With respondents to her c-store survey consistently citing Monster Energy as standout bev performer, Wells Fargo's Bonnie Herzog has initiated coverage of Monster Beverage Corp, in part attracted to its robust innovation and international potential, at time controversies over safety seem to be receding. Investor note heralding her coverage offered strong endorsement for energy category in general, noting that it "remains one of the few bright spots in US beverages, growing on average 25.2% annually, versus CSDs declining 1.7% over the past decade . . . Our retailer contacts believe energy drinks will soon represent nearly one-third of all beverage shelf space in the c-store channel, up from about 20% today." In lengthy analysis supporting "outperform" rating on stock, Herzog terms acquisition of MNST "unlikely in near term" on account of extensive slate of legal challenges confronting co, saying "we suspect that any potential buyer will wait on the sidelines until all outstanding issues have been resolved." She rates distribution partner Coca-Cola as the likeliest buyer, even tho co has indicated that it's reluctant to do megadeals on order of $4.1 bil acquisition of Glaceau, which came to 20X trailing cash flow. "However, given the challenges of the CSD market in the United States, we believe that there is still a possibility that KO would be interested in buying MNST and potentially paying a similar multiple for MNST, which would represent a 25-30% premium" of anticipated 2014 cash flow, Bonnie figures.  

John Harney, ex-Marine and innkeeper who came late to tea game but built enduring global biz as Harney & Sons that numbers among its customers Buckingham Palace, passed away on Tues at age 83. Harney started biz in 1983 at age 53, when some people may feel their better days are behind them, his son Michael Harney, 58, told Poughkeepsie Journal. Not many Americans outside Northeast drank hot tea at time either. After partnering for 3 years with 3d-generation British tea merchant who'd supplied his inn, Harney went out on his own under name Harney & Sons, in hope his sons eventually might be coaxed into biz. (They were: Michael is vp, and his younger bro Paul launched admired RTD line and set up distribution operation in NY to get it to retail. Grandson Emeric is also in biz.) Co launched in Salisbury, Conn, and later moved to Millerton, NY, where it operates tea room (along with another in NY's Soho district). TeaBizBlog reported that biz has grown to 170 employees and occupies 90K sq ft of warehouse space in Millerton, with new bottling facility under construction. After serving in Marine Corps and attending Cornell Univ School of Hotel Administration, Harney had run historic White Hart Inn in Salisbury for 23 years, becoming enchanted with Sarum loose tea supplied to inn and deciding to take plunge into biz himself. At shows like Fancy Food Show, BBI editor found Harney to meld genteel demeanor with pixie-ish sense of humor and infectious enthusiasm for latest tea blends. He was awarded Cha Jing award for lifetime achievement in tea in 2011. He's survived by wife Elyse, 5 children and many grandchildren, Michael Harney told paper.  

A push to require warning labels on sodas and sports drinks that barely passed California State Senate last month came up short of votes this week in State Assembly, reported Sacramento Bee. Senate Bill 1000 was approved by Senate last month "with the bare minimum 21 votes needed," but came up 3 votes shy of 10 needed in Assembly Health Committee. "It's an honorable effort but I feel it's ineffective," said Rep Lorena Gonzalez. "I think this bill creates as much confusion as it does information. A label which will appear on soda and sports drinks with no labels appearing on chocolate milk, juices or alcoholic beverages sends the wrong message." Other Assembly members were also skeptical that labels would change consumption behavior, despite clams from bill's author, Sen Bill Monning, that warning label "is based on science that says liquid sugar is a unique driver in today's obesity and diabetes epidemics."  

