First Aid Shot Therapy, marketer of FAST-branded cures helmed by former Coke exec Mary Page Platerink, as anticipated has broadened line with FAST Upset Stomach, joining existing FAST Pain Relief. As reported (BBI, Feb 12), co had recently completed Series B financing round via likes of Zico founder Mark Rampolla and co-leaders Sofinnova Ventures and Redmile Group, with view to funding launch of Upset Stomach, which melds active ingredient calcium carbonate with peppermint and ginger flavors and hint of chocolate. Each 1.15-oz bottle comprises single dose. As reported, co is taking conservative approach to building presence, so far confining itself to Seattle-area retailers like Bartell Drugs, Haggen/Top Foods and Barnes & Noble College Bookstores, and adding Tedeschi chain in Boston area.  

In move that's got Northeast bev people buzzing, Essentia Water has opted to go with Polar Beverage over rival NIDA network of indie distribs, despite presence in Essentia inner circle of pair of longtime NIDA proponents. Word is that high-pH water brand will arrive in Polar's warehouses in next coupla weeks, in apparent hope of riding Worcester, Mass-based bottler's uncommonly strong hold on retail chains, where Essentia so far has resonated best, starting in natural channel. By contrast, NIDA network often is the choice for brands that see biggest opportunity in up-and-down-street market. Move has left some NIDA members grumbling about lack of love from Essentia's sales/distribution chief, Neil Kimberley, who cut his teeth on Snapple brand that was foundation of network, and co's recently added advisor Ken Sadowsky, who's exec dir of NIDA. Neither Neil nor Polar exec John Wetzonis was ready to comment on choice. That said, it's not quite as stark a choice as it seems on surface on account of growing ranks of NIDA members who've been taking on roles as sub-distributors for their archrival Polar, which has cut back on its own network in some secondary territories. Note that another Kimberley-affiliated brand, Runa Guayusa, for which he serves as advisor, similarly opted for Polar, tho it's retaining at least one key NIDA partner, G Housen (BBI, Apr 8).  

into dropping melatonin from its until-then briskly growing Marley's Mellow Mood relaxation bevs (BBI, Apr 17 2012). Letter to Dewmar holds particular relevance, regulatory expert Justin Prochnow of Greenberg Traurig pointed out, because it's first sent by agency since issuance in Jan of its long-awaited Guidance for Industry: Distinguishing Liquid Dietary Supplements from Beverages. The lesson? Latest letter "reinforces the notion that you must be consistent in your marketing and advertising of your products as supplements or beverages," Justin warns. "This will likely not be the last letter industry sees over this issue." Text of letter, dated Mar 27 but just released publicly, can be viewed at: http://www.fda.gov/ICECI/EnforcementActions/WarningLetters/ucm390967.htm  

New-age vet Mike Joyce, whose resume includes likes of SoBe and Glaceau, has taken key role at Steuben Foods, dairy house that's showing thru its recent hiring that it's looking to accelerate ambitions to develop diverse food and bev businesses around its aseptic processing skills. Steuben, with operations in Elma, NY, outside Buffalo, and Jamaica, Queens, and affiliated with Elmhurst Dairy and NY DSD house Dora's Naturals, has explored provocative ideas like indulgent bev line licensed from Cold Stone Creamery, but been deliberative perhaps to a fault. (A year and a half after sparking retailer interest at NACS showing, Cold Stone line is still in just handful of distributors.) Just 2 weeks on job so far, Mike was reluctant to talk to BBI in detail yet, but said it was Steuben's state-of-art mfg capabilities that made opportunity compelling. Co's Web site lists tubular, steam injection, steam infusion, SSHE and PHE as all within its purview. "I'm superoptimistic about aseptic: Steuben is poised to lead that revolution" with arsenal of processes and patents, Joyce said. Tho co's contract mfg of low-acid items like protein bevs, RTD coffee and milk shakes, including as retailers' private labels, remains key focus, Joyce noted that the entrepreneurial side in him is reveling in ability to build new brands without chronic worry about raising the money to produce them. Mike knows whereof he speaks: after 8-year run at SoBe and its acquirer Pepsi, Mike has moved thru varied series of stints at likes of Shadow Beverages & Snacks, Deep River Snacks, alc play Bruvado Imports and Nutrition53 (shake line launched by retired NFL player Bill Romanowski). Joyce joins team that includes Steuben owner Henry Schwartz and co's svp/gm for brand and biz development, Gail Schnur, whose near-decade at PepsiCo overlapped with Mike's. She joined Steuben only in Nov.  

