Partly because it’s election season, buncha policy issues are aboil in US and overseas.  Here’s quick roundup.  

Mexican Senate Says Yes to Soda Tax   As part of sweeping tax reform package, Mexico’s Senate approved 1-peso (8-cent) tax per liter of sugared bevs.  Senate also went further than previously approved 5% tax on “junk food,” upping take to 8%.  “The move compensated for the decision to trim income tax for some earners that had also been approved by lower house, which will have to vote again on bill,” noted Bloomberg.  Mexico’s Nat’l Soft Drink Assn figures soda tax “would result in the loss of 20,000 jobs, from workers who cut sugar cane to those in factories,” added report.  Coke Femsa execs have previously estimated tax could result in price increases up to 15% and 5% drop in volume (BBI, Oct 28). 

UK Docs Says 20% Tax Could Put Dent in Obesity    Meanwhile, study by UK’s Academy of Medical Royal Colleges is getting lots of attention from press over past coupla days.  Study determined a 20% tax on sugared bevs in UK would cut obesity rate there by 1.3% while dropping consumption by 15% and raising $443 mil in revenues each yr, reported Bloomberg.  Among those age 16-30, steep tax like that would cut obesity rates by almost 8%, study found. 

Penny-per-Oz Levy Pondered in Telluride    Back in US, Telluride, Colo, voters will decide next week on penny-per-ounce tax.  Seeing building momentum in that vote along with proposed 2-cent tax in San Francisco (BBI, Oct 28) and developments in Mexico, Center for Science in Public Interest’s Michael Jacobson claimed “a soda tax is something that American city councils, state legislatures, and Congress should be looking at in the months and years ahead.”  While “big soda” has had success beating back tax initiatives in different cities, “as more and more jurisdictions simultaneously considers such taxes, it might be harder for the big spenders at the soda lobby to keep up,” he added.

Corporate Contribs Pile Up as Wash State GMO Vote Nears   Big spenders are out in full force in Washington State, where vote is looming on bill that would force marketers to label products containing genetically modified ingredients.  (Since overwhelming amount of corn is GMO these days, that’s lotsa bevs, readers.)  As reported, supporters of so-called Initiative 522 had predicted that major pharma and consumer products marketers, often working thru Grocery Manufacturers Assn as shield, were likely to pony up to tune of outspending Yes on 522 supporters by margin of 2 to 1 (BBI, Oct 4).   As vote approaches next week, that now seems to be closer to 3 to 1 margin, with $29-30 mil all told spent on battle, making it among most expensive initiatives in state history.  Meanwhile, following challenge by state atty genl, GMA has been forced to divulge identities of contributors, including Monsanto, PepsiCo, Coca-Cola, General Mills and Kellogg.  Wash gov Jay Inslee is among undecided voters, NY Times reported, tho he’s said he hasn’t seen scientific evidence that genetically modified foods pose health risk.

CSDs might be eroding, in both full-calorie and diet segments, but at least we’re playing in “rational” pricing environment.  That’s been reassuring message for some time from top brass at Coca-Cola, PepsiCo and Dr Pepper Snapple Group.  But is it still true?  Not to ceo who’s got most to lose if it’s not:  Jerry Fowden, who runs private-label leader Cott.

Fowden lashed out at biggies’ “deep-cut” promo activities yesterday in reporting Q3 that saw COT volume sag 5% in raw cases, 8% 8-oz equivalent cases to 205 mil cases.  N Amer revenue plunged 13% to $383 mil on 12% volume decline.  Overall, COT rev dropped 7% to $543 mil, and gross margin edged down to 12% from 12.5%.  About half volume reduction was attributed to COT’s ongoing exit from essentially profitless casepack water segment and to declines in CSDs, the rest to highly competitive national brand pricing and promo activity from early Aug to end of Sep.  While performance did improve somewhat over Q2, “it’s fair to say we did not see the level of improvement we’d been hoping for” at time of Q2 report, Fowden allowed. 

