First Lady Michelle Obama’s exhortation last week for Americans to “Drink Up” more water might seem unexceptionable on surface, but it seems to be drawing conspiracy theories the way fluoridation programs once did, decades ago.  Analysis from blogger Morgan Whitaker (circulated to BBI by Mountain Valley Spring Water ceo Breck Speed) has fun noting apoplectic reaction last Fri of rightwing radio fixture Rush Limbaugh, who demanded:  “We have real trouble, real problems in this country and around the world.  What is this push to drink more water?”  Rush goes on to quote kidney specialist and frequent Affordable Care Act basher Dr Stanley Goldfarb, who claims there “really isn’t data to support” claims that increased water consumption can achieve goals of First Lady’s campaign. “To make it a major public health effort, I think I would say it’s bizarre,” is Dr Goldfarb’s take.  (Whitaker notes that the data comes from Centers from Disease Control, which finds many Americans don’t drink water at all during their day.)

Critics of Drink Up program seem to be finding different, sometimes conflicting, reasons to view it as favor to Big Soda cos, which are participating along with their lobbyist American Beverage Assn.  “We’re delighted that First Lady Michelle Obama is urging people to drink more water,” responded Center for Science in Public Interest.  “But we hope people also take that advice to mean that they should drink less soda.  There’s not exactly a hydration crisis in this country that needs solving.”  (As noted, CDC believes otherwise.)  By contrast, since Coke and Pepsi also sell lotsa bottled water, Limbaugh was taking Drink Up as initiative that directly fills their coffers.  “It’s Big Bottled Water, or Big Bottled Water is Big Soft Drink,” Limbaugh said.  “That’s who’s pushing this.”

As noted by the blogger Whitaker (@morganwinn), political pundit Bill Maher had his own mock-conspiracy theory about initiative.  As he joked on show that Fri, “I think this is a test to see if the Republicans will come out against water. ‘That’s not water, that’s socialism juice!’”  As Whitaker concluded:  “At least one Republican managed to pass that test.  Congrats, Rush.”

With skepticism mounting that lower-calorie Ten platform represents meaningful escape route for declining CSD category, Goldman Sachs has lowered rating on Dr Pepper Snapple Group from “neutral” to “sell.”  True, bank has grown skeptical of entire North American RTD segment at time that diet CSDs are fading faster than core CSDs and even previously immune sectors like iced tea and bottled water are seeing declines in their low-cal items.  But it’s most concerned about DPS because over 90% of its sales are in N Amer RTD sector, and investments in 10-calorie Ten platform “have yielded lackluster results thus far,” wrote Goldman’s Judy Hong.  “We see further risk to sales guidance as the current volume and price environment make 2% sales growth target difficult.  Competitive intensity is unlikely to subside given broad-based industry vulnerability and strategic efforts and priorities of key competitors.”  (In layman’s language, Coke and Pepsi likely will be dealing like crazy.)  Judy’s lowering estimates and share price targets for all of Big 3 soft drink cos.

Worst Year for CSDs in Nearly Quarter Century   Hong’s report takes sobering tone, noting that for YTD, “2013 has been the worst year for CSDs in nearly 25 years.”  While industry execs have with some justification cited bad weather and payroll tax rise, “we believe exacerbation of secular pressures has also been kernel to the sales deceleration thus far this year,” Judy wrote.  “Favorable July and August weather were not accompanied by a sales rebound as seen in other categories such as beer.”  Worse, “perhaps counterintuitively, diet CSDs have seen the largest deceleration in the space, as we believe that health-conscious consumers are migrating elsewhere as concerns of artificial sweetener health impacts have recently increased.  Low-calorie and zero-calorie beverages in other categories have declined as well, with particular severity in RTD Tea and sports drinks.”

Walmart seems ready to bet that a lot of its shoppers are craving low- and no-calorie iced teas.  It’s already expanded 200-store test of Inko’s white tea brand to 783 stores in July, and now it’s moving brand out to 2,500 units.  Move adds further credence to mass merchandiser’s vows to offer healthier food items to its shoppers, previously perceived to be driven more by value than nutrition.  Indeed, in Walmart so far, Unsweetened Mint tea has proved to be Inko’s top seller.  “I wouldn’t have believed it,” allowed Inko’s founder/prexy Andy Schamisso.  “However, indeed our #1 and #2 selling flavors in Walmart are our Original and Unsweetened Mint teas, which are our first 2 entries into the marketplace more than 10 years ago.”  He added:  “Go into Walmart today and there are more healthy choices than ever.  We’re certainly proud to be one of those choices.”  Tho Inko’s has been fixture in health-oriented retailers like New Seasons in Portland, Ore, and Westerly Market in NY, by now it’s also carried by such mainstream grocers and druggists as Safeway, Stop & Shop, Giant Carlisle, Rite Aid, Publix and Albertsons . . . Kids-oriented water brand Wat-aah has won authorization at several new chains: Winn Dixie, Bi-Lo, Price Chopper, Albertsons’ Intermountain region and all Roundy’s banners including Pick 'n Save, Copps, Rainbow, Metro Market and Mariano’s.  Latest additions boost NY-based brand’s presence in core Northeast, Southeast and Midwest regions. 