Count it as deft maneuver by both parties to deal: Ron Burkle will get Wild Oats trademark he owns a big burst of visibility while Walmart latches onto equity of one-time organic mainstay in upgrading its slowing grocery biz via line of affordable, Wild Oats-branded staples. Supermarket magnate Burkle had acquired brand rights from Whole Foods, which acquired its closest retail rival Wild Oats in 07, and had reintroduced brand into Tesco's failed Fresh & Easy chain, which he acquired out of bankruptcy last year via loan from Tesco. Burkle had also been biggest shareholder of Wild Oats at time it was acquired by Whole Foods. Perhaps most striking aspect of Walmart's move is its determination to price new organic offerings comparably to its conventional foods, or 25-30% below those of its organic offerings. "If we can make that price premium disappear, we think it will grow much, much faster," grocery evp Jack Sinclair told Reuters, citing Walmart research showing that 91% of its shoppers say they would buy affordable organic products. Initial array of Wild Oats organics will include such shelf-stable items as salsa, olive oil and canned beans, tho Walmart is considering adding fresh items like milk, eggs and salads down road, Reuters noted. Move drew ringing endorsements from organics proponents - and sometime Walmart adversaries - such as Center for Science in Public Interest, which heralded move for ushering in broader farming of organics in US. Slightly grudging statement noted, "Like with everything else Walmart does, there will be trade-offs here. Regardless of the company's behavior in other spheres, it has demonstrated before that its marketplace power can help drive valuable progress on nutrition and the environment." Note that Walmart already carries considerable array of above-premium organics, which will stay in mix at current pricing.  

Non-alcoholic beverage trends remain solid and sales are projected to be up 2.8% in 1st qtr, per Wells Fargo Securities' Bonnie Herzog, based on her survey of contacts representing 15,000+ c-store locations throughout US. "Strong results" in qtr were driven by "energy and bottled water/enhanced waters, which offset declines expected in both CSDs and juices," said Bonnie. "Iced teas and enhanced waters also performed well," she added, "likely driven by the success of brands like Sparkling Ice." Once again, weather was cited as key drag on sales during Q1, with "three-quarters" of respondents indicating "it had a worse impact on sales" vs last yr. Below is breakdown of c-store retailers' thoughts on major suppliers' performance and pricing trends; what's happening in key energy segment in these locations, and thoughts about sweetener innovation.

KO Volume Flat' PEP Up Slightly; KO's Aggressive Pricing; DPS Struggles Coca-Cola volumes are estimated to be flat while its avg price was "up a strong +2%" vs last yr, based on survey responses. "We are encouraged about KO's ability to take pricing with limited negative impact to volumes," said Bonnie. KO's "shrewd pricing strategy over the last year has paid off thus far and should help support domestic top-line growth," she added. One retailer surveyed indicated KO's CSDs were "down slightly" and noted Dasani and Vitaminwater brands "were down even more." PepsiCo volumes are estimated to be up 0.6% on 0.7% avg price increase, based on survey results. "Several retailers" cited "strength of the Mountain Dew franchise as one of bright spots" for PEP in qtr, while one suggested Aquafina, Lipton and SoBe brands "suffered major declines," noted Bonnie. Dr Pepper Snapple volume (+0.6%) and pricing (+0.7%) estimates are similar to PEP based on survey, tho 40% of retailers suggest DPS volumes fell during qtr, which was "the worst performance of its peers." As previous Buzz surveys have indicated, DPS's TEN brands are still underperforming and maybe worsening, as "many retailers suggested they have plans to pull the TEN line."

Energy Up Double-Digits; Could be Grabbin' More Shelf Space Based on survey results, energy drink sales should be up about 10.9% in 1st qtr, "in line with the improved growth trajectory the category has demonstrated for the past 2 quarters." If estimated gain holds true, it will be energy segment's 3d straight qtr of double-digit sales gains. Monster Energy outperformed, up 14.3% vs 6% estimated sales growth for Red Bull. MNST volume was up an estimated 11%, attributed to "an increase in promotions and innovations, such as Zero Ultra and Monster Muscle." Looking ahead, retailers indicated they believe energy segment (along with enhanced waters, meaning Sparkling Ice) will be sales leader in c-stores for full-yr 2014 with projected 10% growth.

Survey also revealed that energy drinks, which are more profitable and provide higher margin to retailers (nearly 40% vs 35-40% for other NAs) are "continuing to take shelf space" in c-stores, wrote Bonnie. Energy category "comprises approximately 20% of our retailers' shelves," currently, and "our retail contacts think that over time, there is an opportunity to expand the energy shelf space by 50% to over 30%" of c-store shelf space, she added. Energy drinks accounted for 25% of c-store bev sales in Q1, up from 22% in Q4 2013.

