While soda tax initiatives have struggled to garner support at state level in US, Mexico is poised to vote in couple of months on new tax at national level on sugared bevs (not just soda) to combat health issues, reported Wall Street Jnl. And NY's activist mayor on issue, Mike Bloomberg, has indirect hand here, too.

Last Sun, President Enrique Pena Nieto proposed tax plan to add 1 peso (8 cents) per liter to all sugar-sweetened bevs. "Concentrates, powders, syrups, essences and flavor extracts would be taxed based on the amount of sugar-flavored beverage they would yield," noted WSJ. Mexico's Congress "is expected to approve the broader fiscal proposal" of prexy, including tax by mid-Nov. Mexico, 2d-biggest consumer of soda per capita (per Euromonitor Int'l estimates), is looking to use what it projects as close to $900 mil in annual funds to fight obesity levels, said to be near 70%, as well as cover costs for estimated 15% of Mexicans over age 20 who have adult-onset diabetes.

An analysis of impact from proposed tax "shows that the overall impact on US beverage companies is likely to be modest," said Goldman Sachs' Judy Hong. She estimates less than 1% "EPS downside risk for KO, PEP and MNST, while "DPS may be the most impacted of the four companies, but we still do not expect much more than a 1.0-1.5% hit to EPS" if tax is approved.

"The sugar content of carbonated soda has received heaps of attention in Mexico recently," mainly from public awareness campaign "funded in part by Bloomberg Philanthropies, the umbrella organization for New York Mayor Michael Bloomberg's charitable activities," noted report. So ironically, Mayor Mike, who so far has lost his court battle to impose tax on bevs 16 oz or larger in NY, may win his first such battle outside US.

Pair of high-profile brands are adjusting their staffing levels to adjust to more regional focus after aggressive national pushes didn't pan out as expected. Marley marketer Viva Beverages is cutting 8-10 spots as it shifts focus to key metros in its half dozen strongest regions: Southeast, Midwest (incl Detroit base), Northeast, Southern Calif and Pacific Northwest. Having set brand positioning framework and marketing activities now devolving to local level, marketing vp Lee Brody is among casualties. While recruiting network of regional field teams Lee had also devised multi-tier music tie-ins playing on Marley heritage, but national umbrella programs are being suspended for now. At same time, Viva will be adding 30-40 local and regional spots in coming year as it intensifies activation with local DSD partners, said core investor Gary Shiffman. Co is still seeking successor to ceo Kevin McClafferty, who recently resigned.

SF-based FRS has similarly cut couple of sales execs in East Coast and Central regions, as it restores focus to West Coast while maintaining national accts team that can cover key retailers serviced by departing execs. "We're retooling a few things," said ceo Dave Henderson, in keeping with shift in strategy since departure of prior ceo Carl Sweat that's seen co focus on broader range of products than just bevs and step up emphasis on energy brand's core ingredient, quercetin. "Win in West" strategy calls for upping emphasis on concentrates, chews and other non-bev formats so that co is engaging with both bev buyers and health & beauty care buyers in grocery, while also better penetrating natural channel and restoring presence in specialty grocers like Genuardi's and Lazy Acres. Recall that after Pepsi distribution alliance established by Sweat was unwound, co returned to DSD but mainly out West, while relying on broadline distributors like UNFI, Kehe and Europa for most other markets. Latest tinkering has also cost a few jobs in corporate hq, including that of marketing vp Matt Kohler, who joined in 2011, and is being replaced by internal promotion of Jean Ercolani. Matt's exit follows by a few weeks that of another marketing-oriented exec, Corey Blick, who's segued to Nawgan brain tonic brand.

Because of its founders' identity, resources put behind it and sheer ambition of creating new "superdrink" category, Body Armor has been one of more closely scrutinized launches of past decade. As brand has undergone changes of formula, packaging, pricing and positioning, and suffered departure of founding sales chief John Kenneally, it's sparked constant predictions of its inevitable demise in bev grapevine. "We're under a microscope, unlike with Vitaminwater and Fuze," acknowledged former Vitaminwater principal Mike Repole, who's teamed with Fuze creator Lance Collins to launch Body Armor. (Both brands sold to Coca-Cola.)

