Natural Products Expo East opening on Thurs in Boston is looking to have smaller roster of bev exhibitors but plenty to look at anyway. Protein-drink marketer Mix1 will buttress its line of All-Natural Protein Shakes with Mix1 Lean Performance, which melds 10 g of whey protein isolate and 3 g of soluble fiber in 11-oz pack with only 90 calories. Also in mix are antioxidants equivalent to 3 servings of fruits and veggies and 1 g of fat from olive oil. New line breaks in Acai-Pomegranate and Orange-Twist flavors . . . Altsoda marketer Maine Root will offer Maple Syrup Lemonade. And as reported, Dry Soda will have new look. Show info and exhibitor lists at expoeast.com. 

Activate, which has been taking deliberate approach to building distribution for cap-activated enhanced water line, is adding big chunk of territory: much or all of Pacific Northwest territory serviced by Columbia Distributing. Prexy Dan Holland confirmed move into big house covering Wash and Ore states, tho he declined to specify whether assignment is for entire territory. Move comes at busy time for Columbia, which recently added Skinny Water and sold Thomas Kemper Soda rights to other regional houses. It’s also brisk time for Activate, which last mo added New Age Beverage for most of Colo.  

 Tho Monster Energy unit didn’t disappoint cellphone-camera-waving NACS attendees with usual display of female beauty at booth, most of Hansen Natural’s new-product news was bubbling up in booths situated on other parts of massive c-store show floor. On display for 1st time was co’s much-anticipated new take on energy shots, Worx, after failure of earlier effort under Hitman moniker, with booth hands talking up $20 mil media budget to support. There also were rumblings that co may try to take a piece out of AriZona’s burgeoning Arnold Palmer franchise with its own half-tea, half-lemonade in a can; 1 source encountered away from Hansen booths said co is lookin’ at Country Club name but wd really like to land Caddyshack license for line. Use of 1980 comic icon could offer subversive counter to staid Arnold Palmer brand. Meanwhile, big Peace Tea booth looked like 60s revival, complete with VW bus, with fringe-trailing female staffers there offering low-cal and unsweetened line extensions of prepriced brand now on track to break 4 mil cases this year. And as reported (BBI, Sep 24 and Oct 7), Hubert’s Lemonade line made debut as glass-bottle alternative to fast-growing Calypso. All in all, it suggested that Corona, Calif-based co is engine of innovation – and therefore perhaps worth grabbing down road by distribution allies Coca-Cola or Anheuser-Busch.

Worx Gets $20 Mil in TV, Other Ad Support Show staffers said co is planning $20 mil in media support behind new Worx Energy shot line, due to go out via Coke bottling system next mo. (Sorry, in prior articles based on rumor, hearsay and innuendo, BBI “misspelled” name as Works.) With much of spend apparently being tilted toward TV effort targeting workday crowd, that suggests head-on assault on leader 5-Hour, which has been setting latest ads in workplace settings. With no calories, no sugar, sucralose-sweetened line is out in Original formula, with 2,000 mg energy blend, and Extra Strength formula, with 2,500 mg. (Note that market leader 5-Hour’s most popular sku is its extra-strength sku.) Recall Hansen’s also been battling 5-Hour in court, challenging “5-hour” claim and trying to force brand name change.

Peace Tea on Track for 4 Million Cases; Adds Diet, Unsweetened SKU’s Hansen’s Peace Tea booth had BBI editor flashin’ back to teen years, and it wasn’t entirely pleasant. Wasn’t all peace and love back then, as he semi-recalled. But no question value-priced line geared to Coke bottling network is off to fast start, even as new sku’s and marketing initiatives kick in. Brand “really resonates with young consumers” and KO rollout “very well executed,” said DSD brand mgr Steve Jugan, speaking at booth. In just 10 mos so far, line has chalked up 3.8 mil cases shipped, meaning line is sure to break 4 mil in 1st year. Meanwhile, co is adding flavors, including Diet Green Tea, zero-calorie item sweetened with sucralose/ace-K blend, and 5-calorie Unsweetened Tea. Additional flavors are in pipeline to augment initial lineup of Green Tea, Imported Ceylon Tea, Sweet Lemon Tea and Razzleberry Tea. No word yet as to whether co is ready to add other packaging configs, like 20-oz PET bottles, that might make line more profitable to bottlers, as Hansen ceo Rodney Sacks has promised. No definitive word either on whether Peace Tea will retain 99-cent preprice thru 2011, something rival AriZona recently just vowed is a lock (BBI, Oct 5).