Not Expecting Sweetener Salvation While there's lotsa buzz about new sweeteners or limited runs of "real" sugar colas helping reverse slide of CSD sales, this survey found big majority of retailers don't think sweetener innovation will do much to move needle. "Our retailer contacts almost universally believe that it's 'too late' and that customers have 'too many choices that they have already switched too,'" asserted Bonnie. Survey found whopping 82.4% of c-store retailers think all-natural sweeteners could bring consumers back to CSD category but it will not bring any "meaningful increase in sales." Just under 18% think new natural sweeteners could boost CSD sales from 1-5% but not a single of Herzog's retailer contacts think it could bring growth higher than that.  

It's akin to star pupil who suddenly finds herself focus of worried parent-teacher conferences and after-school remedial courses: Coca-Cola, once viewed as steaming forward unimpeded toward its ambitious Vision 2020 goals, is now being besieged by unsolicited strategic advice, not to mention challenges from some institutional holders on exec compensation plan. As noted earlier (BBI, Feb 20), that's unaccustomed terrain for chmn/ceo Muhtar Kent, who announced his ascension to KO's inner circle 7 years ago with a bang with $4 bil acquisition of Vitaminwater marketer Glaceau and since then has had Wall Street wind at his back as investors and analysts bought into notion that he's strong-willed exec who won't be deterred from twin goals of resuscitating CSD growth while not missing out on fertile realms of new growth. Yet all of a sudden, on heels of cloudy Q4 report and 2014 outlook in mid-Feb, it's KO - not rival PEP, as in recent past - whose strategy is object of greatest second-guessing. And as also suggested in BBI recently, increased pressure to unlock new growth could provoke either KO or PEP into move - such as acquiring Monster - that might be viewed on Wall Street as transformative sign, much as Glaceau deal was last decade. All this as KO's Q1 earnings report looms next Tues and annual meeting 8 days later. Here are trio of more provocative views we've seen amid the recent din:

CNBC Report: Buy Monster, or Risk Losing Brand to Rival On CNBC this week, correspondent John Jannarone, taking cue from Stifel Nicolaus' Mark Swartzberg, made cogent case for why Coke might acquire Monster Beverage to reignite its earnings growth. Under headline "Is Monster a Fix for Coca-Cola's Diet Coke Withdrawal?" Jannarone noted that current distribution relationship with Monster generates 13% of N Amer operating profit and 3% on global basis, per Stifel Nicolaus estimates. Worryingly, "that income could vanish quickly if Monster were sold to a strategic buyer that decided to take away Coca-Cola's piece of the Monster distribution," with Anheuser-Busch InBev and PepsiCo cited as 2 possibilities. (Neither would comment to CNBC.) "If Monster were gobbled up by a rival, the pressure on Coca-Cola to meet its long-term targets would likely intensify," CNBC report argues. "The company has a target of doubling its 2010 revenue by 2020-including any acquisitions-which implies a roughly 7% annual growth rate. Unfortunately, that has proven a tough pace to achieve," as organic growth pace has slowed from 6% in 2012 to 3% in 2013. Tho MNST would rep big-ticket deal, Jannarone notes that its current enterprise value, adjusted for cash, of 12.9X 2015 consensus earnings is less than KO's own 13.3X multiple.

Morgan Stanley Analyst: CSD Issue Is Secular, Not Temporary Morgan Stanley's Dara Mohsenian concluded "deep dive" into Coke operations with view that "slowdown in CSDs is more secular than temporary," systematically discounting theories that attribute slowing growth to factors like sluggish economy. For one thing, Dara shows that KO's sales growth hasn't meaningfully correlated with GDP growth in past. With diet CSDs now declining faster than full-calorie ones, "decoupling" of 2 segments is worrisome sign. So is marked decline in penetration of CSDs among younger consumer segments - say, from 61% of 12-to-17's in 2005 to 51.5% in 2012, and from 69% of 18-to-24's to 62% in same time frame. Thus, "we believe health/wellness pressure, and a general fragmentation of consumer demand to non-CSDs from CSDs (particularly among younger consumers), are driving slower CSD category growth that is likely to linger, particularly in the US," writes Mohsenian. Tho KO has vowed to push hard on marketing (see next section below), "we are concerned that higher KO marketing spending will have only a muted impact on these issues." Interestingly, analyst shows little faith that right acquisitions might remedy issue. "Generally, we believe large-scale M&A has been value-destructive in the CPG (consumer packaged goods) space historically, particularly when done from a defensive posture. We believe Coke has had a mixed acquisition track record."