PepsiCo is considering invoking its founder Caleb Bradham for new sugar-sweetened entry, BBI has heard.  Caleb’s Craft Cola apparently would be named for Caleb Bradham, the New Bern, NC, pharmacist who created brand, would use real sugar and wouldn’t be conspicuously branded as a Pepsi item.  It’s unclear whether project is at preliminary or more advanced stage, and Pepsi rep, while not commenting on this project specifically, reminded that Pepsi’s always examining new concepts, only some of which make it to market.  Note that Pepsi system appears to have done well with regional soda brands like Cheerwine (from NC) and Big Red (from Tex), and also enjoyed fun run with Throwback-branded real-sugar items under Pepsi and Mountain Dew brands. Old-time pharmacists and apothecaries have made appearances on other contemporary items, as with functional Rx line from AriZona that carried signature of apothecary JW Lippincott (tho he apparently was totally made up).

Seth Kaufman, who’s distinguished himself running highly successful Pepsi/Starbucks joint venture, has been assigned to take on task of reinvigorating marketing of PepsiCo’s core colas.  His move to post of vp brand marketing for colas takes spot of Angelique Krembs, who’s moved to newly created post of vp field marketing and innovation for North American Beverages, Advertising Age reported. Kaufman will report directly to Simon Lowden, cmo of Pepsi Beverages North America.  Earlier in PEP career, Kaufman was dir of media strategy and investment for PepsiCo beverages, where he was credited by AdAge with having devised such innovations as a Pepsi Max “video-in-print” ad for Entertainment Weekly. “Aside from Seth’s media experience, which speaks for itself, his general-manager mindset and broader commercial mindset is so important, and he brings that from Starbucks,” Lowden said.  As for Krembs’ new role, Lowden told Ad Age: “We used to adapt national programs for a region; now it’s about having programs that can stand alone,” as with recently set NFL program that dedicates discrete marketing initiatives to each of league’s 32 teams (BBI, Sept 5) . . . Lavazza Premium Coffees has named 2 group directors to Italian co’s North American hq, both of them boasting past experience at PepsiCo.  In as sales dir for N Amer is Michele Abo, a sales and genl mgmt vet of Chevron, PEP and Entenmann’s.  And Ricky Khetarpaul is aboard as dir of finance & administration of 8 years at PEP.  Moves come as co is stepping it up on this continent, launching first e-commerce store in Sep and debuting specialty coffee line for retail channel. 

For Vitaminwater, whose intensity of price promotions has accelerated since acquisition of its parent Glaceau for $4 bil by Coca-Cola in 07, NYC has been last truly premium market.  Tho 10-for-$10 deals that are ubiquitous elsewhere in the country sometimes pop up at grocers and mass retailers around NY, they’ve still been exception, not rule, for brand with nominal SRP of $1.79, and truly extreme discounts taking brand down well below $1 have been rare.  That looks to be over starting today.

With brand taking a beating around the country, and believed to be down even in NYC stronghold, Coca-Cola has launched sales “acceleration” program that will take VW pricing to unheard-of depths in city where brand launched and remains ensconced at indie distributor, Big Geyser, according to promo info seen by BBI.  (Remember, brand has transitioned to Coke bottlers nearly everywhere else in US.)  Ads breaking today at Food Bazaar take brand’s 20-oz PET bottles down to 10-for-$5, for unit price of 50 cents, and single bottles will be dipping well below $1 at Gristedes (79 cents), Fine Fare (69 cents), S&S (69 cents) and Pathmark (68 cents).  While 4-for-$5 has become regular promo price for premium brands at Whole Foods and upscale grocers, VW is reversing that to 5-for-$4 at Morton Williams grocer.  Next week will see deep deals at Shoprite and C Town (both 69 cents).  Ubiquitous Duane Reade chain, straddling identity as druggist and c-store, will offer brand at 79 cents.  No sign that prices will be changing in UDS channel, still a potent force in NY, tho indie retailers can’t be happy to see brand available for as little as 50 cents at chains.  In UDS, brand has continued to command its $1.79 SRP.

Coming on heels of massive downsizing of Glaceau’s local field marketing staff – said to have been cut from a bit over 100 to 20 or so (BBI, Mar 6) – it seems to mark tilt from demand creation at street level to discounting as means of revving volume.  No comment from Geyser, but its history maintaining premium pricing on its brands suggests it might have fought move.  Further complicating things is bifurcation of brand now that Big Geyser, which already had picked up Sparkling Ice for distribution, refused to carry Glaceau’s Ice-fighter Fruitwater, which went instead to local Coca-Cola Refreshments bottling operation.  Ice is believed to be sourcing lots of volume from Vitaminwater as well as conventional CSDs, so KO probably has been irritated to see Geyser running with Ice.  Brands have been running strictly separate sampling and promo events – recent back-to-school sampling tables set up at entry of Kmart store near New York University, for example, featured only Vitaminwater and Smartwater, but no sign of Fruitwater.  It’s making for odd fall for brand that not so long ago captured huge excitement on retail landscape in city.