On marketing front, co is trying to meet brand name’s implicit obligations to make world better place via donations to groups like Jane Goodall’s Peace Day Parade and orphanage in Mexico that was destroyed by quake. Proceeds from recycled cans from 5K race in Carlsbad all went to local charities. For next year co is planning 1st of what are to be annual series of Peace Tea parties with art, music, food fair. Inaugural one likely will happen in Calif next summer or fall. Note that co is practiced hand at promoting own concerts thru activities on energy side.

Selling points vs AriZona? Peace Tea sell sheets pull no punches. “Consumers want authenticity and products they can believe in. AriZona is a New York-based company with no ties to the state of Arizona” . . . Sugar-based Peace Tea “not loaded with HFCS, as AriZona.” AriZona line currently “is over-spaced, with multiple SKUs double-faced” at retail. But hey, man, like where’s the peace and love?

Now that Coca-Cola has completed acquisition of North American oper of its largest bottler, CCE, Credit Suisse' Carlos Laboy sez "a new US partnership model and other company-owned bottler divestments will likely emerge faster than investors anticipate." For starters, "there has never been a better time to be a Coke bottler," given that "cash is building up at a time that system investment is soaring," according to Carlos. US and Canada mkts "do not lack interested parties willing to take on a recast North American bottler," and in his view, "in 2011 Coke will likely have a clear idea of who its future partners will be and the structure of a new partnership model under which it can be run."

Carlos expects "North American unit could be recast into 4-6 new territories," and runs down who "likely" partners would be. Whoever, they "need to bring exceptional logistics insights to the North American system, a culture of exceptional execution at the point of sale and the ability to attract, develop and retain a superior talent pool." His top candidates: Coca-Cola FEMSA; Swire Group; Reyes Holdings; Coke Consolidated. Coke FEMSA "has made no secret of its desire to own a stake of the new US partnership model," he noted, and co "may be running out of options for meaningful acquisitions" in Latin America. On down side, FEMSA "lacks" a talent pool for US/Canada mkt. Swire is interesting possibility given it's already "powerful bottler in China," which is "market of the future."

As for Reyes Holdings, "if we had to pick one extraordinary new agent for Coke to pull into its" N Amer partnership model moving forward, "we would consider a group like Reyes," sez Carlos. After all, Reyes is largest and most profitable MillerCoors distrib in US, and "runs a formidable $13 billion revenue logistics/distribution business that includes McDonald's on the food side." Reyes has "deep talent pool" along with "exceptional knowledge of key US geographies," particularly in Midwest. Also, Reyes "brings an interesting perspective to the Coke system as the top competitor of Anheuser-Busch InBev" in US, "for those, like us, who worry for Coke about the growing relationship between ABI and PepsiCo." Last contender, Coke Consolidated and other smaller Coke bottlers "may see an opportunity to trade into a new model," per Carlos. "These bottlers seem to endure due to favorable legacy terms of their agreements and this strikes us as a historic moment for Coke to find a way of helping them evolve."

However Coke decides to run its North American biz, "it can't simply toss it and break it into new 'bottling' franchise territories with concentrate fees and fragmented production plants," he noted. Coke's new partnership model "is likely to have all of the national manufacturing assets under a single co-op," and Coke and bottlers likely will have "a 50-50 JV in these assets." The manufacturing end "is unlikely to be run for profit," as "the new national partnership will generate its profit from optimally capturing the value of the entire portfolio of Coke products at every possible point of sale," added Carlos. He foresees "a national selling organization for key accounts," and bottlers "defining price-package-channel-point of sale decisions up and down the street at every other point of sale."  