It's roundabout strategy for getting RTD item into retail: Whynatte Latte has spent past 4 years patiently cultivating bars and clubs in its hq Atlanta area with canned coffee play positioned as mixer. But things are starting to move faster now: brand is reformulating as all-natural, dropping extraneous ingredients that create pricing issues and unwelcome association with energy drinks, and edging into first 2 outside regions: Boston and Tenn. This as Whynatte concluded successful navigation of money-and-advice program of NY brand accelerator AccelFoods (below). Thru all the changes, tho, core strategy under cofounder Jesse Altman remains same: build brand awareness in clubs and bars via alliances with liquor brands and distributors (buttressed by investor/endorsers like comedian Margaret Cho), and use that awareness to enter nearby retailers. "We won't go into the coffee set (at retail) unless we're cranking on-premise," he vows. That's panned out in Atlanta, where Kroger and Publix stores that carry brand in nightclub-intensive areas like Buckhead have done well with it. Time will tell whether novel approach can make dent in enduring RTD hegemony of Pepsi/Starbucks collaboration that many others have tried unsuccessfully to crack.

Brand comes in dark brown 8-oz slim can with big scripted gold W dominating label. Beneath package, much is about to change: it's being reformulated to be all-natural, which not only will get brand into retailers like Sprout's and distributors like UNFI, but also will serve to distance brand more from energy drinks, a priority of spirits partners like Jim Beam and Diageo, who want to put distance against energy drinks after alc-and-energy controversies of recent years. Along those lines, brand is dropping ingredients like taurine and L-carnitine that are associated with energy drinks and add to production costs. New sweetener blend of stevia and monkfruit will dial down calorie count from 100 to 90; overall sweetness level also is being reduced. New version will hit market in late Aug or early Sep.

With strategy vindicated in Atlanta, brand has just entered Mass, via spirits operator Martignetti, and Tenn, via bar and restaurant operator that had pursued Whynatte for some time, Jesse said. Initially, new partners are focusing strictly on-premise, until revamped product is ready later this summer. (In core Atlanta market, brand moves thru National wine/spirits house after early experiment with beer house.) For off-premise, Altman's looking to employ broadliners like UNFI. Overall plan is to show that strategy is replicable outside Atlanta as co preps for new financing round early next year. "It's great to finally be outside Atlanta" after 4 years of honing proposition, Altman observed. He launched brand as a lark after a night of hijinks with collaborators who've since moved on.

Successful Jaunt thru AccelFoods Accelerator Having "graduated" earlier this month, Whynatte is first bev case history to emerge from AccelFoods, brand "accelerator" set up by Lauren Jupiter and Jordan Gaspar. Working out of shared space in NY's Times Square area, AccelFoods brings in 4 early-stage food/bev cos at a time for 6-month menu of seminars, expert consultations and other activities that take advantage of such experts as star chef Tom Colicchio, Verlinvest brand scout Franklin Isacson, bev lawyer Nick Giannuzzi, natural products consultant Bob Burke. It's allied with such potential retail accounts as online grocer FreshDirect, JetBlue air carrier and Loews Hotels & Resorts. Accel gets sliver of equity, below 10%, for its role.

Approach to Whynatte came from Tappan Shah, ex-Vitaminwater exec now serving as Accel's marketing dir. (Altman knew him from outside bev biz, having grown up with Shah's future wife.) It became one of 4 cos accepted into first phase, along with Exo (protein bars made from crickets), Jaali Bean (Indian soup and side kits) and Kolat nut butter spread. Tho Altman won't discuss financial details, structure produced investment in Whynatte off the bat, and 2d tranche after Whynatte successfully completed program. Accel's investments typically are in 5-figure range for initial tranche, and low 6 figures for 2d one, meaningful amounts of capital for early-stage cos just starting to generate revenue. For Whynatte, money served to close ongoing round that co had launched late last year. Indeed, Accel connection put him immediately in touch with 10+ private-equity firms who're all investors in Accel or otherwise associated with accelerator. "It's a good model: their actually making an investment changes the dynamic a lot, puts them on the same side of the table," compared to for-hire incubators or those who just grab some free equity for their services. While Altman readily admits he was skeptical going in, he says he's a convert now, cherishing the connections it brought as much as actual capital and strategic guidance. At FreshDirect, for example, if you're all-natural, you can pretty much expect to be picked up by online grocer as result of having been accepted into Accel program, he said. Another partner, Ignite Sales & Marketing Management's Kent Pilakowski, has served as outsourced chain-call solution. And lawyer Giannuzzi has proved invaluable ally as Altman tackles task of writing contracts with new distributors. Program concludes with so-called Demo Day, which offers opportunity to pitch investors for future rounds (tho none of 4 cos at inaugural Demo Day, in NY movie theater, was in capital-raising mode). Accelerator just announced that participants in 2d class will include 2 bevs, Iconic meal replacement and Four Sigma mushroom tea mix. Info on Accel at AccelFoods.com. Info on accelerator, which is setting 2d class, is at AccelFoods.com.  