WSJ: Not Heeding Diversification Calls, KO Doubling Down on CSDs While brand Coke sales have been slipping for 13 yrs and counting and Diet Coke sales "are falling off a cliff" this year, Coca-Cola is ignoring calls to "diversify aggressively through acquisitions," wrote Wall Street Journal today. Instead, KO "plans to double-down on its namesake brand" by ramping up global advertising by $1 bil over next few yrs, which will include marketing efforts with singer Taylor Swift and World Cup sponsorship, described as its "largest marketing campaign ever." Coke is also defending aspartame, citing over 200 studies that affirm sweetener's safety, and is launching stevia-sweetened Coca-Cola Life. Ceo Kent didn't respond to WSJ's lengthy article, with reps noting he's not avail before Apr 15 earnings report. Report notes analysts such as JP Morgan's John Faucher have called on KO to diversify, and paper cites AriZona Beverage as potential target along with Monster Energy. KO shares are off 2.7% over past year vs 21% gain for S&P 500, noted Journal.  

Acai pioneer Sambazon has added 1-liter bottles priced at $6.99-7.99 for its Protein Charge (with Brazil nuts, cashews and cocoa), Purifying Greens (kale, apple, cucumber and parsley) and Daily Cleanse, which carries spicy lemonade tang and rolls out thru Costco. Protein Charge and Purifying Greens also are getting single-serve packs (10.5 oz). Meanwhile, canned Amazon Energy line has been outselling Red Bull at Stanford Univ, said founder Ryan Black, and has begun to enter produce sets at retail. Co now operates 2 acai cafes in area south of LA near its San Clemente hq but is hoping to crack LA metro with a 3d café this summer, Ryan said.  

Boylan Bottling, which has trimmed down payroll since bringing in as ceo the youthful son of core investor Emigrant Capital's Howard Milstein, has brought aboard Pepsi and Reed's vet Eddie Pearson as its vp sales, per LinkedIn update, perhaps suggesting it's back in expansion mode. Chattanooga, Tenn-based Pearson had 6-yr run at Pepsi and 6-year run at Reed's after starting his career at Coca-Cola Enterprises and Xerox. He presumably reports to Michael Milstein, who was 23 and recently out of college when he took over as ceo a year ago in wake of departure of ceo Martin Kelly (BBI, Apr 5 2013). By most accounts, Milstein is running vastly stripped-down co from regimes of founding family, Fiorina bros, and successor Martin Kelly, but Boylan soda line and sibling Mash juice line appear to have retained presence in key accounts in core market, Northeast.  

While enjoying the doors that its new Cleanse sku seems to be opening, particularly in drug chains, Balance Water is rethinking its strategy as it grapples with difficulty of communicating to consumers the tenets of its unclassifiable bev, which consists of water, wild-harvested Australian flower essences but no sweetness, flavor or color. Tho established entries Mind, Relax and Refresh have held their own at retail and been modestly adding new markets, chains and DSD distributors, Cleanse item has enjoyed considerably easier ride to acceptance thanks to broad retailer and consumer awareness of juice cleanses, said partner Martin Chalk. Cleanse was unveiled at NACS c-store show last fall as diuretic infusion of water with papaya, she-oak, bottlebrush and bush iris (BBI, Oct 28) and just released to market now. Like other entries, it's available in straight-walled half-liter and 1-liter PET bottles. Tho Relax has been core sku to date, Chalk said Balance is happy now to ride Cleanse into new retailers like drug chains and maybe let other sku's follow. Tho it's still early days, in core NY market Cleanse is far outselling existing sku's, perhaps because consumers are heeding on-pack call to "Purify your body daily." Next week, Cleanse begins test in 250 GNC Nutrition stores.

Extension's easier glide path into retail comes as co based in NY and Sydney, Australia, has retained agency Bex Brands in San Diego (which has done work on Suja cold-pressed juice brand) to rethink branding. Last major iteration had intro'd visually striking aboriginal disk art on labels, printed in high relief, but while that's done much to augment presence on shelf "it doesn't contribute to understanding of our product," Chalk acknowledged. (Cleanse sku, however, omits disk in favor of water theme, in keeping with brand function.) So Bex' assignment is to figure out what other changes might need to be undertaken. Just to give consumers some kind of peg to hang brand on, Martin said he'll consider departing from no-flavor, no-sweetness stance, perhaps by offering flavor essences. Co also has been talking to ad/pr shops to lay groundwork for out-of-home and other ads planned once repositioning has been worked out.

As reported, last fall Balance moved beyond DSD house Exclusive in NY to handful of NIDA alliance members in New England: Great State (Boston/NH), National (Maine), Northeast (RI). While Duane Reade drug chain has been workhorse retailer in NY, the new distribs have succeeded in getting Balance into small c-store chains in New England, including Nouria Energy and Alltown. Brand also has enjoyed good following in Boston thanks to city's ardent yoga community, Martin noted. As result of strong response to Balance's Expo West presence a couple of weeks ago, co now is in discussions with about 8 DSD houses in Calif and also is ready to explore Southeast, incl Fla. To help manage growth, co is seeking sr sales exec, Chalk indicated.