Monster Beverage pointed to continued share gains in weaker energy drink environment as sign that its core brand is in healthy condition, reporting 8.9% net revenue gain to record $590.4 mil for 3d qtr. While US sales were up 9.5%, overseas sales rose a mere 4.8% to $151.6 mil, with pace of growth in Europe tapering off. Operating income rose 7.6% to $151.4 mil. For 9 mos, net sales rose 7.3% to $1.71 bil and oper income edged up a slight 0.3% to $438.2 mil. Earnings per share, at 53 cents, missed consensus by 4 cents. Pointing to "solid" sales growth, chmn/ceo Rodney Sacks noted: "The Monster Energy brand continues to grow in excess of category growth in its major markets and the brand's market share continues to increase." Still, shares sagged 4% to $55 range at press time.

"Glass Half Full," headlined Morgan Stanley's Dara Mohsenian. "Clearly, the miss was driven by international weakness . . . but we believe there were a number of positives," including fact that substantial portion of miss was related to inventory de-loading by distributors in Japan, Brazil and CCE in Europe. Results should improve as inventory normalizes, MNST enters India and local production finally comes on-line in Japan, South Africa and Europe. Further, he noted, US results in Oct augur a regaining of momentum - "a clear indication of greater confidence and that some of the weather/health pressures on the category are easing."

Mark Hall Steps Back On conference call last night, chmn/ceo Rodney Sacks discussed coupla key developments unrelated to financial performance. For one, 25-year bev vet Mark Hall - who created a Monster - is finally easing back a bit, taking a powder thru year-end for "personal" reasons and returning in reduced role as chief brand officer overseeing Monster and Peace Tea brands and broader innovation efforts, but out of day-to-day rigmarole. New post simply "formalizes his current role," Rodney noted, and is "win-win situation." Hall's absence from recent NACS c-store show in Atlanta had prompted some internal rumblings about whether he might be ready to bolt MNST entirely, perhaps to take flier on startup. (One guess was coffee-related initiative related to plantation he's bought in Hawaii.) So, internally, disclosure likely comes as relief to troops.

'Model Guidelines' Offered Also on call last night, Sacks devoted extensive time to addressing various controversies enveloping Monster Energy brand and energy biz as a whole. He said co on Oct 28 had sent response to US senators who've been clamoring for limits on energy drinks' marketing practices and to American Beverage Assn, in which MNST offered to adopt numerous "model guidelines" on marketing if rest of energy biz agreed. Guidelines would address senators' concerns, Sacks argued, without putting anyone at competitive disadvantage - implicit rebuke to plan earlier offered by Red Bull North America that called for dropping of larger cans that are central to positioning of Monster and most other Red Bull rivals (BBI, Aug 1).

Sacks reiterated as usual that, with nearly 10 bil cans of Monster sold over past 11 years, Corona, Calif-based co has detected no grounds for safety concerns. He also said he's seeing signs controversy is abating. "Still some impact," he allowed, "but it's lessening as time goes on . . . the amount of articles and comments has become lessened. So we do believe there has been lesser of an impact, and do believe eventually it will be eliminated and will go away." Ongoing controversies continue to sap resources, tho, accounting for $5.3 mil of co's total $6.5 mil in net professional services fees for qtr, or 2 cents per share.

Sacks said co is still awaiting release of report from Aug workshop convened by FDA on caffeine safety (BBI, Aug 9). On class-action front, after court dismissed suit challenging co's safety and marketing, litigants filed amended complaint which has been tentatively dismissed by judge, with MNST awaiting final action. And in action brought by SF, hearing on motion by DA is on calendar for Dec 9.

Ultra, Muscle Monster, Rehab Still Gaining On brand front, zero-calorie Ultra Blue entry, protein-infused Muscle Monster and latest noncarb Rehab extensions have all exceeded expectations, Sacks said. Ultra Blue, 2d sku in Ultra line, has quickly moved to top 5 Monster sku's in C&G channel, tho Ultra subline has caused some cannibalization of other sku's. Nielsen 13-week data show Muscle Monster is now #2 protein supplement brand in C&G channel with 20% market share despite penetration hovering at just 38% ACV so far. It's now adding Strawberry flavor, eyeing another addition early next year and mulling intro into Canada.