But informal poll of key distributors over past 2 weeks suggests there's been little wavering of faith as brand has worked to find footing. True, many distribs are among minority investors in brand, and psychically invested in its becoming premium workhorse for them down line. But given adversity brand has faced, they show no signs of hedging their expressions of support. "We have had the best 2 months we have ever had with BA and we are very excited about the brand after some peaks and valleys," wrote Big Geyser's Jerry Reda in email. "I like Lance a lot, but I have been so very impressed with Mike Repole's passion and dedication to get this right. Mike has spent a huge amount of time on marketing, reformulation, pricing, etc, and I believe he is on the right track. Save this email: the brand will be bigger than Vitaminwater and Gatorade someday." (Geyser was instrumental in past success of both Vitaminwater and Fuze.) This from Randy Shanker of Canada Dry Bottling Co of Lansing: "I love that Mike Repole took it over and took it to New York. I have great faith in him and always had. It's not a high brand for us yet, but I'm excited to see the next 6 to 12 months." Tony Haralambos of Haralambos Beverage in LA: "It's moved up a couple of notches for me. I'm certainly more bullish than I was a year ago." Speaking last night, Repole told BBI sales in 2013 should double from 2012 (believed to be in $5 mil range) and will double again in 2014.

Among key changes under Repole's watch, co has narrowed positioning to focus on handful of key ingredients - electrolytes, antioxidants, vitamins, coconut water - and jettisoned green tea catechins, fiber, amino acids and others that no longer provide a marketing lift under new focus but mar flavor and add cost. In other words, initial kitchen-sink approach to ingredients has been sharply narrowed. "You can't be everything to everybody," noted Mike. Aim is to offer "superdrink" consumers readily perceive as offering "meaningful levels of nutrients with great taste," in contrast to other purportedly functional brands that are lacking in one or both of those qualities. Tho distributors routinely ID Body Armor as a "sports drink" in conversation, Repole still hopes to establish "superdrink" as identifier, just as Vitaminwater established "enhanced water" as new segment. That said, he readily acknowledges key attribute is brand's improvement over "flawed proposition" of Gatorade brand that hasn't changed meaningfully in decades. Certainly, Body Armor's sports identity is backed by potent array of athlete endorsers, which is expected to expand in coming weeks.

Facing Facts on Pricing: Above $2 Is Trial Barrier Flavor names have segued from arcane compound ingredients to "mainstreamable" ones like Fruit Punch and Orange Mango, in Repole's phrase. And with $2 proving formidable post-recession barrier to consumer trial, brand has been repriced to $1.99 from $2.79. In some accounts, switch accelerated velocity from 1 case per week to 4-5 cases, Repole said. Ideally, in 2014, brand will go out at $1.99 in c-stores and $1.69-1.79 as co adds upscale grocers. It's concession to reality of weak economy and 88-cent quarts of Gatorade. "I can't believe some of the retails," rued Repole, who's seen his own Vitaminwater sink to well below $1 on deal. Tho some distribs (and Collins himself) have lobbied to add lower-cal extensions to line that clocks in at 140 calories per 16-oz bottle, Repole maintains that's premature move - consumers should accept slightly higher calories that come with Body Armor's nutrient density.

No New Territories in 2014; Focus Sticks to 5 Core Markets; Burbs a Surprise Co is sticking to focus on 5 core markets served by key DSD partners: Boston (via Great State/Blue Coast), NY (Big Geyser), LA/Orange County (Haralambos), Northern Calif (Dr Pepper Snapple Group) and Mid-Atlantic (Honickman Group). All had record months in Aug, Repole said. Those are getting 80-90% of resources, and co will add no new territories or distribs next year, he vowed. Co will maintain presence in handful of heartland markets worked by committed distributors like Canada Dry Lansing. That said, several distributors remarked upon one big surprise in brand development: contrary to expectations (and to history of breakthrough brands), it seems to fare better in suburban markets than so-called influencer areas within urban core. "It's resonating in outlying areas, not influencer areas," noted Haralambos Beverage's Tony Haralambos. Repole confirmed that seems case, and said he had no firm explanation yet. But co is tilting manpower from heavy urban focus last year to burbs in 2014. Further, tho c-stores and schools have proved good channels, Body Armor execs admit to being puzzled by why brand hasn't fared so well in Whole Foods.

