Celsius Holdings has hired V8 and Slim Fast vet Darren Hopkins as vp of marketing. "His experience in the functional beverage/sports nutrition categories will provide Celsius the best opportunity to maximize our marketing resources," said Gerry David, prexy/ceo of Boca Raton, Fla-based co that's put such unconventional marketing initiatives as Pandora music buys at core of turnaround efforts. Hopkins' brand management experience includes General Mills, Campbell's (on V8 and V8 Splash), Rexall Sundown (Met Rx, Pure Protein) and Unilever (Slim Fast). He's also consulted on marketing strategy for Kraft Foods, Colgate, Miller Brewing, Taco Bell and PepsiCo . . . Coupla probiotic brands have made key sales hires. GoodBelly has brought aboard James Moss as vp sales, reporting to founder/ceo Alan Murray at Boulder, Colo-based co that targets digestive health market. Moss has earlier held leadership posts on consumer packaged goods and private equity sides of Buxton Co, consumer analytics and insights firm, after run as vp of marketing services for Crossmark brokerage. Earlier in career he held roles at GlaxoSmithKline and Cadbury Schweppes, predecessor co of Dr Pepper Snapple Group . . . Kombucha-like probiotic play KeVita has named as its svp sales Tim Arneson, who segues from role as vp/gm for national accounts at downsizing energy drink player FRS Co.?  

Costco exec and LA Libations brand-incubation principal had lively exchange at BevNet Live conference this week that offered several insights - a couple of 'em counterintuitive - on how warehouse club giant operates. John Eagan, vp and sr genl merchandiser for Costco Wholesale, offered guidelines for bevcos that would like to get brands into warehouse club chain and meet its $1K/week sales threshold to remain there, with LA Libations cofounder Danny Stepper offering examples from his own experience selling his own and other people's brands into Costco.

For starters, tho Eagan is interested in early-stage brands, and exclusives on new sublines, he doesn't want to be first to carry a given brand. "I would like it pre-sold and have an image already created . . . and I just put it on the shelf at a value," he said. Indeed, if chain starts edging toward 25-30% of brand's total sales, he starts to get jittery. "I encourage them to get out and get more volume elsewhere," John said. "I don't want to own that company and I don't want to dictate to them how to run their business. It's not healthy."

Zico Coconut Water was cited as doing more than 1 mil cases of volume at chain last year (in look-ahead mode to 2014, they probably meant this year), and others that Stepper has observed on shelves at LA units have been Mamma Chia, Chia/Vie (which LA Libations handles) and Aloe Gloe (LAL's own brand). Eagan noted that chain was early adherent of refrigerated Naked Juice, Bolthouse Farms and Evolution Fresh brands, and also has done well with Sambazon acai juices, including recent cleanse offering that debuted in Costco. That said, on shelf-stable side, half of top-10 juices are Costco's own Kirkland brand.

As example of how chain will work constructively with bev brand, Stepper and Eagan noted how Aloe Gloe was faltering at only $600-700 per week per club, not enough to make cut. Costco exec suggested offering more apparent value to consumers by moving into 1-liter Tetra Pak, and that helped ignite sales to more sustainable level.

Organics are high on Costco's list, Eagan said, noting that 12% of co's 1,600 food/bev items already are organic, and chain will be augmenting push. Eagan said he personally strolls aisles of Trader Joe and Whole Foods stores every week, trying to spot what's new and worth a gamble in his stores.

In surprising exchange, Stepper readily acknowledged that he discloses his cost structure to Costco, on grounds that transparency is essential to solid relationship with operator that recognizes suppliers' need to make a profit. Costco buyers will ask you about minutiae like the cost of your bottle caps, "and if you don't know it's embarrassing," Stepper said. In any case, even without your own disclosure, Costco execs have pretty good read on what your costs are likely to be. "It's a radical idea, but it works," Stepper said of his full-disclosure stance. He aims to price fairly for both parties, and "never, ever has any Costco region in the country told me I'm making too much." Added Eagan: "If I know his costs, I don't use that as a hammer necessarily." (Hmm . . . was "necessarily" necessary?) In one case, Stepper claimed, he was able slash an input cost and promptly went back to Costco to share the savings via a lower price to the retailer.  

Another mainstream retailer seems to be striking up test to offer greater prominence to cutting-edge, premium bevs. This time it's Safeway, which is said to be prepping test in Feb of superpremium cold juices on order of Raaw, Suja and BluePrint, which would be merchandised in prominent endcap in forward position in store, area with greater visibility and traffic than produce set. Apparently nothing's finalized yet, but as things stand now, test would commence in retailer's Northern Calif and Pacific Northwest regions. Safeway joins ranks of mainstream retailers like Target and Kroger that are looking to offer greater prominence to innovative bevs.  