Among challenges, glass-bottle Monster, Monster Extra Strength and Worx energy shots all declined. And warehouse side, where brands like Hansen, Blue Sky and Hubert's are lodged, edged lower as result of unsuccessful retailer program behind unidentified brand (tho Hubert's line itself was "significantly above" last year and continues to show promise, Sacks said).

Peace Tea sagged 5% in core convenience-and-gas channel, in category that was down 1.7% as a whole. But co still believes in brand's potential, Sacks said, and will add juice cocktail subline to mix, while evaluating glass-bottle coffee entry. As reported, Peace Tea continues to struggle for focus in Coke bottling network and has devised series of new initiatives to address that in 2014 (BBI, Oct 18).

$10 Mil in Distrib Termination Costs And for 9-month period, distributor termination costs amounted to $10.7 mil, reflecting exits from Bud/Coke houses in NY metro and from Lenore in San Diego.  

Monster Beverage pointed to continued share gains in weaker energy drink environment as sign that its core brand is in healthy condition, reporting 8.9% net revenue gain to record $590.4 mil for 3d qtr. While US sales were up 9.5%, overseas sales rose a mere 4.8% to $151.6 mil, with pace of growth in Europe tapering off. Operating income rose 7.6% to $151.4 mil. For 9 mos, net sales rose 7.3% to $1.71 bil and oper income edged up a slight 0.3% to $438.2 mil. Earnings per share, at 53 cents, missed consensus by 4 cents. Pointing to "solid" sales growth, chmn/ceo Rodney Sacks noted: "The Monster Energy brand continues to grow in excess of category growth in its major markets and the brand's market share continues to increase." Still, shares sagged 4% to $55 range at press time.

"Glass Half Full," headlined Morgan Stanley's Dara Mohsenian. "Clearly, the miss was driven by international weakness . . . but we believe there were a number of positives," including fact that substantial portion of miss was related to inventory de-loading by distributors in Japan, Brazil and CCE in Europe. Results should improve as inventory normalizes, MNST enters India and local production finally comes on-line in Japan, South Africa and Europe. Further, he noted, US results in Oct augur a regaining of momentum - "a clear indication of greater confidence and that some of the weather/health pressures on the category are easing."

Mark Hall Steps Back On conference call last night, chmn/ceo Rodney Sacks discussed coupla key developments unrelated to financial performance. For one, 25-year bev vet Mark Hall - who created a Monster - is finally easing back a bit, taking a powder thru year-end for "personal" reasons and returning in reduced role as chief brand officer overseeing Monster and Peace Tea brands and broader innovation efforts, but out of day-to-day rigmarole. New post simply "formalizes his current role," Rodney noted, and is "win-win situation." Hall's absence from recent NACS c-store show in Atlanta had prompted some internal rumblings about whether he might be ready to bolt MNST entirely, perhaps to take flier on startup. (One guess was coffee-related initiative related to plantation he's bought in Hawaii.) So, internally, disclosure likely comes as relief to troops.

'Model Guidelines' Offered Also on call last night, Sacks devoted extensive time to addressing various controversies enveloping Monster Energy brand and energy biz as a whole. He said co on Oct 28 had sent response to US senators who've been clamoring for limits on energy drinks' marketing practices and to American Beverage Assn, in which MNST offered to adopt numerous "model guidelines" on marketing if rest of energy biz agreed. Guidelines would address senators' concerns, Sacks argued, without putting anyone at competitive disadvantage - implicit rebuke to plan earlier offered by Red Bull North America that called for dropping of larger cans that are central to positioning of Monster and most other Red Bull rivals (BBI, Aug 1).