Tho Repole came in 20 months ago as nominally hands-off investor with non-exec chmn title, he's since relocated base of operations from Collins' LA home to NY office of his Driven Capital and applied familiar obsessively detail-oriented approach to brand, even while juggling several other biz enterprises and big stable of thoroughbred horses. He was quick to note that recent $200 mil sale of Pirate's Booty snack brand has freed up time so that Body Armor now reps his #1 involvement. He makes no apologies for in-your-face mgmt style that bombards employees with emails and phone calls at night and on holidays, saying "I don't have a clock." That style, tho it might have contributed to Kenneally's recent departure, was brought up as reassuring fact by every distrib contacted by BBI. "No way he'll allow that brand to fail," said one. For now, any needed investments will come from Repole, Collins and existing investors, tho Repole said he takes encouragement from constant approaches he gets from would-be investors.

Meanwhile, brand's numerous adjustments to market learnings have accomplished more since Repole's Jan 12 arrival "than most companies do in 5 years," vowed Mike. "20 months into this, I've never been more confident than I am today. No brands get built overnight - it takes years." He added: "I never expected to get this brand right the first time. Taking Vitaminwater from zero to $30 million was tougher than taking it from $30 million to $1 billion." He might be 10 years older now, in his early 40s, but he's enjoying the challenge, he said.

Carbonated soft drink sales sank 4% for 4 wks thru Aug 31 in Nielsen data for XAOC (food, drug, mass, EMT and dollar stores) reported by Goldman Sachs' Judy Hong and Wells Fargo Securities' Bonnie Herzog. CSD sales were "worse than last period despite a marginally easier comp," said Judy, who also noted, "the concerning descent of diet CSDs continued." CSD prices were down 1.5% and volume was off 2.5%. "Consistent with our 'Beverage Buzz' results we believe this modest sequential improvement in volumes was driven by more-aggressive promotional pricing. In fact this represents the first equivalent-unit pricing decline we have seen in over a year," said Bonnie. She too noted "downward spiral" for diet CSDs, with sales off 8% despite "aggressive -2.0%" pricing.

KO, PEP Volume Trends Improve with Lower Pricing Lower avg pricing of -2.7% over last 4 wks in XAOC stores helped boost Coca-Cola CSDs to 0.8% gain vs -2.4% decline for longer 12-wk period. KO sales sagged 1.9%, smallest avg sales decline among top CSD suppliers. PepsiCo pricing was down in latest 4 wks as well (-2% on avg) after holding close to flat over 12-wk period. That helped slow PEP volume decline to -3.5% vs -4.7% over 12 wks, while sales fell 5.4%. That's steepest sales dip among Big 3. Dr Pepper Snapple Group's CSD volume slipped 1.6% on avg 1.4% price drop, making for sales decline of 3.0% for those 4 wks. Pricing trends for private-label brands -1.4%, in line with 12-wk trend, but volume (-11.3%) and sales (-12.6%) were still down double-digits.

Price Dip Boosts Monster, Overall Energy Category Avg prices for energy drinks were down 2.2% in XAOC stores last 4 wks vs -0.7% avg over last 12 wks. That helped lift segment to 3.2% volume gain (vs +1.2% for 12 wks) and sales gain of 1% (vs +0.5% for 12 wks). Monster outperformed in posting a solid 5.6% sales gain last 4 wks, more than double its gain pace over 12 wks. MNST volume was up 7.3% on avg -1.6% price drop. Red Bull sales edged up 1.7% vs 3.4% avg gain over 12 wks in these stores. Volume was up 1.5% on small (0.2%) price increase. KO (with brands like Full Throttle) was only other co with sales gain in energy segment, up 11.2% as steep 19% price cut boosted volume by 37.2%. Rockstar volume was up slightly (+0.7%), but avg -7.3% price decline meant $$ sales fell 6.6%. PEP (Amp) energy brand volume remains in deep morass: -20% on -8.2% price drop that resulted in sales slump of 26.5% last 4 wks.

Gatorade Rolls Up Solid Gains Credit price cuts for helping improve sports drink trends in XAOC stores over last 4 wks. Avg prices were down 1.7% vs -0.3% over last 12 wks. Sports drink volume got back on plus side with 1% gain (vs 2% drop last 12 wks) and sales decline slowed to -0.7% last 4 wks compared to -2.3% drop for 12 wks. Gatorade trends remained healthy as volume increased 7.8% on avg price drop of 2.5%, for sales gain of 5.1%. But Powerade volume was off 1.4% on avg price cut of 3.4% for overall $$ sales decline of 4.8%.