Latest investment from First Beverage Group highlights notion that LA-based private-equity shop is looking for bev plays well beyond the actual product space. Today it said it's committed undisclosed amount of capital to Repsly, field team management and field sales enablement software provider. "Marko Kovac, together with his team, has created a breakthrough solution to give companies real time visibility to their work in the field," said managing partner Tom First of latest target. "Any beverage company or food company that values field execution will benefit from this innovative mobile solution." Co had earlier been called Salespod. Kovac said tie to First Beverage is valuable not just for capital it brings in, but for co's insight into "what is truly important to field operations in the beverage industry, our fastest growing sector." New corporate name, Repsly, doesn't seem to be intentional reference to perception among some sales execs that their field reps occasionally lie to them . . . Tho more relevant metric to parent Coca-Cola in long term will be hitting $1 bil in retail sales, Honest Tea has crossed another impressive milestone, selling more than 1 bil bevs since 1998 founding in Bethesda, Md, kitchen of ceo Seth Goldman. Along way, co has purchased more than 22 mil lbs of organic ingredients, from tea to sugar cane, in keeping with mission to democratize organics in North America. "It's nice to see our brand and mission reach an audience well beyond my personal sales route," noted Goldman. Co expects to purchase 8 mil lbs of organic ingredients this year. "Now when I visit with our suppliers, they know it's not just some guy who started a company out of his house, it's a representative of The Coca-Cola Company," Seth declared.    Go To Top

 

BBI reader has sent photo taken at NY-area Whole Foods store showing Coca-Cola's Honest Tea brand promoted at 3 for $2, down from regular $1.79 price, for window listed as Apr 30 thru Jul 1. That's pretty deep discount, and over 2-month window, no less. Visible on lower shelf in foto is organic tea rival Sweet Leaf, now owned by Nestle Waters, at 3 for $3. Have you spotted interesting price trends in your travels, readers? Please send them our way.  

Youthful veteran of granite biz of all things is closing in on 3d year operating small DSD house in Sacramento area of Northern Calif, building bev roster so far that includes Cabana lemonades, Reed's sodas and kombuchas, Chia/Vie, Aloe Glow, C2O Coconut Water, Grumpy Cat bottled coffee and co's own line of canned and bottled sodas under Senuca brand. Owner John Senuca told BBI that Senuca Beverage launch stemmed from fascination he'd had with bevs since stepping into copacking plant as a little boy; when circumstances found him visiting another copacker 10 years ago, that was it, he recalled. "I have to pursue this business," he thought. So a few years ago he sold his granite co and hung out shingle as bev shop, now working 15-county region around Sacramento, including areas whose long distances and small drops have made them forbidding to prospective rivals. (That's why, he says, he's happy to take on non-exclusive brands like Nestle Waters' Pellegrino, Sweet Leaf Tea and Tradewinds Tea, knowing he won't have much local competition in some of his territory anyway.) He said he's increasingly focusing on natural and organic items. So far, Senuca is operating fleet of 5 trucks, with room for 3 more, which likely will include refrigerated units. He's got enough warehouse refrigerated space to stow 26 pallets of inventory. With product support from suppliers, John said he's happy to work events, Costco road shows and other sampling opportunities, noting that by now he's done 200+ events just for Cabana lemonades. Co celebrates 3d anniversary this Aug. Info at Senuca.com.  

Sipp Sparkling Organics has ridden brand refresh to new positioning, lower price and broader presence that's taking it into expanded array of retailers and even into foodservice side.