Sacks reiterated as usual that, with nearly 10 bil cans of Monster sold over past 11 years, Corona, Calif-based co has detected no grounds for safety concerns. He also said he's seeing signs controversy is abating. "Still some impact," he allowed, "but it's lessening as time goes on . . . the amount of articles and comments has become lessened. So we do believe there has been lesser of an impact, and do believe eventually it will be eliminated and will go away." Ongoing controversies continue to sap resources, tho, accounting for $5.3 mil of co's total $6.5 mil in net professional services fees for qtr, or 2 cents per share.

Sacks said co is still awaiting release of report from Aug workshop convened by FDA on caffeine safety (BBI, Aug 9). On class-action front, after court dismissed suit challenging co's safety and marketing, litigants filed amended complaint which has been tentatively dismissed by judge, with MNST awaiting final action. And in action brought by SF, hearing on motion by DA is on calendar for Dec 9.

Ultra, Muscle Monster, Rehab Still Gaining On brand front, zero-calorie Ultra Blue entry, protein-infused Muscle Monster and latest noncarb Rehab extensions have all exceeded expectations, Sacks said. Ultra Blue, 2d sku in Ultra line, has quickly moved to top 5 Monster sku's in C&G channel, tho Ultra subline has caused some cannibalization of other sku's. Nielsen 13-week data show Muscle Monster is now #2 protein supplement brand in C&G channel with 20% market share despite penetration hovering at just 38% ACV so far. It's now adding Strawberry flavor, eyeing another addition early next year and mulling intro into Canada.

Among challenges, glass-bottle Monster, Monster Extra Strength and Worx energy shots all declined. And warehouse side, where brands like Hansen, Blue Sky and Hubert's are lodged, edged lower as result of unsuccessful retailer program behind unidentified brand (tho Hubert's line itself was "significantly above" last year and continues to show promise, Sacks said).

Peace Tea sagged 5% in core convenience-and-gas channel, in category that was down 1.7% as a whole. But co still believes in brand's potential, Sacks said, and will add juice cocktail subline to mix, while evaluating glass-bottle coffee entry. As reported, Peace Tea continues to struggle for focus in Coke bottling network and has devised series of new initiatives to address that in 2014 (BBI, Oct 18).

$10 Mil in Distrib Termination Costs And for 9-month period, distributor termination costs amounted to $10.7 mil, reflecting exits from Bud/Coke houses in NY metro and from Lenore in San Diego.  

What's it like when an army rumbles into gear to offer new life to underperforming brand? BBI got first-hand look last week at progress of NY distributor Big Geyser in reinvigorating Monster Energy brand that had been scarce presence in Manhattan, Queens and Long Island in hands of prior distribution partners within Bud system. As reported (BBI, Feb 1), big distributor won brand in NY metro in Apr, displacing network of Bud corporate and indie distributors in city and Long Island, and Coca-Cola Refreshments in Brooklyn, in rare US market where Red Bull had been virtually unchallenged for hegemony. Move was a coup, considering that Bud and Coke are Monster's strategic allies in rest of country. Geyser of course is NA-only house that numbers among key brands Vitaminwater, Smartwater, Honest Tea and Muscle Milk - which all have transitioned to either Coke or Pepsi networks in rest of country - along with Sparkling Ice, Body Armor and Zico Coconut Water. BBI editor undertook day-long tour of market last Thurs with Big Geyser coo Jerry Reda, visiting 26 retail accounts for fine-grained gauge of progress so far, tho turnaround is clearly evident to anyone in market. Exec at Monster Beverage, which reports Q3 earnings tomorrow, declined to comment on NY progress.

Getting Started: Weekend Huddles, Revamped Comp Scheme Geyser and its new partner had kicked off brand assignment with massive event at Towers on Park in Queens in late Mar featuring demos by 3 motocross riders and 15 Monster girls, to flag ambitions for brand. "That set the tone: money's no object," Reda recalled. Core members of team met on Sat and Sun for full month to plot strategy, which is initially focusing on single cans vs 4-packs, particularly "Core 5" sublines. Also a priority for fixing was brand's near absence from up-and-down- street biz - a key strength of Geyser's. Big challenge was getting whole-hearted effort without undermining progress on existing portfolio, which includes mix of megabrands and emerging brands, as well as another hi-velocity brand, Sparkling Ice, that arrived at house about same time. Recall, too, that co's indie route owners have considerable autonomy. "The business was growing substantially without Ice and Monster," Reda said. "It has been very, very challenging to absorb all these. It took a lot of weekends and nights to hash out." Incentive plan was revamped so that incentive $$ on Monster progress wouldn't kick in if performance on existing brands deteriorated. Decision was made "not to attack Red Bull's space off the bat," he said.