Weak Water Trends to End Summer Pricing for bottled water remained fairly consistent at -5% in XAOC stores last 4 wks thru Aug 31, while volume slowed to -0.9% vs +1.4% gain last 12 wks. Private-label water brands enjoyed 9.3% volume gain on avg -3.4% price drop, while Nestle, KO and PEP waters all had double-digit volume drops. Nestle volume off 10% last 4 wks on 0.9% price gain. KO water volume fell 12% on slight price decrease (-0.2%) while PEP volume fell 10.5% despite heftier 4.8% price cut.

Share of National Beverage, whose motley array of mainly value-oriented brands has allowed it to skate over economic challenges of recent quarters, finally took a hit as first-qtr revenues sagged 6% to $172 mil and net income dropped 16% to $12 mil. Report sent shares skidding down nearly 10%. As usual in his earnings statements, chmn/ceo Nick Caporella offered more in way of apothegms, slogans and rhetorical questions than actual discussion of performance of specific brands like Faygo, La Croix and Everfresh. "Should we have the most credible reason for these results (and we could have), would it make a difference? Does it make us feel less contrite relative to the credibility of the justification?" he queried. Still, he noted that FIZZ wasn't immune to the winds whipping other bevcos and faulted both the bad weather and his larger rivals for trashing prices: "From mega retailers to soft drink giants, the summer of '13 will symbolically claim its victims! Consequently, the culmination of nervousness of a 'whiplashed' consumer to the 'knee jerk' reaction of Big Cola . . . all segments of soft drink sales were affected - as retailers and soft drink companies subsequently disclosed. The lowering of prices being Big Cola's response - further complicated the situation! Cooler weather compounded already weakened consumer spirits." He concluded: "Judge us by all 4 quarters next July 2014. Certainly, we have come to know - precious rainbows usually require both rain and sunshine! Team National's results were obtained by diligence and untiring determination. We are Disappointed - Yes; Contrite - Certainly; Resilient - Absolutely . . ."

Bolthouse Farms is playing the seasonal-entry game this fall with trio of limited-edition holiday items. Launching this September are Pumpkin Spice Latte, Peppermint Mocha and an effort at a healthier Holiday Nog. The Pumpkin Spice Latte and Peppermint Mocha both offer RTD alternative to seasonal mainstays at Starbucks and other coffee houses. Pumpkin entry uses pumpkin puree, blend of 4 spices and 100% Arabica coffee, and contains 7 g of protein, as does Peppermint Mocha entry. As for the nog, that's made with milk and eggs, vanilla bean and spicy nutmeg but cuts out most of fat and calories associated with nogs . . . Energy drinks and caffeine may be under attack in Washington, but Redco Foods' Red Rose Tea is taking a leaf from that segment with a super-caffeinated version of its black tea. Red Rose Energy Tea is pegged as naturally flavored black tea that provides "coffee-like" caffeine levels without sacrificing tea taste. New entry, out in French Vanilla and Hazelnut flavors, attempts to lure consumers who may drink coffee in the morning for its higher caffeine levels even though they prefer the taste of tea. "With our Energy Teas, consumers can get 60 mg of caffeine versus the regular 40 mg per cup of tea to jump-start their mornings," said brand mgr Tom Schuler. "Now they don't have to turn to coffee for the energy boost." It's out in single-serve cups priced at $8.99 per 12-count box.

As one of its core team members, Sean Venus, segues back to entrepreneurial gig, fast-expanding Mamma Chia has brought aboard Trader Joe's vet Annette Davidson as its new vp operations. Annette had spent 15 years at upscale retailer with cult following, where she was variously involved with fresh foods, dairy and deli depts as well as fresh juice, overseeing as much as $750 mil in sales. At Mamma Chia she'll be asked to manage co's rapid growth within what not long ago was considered to be obscure niche, allocating resources and recruiting new copackers even as she manages innovation and its flip side sku rationalization, and vendor relations. Also on Annette's resumes were stints at Fresh & Easy, the ill-fated US c-store initiative by UK grocery giant Tesco, and functional snack marketer Corazonas. She found herself missing natural-food environment during latest gig, at commissary supplier Union Supply Co, said Mamma Chia founder Janie Hoffman. "She's a great cultural fit, and can handle skyrocketing growth," she said, noting that with sales chief Matt Buckley co feels prepared for next great run. Recall that Mamma Chia recently dramatically expanded its product line with squeezable line for kids.

