive avg price increase at 4.6% last 4 wks and volume slipped 4.3%, a much steeper decline vs -2.3% over last 12 wks. Private Label brands were down 1.4% with avg price up 3.4% last 4 wks. That's in-line with private label avg price over last 12 wks.

Energy Still Rolling; 5-Hour Gains Accelerated "Energy drink volume growth remains robust," up 16.7% last 4 wks. Energy drink pricing was up 3.4%, up from 2.6% avg gain for 12 wks. Hansen Natural matched category with volume increase of 16.7%, which was "a slight deceleration," from 12 wk gain of 18.3%, noted Bill. HANS prices were up avg 3.3%, much higher than 1% avg over 12 wks. Red Bull volume was up 17.8% with flat pricing, down from 18.3% volume gain last 12 wks. Coca-Cola and Pepsi energy brands "continue to be a significant source of share for the leading brands," he added, with KO energy volume off 7%, even with a 4.7% price drop and PEP energy volume up 4.3% with a 1% price gain. Energy shot leader Living Essentials (5-Hour) gain pace accelerated to a 59.7% last 4 wks, up from 56.4% gain over last 12 wks. Avg pricing for Living Essentials was up 0.8% last 4 wks, down slightly compared to 12 wks.

PowerAde Surge Sport drink segment volume trends "are still running up double-digits, led by PowerAde," reported Bill. Sport drinks were up 13.6% in F/D/Mx/C-stores last 4 wks with avg price up 1.3%. A 2.2% decline in avg price last 4 wks helped Coca-Cola (PowerAde) to a 44% jump in volume last 4 wks while PepsiCo (Gatorade) volume was up just 3.7% with an avg 4.1% price increase. That's double avg price for Gatorade over last 12 wks. Private label sport drinks continue to outperform: + 89.6% last 4 wks even with a 35% jump in price. PL sport drinks up 77.5% last 12 wks with avg price increase of 33.5%.

Double-Digit Gains for Teas The RTD tea category remains hot in F/D/Mx/C-stores as it "continues to grow double-digits driving by value offering - evidenced by the 3% decline in average price per volume," said Bill. Tea volume increased 19.4% last 4 wks with PepsiCo, Coca-Cola and Ferolito Vultaggio each posting double-digit gains. PEP tea volume had best gain in category, up 21% aided by avg 8.3% price drop. Coca-Cola tea volume increased 20% on more modest 1% price decline while FV (AriZona) was up 12.9% last 4 wks with 1.4% price drop. Dr Pepper Snapple volume was up 1.6% last 4 wks vs a 5.2% gain last 12 wks. DPS avg price was up a more aggressive 6.7% last 4wks vs 4.4% 12-wk avg.

Lower Prices Drive Water Flow Same story in water segment as volume gains have been driven by "significant declines" in avg pricing, Bill reported. Water volume was up 16.5% last 4 wks with avg pricing down 5.7% compared to 6.1% avg drop over last 12 wks. Nestle was most aggressive on price as avg dropped 11% last 4 wks and help boost volume 30.6%. PepsiCo water prices were down 2% with a 4% volume gain while Coca-Cola water volume was up just 2.6% as avg price was up 8.2%. Coca-Cola's avg water price still up near 11% last 12 wks.  

Starbucks Corp denied reports in Wall St Jnl and Reuters (which BBI picked up) that it's planning to enter market for single-cup coffee brewers. "We have no plans to launch our own one-cup brewer at this time," SBUX rep told Reuters. Co had previously indicated to investors that it was investigating idea, but reports of imminent launch apparently were premature . . . Bev vet Trent Moffat, now pushing Avitae caffeinated water, worked at Nestle, not Snapple, earlier in career.  

Looks like Coke bottler Chesterman won't be buying 2 Bud houses in Iowa after all (BBI, Sep 21). Tho transaction had been regarded as another step toward convergence of beer and soft drinks, needed supplier approval didn't materialize. After Anheuser-Busch nixed deal, buyer will be Doll Distributing of Des Moines/Council Bluffs, as BBI's sibling newsletter Insights Express reported this week. Doll's purchase of Kabrick and Whittenburg houses will add 1.5 mil cases, bringing Doll to 8 mil cases in all, about 1/3 of A-B volume in state.  

