Hain Celestial ingredients are being challenged in court yet again as Nov 6 suit alleges its teas are not "100% natural" and in fact contain high pesticide residues, reported Food Navigator-USA.com. Plaintiff Tatiana Von Slomski cites claims that lab tests have found Celestial tea brands contained pesticide levels higher than legally allowed. Had she had any inkling they weren't 100% natural, she would not have purchased them, suit contends. A company rep derided suit as "without merit" and said plaintiff claims are simply "recycled from a report issued in February by a 'short seller,'" one that stands to make money by precipitating decline in Hain Celestial stock price. Recall that co is also facing a lawsuit over claims that its BluePrint juices are not "100% raw" or "unpasteurized" as advertised, given that they undergo high-pressure processing (HPP) for longer shelf life (BBI, Oct 28).  

Hefty payout ordered by arbitrator for Starbucks to pay Kraft successor co Mondelez Int'l this past week certainly caught lots of folks' attention Tues eve and Wed morning. But there was no panic among investors (SBUX share price actually has increased since decision) nor is co second-guessing decision to pull packaged brands away from Kraft given that packaged coffee channel has grown to $3.2 bil, noted Motley Fool. MF report was somewhat surprised/amused that "Starbucks is out of cash, and no one cares," given anticipation that SBUX will bounce back quickly. After all, co had "more than doubled its cash on hand" from $1.2 bil to $2.6 bil during fiscal 2013. "In a world where cash is king, Starbucks in an emperor. The business is generating cash at an incredibly healthy pace, and it shows no signs of letting up," assessed MF.  

In a field full of tepid Sparkling Ice wannabes, folks at AriZona Iced Tea have found more distinctive approach: tying in with Bethenny Frankel and her successful Skinnygirl cocktail franchise. Move announced on star's Bethenny show brings to market Skinnygirl Sparklers, initially in Tangerine Mango, Strawberry Lemonade, Pink Grapefruit and Pineapple Coconut flavors. They're launching now in the 3 markets where Ferolito, Vultaggio & Sons controls its distribution: NY, Fla and Chicago. Partners were brought together by Skinnygirl's licensing agent, CAA Global Brands, and items are not branded as AriZona products. Recipes also diverge considerably from Ice and its most blatant knockoffs, offering 5 calories per serving, presumably in interest of flavor, rather than going all the way to zero, and including fruit juice, 6 vitamins, superfruit extracts and green tea polyphenols. But they're packed in straight-walled PET bottles that have become de rigueur for all entries but Pepsi's Aquafina Splash. To promote new line, Create the Next Skinnygirl Sparkler Contest running thru Tues invites viewers of show to create new flavors for line in hopes of winning $10K in cash. By now, Skinnygirl trademark has expanded into range of items including the alcoholic cocktails, wines, sweeteners, lingerie, workout accessories and even daily cleanses.  

Natural-soda marketer Reed's Inc brought investors a 3d qtr with strong revenue growth, modest profit and no negative surprises this time. Net revenues surged 28% to $10.1 mil, as disclosed in sneak peek last week (BBI, Nov 6); that's in line with ongoing pace this year with 9-mo revenues up 25% to $27.7 mil. Gross revenues came in up 33% before stepped-up promo expenses, particularly on kombucha side as co seeks to seed its Culture Club line. Gross profit rose 29% to $3.2 mil and co eked out $34K in net income vs $22K loss a year earlier. Loss before noncash items and finance costs was $372K. And unlike last qtr, there were no serious shocks this time, aside from disclosure that co would have added $100K more to bottom line were it not for costs incurred expediting order to meet delivery deadline, presumably of private-label customer. In remarks during investor call, founder/ceo Chris Reed noted significant progress on kombucha launch - just few mos after slow start and restive investors had him wondering if he should throw in towel - but also indicated he's getting feeling that current excitement surrounding HPP juices has eclipsed kombucha as the "it" category. Still, brand continues to make strong retail inroads and should double its sales next year.