Has Placed 650 Coolers, Biz Still Growing in Oct To date, BG has decal'ed 20 trucks with Monster imagery and installed 650 coolers in market. Wrapped van works market handing out stickers of iconic green claw and full-can samples (on tour, Reda himself frequently dropped sticker boxes on c-store counters as reward to consumers who purchase pair of cans at a time). Three sampling teams with off-road trucks work consumers on street and beaches. During tour, neon fixtures of green claw were frequently spotted in c-store windows, and special logo'ed glides brought in from Europe often enhanced cooler presence. Coolers featuring illuminated fiber-optic claw on door and LED lighting made Red Bull's fluorescent coolers sometimes look drab. Support from supplier has been unstinting, Reda emphasized: "They're among the best partners we've ever had."

Tho co didn't offer specific scanner or other $$ data, biz has continued to build even as peak summer selling season headed into fall, Reda asserted, with Oct clocking in as biggest sales month now that repeat purchases are kicking in. Brand has dramatically boosted presence in Duane Reade, where Big Geyser serves as category capt for bevs, and has picked up CVS and 7-Eleven presence. College scene, crucial to Monster success in rest of country but absent from mix in NY, has moved further into balance vs Red Bull - say with NYU student center tilting from 2 RB coolers to 1 of each. Tho Manhattan no longer sports many gas station stores, they're huge presence on LI, and key focus there. Island's busiest store, massive BP unit in Maspeth that's part of 40-unit Orkin chain, has moved 240 cases so far this year. After only carrying green and blue sku's in past, it's given Monster 4 shelves vs Red Bull's 5, and brand "is almost equal to Red Bull," said mgr named Onur. His front window flagged 2-for-$4 Monster deal. Simply by consolidating with single distributor from array of Bud and Coke shops, Monster has been able to eliminate frequent irritant to multi-unit retailers: wild inconsistencies on prices they were offered, noted div mgr Dan Reade.

The Tour: Boost in Penn Station Presence; Gains at Kmart, Target Tour arranged by Big Geyser took us thru Manhattan, Queens and deep into Long Island, all areas previously worked by Bud system. It included numerous gas stores, and such big box retailers as Kmart, Target and Fairway. It began at NY's Penn Station, where pair of Monster Girls in Halloween outfits were expected that afternoon at Central Market concession on main concourse before heading downtown to work frenzied Halloween parade in Greenwich Village. (NY mgr David Espinal later reported that 1,200 cans and 4K claw stickers were given out, and girls posed for 100 pics each with passersby.) All told, brand has improved from single location within massive transit hub to 14 locations now, said Reda.

At adjacent Kmart store - chain's top performer in country - Monster has broken exclusive hold of Red Bull as only energy drink offered cold, and sales have advanced from 15 cases for all of 2012 to 300 cases so far this year. New cooler at checkout replaced Red Bull cooler, thanks to Geyser's ability to deliver product every day of week, Jerry said. High service level similarly was key at Target store in Westbury, LI, chain's best-performing unit on East Coast: BG's ability to have people in stores 3-4X per day has enabled it to win greater share of store mgr's discretionary flex space. To win prime impulse spot, Geyser custom-designed coolers to fit specs of checkout area.