Cathleen Black, magazine exec who was surprise nominee for NYC schools chancellor, has drawn lotsa heat for lack of education experience. And 1 of few roles in which she may have contact with school issues - via her board seat on Coca-Cola - is being painted as sharp negative in city that has marshaled gruesome ad campaign to scare kids away from soft drinks. "As (Mayor) Bloomberg Fought Sodas, Nominee Sat on Coke Board," headlined NY Times, about her nearly 2-decade run on board, where she sat on committee dealing with policy issues like child obesity. (She resigned board this week.) . . . PepsiCo named Tim Cost to newly created post of evp for global corporate affairs, effective Dec 1. Tim, who'll report directly to chmn/ceo Indra Nooyi, will be responsible for protecting PEP's corporate reputation. He comes from pr firm APCO Worldwide, after long run on pharma side at Bristol-Myers Squibb.  

For most energy-challenged folks, double espresso will perk them back to life in no time. But a double espresso "is for wimps'" at The Pulp & The Bean in Crown Heights, Brooklyn, which just started serving 10-shot, 20-oz espresso, reported NY Daily News. The Dieci (Italian for 10) is "one giant cup of jet fuel," boasted owner Tony Fisher, who advertises it on sign outside shop as "coffee porn in a cup." On first afternoon of sales, 16 customers spent $8 apiece to sample it. "It just dawned on me that people really love espresso, so why not just give them a cup full of espresso," added Tony. Is it safe? "If you're young and healthy you will get away with it, but it's not something I would recommend," Dr Jacob Shani of Maimonides Medical Center told paper. Tony told News he hopes the Dieci will help make Brooklyn a coffee destination: "Why is it that pushing the limits of coffee should only be confined to Seattle or Portland?" he asked.  

While consumer demand for coffee "remains robust among people aged 45 and over" and older drinkers will likely drive sales growth "over the next 5 years," the industry has looming problem with younger drinkers, Time reported. Only 27% of people age 18-24 report drinking coffee daily, per Mintel research. That's quite a drop from 75% for 45-54 age group and 80% for 55-64 bracket. Many younger drinkers cited "taste, health concerns and a penchant for sweet energy drinks as factors keeping them away from coffee," noted mag. Just 28% of 18-24's said they actually liked taste of coffee by itself vs 53% of 45-64's and 61% of those 65 and older. "The concern is real," said Bill Patterson, sr analyst at Mintel. He doesn't see trend as simply a fad. "The older generations that now drink coffee were brought up on coffee, they always drank coffee, and they've taken that coffee-drinking habit all the way through their life," he said. "I do not see the younger generation reaching middle age - late 30s and beyond - and going, 'Oh, I'm going to start drinking coffee now.' The mold has been broken." 

It's small but intriguing deal: PurBlu, Pittsburgh-based marketer of Give Water launched 3 years ago by Wharton undergrad Ben Lewis, now 22, has thrown lot in with fast-growing distributor Green Shoots, launched by cadre of former Odwalla execs on W Coast. BBI flagged pending deal coupla weeks ago (BBI, Nov 5) but its dimensions weren't really clear. Now Lewis and Green Shoots chief Nat Noone are ready to offer details on structure of deal and operating plan going forward.

Collaboration, but Not Outright Merger Deal, which closed last Wed, isn't outright merger but more complex arrangement in which PurBlu, banking savings from consolidating sales/distribution effort with Green Shoots, will invest $1 mil over next 12 mos to garner minority stake in Green Shoots and access to its distribution network for any of its brands. PurBlu will operate separately but serve as brand incubator for Green Shoots, including Noone Time soda line that Nat hopes to launch soon. PurBlu portfolio currently includes Give Water, Give Energy and Potions shot line that's being rebranded as Tonic. Green Shoots takes minority position in new brands. Keeping entities separate allows PurBlu to raise money for or monetize specific brands. Ben assured BBI that no current distribs are being dropped in transition, tho some accounts may be moved around.