Parsing results, cfo Jim Linesch noted that co's top 12 sku's accounting for 70% of revenues grew at 34% pace. Culture Club Kombucha is at $5 mil run rate with potential to double next year, notching gross sales in Q3 of $1.2 mil. Stars seem to be aligning even on smaller brands - say, #7 seller Butter Beer, ambush of Harry Potter franchise. REED had hoped Walmart would place it in Harry Potter DVD displays and "when that didn't happen, I didn't think it would go anywhere," Reed acknowledged. But it seems to have clicked at other retailers, rising 158% year over year and doing about $1.2 mil per year and growing very fast, he said. Among priorities for 2014: working with key DSD shops to grow core brands more aggressively, including NY's Manhattan Beer.

Flavor Breakthroughs Aim at Carving Out Room for #2 to GT's Reed acknowledged that co's guidance on kombucha had been "all over the place" in past, as co got investors salivating by pointing to potential of being #2 player in $300 mil sales segment dominated by GT's. Tho others like Hain Celestial had tried for years to crack code without much success, "we felt we had a better pulse on the market, a sense of what was not working with the other brands," Chris said. So it was tempting to predict REED would grab 5-10% of market within a year and a half, enough to create as much as $30 mil in new revenues for soda player.

Clearly that hasn't happened. Still, co still regards launch as success, leaving Culture Club as "clear #2 brand with years ahead of us." Encouraging surprise has been alacrity with which general grocers have brought line in, in part because its 6-month shelf life: they include Giant Eagle, all Kroger banners, Wegmans and Jewel-Osco. Recent learning includes a chance that "the market's somewhat moved on from kombucha, looking for high-pressure pasteurization products (cold-press juices)." A hurdle to winning placement is retailer objection that "we're real happy with #1, why do we need you as #2?" That's where radical flavor innovations come in: items like Cabernet Grape, Hibiscus Ginger and coconut-water-based sku offer promise of shaking things up. "So people are starting to take us more seriously," Chris said. Second batch of 4 flavors now accounts for 25% of biz and will be supplemented with pair of new ones soon.

LA Plant Finally in Good Shape On production front, makeover of LA plant is nearing completion, with output goosed from 40K cases in a good month to 130K cases this past month. So co is aiming for 100K cases per month next year. Speaking as chem engineer who used to design liquid-natural-gas plants, "this plant was not going to beat me," Reed vowed. Meanwhile, negotiations to supplement current East Coast production are going well, he noted. Still, to broaden field of US and overseas copackers who're able to handle difficult-to-brew core Ginger Brew brand, co is looking to pre-process drinks in LA.

Swingtops Swinging on Private-Label Front Continuing skepticism on wisdom of co's private-label push was further stoked by last qtr's surprise announcement that customer rejection of key delivery was forcing REED to take $412K reserve, throwing it into loss for period. No such shocks this time: PL revenue edged up to $1.3 mil from $1.1 mil a year earlier. Items packed in Grolsch Beer-style swing-top bottles "went through the roof for us" and co is tooling up to be country's only automated swing-top facility. As for rejected delivery, REED is still hoping to coax customer into taking some of it, but meanwhile has sold about 6% of it and may be able to reverse some of writedown in future as it salvages some revenue from product.

Cable TV in Mix for 2014? Thass Kombucha! Over past year or so ceo has taken to lamenting that operational focus has cost co opportunities to inaugurate meaningful consumer "pull" marketing programs to complement "push" of trade promos. "We're still a company pushing our way to a $40 million run rate with no marketing and sales to speak of, at least in a serious way," Chris noted on call. For first time, tho, co is starting to engage in such programs, working events like Taste of Soul in LA that drew 300K attendees. For 2014, Reed hopes to deepen involvement in social media and might even veer into targeted cable-TV buys on platforms like Food Network that are hospitable to co's "crafted foodie love thing." What might creative look like? Reed points to video called Thass Kombucha devised by his ally Snoop Dogg's LA agency, Cashmere, available at https://www.youtube.com/watch?v=KF_sNAGGI7A&feature=youtube_gdata. Video pairs the rappers DJ Dave - guy who confides "I've been on edge ever since they took kombucha off the shelf" in Getting' Real in the Whole Foods Parking Lot video that's been viewed 5 mil times on Youtube - and MURS (Nick Carter) in kind of hiphop Socratic dialogue about kombucha's qualities. "Thass kombucha," DJ Dave advises. "Not watcha used ta."  