In remarks to analysts, Fowden offered lurid picture of promo scene he no longer expects to change, contrary to rhetoric of branded players.  The real trouble started when national branded player (read that Coke?) kicked off Labor Day promo by pricing core 2-liter bottle at $1 or below at key retailer, prompting response in kind from other national CSD players and most other retailers.  That’s bad enough when it happens in 5- to 7-day window immediately surrounding Labor Day, but this was something different, Fowden noted: it began early Aug and didn’t conclude for 7 weeks until back end of Sept, “with one national brand player continuing at the $1-or-below price point for 2-liter CSDs thru early October.”  That slashed typical 35-40% price gap vs private label items to just 15-16%, and likely cost COT 3 mil raw cases of volume (8 mil in 8-oz equivalent cases).  While deep promos “seemed to bring little benefit to the overall CSD category,” which continued to decline by 3.5% in volume, 4% in value across qtr as a whole, Nielsens saw PLs fall at twice rate of CSDs.  Episode thus “reinforces our need to execute against our diversification strategy,” both organically and via bolt-on acquisitions, Fowden vowed. 

Just a one-time episode?  Fowden doesn’t believe that.  “While there has been some recent public commentary by the national brands about not engaging in battles over volume at the expense of profits, we continue to see a deeply discounted promotional activity taking place in the market,” he said.  “I believe we’re likely to continue to see a highly competitive beverage marketplace where deep-cut pricing and promotional activity becomes an increasing part of the business landscape rather than an occasional exception.  We thus believe competitive pricing activity will continue in one form or another.”  While COT will do its best to run its biz tightly, “it’s clear that recent market declines and the resultant excess capacity is causing a shift in both manufacturer and retailer behavior that we do not see abating as we look out over the next 12 to 18 months.”  Indeed, he noted, “even since that commentary, we have seen some further deep-cut activity, with in one case major national brand canned promotional activity actually below the price of our EDLP (everyday low price) private label.”  Whew!

On core CSDs, COT’s ability to maneuver is limited.  “We will remain focused on the areas we can control . . . and manage our business as tightly as possible,” Fowden said.  Where it can, COT will make gestures at promoting its easiest-to-produce CSDs, even tho that’s divergence from private-label model of sticking with EDLP.  That happened with 24-pack cans in Canada in Sep, with positive results, “but it’s not kind of thing our model is to do on a daily basis,” he said.

If Fowden’s team had any lingering doubts about need to accelerate diversification away from CSDs, Labor Day carnage dispelled them.  So Toronto-based co is rushing to add as many non-CSD, non-water legs to biz as it can.  It just began production of water-enhancer line in Columbus, Ga, that will serve US and Canadian customers, and is shaking down line in Dallas that will produce co’s first alcoholic pouch products in US in Q1.  (Initial order is probably under 500K cases, Fowden said, but other jobs are in pipeline.  COT has done alc products in Canada, UK and Mexico in past.)  It’s upping capacity in hotfill as well as less conventional coldfill, with test run proceeding of 24-oz coldfilled canned product shipping this qtr to unidentified customer.  New hotfill juice contract will expand slowly thru 2014 into 2015, offering roughly 4 mil raw cases initially and likely doubling in 2d 12-month period.  Another such contract should yield 3 mil cases.  In UK, co is integrating small juice co it acquired called Calypso (no relation to lemonade brand of that name in US). 

Avitae USA has gotten its Avitae Caffeinated Water into Whole Foods’ Mid-Atlantic region, at shelf price of $1.49 per half-liter bottle.  Item will be distributed by DPI Specialty Foods to 42 Whole Foods units in Ky, Md, southern NJ, Ohio, Penn, Va and DC . . . Icelandic Water Holdings has signed with Ukrainian distributor of wines, spirits and NA bevs called Wine Bureau to take its Icelandic Glacial bottled-water line to retailers including Wine Bureau’s own Good Wine stores.  Wine Bureau is based in Kiev.