Following failed attempts to increase soda taxes in NY over past 2 yrs, Gov David Paterson and NYC Mayor Mike Bloomberg are trying new tactic to reduce consumption. They've sent request to USDA to bar city's food stamp recipients from using coupons to buy sugared bevs, reported Wall St Jnl. NYC is requesting 2-yr study period to determine whether soft drink purchases decline as a result. "In spite of the great gains we've made over the past 8 years in making our communities healthier, there are still 2 areas that where we're losing ground: obesity and diabetes," said Mayor Mike. Move would put soft drinks on par with alcohol and tobacco, other "sin" products food stamp recipients are barred from buying.  

During 1st 18 mos installed as chief of Sweet Leaf Tea, Nestle Waters North America vet Dan Costello has stayed under radar. Austin-based co, owned mainly by NWNA and private equity shop Catterton Partners, has acquired another tea co, Trade Winds, and built out Sweet Leaf's DSD network, sometimes moving into NWNA houses, but brand's overall ACV gains have been limited, some long-term execs including founder Clayton Christopher have departed, and buzz that once surrounded brand seems to have subsided. Some outside co have wondered what strategy is, or whether there's even fully formed strategy in place. In conversation with BBI and NACS, prexy/ceo Costello offered glimpse into where he's hoping to take co and why progress hasn't always been outwardly visible. Highlights:

Sweet Leaf, Trade Winds Are Complementary, but Not in Regional Sense At time of surprise Trade Winds acquisition, some wondered whether it was part of strategy to replicate what NWNA does in bottled spring water, offering range of regionally oriented brands, working off Sweet Leaf's stronger success in Sun Belt and Trade Wind's heartland presence while seeking additional buys. Not so, said Dan: both brands are viewed as holding national potential and are complementary not at regional level but in terms of channels and consumers. "Both are high-quality brands but they reach different consumers." All-natural Trade Winds goes direct or via brokers to chain retailers via multipacks while organic Sweet Leaf focuses on moving single-serve packs exclusively thru DSD channel. "We feel the diversity of packaging, liquids, distribution partners is a great strength," Dan said, even if that diversity rules out, say, putting some Sweet Leaf production into Trade Winds' facility in Cincinnati. By now, Sweet Leaf DSD net is pretty much built out. Tho some new houses (say, Manhattan Beer in NY) are on roster of Nestle bottled-water brands, that's true for only small proportion, Dan said. Some of last voids are in Northeast. Nor did Costello ever hold expectation that he could get both brands into same house in given market. "Everyone's looking into sku rationalization and efficiency. I would love to my distributors on either brand to carry both but I'm not going to kid myself that that's going to happen."

Lotsa Activity Happening on Packaging Front; ACV Push to Follow Sweet Leaf is launching proprietary 20-oz PET bottle that closely resembles 20-oz glass bottle. Earlier packaging move, addition of canned subline targeting c-stores at 99-cent price point, has proved successful without undermining other packs, Dan said. Further pkg additions will target other consumption occasions and customer types, he said. As for Trade Winds packs, those are getting facelift due by Jan. In meantime, co has refrained from hitting gas on ACV growth, knowing older packs would soon have to be moved out of system, Costello said. Once packaging initiative is over hump, expect to see greater retail presence and marketing support. Don't expect any great product divergences, either: unlike rival Honest Tea, Sweet Leaf has no immediate plans to enter segments like yerba mate or kombucha, Dan indicated.  

As Hansen Natural evolves and expands warehouse-oriented natural bevs that once comprised its core biz, it's quietly been establishing DSD network that's parallel to Coke and Bud systems that carry Monster Energy line. As anticipated, offerings were enhanced with lemonade entry under Hubert's brand, named for Hansen founder (BBI, Sep 24). New line adopts retro look, with image of winking lemon and slogans "Only the best will do" at center of bottle and "All Natural since 1935" at bottom (reference to longevity of co, not brand). It's packed in 16-oz straight-walled glass bottles sweetened with cane sugar, juice and stevia, in Original, Honey, Mango and Raspberry flavors. Flavors are in 60-70 calorie range per 8-oz serving. SRP is about $1.49. Hubert's joins lineup that includes recently restaged Vidration enhanced water line, Hansen 8-oz canned energy line (which predates Monster), Hansen-branded natural soda line in 16-oz cans pre-priced at 99 cents, and Admiral Tea line in AriZona-size 23-oz cans. With some DSD vets who've come over from energy side, HANS' natural unit has built hybrid system that includes DSD component comprised of Bud houses, independents, even Empire liquor house in Ga.