Yet another longstanding distribution alliance involving Coca-Cola in US is going by the boards: its deal to handle one-time superpremium icon Evian Water. About 4 years after Evian owner Danone pulled back its marketing responsibilities for brand (BBI, May 19 09), it's now taking back distribution piece as well, in split set for mid-2014. Breakup will allow Danone, via its Dannon dairy unit in NY area, to ride some deft marketing improvements on water brand that so far haven't appreciably changed its fortunes at retail, even as Coke plays its hot hand in premium water with its wholly owned Smartwater brand. It will be status quo for current DSD partners who've performed well - such as Honickman Group in NY - as well as for Coke itself in Canada. Southern Wine & Spirits will continue as on-premise partner, job that might get easier if brand is able to restore more of its premium allure at retail. With Coke fully engaged with its own premium play, "it's time for the brand to emerge from the Coke system and find its roots," confirmed Dannon rep Michael Neuwirth. The pending change has been announced internally but doesn't seem to have percolated much beyond the 2 cos yet.

Breakup continues recent Coke streak that started with dissolution of its long tie to Nestle on Nestea-branded teas and other products a coupla years ago and continued this year with its split from Campbell Soup and its V8 brand (story below). Danone divorce followed similar pattern to that of Nestle tie, with some elements of alliance dropping out before final break occurred. KO has sought to fill the void of Nestea with Fuze, among other brands, with mixed success, and is likely to launch its own RTD fruit/veggie blends to replace those marketed by Campbell Soup under V8 brand. For successor to Evian, tho, no fancy footwork is required: for years KO has been riding hot brand in Smartwater, even as sibling brand Vitaminwater has languished, and now it's expected to double down. Just this week, co said it's investing $30 mil to add Smartwater line to bottling facility on NW side of Milwaukee, bringing # of production sites for brand to 5.

So what's Evian plan going forward? Plan is still work in progress, but it will entail hybrid/direct approach that sees large-format retailers served via Dannon's fresh dairy system, while c-stores, drug chains and foodservice channels are serviced partly via direct route. Key players in assembling team for new era and implementing shift include gm Eric O'Toole, in that post about a year now, and sales chief Steve Finn.  

NY Post's Page Six claims that Vitaminwater founder J Darius Bikoff forked over an "estimated $1.3 million" to Justin Timberlake to surprise his wife Jill with a performance at the couple's 10th anniversary party this past Fri at NY's Nomad Hotel. It's not immediately clear if it was a "Suit & Tie" affair.  

Just Chill is brand name, but it might also be Chill Group Inc's mantra as it gradually expands presence of all-natural relaxation line from its Venice Beach, Calif, base. It's rare relaxation line that garners its L-theanine via natural extraction methods from green tea, and it recently upgraded to branded, clinically supported Suntheanine ingredient, in amount exceeding 150 mg per can, said cofounder/ceo Max Baumann. Other key ingredients are lemongrass, vitamin C, B-complex vitamins, magnesium and zinc. It's drawn considerable retailer interest for eschewing melatonin, a focus of FDA's ire in recent years. It goes out in Tropical, Rio Berry and Jamaican Citrus flavors, priced at $1.99 per 12-oz can.

Brand launched in 2010, then stepped things up in 2011/12 after pulling in some funding, but so far is sticking to "inch wide, mile deep" strategy, per cofounder/ceo Max Baumann. Key members of Baumann's team are all former college roommates: cofounder Russell Fager, who serves as vp, focusing on operations, along with Mitch Raisch, as marketing mgr, and Caleb Davidge, district sales mgr for core Southern Calif market.

In Southern Calif hq market, distribution has been work in progress: brand started with Ace and Mission, but things didn't pan out, largely because co didn't have any key retail accounts to bring them, Max allowed. So it moved on to smaller LA Distributing operation, where it could count on greater focus. For 2014, co will look to establish blend of targeted DSD, mainstream retailers and showcase partners like Whole Foods in such key regions as Southern Calif, Las Vegas, Phoenix, Portland (Ore), Denver and SF/Silicon Valley.