Fresh & Easy Neighborhood Market, foundering chain opened by UK supermarket giant Tesco, has won court approval of procedures for Nov 19 auction that will feature lead bid from affiliate of Ron Burkle’s Yucaipa Cos, Bloomberg reported. At hearing in Wilmington, Dela, US bankruptcy judge Kevin Carey said he would approve guidelines to govern proposed sale, including deadline for potential bids of Nov 15.  The auction would be held if competing qualified bid was received, with Nov 21 set as date for hearing to determine auction winner.  Some 4K jobs are at stake if chain can be revived in some more sustainable form.  Under proposed deal, Bloomberg reported, Tesco affiliate would lend Yucaipa $120 mil to help fund acquisition, and receive warrants to buy as much as 10% of equity of reorganized chain.  Yucaipa’s plan is to take over 150 of Fresh & Easy’s 167 stores and commissary plant in Riverside, Calif.

AriZona Iced Tea marketer Ferolito, Vultaggio & Sons has jumped into the liquid enhancers fray with 7 of its trademarks, all offered in zero-calorie formulations:  AriZona Iced Tea, AriZona Green Tea with Ginseng, Arnold Palmer Half & Half and its Strawberry extension, AriZona Mucho Mango and Fruit Punch juice flavors, and Golden Bear Lemonade . . . Salada Tea has intro’d drink mix sticks line called Salada Tea Therapy Performance that debuts at GNC chain and Web site.  Line melds Salada green tea extract with fitness ingredients and debuts in Energy (with green coffee bean extract) and Metabolism (raspberry ketones) blends . . . LA-based Sencha Naturals, creator of Sen Cha Green Tea Mints, has added effervescent drink mix called Green Tea + C that melds co’s matcha and sencha green teas with vitamin C from acerola cherry, electrolytes from coconut water and traditional herbs such as organic orange peel, ginger root and turmeric.  It’s sweetened with stevia and packed in 5 g packets for starters . . . Phoenix-based Shamrock Farms has expanded its milk-based Rockin' Refuel Muscle Builder line with Rockin' Refuel Lean Builder, 150-calorie protein milk item that seems to be targeted at non-milk protein rivals like restaging Labrada Lean Body.  Lean Builder offers 20 g of protein with 8 g of carbs and 6 g of sugar, in 12-oz bottles in Chocolate and Vanilla flaves.  Tho formulated from essential nutrients naturally found in milk, it’s lactose-free. Rockin' Refuel Muscle Builder contains 30 g of protein with 8 g carbs for athletes more interested in bulking up. 

Peter Burns, who interrupted long run at Celestial Seasonings with stints at Izze, Jones Soda and Dry Soda brands, has stepped down from post as prexy of Hain Celestial unit that he’d held for past 5 years.  Role in Boulder, Colo, is being picked up by 19-yr Celestial vet David Ziegert. Peter is also dropping other set of duties as chief sales officer of grocery, snacks and personal care for Hain.  “It’s a decision that I made for me and my family,” Peter told local Daily Camera newspaper, adding:  “The future’s incredibly bright here.  If your base business is healthy, if your core business is healthy, it gives you the opportunity to go out and (look to buy other companies).  We’re active on all fronts.”  Recall that acquisition of small local kombucha producer in Boulder provided entrée for Celestial Seasonings into that realm, albeit with a few twists and turns on way.  Burns served at tea marketer from 1992 to 2000, and returned in 08 as prexy.  Ziegert has served as gm for tea unit, managing supply chain and other duties.  “It’s been wonderful, but it’s time to slow down and not travel so much and figure out what I want to do next,” Peter told BBI.  

SodaStream International said its net income slipped 2% to $16.4 mil, or 76 cents per share, in 3d qtr, just beating Wall Street consensus of 72 cents.  But reported revenue gain of 28.5% to $144.6 mil just missed analysts’ expectation of $145 mil, per FactSet, and shares went skidding down 11% by end of trading today.  Operating income grew 9.6% to $18 mil in qtr as operating expenses soared 35% to $60.2 mil as co cranked up sales and mkting spending by 33% to $47.5 mil, or 32.9% of co revs.  SODA ceo Daniel Birnbaum stressed on conference call that slower gains were not for lack of consumer interest but blamed retailers’ inventory management, reported The Street.  “We’re disappointed that our Japanese distributor is not properly supporting the brand with marketing investments and retail expansion,” he noted on conf call this morning.  “We remain optimistic about the potential for SodaStream in Japan and we’re evaluating the best options for this business going forward.”  SodaStream sales were up 21% in Americas and 43% in Western Europe but fell 21% in Asia due to Japan situation.