Green Shoots Expands Distribution Net Beyond West Coast Co launched in Calif and has been expanding rapidly, thanks to velocity of its core brand, refrigerated Columbia Gorge juice line, which has struck chord within Whole Foods as family-owned, organic alternative to big players Odwalla, Naked and Bolthouse Farms. It's already strong #2 brand in natural channel in Northern Calif, Nat said. Distrib operation also carries Sambazon acai lines and newer kombucha entry, Kombucha Botanica, and is picking up snack lines like Evol Burritos. Green Shoots' plan is to ride Whole Foods into new market, then add resources as it gets brands into universities, foodservice, specialty grocers and indie prestige accounts. Co started in NorCal, where it operates 6 trucks now, and SoCal, with 4 trucks, and just entered Denver and Phoenix with a truck apiece. DC's next. It's adding markets like Las Vegas, Boston, Chicago, Miami and Tex as it builds mass. Co is also launching brokerage type of unit called Root Architect, partly to get around channel conflicts with natural food distributor UNFI, which is both customer and rival. Execs wouldn't discuss #'s but Green Shoots is believed to be nearing run rate of $100K per week, after launching only in Jun (BBI, Jun 27). 

Tenaya LLC, Winnetka, Ill-based co launched by pair of Nestle vets, is latest to get religion on price, recognizing that $2 has become tuff barrier to crack among recession-strapped consumers. So it's knocking down SRP of its organic fruit-green tea Made line from $2.69 to $1.99 per bottle, and planning lotsa 2-for-$3 promos in coming year. It's also taken some sugar out of drink, responding to consumer feedback.

Co-founder Charley Snell readily acknowledged that $2+ is steep price, so he's rationalized whatever costs he can and allowed margins to get squeezed a bit more. Co's buying most of its fruit juice from contracts now, rather than on spot market, and its higher volume has shaved unit cost of bottles and sleeves. "At Nestle, a big part of my job was driving cost out of the P&L," so that's his orientation anyway, he said. Reformulation cut 18-20% of sugar out of drinks, for healthier drink and allowing flavor to pop more.

Recall that many in tea and enhanced water segment, including Adina, have noted that velocity plummets at prices above $2 and have strived to get price down. (More highly functional lines can go higher, but are under pressure to get below $3.) At least one - Rob's Really Good - has dropped organic certification in favor of less expensive all-natural, but that's not step Charley is considering. Matter of "personal belief," he explained.

So far, brand has taken conservative approach to growth, adding regions carefully and stepping gingerly into DSD world. Biggest market is Calif, where it employs Haralambos Beverage in LA and natural distribs up north to work chains like Mollie Stone's, Genuardi's and Whole Foods. It's in Whole Foods in Carolinas and Ga, and Shaw's in New England, but hasn't yet sought to crack NY, Fla or Tex. It only just opened its backyard - Chicago - last month, using Central Beverage to work downtown and northern suburbs, 150 accounts so far.  

It's been odd year that's seen not 1 but 2 thriving categories vanish from retail shelves: first kombucha, as result of June recall by Whole Foods that segment is only beginning to recover from, and now caffeinated alcohol drinks. Action this week by FTC and FDA drew boundaries of banned bevs fairly narrowly, forcing exit or reformulation of likes of Four Loko and Joose but excluding caffeinated alc bevs whose caffeine source derives naturally from ingredients, as with Kahlua spirits, Boston Beer's thriving Twisted Tea line or legion of coffee-based craft brews. And no serious discussion so far of banning non-packaged blends like Red Bull and vodka served at countless bars.

So what's it mean for NA energy players? Some are predicting mild upswing in biz, both on- and off-premise. "I am salivating at the prospect of this category having to take the caffeine out of the mix," said Red Bull wholesaler. "Nothing but upside for our Red Bull business. I am sure the folks at Monster are all for it too. Pre-Joose/Four Loko, I oftentimes saw consumers purchasing a 24-oz can of Bud Light and an energy drink." Rise of Joose and Four Loko resulted in those consumers trading down from 2 bev purchases to 1. Dollar ring dropped from $4 to $2.39, he noted.