Recall that Penn-based mixologist Beth Wilson-Parentice launched brand a few years ago as Sipp Eco Beverage, to puzzlement of some in biz who didn't see any particular green connection. But Emil Capital Partners (family office for A&P/Tengelmann retail fortune) came aboard and funded summer 2013 brand refresh that downplayed eco language in favor of more straightforward positioning as Sipp Sparkling Organics. Brand also rethought pricing, getting front line down from forbidding $2.39-2.49 range to $1.99, making Sipp competitive even with most non-organic natural sodas. Now that co has found certified organic copacker with tunnel pasteurization and carbonation capabilities, brand will be able to sport organic certification emblem on-pack, as will be visible at upcoming Fancy Food Show in NY. Restage included dialing up flavor intensity of Mojo Berry and Honey Pear (renamed Summer Pear), tho 3d core sku, Ginger Blossom, was left unchanged. Fourth flavor, Lemon Flower, was added last Nov, as were 4-pack carriers (tho tight margins means usual frontline of $7.99 for those, for same per-bottle price as the singles). All flavors are subtle gourmet blends - Lemon Flower, for instance, includes elderflower and tarragon - in graceful glass packs. They clock in at 100 calories, lower than many rival brands. So far, Wilson-Parentice said, she's unwilling to make flavor tradeoff in quest of lower-calorie offering. "Our customers are foodie people," she explained.

Result of refresh has been broadening of availability beyond natural channel, mainstream grocers like Food Emporium, gourmet shops like Balducci's, and with nod to drinks' mixability, wine and spirits retailers like ABC Fine Wine & Spirits in Fla and, shortly, Beverages & More chain. To support BevMo in Southern Calif, Sipp just brought on LA-based Real Soda in Real Bottles, operated by soda obsessive Danny Ginsburg (who reminded that he's "fully aware that 'pallet' and 'palate' are not merely differentiated by their spelling"). Real Soda will later move brand thru its territory in Pacific NW and other western states. On natural side, Whole Foods has come aboard with Mid-Atlantic and Northeast divs and HEB's Central Market banner has committed to pick up line.

Next frontier is foodservice side - including potentially some familiar fast-casual chains that approached co at recent National Restaurant Assn show in Chicago. Many said they liked brand's niche as hybrid of sparkling water and soda, she reported. Tho it's too early to name names or say for sure that deals will pan out, Beth said interest makes sense for restaurant and café operators who're playing farm-to-table card with food offerings and want to similarly upgrade bev set. Sipp is getting set up with US Foods to pursue this channel.

To date, brand has focused its sales efforts on East Coast, West Coast and Tex. Working with NY-based Cascadia Managing Brands, Sipp has been building DSD footprint, which currently includes Preferred in NY, Geyser in Bay Area, Maletis in Northwest and Real Soda. On to-do list is landing solid DSD partner in Chicago. Tho co continues to operate leanly, it's hired sales staffer based in SF, and benefits from Emil Capital investment by sharing pair of sales staffers with other portfolio cos, including Cheribundi cherry drinks and Tcho chocolate. So far, co has adequate capital, tho as year progresses it may start to consider next round, going beyond Emil for some of money. Brand info at newly revamped Web site HaveASipp.com.  

Reed's Inc has continued to recruit DSD distributors for its refrigerated Culture Club Kombucha line, even tho most don't maintain fleet of refrigerated trucks. By now, brand has built network that includes such leading distributors of shelf-stable brands as Haralambos Beverage in LA, Great State in Boston/NH, Manhattan Beer in NY, Peerless in NJ and Senuca in Sacramento, Calif, with other deals well along in negotiations. Most or all of those houses already carry Reed's core shelf-stable boutique soda lines, Reed's and Virgil's. Strategy has aroused interest because finding effective route to retail for refrigerated items like kombucha, cold-pressed juice and cold-brewed coffee has been key obstacle to those categories igniting; Reed's, having pushed shelf life to 5-months, has been willing to take a flier on wholesalers who maintain refrigerated warehouses but not refrigerated fleets. Some other refrigerated brands have likewise been finding their way into beer houses and other shops that don't currently maintain refrigerated fleets.