How productive was 17-year Polar Beverage vet Gerry Martin before his surprise departure last month for Conn soda concentrate firm?  Well, it’s taken 8 moves to divvy up his responsibilities at big bottler/distributor based in Worcester, Mass., with longtime exec John Wetzonis picking up role as gatekeeper for new brands seeking entry into Polar’s distribution network.

Among key moves described by Wetzonis today, John himself takes up title of svp sales & marketing, and becomes main point of contact for new brands looking to enter Polar, alliance which sometimes may entail investment by bottler and/or copacking arrangement.  (That’s been case with brands like O Water, Hydrive Energy and 989 On Demand).  For Wetzonis, new duty is no stretch, considering that he’s always been closely in loop on brand additions: Martin would bring his recs to Wetzonis and Polar owner Ralph Crowley, and if they liked brand, it then went to sales force for input before co got down to brass tacks of working out contract.  Among Martin’s other key responsibilities, task of marketing Polar’s fast-expanding seltzers and other brands has fallen to Elizabeth McKinnon, former New Balance marketing exec.  And Martin’s role managing profitable immediate-consumption channel falls to 8-year Polar vet Paul Henehan.  As noted, another 5 moves were required to deal with Martin’s lesser responsibilities.  Martin, now at Al’s Beverage, “did a great job for Polar,” John noted with what must be considerable understatement.  Wetzonis, who’s approaching a decade at Polar after career at Cadbury Schweppes Americas Beverages (now Dr Pepper Snapple Group), noted that his office already is cluttered with new-product samples from those vying to get distribution at Polar, which generally vies with Northeast Independent Distributors Assn members for new brands.  (Many NIDA members also distribute Polar seltzers, tho.) 

Polar Frost to Vie in Sparkling Ice Sweepstakes    Polar was among marketers that used NACS c-store expo in Atlanta as launch platform for zero-calorie Sparkling Ice wannabe.  Polar’s entry, called Polar Frost, picks up key Ice cues like straightwall bottle while maintaining Polar brand family resemblance, with key twist: 1 of its 4 initial sku’s is caffeinated.  That flavor, Lemonade, carries 25 g of caffeine, offering another set of occasions beyond refreshment for purchasing item.  Other 3 flavors are Orange Mango, Pink Grapefruit and Black Cherry.  Sales/marketing chief John Wetzonis said co decided to go with bold flavor profiles, and views line as potential entry point to Polar brand for consumers who may not be ready to go straight to its unsweetened flavored sparkling waters.  Polar will happily discuss offers to distribute brand beyond its core footprint in New England and down eastern seaboard, as its NACS presence signaled. 

Big retailers seem to be addressing challenge of easing path into stores of innovative brands with increasing sense of urgency.  Last issue we offered glimpse at how Kroger is implementing Taste of Tomorrow initiative, starting at its King Soopers chain in Colo  (BBI, Oct 28).  Meanwhile, another ambitious experiment just got under way at Minneapolis-based Target: it’s set varied group of 56 stores within its 1,788-unit US footprint as testbed to determine which new brands offer broad enough consumer resonance to fly nationally, as it looks to reinvent loosely defined enhanced-water shelf set at time leader Vitaminwater continues steep decline.