Energy drink volume soared 13% in convenience stores for 4 wks thru Nov 23, per Nielsen data reported by Wells Fargo Securities' Bonnie Herzog. Avg price for segment was -1.7% vs -2.9% over last 12 wks as Monster and Rockstar discounted less. Energy drinks still posted double-digit gains even though they were going against comp w/out Thanksgiving holiday this yr. Monster was best gainer once again, with volume jump of 19.3% on 1.7% price drop for the 4 wks. That's up from -3.1% pricing for MNST over last 12 wks during which volume has jumped 36%. Red Bull gained 7.4% on 0.6% price increase last 4 wks. Rockstar volume was up 14% with 2.3% avg price decrease, well below -4.7% avg over last 12 wks. Even with steeper avg price discount (-3.8%) last 4 wks, PEP energy brands lost 3.1% while Coca-Cola energy volume jumped 17% on similar pricing (-3.4%). Latest results are another strong indication that energy category "continues to recover following a weak summer," Bonnie noted, and "we are encouraged by ongoing strength" of category.

CSDs Still Struggle; Pricing Remains Solid Carbonated soft drinks continued familiar pattern of rational pricing amid declining volume. Volume fell 4% in c-stores over 4 wks thru Nov 23, slightly worse than category's 12-wk trend (-3.6%). Prices were up avg 4.3% tho, in line with 12-wk trend. Coca-Cola volume was off 3.3% with avg price up 4.3% while PepsiCo down 4.3% with avg price increase of 5.4%. Dr Pepper Snapple had steepest volume decline (6.1%) among top 3 suppliers while its avg price rose 2.8% for 4 wks vs 1.9% increase over 12-wk period.  

PepsiCo is taking over as official non-alc bev at Buffalo Wild Wings chain - coveted for its young male crowd and allegiance to football - and letting sometimes skeptical investment world know that deal reflects power of PEP's melding of snacks and bevs. BWW is "one of the nation's hottest restaurant chains" and bev deal provides PepsiCo other opportunities as well with its snack brands, noted NY Times, to whom announcement looked to have been leaked by PEP and which gave it prominent play fronting biz section. "You've got to get in the door with great beverages. But what this partnership does is give Buffalo Wild Wings a full access pass to all the PepsiCo has to offer," as NYT quoted Kirk Tanner, prexy of PEP's foodservice op. Down the line that could mean "a Dorito-crusted wing or a Mountain Dew Cocktail," speculated NYT. Sports-centric theme at BWW "fits rather neatly with some of PepsiCo's products" and endorsements, and gives PEP access to key demographic of young men, "who also tend to be the biggest drinkers of Mountain Dew." Terms of deal weren't disclosed. Sally Smith, ceo of BWW, expressed no dissatisfaction with relationship with incumbent Coca-Cola, whose contract was ending. "We had poured Coca-Cola for a number of years, and together with our franchisees, we thought it was important to go out and have a look at what the options are," she said. In official release that went out afterwards, chmn/ceo Indra Nooyi reiterated, "We see tremendous opportunities to leverage PepsiCo's diverse food and beverage portfolio in ways that benefit both companies through exciting new innovations, unique consumer engagement programs, and powerful brand activations tied to sports and entertainment." Take that, Power of One skeptics!  

Most observers expected establishment of cap-dispensed bev segment to be arduous undertaking, and stresses became more apparent this week at category leader Activate: investor and former Disney chief Michael Eisner, who'd taken hands-on role since departure of ceo Dan Holland a year ago, is elevating his son Anders, who co-created brand, to prexy job, and father-son duo apparently are moving to buy out stake held by India's Tata Group. Change, which is believed to include some layoffs, includes exit of current prexy Reza Mirza, a former Nestle Waters exec, and move of Craig Berger into dual roles of cfo and coo. In statement to BBI, Anders said he's buying co back from existing investors after strong year of distribution announcements and growth, and described change as follows: "I am excited to take Activate back to our roots of a small business with an entrepreneurial spirit. As we look forward into the new year, we are going to hit the pavement hard with increased opportunities for sales and growth," including new products and distribution deals. In his stint, Mirza had worked alongside the senior Eisner to narrow focus of brand, exiting territories like Southeast while finally pushing into Northeast, where cap-dispensed rivals like Karma and 989 On Demand had already established foothold. Anders had created brand with Burke Eiteljorg, who has since left co.  