Tho distrib would be expected to highlight star accounts, tour included several impromptu digressions and in any case results gibed with BBI's own observations: where once Monster barely had core green-claw sku present in market, now it's not uncommon to find multiple facings of green can, Lo Carb (blue can), Zero Ultra white and blue entries, Rehab noncarbs, Java Monster coffees and Dub and Import sku's, particularly in ethnically skewing areas. Several retailers rated Bud houses as highly reliable suppliers on beer side, but scattershot in approach to Monster, with poor-selling sku's too often emphasized and excessive inventory dropped on them. At sprawling QuikStop/Gasoline Heaven emporium, which even has drive-up window for panini sandwiches and burgers, Monster sales have tripled since Geyser came in, even as Red Bull has remained strong, reported owner Rudy Massa. Former distrib "was too busy selling Budweiser," he said.

Overall, price promos seemed restrained by all players, with occasional 2-for-$4's seen on Monster (via national program) and single 2-for-$3 deal seen on Rockstar at Gulf Express store (tho store had no inventory). Red Bull consistently stuck to premium positioning, with no unusual promos spotted at all. Most aggressive offer was 3-for-$5 Zero Ultra deal at Hess stores (below).

Sales Rising 88% at Duane Reade; Viewed as Make or Break Chain for Brand 240-unit Duane Reade chain, now owned by Walgreens, is ubiquitous presence on retail landscape, and viewed as much as impulse-driven c-store as drug chain. "If we can't get Duane Reade to resonate with Monster, then we don't have a brand here," Reda said flatly. So that's been major front in energy war - abetted by Big Geyser's status as category captain for chain's bev set, working with 3d-party consultant SMSB to devise planograms. Upon winning brand in Apr, distrib made Duane Reade key focus, starting with single cans. It had every store reset within 3 days. To date, Monster sales in chain are up 88% vs last year, per Geyser brass. Effort was visible at block-long store by Penn Station, where Monster coldbox presence has grown to 5 cold shelves from 2 shelves, vs 4 for Red Bull, with BG using its own gear to create extra shelf. (Reset did away with RB trick of placing tall 16-oz can on every shelf to limit total # of shelves and thereby block out rivals.) At store, Rockstar and Amp each holds half shelf. With single cans showing momentum, BG is ready to move on to getting 4-packs established at chain.

Tight Execution Overall Execution overall was impressive, with newly launched Muscle Monster protein line successfully winning placement not in energy set but in more coveted protein section at many accounts, such as corporate-owned 7-Eleven stores on W 34 St and in Bayside, Queens. But Hess gas stores had jumped gun on promo involving forthcoming red sku in Ultra line, plastering coolers with signage heralding mix-and-match deal on all 3 flavors at 3 for $5. That sent Reda scrambling to accelerate shipment to chain, Geyser's #2 c-store account behind 7-Eleven. Few other glitches were spotted. Where header cards were absent from displays or coolers, Reda attributed problem to frequent thefts by Monster enthusiasts - not a terrible issue to have. Ditto with retailers' constant demands for Monster swag. Among unusual ad placements, BG has negotiated for signage on 8 pillars supporting canopy over massive Gulf service station in Hauppauge, which it used to flag Monster, Vitaminwater, Smartwater and Body Armor brands. For its part, Red Bull, which moves thru indie house Beverage Works, maintains durable presence, tho retailers offered mixed reviews of performance of flavored Red Bull Editions. BBI editor didn't detect any obvious response to Monster push, with Red Bull refraining from any price promos and generally riding longstanding presence as NY energy kingpin. No real complaints to BBI from retailers about RB service levels.  

At least coupla allied noncarb brands are ready to ride Coca-Cola's coattails during 2014 Winter Olympics in Sochi, Russia. As official coconut water of games, Zico is running sweepstakes offering winner and friend a chance to meet 2006 gold medalist Jula Mancuso at games. Alpine skier, who signed up with Zico in Jul, will also share training tips and favorite Zico recipes on brand's Facebook page. Meanwhile, Core Power milk-based line has gotten nod as official protein drink of Sochi games, aligning with 4 USA hopefuls who'll be featured on limited-edition bottles hitting retail in Jan. The 4 are aerial skier Emily Cook, slopestyle snowboarders Eric Willett and Jordie Karlinski and bobsledder Jazmine Fenlator . . . Red Bull Media House is partnering with Outside Television to create 45 hrs of original TV programming, including 3 documentaries focused on Felix Baumgartner, who most famously did Red Bull-sponsored skydive from edge of outer space. Also in mix is 7-part The Art of Flight, which follows Travis Rice and other pro snowboarders around world, as feature film under that title earlier did.  