But that's not universally held view, and in truth environment has been shifting so rapidly any firm statements are risky. Ex-Monster exec noted that, if Four Loko critics are right, many purchasers of brightly colored cans are below or barely legal age - certainly not in Red-Bull-and-Grey-Goose realm. So he figures lift to Red Bull will be minimal. Others warn that episode is likely to raise scrutiny across the board, with media thirsty for lurid accounts of abusers of NA energy lines who end up in emergency room. That's been on-again, off-again issue that some believed was due to resurface anyway, at time of heightened regulatory scrutiny under Obama administration. "Be interesting to see what happens to the energy world in general," noted Tom Mahlke, who as marketer of Crunk has foot in both camps after launching alcoholic version, Crunk Juce, in early summer.

Blowup No Surprise to Crunk's Mahlke, Ready with Reformulation Crunk marketer Solvi Brands launched Crunk Juice in late June in Ga/SC, then added La and now is in 20 states, "running hard and fast," said chief Mahlke. But even at launch "we knew this could happen," he said of current furor, so 12%-alcohol line was formulated with relatively modest 60 mg of caffeine per 24-oz can - lower per oz than most soft drinks. And co came up with non-energy version that's been ready to go, with transition anticipated next mo. Tho Crunk core brand is synonymous with energy, Mahlke has no worries that reformulated one will land with thud: Bud's restage of Tilt as non-energy line has been successful, and distribs assure him they still would find it viable entry. 

Skinny Nutritional reported tapering off of growth rate in Q3 spanning key summer selling season, but attributed it to sweeping distribution revamp that should pay dividends down road, as well as different way of booking revenues. Meanwhile, it's taking other steps to build foundation for strong 2011, including trying to nail down endorsement deal with one high-profile fan, believed to be Black Eyed Peas' Fergie. That in turn could open up marketing and financing opportunities. And ceo says it's determined to upgrade shares from bulletin board to Nasdaq.

Bala Cynwyd, Penn-based marketer of Skinny Water said net revenue growth in period ended Sep 30 tapered off to 22% rate, to $1.88 mil, leaving 9-mo revs up 53% to $5.91 mil. For period, volume of 12-unit cases rose 36% to 254K; for 9 mos, vol rose 63% to 785K cases. Net loss came to $2.1 mil, incl $719K non-cash expense. Despite slowdown, chmn/ceo Michael Salaman said co still should meet goal of doubling sales this year to $8-9 mil range, even as it revamps distribution to build on brand's greatest strength, in chains. As reported, co is swapping out indie wholesalers in New England for Polar Beverage Group, and it's signed Columbia Distributing to break into Pacific NW. Co also confirmed earlier report that line is testing in company-owned Dr Pepper Snapple operations in Indianapolis, Ind, and Columbus, Ohio, which it hopes will prove successful screen test for broader distribution within #3 soft drink network (BBI, Aug 24). Most indie houses it's signing these days, incl Polar and Columbia, are DPS houses. Michael also noted accounting change: last year, co wasn't subtracting billbacks and slotting from gross revs, figure which accounted for roughly $200K in latest qtr. More consistently reported, gain would have been substantially more than 23%. He expects sales to double again in 2011.

Tho brand so far has been "Northeast-centric," with exception of Target chain nationally, that will change in 2011, Salaman said, as co works new distribs and targets Southeast and Midwest. Execs are hopeful DPS test will pan out so that brand can ride strong DPS bottlers in Midwest to greater prominence there. Big Safeway authorization should also offer lift: Skinny's getting into western region stores from Wash State south to San Diego, as well as Denver, Chicago and Md/Va.

Co also aims to hitch brand to outsize personality, "female, athletic, international star," per Michael. It's open secret that must mean Fergie, who's been photo'd often enough cradling bottle of Skinny. Alliance could open doors to major retail tie-ins as well as new capital, he suggested. Singer/actress is headin' onto Oprah show soon.