Vidration, restaged in Jul, is in firmer bottle with slightly wider mouth and bolder, cleaner label. Unlike all-natural siblings in stable, it's cold-fill line that's thereby able to joust profitably with hotfill Vitaminwater and Life Water lines often priced at a buck. Booth staffers at show said it's picking up speed since restage, recently cracking Publix chain in Fla. 

PepsiCo produced solid 3d qtr but view of biz fundamentals was clouded by inclusion of recently acquired N Amer bottling operations. Still, core PepsiCo Americas Beverages unit chalked up 13% volume gain and "all divisions delivered better than forecast volumes," noted Deutsche Bank's Marc Greenberg, who'd projected 10.5% PAB gain. Still, co seemed to arouse suspicions of Marc and several other analysts with slight narrowing of projected annual EPS gains from 11-13% range to 11-12% range, change that PEP brass denoted as mere "tightening" of projections but which the analysts worried signaled that higher branding and innovation spend will sap earnings growth down road.

"The decision to again invest incrementally behind growth (beverages, China, NutritionCo) while beverage margins lagged our forecast has caused the company to lower the high end of EPS growth guidance from 12% to 11% this year," noted Marc, in typical comment. "While its long-term focus is laudable, it is increasingly clear that the cost of competition domestically is ramping, which will limit upside to both earnings and cash return to shareholders." That and "modest currency headwind" prompted 4-cent reduction in his 2010 earnings estimate to $4.12.

For their part, PEP execs seemed flummoxed by criticism, noting that their role is to pony up for needed investments to insure future growth. Chmn/ceo Indra Nooyi cited co's "steadfast commitment to managing both the short-term and long-term, by driving balanced growth across our portfolio while making the right strategic investments."

Nutrition R&D Center Ramping Up To make good on ambition of tripling size of $10 bil nutrition biz by 2020, co is setting up Chicago-based Global Nutrition Group headed by PEP's chief scientific officer Mehmood Khan with centralized focus on "areas of fruits and vegetables, grains, dairy and functional nutrition." Latter reps broadening of functional scope that to date has mainly been focused around sports nutrition. General idea is to step up innovation beyond "mere line extensions" to "products backed by science," ceo noted. As ceo of new group, Khan will report directly to ceo Nooyi while continuing to manage global R&D org. Jaya Kumar, prexy of Quaker Foods N Amer, will serve as prexy for Global Nutrition Platforms, reporting to Khan. Idea is to coordinate activities occurring at good-for-you brands like Quaker, Tropicana, Lebedyansky, Sabra and Alvalle, as well as R&D labs and outside partners like universities and private cos like sweetener developer Semonyx.

Volume Was Flat in N Amer Bevs; Noncarbs Grew Comparisons were tough given inclusion of bottlers in #s and PEP brass offered few details of N Amer performance. Overall, volume was flat, representing improvement of 1 point over prior qtr, said cfo Hugh Johnston. Co is "starting to see some positive signs of recovery in the category and expects to return to modest growth," he offered. Co execs said they were heartened to have won overall share vs key rival.

Indra cited Gatorade's G Series (up in mid-teens), tea portfolio (up hi single digits), Pepsi Max relaunch and intro of Sierra Mist Natural as bright spots. This Sat, co will hand out more than 10 mil full-can samples of Natural to Walmart shoppers, largest sampling event either Pepsi or retailer has ever undertaken, she noted. Channel chief Eric Foss indicated that noncarbs improved broadly, with enhanced water, Gatorade, iced tea, energy and RTD coffee all enjoying "solid" growth, while CSDs "performed in line with the CSD category." Among core CSD brands, Mt Dew biz offered big lift. Tropicana 50 lower-calorie line continues to beat expectations, said PepsiCo Americas Bevs chief Massimo d'Amore, and strong innovation plans are in place for juice biz next year.  