Here’s gist gleaned from various bev sources and folks who’ve been in test stores: initiative launched mid-month involves several waves, each including 4 different brands, that move into 56 Target locations carefully balanced to include big and small markets, and range of consumer demographics – say, Brooklyn and Schenectady units in NY State.  Couple of sources have said 4 such tests are under way, in mix of stores that breaks down roughly equally into Colo, Southern Calif and tri-state area around NYC plus Mass, with a few outliers in Utah.  As for length of program, which kicked off in mid-Oct, we’ve variously heard 4 weeks, 10 weeks and 90 days, but it will be wrapped up by year-end, in time for Target to make decisions on which might merit broader rollout starting as early as Jan.  Judging by in-store photos sent in by BBI contacts, one test grouping includes Bai coffee-fruit-based line (seen at $1.99 or promo’d at 3 for $5), Chia/Vie chia brand (at $2.99), cap-dispensed Karma ($1.99) and Sneaky Pete’s oat line ($1.79).  They’re arrayed in quadrant on 2 chest-level shelves nestled between Vitaminwater on right and Sparkling ice knockoffs on left, given protruding display unit for greater visibility to shoppers.  “New at Target,” says shelf-talker.  Another of tests includes Just Chill L-theanine-based relaxation line.  Participants apparently are being offered chance to enlist 3d-party demo co, Boulder, Colo-based Sunflower Group, to run in-store program on one date during test period, perhaps tied to temporary price cut.

Execs at brands mentioned above either couldn’t be reached for comment or said they couldn’t say much more than that they’re in Target test, with a couple noting that they haven’t been given much info themselves by retailer.  At time that rival Walmart is pushing hard to improve health-and-wellness image (even picking up items like unsweetened Inko’s white tea), it’s clear Target is similarly mobilizing to ease path into its stores of innovative items.  For marketers, who often must establish their brand at small, indie retailers, “it’s nice to have a nationally recognized chain to push people to,” noted one.  Marveled another:  “This is a complete departure from where we were a year ago, when they wouldn’t even take a meeting with us.”  But things now seem to be changing fast at even the most massive of the mass retailers.

Big retailers seem to be addressing challenge of easing path into stores of innovative brands with increasing sense of urgency.  Last issue we offered glimpse at how Kroger is implementing Taste of Tomorrow initiative, starting at its King Soopers chain in Colo  (BBI, Oct 28).  Meanwhile, another ambitious experiment just got under way at Minneapolis-based Target: it’s set varied group of 56 stores within its 1,788-unit US footprint as testbed to determine which new brands offer broad enough consumer resonance to fly nationally, as it looks to reinvent loosely defined enhanced-water shelf set at time leader Vitaminwater continues steep decline.

Here’s gist gleaned from various bev sources and folks who’ve been in test stores: initiative launched mid-month involves several waves, each including 4 different brands, that move into 56 Target locations carefully balanced to include big and small markets, and range of consumer demographics – say, Brooklyn and Schenectady units in NY State.  Couple of sources have said 4 such tests are under way, in mix of stores that breaks down roughly equally into Colo, Southern Calif and tri-state area around NYC plus Mass, with a few outliers in Utah.  As for length of program, which kicked off in mid-Oct, we’ve variously heard 4 weeks, 10 weeks and 90 days, but it will be wrapped up by year-end, in time for Target to make decisions on which might merit broader rollout starting as early as Jan.  Judging by in-store photos sent in by BBI contacts, one test grouping includes Bai coffee-fruit-based line (seen at $1.99 or promo’d at 3 for $5), Chia/Vie chia brand (at $2.99), cap-dispensed Karma ($1.99) and Sneaky Pete’s oat line ($1.79).  They’re arrayed in quadrant on 2 chest-level shelves nestled between Vitaminwater on right and Sparkling ice knockoffs on left, given protruding display unit for greater visibility to shoppers.  “New at Target,” says shelf-talker.  Another of tests includes Just Chill L-theanine-based relaxation line.  Participants apparently are being offered chance to enlist 3d-party demo co, Boulder, Colo-based Sunflower Group, to run in-store program on one date during test period, perhaps tied to temporary price cut.

Execs at brands mentioned above either couldn’t be reached for comment or said they couldn’t say much more than that they’re in Target test, with a couple noting that they haven’t been given much info themselves by retailer.  At time that rival Walmart is pushing hard to improve health-and-wellness image (even picking up items like unsweetened Inko’s white tea), it’s clear Target is similarly mobilizing to ease path into its stores of innovative items.  For marketers, who often must establish their brand at small, indie retailers, “it’s nice to have a nationally recognized chain to push people to,” noted one.  Marveled another:  “This is a complete departure from where we were a year ago, when they wouldn’t even take a meeting with us.”  But things now seem to be changing fast at even the most massive of the mass retailers.