But brand is starting to make good strides at retail. It's entered Ralph's and Fred Meyer, which each picked up all 3 sku's, and also numbers as key accounts Whole Foods' Southern Pacific region, Fresh & Easy and The Fresh Market. As reported in BBI (Oct 28 and 30), Just Chill has garnered role in 2 key retailer experiments: Taste of Tomorrow shelf set at Kroger's King Soopers unit in Colo, and Target 56-store test, both via its affiliation with LA Libations. Program hitting Albertson's in Jan will guarantee Just Chill 3-week displays at 150 stores, supported by radio and aggressive merchandising and promos, Max indicated. In corporate settings, brand has found place in vending machines at likes of Yelp, DropBox, Survey Monkey and Disney Interactive.  

Weakness in Daily's frozen cocktail pouches threw American Beverage Corp into the red in Q3, prompting likely full-year operating loss of $8-10 mil and likelihood of layoffs, Pittsburgh Biz Jnl reported. Tho core lines like kid-targeted Little Hug Fruit Barrels did well, Daily's slumped during key summer sales season by over 20% in both volume and value, per quarterly earnings report filed by ABC's dutch parent, Royal Wessanen, which has been seeking to divest co, its last American holding. Now, it will put those sales plans on hold as it seeks to cut costs at Verona, Penn, unit and return co to profitability next year, paper reported. "To become profitable again in 2014, numerous actions have been initiated, including a head-count reduction and immediate cost reductions," report said. "Furthermore, additional plans are under development for addressing procurement, supply chain, manufacturing and marketing to lower the cost base substantially for 2014."  

Dean Foods said 3d qtr revenues were off 2% to $2.2 bil, which still beat analysts' expectation of $2.19 bil. DF income of $415.1 mil or $4.35 per share was result of $415.9 mil it earned on sale of White Wave and adjusted EPS of $0.12 missed analyst expectations by a penny, per FactSet survey. "We continue to be confident in our long-term trajectory," said ceo Gregg Tanner. "We are actively working to extend our competitive advantages through aggressively reducing costs and enhancing our strengths and capabilities." Dean's share of fluid milk volume fell 1.5 share to 36.4 in 3d qtr as previously announced loss of biz dropped its volume by 10% vs 1.7% decline for total industry. Looking forward, Dean has lowered its full year EPS estimates to between $0.85-$0.91, down from prior guidance of $0.94-$1.01.  

Coca-Cola's Venturing & Emerging Brands incubation unit has broadened role of Honest Tea sales vp Chuck Muth to encompass full range of VEB brands being handled by unified sales force. Longtime Coca-Cola Philadelphia bottling exec moves into svp sales role on Jan 1, with mandate to sell full portfolio of wholly owned VEB brands into bottling system - the so-called "red trucks." For now that portfolio only comprises Honest Tea and Illy Caffe but it's expected to grow as VEB launches or acquires other brands. Muth won't need to be replaced at Honest Tea, noted Honest Tea cofounder/ceo Seth Goldman, who said he heartily approved this move to "share the wealth and share the talent." In separate move as VEB gets set for 2014, Matt Hughes picks up title of vp emerging brands incubation, which insiders said doesn't much change his day-to-day tho it makes role more visible. Hughes, believed to be sole VEB principal with extensive entrepreneurial resume of his own, will work to get emerging brands into right blend of distribution channels, working matrix that includes bottling system, indie houses like Big Geyser and natural-foods distributors like UNFI. That was pretty much job description under his prior title of dir of commercial, sales and route-to-market. In interesting twist, Honest Tea's natural-channel sales chief Melanie Knitzer will report to Hughes, presumably on grounds that natural channel really reps incubation channel for co like Coke. She's already helped on natural-channel sales of other VEB items.

Longtime KO exec Deryck van Rensburg continues to lead VEB, which is viewed by many outside KO as having done strong job supporting continued growth of Honest Tea under cofounder Goldman, without compromising brand's principles along way, tho it hasn't fared as well in incubating new brands under names like Sokenbicha, Vio and CasCal, all now discontinued. It also helps manage Zico Coconut Water brand, which retains greater autonomy because it's not wholly owned by KO. Another key member of VEB team is Darren Marshall, former head of marketing for KO's Asia Pacific Group who segued to vp of global shopper development role at Atlanta hq and a year ago came aboard as a VEB vp, where is assignments are expected to include key role in 2014 repositioning of Honest Tea brand as it seeks to boost presence in mainstream accounts like c-stores (BBI, Sep 16).