Coca-Cola suggested it's on a mission to get refranchising of North American bottling operations done fast with surprise reorg that moves Coca-Cola Refreshments bottling arm into Bottling Investments Group - internally dubbed "hospital ward" - that serves as way station for operations being prepped for return to outside ownership. Effective Jan 1, Coca-Cola Americas div is dissolved and integrated North America biz is divvied into Coca-Cola North America marketing/production arm and Coca-Cola Refreshments bottling arm. Latin America Group, led by group prexy Brian Smith, becomes part of Coca-Cola International. In other words, "the Americas division is being eliminated with all that is not North America moving into International," as Stifel Nicolaus' Mark Swartzberg put it. In biggest surprise of revamp, Coca-Cola Americas prexy Steve Cahillane is exiting co, after being on some observers' short list of execs with shot at eventually succeeding Muhtar Kent as KO's ceo.

Recall that in contrast to rival PepsiCo, which had touted acquisition of bottlers as resulting in superior go-to-market system, KO had never stopped touting franchise model as effective one, apparently following in PEP move to buy its bottlers with view to ousting Coca-Cola Enterprises as N Amer partner, rewriting rules to reclaim certain channels and mfg responsibility, then refranchising territory to more-preferred partners. Those talks already are well under way with 5 incumbent bottlers (other partners could come into picture, too), so new move sets stage for acceleration of program. By now, PEP too has moved to refranchise N Amer bottling system, with announcements anticipated early in coming year.

Under new structure, Coca-Cola North America (CCNA) will be led by former CCNA chief Sandy Douglas as group prexy, reporting directly to chmn/ceo Kent while continuing in role as svp and global chief customer officer. Reporting to Sandy will be North America Brands, Foodservice, Brand Commercial, Retail Sales, Research & Development, Venturing & Emerging Brands incubation unit, Strategy, Franchise Leadership & Transformation and Canadian franchise operations. Meanwhile, BIG vet Paul Mulligan comes in to run CCR, reporting to BIG prexy Irial Finan. An accountant by training, Mulligan has spent 17 years crisscrossing world in various Coke roles, currently serving as head of commercial for BIG and region dir responsible for BIG operations in Japan and Latin America. KO said its North America Enabling Functions org will continue to support both CCNA and CCR.

After a reorg last year intended to improve co's agility, latest moves leave KO "in a position to leverage this flexibility to return to a traditional company and bottling operating model in North America, which will enhance our focus on execution and accelerate the refranchising of our bottling system in our flagship market," Muhtar said. Cahillane, described as leaving to seek other opportunities, got this encomium from Kent: "Under Steve's leadership, our North America business delivered several consecutive quarters of volume and value share gains, despite operating in a very difficult economic environment the past 3 years. We wish him well." Noted Stifel's Swartzberg: "We had considered him a potential coo and ultimately a potential ceo." Mark also wondered why current CCR head Glen Water, succeeded in that role by Mulligan, isn't named in any of reorg news. "We wonder if Mr Walter is going with Mr Cahillane," speculated Swartzberg. "They worked together at InBev and both have multiple years of sales and management experience in North America beer (eg, Labatt)."

Analysts See Accelerated Refranchising, Further Cost Efficiencies Analysts generally reacted favorably to news, and KO shares were trading up today after last night's announcement, which culminated series of investor meetings earlier this week. "We believe this news is another step in an ultimate refranchising of the NA bottling business, which should be viewed favorably for Coke with incremental cost-cutting, and given a refranchising would unlock higher returns and bring able local bottling partners in to improve operations," wrote Morgan Stanley's Dara Mohsenian. "We continue to expect incremental news early next year around an initial agreement with the 5 US bottlers with whom Coke has announced it is in talks, as well as incremental cost-cutting plans." This assessment from Wells Fargo Securities' Bonnie Herzog: "We think investors will applaud the organizational change, as it effectively accelerates the refranchising of KO's bottling operations to independent bottlers; however Cahillane's sudden and unexpected departure raises questions about the rationale behind this surprising announcement." Still, "we are pleased that Ahmet Bozer and Sandy Douglas will remain an integral part of KO's leadership team and future."  

NY State attorney general Eric Schneiderman reached settlement late last week with Abbott Laboratories over advertising of its Pediasure SideKicks bevs, AP reported. Pharma co agreed to cease ads with unsubstantiated claims that sugary drinks with added vitamins and minerals "targeted nutrition" for kids' "unique needs," per report. Abbott will pay $25K fine to state. AG office began investigation after receiving complaints that ads were misleading by implying that pediatricians recommend SideKicks for healthy, thriving children. Abbott rep told AP that co is happy to resolve issue and that PediaSure SideKicks is "nutritious snack alternative for children" who may have nutritional gaps in daily diet.  