Charlotte-based Coca-Cola Bottling Co Consolidated said net sales rose 3.5% to $434.5 mil, and net income surged 60% to $16.2 mil. Strong results were "driven by growth in both volume and pricing," said chmn/ceo J Frank Harrison. "After a challenging first half of 2013, we saw a return of more normal weather patterns during the third quarter which helped drive revenue growth of 3.5% and earnings per share growth, on a comparable basis, of 30%." He noted that COKE continues negotiations to acquire new territory . . . LA-based natural-soda and kombucha maker Reed's Inc said it broke $10 mil quarterly sales mark for first time in 3d qtr, scoring 28% gain to $10.1 mil vs year-earlier period. Co will disclose more details of qtr on Nov 14.  

Unilever's Lipton North America unit is adding caffeine-boosted line to its bagged teas. Unit based in Englewood Cliffs, NJ, is offering Lipton Natural Energy Tea, bagged black teabags with 75 mg of caffeine and 20 mg of L-theanine amino acid, as venerable brand stakes claim to consumers' seemingly unending need to get energy boost. "Energy naturally drops throughout the day, but studies have shown that drinking tea on a regular basis helps people feel more alert, energized and attentive," said brand dir Melissa Weingarten. Line goes for $4.29 per 40-unit box. It's 100% Rainforest Alliance-certified.  

With integration of BluePrint cold-pressed juice brand proceeding well, Hain Celestial brass already is talking about viewing it as "lifestyle" brand that may soon be extended into other categories. HC founder/ceo Irwin Simon suggested that, while BluePrint currently plays in cleanse, juice and meal replacement sectors, new entries may appear under that brand in next 6-9 mos in snacks category, other fresh products, spreads and even personal care items. "Based on the early success of BluePrint since we acquired it last year, we increasingly believe BluePrint can be Hain's lifestyle brand," he told investors on conference call yesterday afternoon. "And we look to expand this brand into numerous other categories." Fact that consumers are willing to pay $6 to $11 per bottle of the juice suggests brand should stretch well into other premium categories, he figures. "The brand acceptance and demand for BluePrint has been one that's been exceptional out there," he said.

Brand continues to broaden retail presence. John Carroll, HC evp and ceo of its US biz, said Wegmans has expanded ongoing test into twice the # of stores, and early days of Safeway test are seeing similar growth to that at Wegmans. He cited unidentified "third major retailer" that's about to launch BluePrint test.

Remarks came as diversified HC, which plays in food, loose tea, personal care and other segments, reported record first qtr that saw 33% sales gain to $477.5 mil, with cash flow surging 42% to $57.8 mil. US unit scored 23% sales gain to $312 mil, with Ella's Kitchen and BluePrint brands, both acquired a year ago, contributing.  

New owners of Mix1 protein line are ready to shake and bake. Mix1 Life Inc, which acquired rights to protein shake line from Hershey after chocolate maker bailed on its $15 mil acquisition in face of lingering production snafus, said it's started manufacturing restaged line, which has upped protein content from 15 g to 24 g while retaining 12-oz PET bottles that proved brand's undoing under Hershey. "Yes, reformulation has resolved all issues," prexy/ceo Cameron Robb assured BBI via email. "Moreover, we have increased protein and product tastes fantastic." Robb said he envisioned employing distribution mix of broadliners, direct-to-retail and targeted DSD to get brand back out to customers. Robb, who comes out of marketing background, is working with core team that includes Coby Bush as operations dir and Kevin Conrad running sales. Parent co is publicly traded, now under MIXX symbol following change this week. Conrad, a vet of Rockstar and Go Fast energy drinks, had been on brand enlisting DSD network during its ill-fated Hershey run, when new bottle proved no-show at its planned unveiling at NACS c-store show in fall 2012. Hershey discontinued effort shortly after that.  