With Pepsi system offering twin protein entries under Gatorade and Muscle Milk brands, it was only a matter of time before Coca-Cola responded. Tho staffers didn't seem to be talking it up or sampling it, answer was available in cooler at Coke booth at NACS c-store show in Atlanta: Powerade Protein Milk Beverage, which goes both Pepsi's entries one better via formula that contains actual milk - 51%, as label states. Line is available in 14-oz black-wrapped PET bottles in Chocolate, Vanilla and Strawberry flavors. Each bottle boasts 22 g of protein, along with 9 essential amino acids and 19 vitamins and minerals. Calorie count comes in at 300 per bottle. Key ingredient is listed as "lactose-free reduced fat milk," fact that's flagged on neck with "Real Milk" slogan/logo. Line is also touted as employing "scientifically designed collegiate formula." Tho clearly intended as response to Gatorade Recovery subline and Muscle Milk, actual milk base would put Powerade entry most directly in realm of Phase III product from Attitude Drinks, now launching in NYC, at time milk processors themselves are touting milk to younger consumers as perfect recovery liquid. Industry exec told BBI package configuration suggests line is being produced by Jasper. Brand could go out in market below $3, apparently.

Detour Bar Enters Fray Detour Bar also threw hat in protein-drink ring with Detour Lean Muscle, lactose-free, milk-based entry boasting 32 g of protein in 14-oz bottle. It's out in Vanilla Bean and Milk Chocolate flavors and is claimed to contain 1,000 mg of Omega-3's as well as 25 vitamins and minerals. Staffers at NACS booth said new line will employ same distribution channels as Detour bars to reach health/fitness channel and c-stores, likely at $3.99 price. Key ingredient is "diafiltered skim milk," per label. Jasper seems to be producer of that one, too. Detour, recall, is controlled by Emigrant Capital, which plays in bevs via Boylan, Jolt and Zola brands.

Also New at Coke: Vitaminwater Stur-D, Rhythm Coke's Glaceau unit has managed trick of offering drinkable bev containing vitamin D and calcium with new entry called Stur-D in blue agave/passion fruit flavor, with 5% juice. Blue-colored liquid is in bottle label has duct-tape look on upper portion. Also new is Vitaminwater Rhythm, with starfruit and citrus flavor. On Powerade front, due soon is Fruit Punch flavor for Powerade Zero subline. 

Nestle and Jamba Inc are back at their collaboration on RTD bevs branded under Jamba Juice name. The 2 cos said they're close to renewing partnership, this time with focus to be line of energy drinks due in early 2011 in Pomegranate Blueberry, Strawberry Banana and Crisp Apple flavors . . . PepsiCo ceo Indra Nooyi was named most powerful woman in US biz for 5th year in a row, per Fortune magazine, followed by Kraft Foods ceo Irene Rosenfeld and Archer Daniels Midland ceo Patricia Woertz. Both of top 2 women made waves, Indra by acquiring PepsiCo's largest 2 bottlers and Irene by leading hostile $18 bil takeover of Cadbury. Highest-paid female boss was Yahoo Inc's Carol Bartz, who earned $47 mil to Indra's $14 mil . . . Seattle-based Dry Soda has come up with new look via local agency Turnstyle, offering bold, graphic silhouette illustrations on clear bottles to capture each flavor's essence while allowing purity of the product to show through. Founder Sharelle Klaus has put her signature on bottle, which also sports low calorie count on neck and flavor name in image of fruit, flower or herb on barrel of bottle. More details of restage in upcoming issue . . . International Bottled Water Association said it settled lawsuit it brought vs Zero Technologies LLC, marketer of ZeroWater line of home water-filtration products. Lawsuit filed in US District Court for Eastern District of Va alleged that ZeroWater made false and misleading statements in its ads regarding health, safety and taste of bottled water products, as well as capabilities of Zero Water's products, IBWA said. Tho settlement is confidential, IBWA said Zero agreed to desist from making onerous comparisons to bottled water. That came just a week after IBWA won request for permanent injunction vs Eco Canteen Inc. distributor of reusable stainless-steel canteens that assn accused of engaging in deliberate scare campaign over safety of PET plastic bottles. That case was in US District Court for western district of NC . . .

Coming up from NBWA: Attorney and distribution expert Drew Jaglom on how to negotiate best NA contract.