At compact expo area attached to BevNet Live conference in Santa Monica this week, Amcor Rigid Plastics was touting forthcoming new program called UpStart that aims to ease barriers to small and emerging brands getting the right packaging solutions. "Scalable bottle solutions" plan due in Feb/Mar timeframe will demand lower minimum runs of brands, in part by adopting new machines that require fewer molds, said Amcor staffer Marisa Ayala. For brands looking for more economical solution to need to customize panel-less PET bottle that has become default choice for many brands, co will offer semi-customization option in which, say, proprietary mold must be cut for top third of bottle but lower 2 sections employ standard mold sections. Idea is to allow new customers to start with smaller runs employing stock bottle and grow with Amcor rather than having to migrate among suppliers as brand develops, Ayala noted. Besides startups, program also targets larger cos that need to muster small runs for promotional bottles or market tests, she said. Amcor's network of 4 regional facilities in Penn, Iowa, Calif and Va also facilitates staged growth of new brands that might start as regional brands before moving to broader geographic presence.  

Tho some Calif beer houses enjoying flush times with craft brews have been standoffish toward NA brands, that may be about to change now that many have agreed to pick up distribution of Jarritos Mexican sodas from importer Novamex, prexy of Bud/Red Bull house ME Fox told BevNet audience. As craft segment has blossomed, some of ME Fox's beer peers have closed their doors to NAs, complicating efforts to offer solid regional coverage and avoid issues like transshipping, said Terence Fox, prexy of family-owned biz that's maintained stable of non-Red Bull NAs. But agreement by 8-10 Calif beer houses to pick up Jarritos as of Dec 1 (following failed experiment by brand in state's Dr Pepper Snapple Group network - BBI, Oct 28) means those houses now are in NAs in a big way and will be looking to bring in other brands.

Tho family-owned ME Fox has been around since 1965 and engaged with NAs since mid-1970s, mgrs there still have sense of "somewhat feeling our way around the dark" amid ever-changing segment, Terence acknowledged. Co does 3.2 mil case-equivalents of beer from suppliers like Anheuser-Busch, Crown, Diageo/Guinness and Sierra Nevada, about 575K cases of Red Bull and another 175K cases of non-RB NAs after selling off Snapple and AriZona brands a few years ago. Current NAs include Nesquik, Hint, Voss. ME Fox serves all of Santa Clara County with its NAs but Red Bull footprint extends to San Mateo County, too. Footprint includes affluent Silicon Valley toward north and west but also Hispanic/blue collar demo. Given its strong Mexican heritage, Jarritos is viewed as key addition that could bring 200K cases - "game changer for us" in that part of portfolio, Fox figures. That kind of volume should be enough for other beer houses to rebuild NAs around, as noted.

In BevNet presentation Fox offered "how-to" for working beer system in NorCal. Safeway is major retailer, of course, but of increasing importance in Fox's Silicon Valley territory are non-trad customers among tech community such as Facebook, Apple, Google, LinkedIn and eBay, some served directly, others via sub-distributors. Google "may want your appendages and organs," but you'll do tremendous volume there, Terence promised. In those microkitchens, "if it's not subsidized, it's free," eliminating liability of superpremium brands in most other retailers. More and more of these accounts are getting licenses to sell alcohol, too.

Fox advised would-be NA suppliers to maintain realistic awareness of pressures and motivations of shops like his. They're under increasing pressure to maintain focus on core suppliers, particularly A-B. They prefer all-channel exclusivity rather than carve-outs for some channels or retailers. (Unlike in other parts of country, tho, Whole Foods won't accept DSD deliveries for NAs in his territory, so that's frustrating fact of life given high volume of beer ME Fox delivers to retailer.) Profitability and quick turns are more important than ever in territory with soaring fuel, warehouse and unionized labor costs, and one in which thriving craft beers offer $12-16 per case margin simply for dropping a few 6-packs on shelves, vs smaller margins for more arduous merchandising of single glass bottles of many NAs. As for interactions with wholesaler, Fox said bluntly that co wants "no needy girlfriends - keep in mind where you fall in the pecking order" at house that does 95% of its biz from beer and Red Bull. That applied to NA supplier who proposed crew drive for Jul 4 holiday, period when co draws 12-15% of its annual revenues. Not gonna happen, Terence advised. No mention by Fox of Red Bull move to open its company-owned Southern Calif distributor to Evian water (story above).

Of course, contracts are issue - Fox allowed that, if it's really powerful brand, he'll settle for less preferable deal, but then won't be so willing to pony up for support. Craft brands' performance, he noted, stands as sign of what motivated DSD distributor can do. Buyout of one times gross profit he referred to as "use and abuse." Judging by the 10-12 NA deals he's negotiated over past 2 years, he noted drily, "I think you're all using the same attorney because they're all one-sided."