For years, marketers of Wat-aah kid-oriented bottled waters have insisted kids are fine without sweetness, flavor or color in their product. And in truth, brand seems to have gotten pretty far in forbidding category with unflavored waters marketed with burst of attitude. But co has just blinked on flavor issue, launching line called Wat-aah Party that offers sparkling essence waters. New line launches in unflavored version called Party as well as the flavors lemon (dubbed Electro), lime (Twist), grapefruit (Tango) and raspberry lime (Boogie). As with core still line, subline contains natural electrolytes and has no sugar, calories or sweeteners. It's packed in same straight-walled half-liter PET bottle, with low label sporting colorful, radiating rays suggesting particular fruit flavor. Open-mouthed yelling-kid icon remains. It's priced slightly up at $1.39 vs $1.29 for still versions. In some ways it might be viewed as kid-oriented version of Hint Fizz. "La Di Da Di, we like to party!" says label copy. "Pop without the drop, fizz without the frenzy and shizz without the sugar."

Co-founder Rose Cameron denied there's any change in strategy she articulated this past summer (BBI, Aug 23), when she said that kids won't be fooled by concessions like bit of flavor. "It's still an authentic water," like flavored sparkling versions of Perrier or Pellegrino, and was driven by requests from schools as well as kids, particularly teens. Rather than starting in core NY market, this entry will go national out the gate in Jan, given interested expressed by grocery chains in recent weeks, she said. Co will support it with outdoor, print and social media in key markets thru spring. in adjoining Bushwick area, with 10X capacity, Bruce said. Product is bottled at E Coast copacker, and Cost is still in hunt for W Coast site.  

Carbonated soft drink volume continued to struggle in latest Nielsen data for XAOC channel, and Wells Fargo Securities Bonnie Herzog gets right to heart of problem, declaring: "diet CSDs remain the single largest headwind to beverage manufacturers' results." CSD volume trends worsened from -2.9% last 12 wks to -3.5% last 4 wks thru Oct 26. While regular CSD volume was off 1.1%, diet volume fell to -8.1% last 4 wks vs -6.9% over last 12 wks. Considering that diets were bevcos' hedge vs continued declines of full-calorie sodas, that's scary development. Promo pricing looks to have eased a bit, with avg price at -0.6% for 4 wks, half avg discount over last 12 wks in these stores. Coca-Cola CSD prices off 1.5% last 4 wks vs 3% drop last 12 wks, and "it appears KO has returned to pricing more in line with its peers, a positive sign for the overall industry's health," wrote Bonnie.

As discounting eased, KO's CSD volume slipped 1.8% last 4 wks, down from +0.9% last 12 wks. PepsiCo CSD volume was down 2.9% with avg price decline of 1.3%, similar to its 12-wk pricing trend. PEP diet CSDs continue to struggle, declining double digits for 3d consecutive month, noted Bonnie. Dr Pepper Snapple CSD volume trends worsened from -3.4% last 12 wks to -4.7% last 12 wks on flat pricing. DPS' regular Canada Dry "was the only major brand to grow sales," and like KO and PEP, its low-cal brands "continue to struggle," with Diet Dr Pepper down double-digits, she noted. (Recall that on recent earnings call, ceo Larry Young had pronounced himself "shocked" at diet-CSD trend.) Trends aren't improving yet for 10-calorie DP 10 extension either. "Despite the fact that penetration of DP 10 remains flat over the past 2 quarters, DP 10 sales are down 10-15% from Q2 to Q3, a worrisome sign for repeat purchases," Bonnie added. Private-label CSDs were off 9.2% on avg price decline of 0.8% last 4 wks.

Price Cut Powers Powerade Sports drink volume rose 2.1% with avg price up 3.3% last 4 wks in XAOC channel, per Nielsen. Powerade volume shot up 24% with aid of 11% avg price drop last 4 wks. That's up from 14% volume gain last 12 wks. Gatorade volume was up 3.9%, in line with 12-wk gain pace, while avg price was off much more modest 0.9% last 4 wks.