Vitaminwater Said to be Exiting Kalil in Ariz after Long, Prosperous Run   Word on street is that Coke is ready to pull Vitaminwater from longtime partner Kalil Bottling in Ariz, powerhouse distributor which played key role in brand’s rise to prominence last decade.  It’s believed contract’s up at end of this year and KO will transition brand to its own bottling system, as it’s done in nearly all of rest of country.  That will leave brand in outside hands only in NY (with Big Geyser) and some Honickman Group territory, it’s believed.  Brand exited another key indie house, John Lenore, in San Diego 2 years earlier as that contract expired.  Kalil Bottling owner George Kalil politely declined to comment for now, saying he might be able to offer more info in another few days.

Join us for the 20^th annual Beer Insights Seminar on Monday November 11^th at the Waldorf=Astoria in NYC.  It’s a jampacked day with up-to-the minute content plus plenty of time for networking with industry leaders.  Our program includes presentations by AB sales veep David Almeida, Pabst prexy Kevin McAdams and Harpoon ceo Rich Doyle, plus a “fireside chat” with HUSA prexy Dolf van den Brink.   We also have two provocative and info-packed panels. Consultant Bump Williams will lead a panel on the evolving retail landscape that includes MC chief customer officer Kevin Doyle, Crown evp sales Bruce Jacobson and Boston Beer’s sales veep John Geist.  BMI’s Eric Shepard will moderate a panel that is a deep dive into data, including (for 1^st time ever) all 3 leading beer info scanned data providers: IRI’s Dan Wandel, Nielsen’s Andrea Riberi and GuestMetrics ceo Bill Pecoriello.  Ten Golden Rules ceo Jay Berkowitz will provide timely and actionable insights into the world of social media and internet marketing.  And finally BMI publisher Benj Steinman will give an overview of industry trends.  Seating is limited.  Click here for more info.  Click here to register. 

Tim, 48, died tragically in a solo car crash at 4:30 AM on Monday morn, according to Delaware News Journal.  Tim had a great can-do spirit.  Recall, he had arrived in a very troubled situation at Delaware AB distrib NKS in 2009 that ultimately resulted in its former chief exec Chris Tigani spending time in prison.  In the last few yrs, Tim had provided stable leadership amidst a real maelstrom of events.  Coming out of that, he had been extremely happy to get rights to New Belgium brands earlier this yr.  He was also chairman of the distrib council for North American Breweries, on NBWA’s board,  very active in Tamarron’s initiative to improve relations between tiers (Independent Council on Three-Tier Dynamics) and much more. He “always went out of his way to support alignment between the tiers… not for one supplier but for everyone. We lost a true gentleman today,” said Tamarron prexy Greg Hopkins. “Tim was memorable” at meetings, said NBWA prexy Craig Purser “because of his kindnes and the positive attitude that accompanied everything that he did…. While not a big man in the physical sense, Tim’s heart and passion for the beer industry made him seem one of those people that seemed ten feet tall.”  He will be missed.  

All yr, top beer execs have pointed to payroll tax and still-suffering low-middle income consumers as key factors for 2% industry volume decline (until recent mos).  Survey of 2,000 consumers by Goldman Sachs published in Wall St Jnl supports those points.  A coupla key findings: 1) 42% of consumers noticed change from payroll tax increase earlier this yr and are “curbing some discretionary spending as a result”;  2) payroll tax reduced household income 1.2% and “actual spending impact may be greater for low-mid income households where marginal propensity to spend is higher”; 3) those with higher incomes ($90K+)  say they are spending more over last 3 mos, while those up to $50K say they are spending less; 4) higher income consumers much more likely to be optimistic about economy than low-mid income.  Among those with incomes over $90K, over 30% optimistic in Q3 compared to below 15% of those with income under $50K.  Finally, Goldman points out that rising stock mkt and housing prices much more likely to benefit those with higher incomes. 

AB projects inventories at 21-23 days in Region 3 throughout the 4^th qtr, AB’s veep logistics Pablo Gonzalez wrote distribs yesterday.  “We expect inventories to be slightly above 2012 levels, and this plan will provide a stable framework to protect against out-of-stocks and provide flexibility for innovation.”  Lagers have 110-day shelf life and AB looks to have minimum of 8 days of inventory and max of 28 days, but that “may increase or decrease slightly due to shelf life, production frequency and cooperage availability.”  Or perhaps to make better numbers.  AB inventories were over this targeted level, more than 30 days in Fla at the beginning of Oct.  And that’s following the implementation of a price hike. True, there was less buy-in than usual, partly because retailers also had to use available funds to buy in Crown and HUSA too.  But over 30 days is high inventory on domestics in a top state, even for 1 week.  AB forecasts inventories to come down quite a bit in Q4.