As for Venus, whose wife Grace Venus helped with formulation of product, he's latest Southern Calif bev guy to move to craft distillery by launching Venus Spirits, starting with Revolution Whiskey, with tequila on way. (His earlier jobs had included Gordon Biersch Brewing in alc sector, along with Purity Organic and SunOpta.) "Born entrepreneur," figures Hoffman, saying she wasn't entirely surprised that entrepreneurial itch got to him even during heady growth phase of Mamma Chia. Recall that Aquahydrate ceo John Cochran recently decamped to Ole Smoky Tennessee Moonshine; others cultivating that new frontier include former Fiji Water marketing exec Tom Mooney, now at Portland, Ore, craft shop House Spirits Distillery.

Mamma Chia continues to broaden its presence at what seems to be staggering rate considering that at time of its launch just 2 years ago hardly any American consumers associated chia seeds with anything but 1980s chia pets fad, if even that. But it's been playing 2 months in Canada now, Janie said, including all Safeway and Whole Foods stores there, and in US continues to expand within Safeway, while picking up other mainstream chains like A&P. By now, both bev and Squeeze lines are in 1,000+ Kroger locations. In a few weeks it will exhibit for first time at Natural Products Expo East show, reflecting its national presence now.

Marley Coffee Adds Mamos, Stange Marley Coffee has made 2 key sales hires, including one seguing over from Marley's Mellow Mood RTD side. Aboard as sales dir for eastern US is Chris Mamos, who until recently was national accts dir at sister co Marley Beverage, which is undergoing something of a shakeup as ceo Kevin McClafferty moves on. Earlier in career Chris was at Fiji Water and Boston Beer. In as sales dir for West Coast is Russ Stange, who's spent many years at natural foods distributor Kehe and its Tree of Life subsidiary. "Russ' objective is to use his background in the natural grocery channel to increase penetration there for Marley Coffee," explained Marley Coffee ceo Brent Toevs. "Additionally, his expertise and relationship with Kehe will be exceptionally useful as we increase our distribution through them. Meanwhile, Chris' experience opening and building big accounts at Marley Beverage will be a tremendous help now that he has moved over to the Marley Coffee team." Founder/chmn Rohan Marley, a son of reggae icon Bob Marley, noted that he's worked with both execs in past and has no doubt they share his vision for sustainably grown coffee line. Marley Coffee, which operates independently of Marley's Mellow Mood parent Viva Beverages, trades publicly under JAMN symbol (for Jammin' Java).

Redline marketer VPX has blown up its approach to Calif market yet again, this time signing up some big names from conventional DSD network that it's often disparaged in past as failing to deliver results that are worth the aggravation. (Of course, DSD operators have often said same thing about VPX.) Fla-based co is working crew drive this week with newly enlisted Saccani in Sacramento, Calif, and it's also brought back one-time distributor Haralambos in LA and signed John Lenore operation in San Diego now that Lenore no longer is Monster house. It's talking to other houses around state, too, said biz development mgr Gene Bukovi. In Southern Calif, shift displaces Statewide operation that VPX itself set up just 2 years ago as response to what it said were dysfunctional DSD options there, citing successful move to self-distribute in Fla (BBI, Oct 5 2011). Statewide has since broadened portfolio, including such growing brands as Xyience Xenergy energy brand. Earlier, VPX had been with Coast Brands incubation network, with whom it split in 09 (BBI, Nov 25 2009).

As usual, nothin' subtle about email VPX ceo Jack Owoc sent to BBI editor to discuss changes: Maker of Redline, Bang and Protein Rush "fires entire California DSD network. Replaces under-performers with heavy-hitting DSD giants," he wrote. Asked for clarification about latest 180, combative Owoc offered characteristic scorched-earth rationale: "We no longer use any underperforming and underfinanced DSDs or DSDs who are defocused on brands like Xyience et al. The tomfoolery of past is behind us. You cannot beat a dead horse to death." A bit harsh, that assessment? "The new DSDs already purchased and sold more in the past 3 months than their predecessors did in the past year." For his part, more diplomatic Bukovi said it was mainly a question of moving to partners sufficiently capitalized to exploit opportunities for VPX brands. Tho he had no ill words to speak of Statewide, Gene noted that Haralambos "is in a power position because they're not strapped financially" and able to bring in broad range of VPX items to distribute from its 3 warehouses.

There's no question VPX offers potent combo of brands to indie houses, at time that Muscle Milk remains barely challenged in protein segment and energy drink hybrids from major energy players Monster and Rockstar have caught on. VPX just repackaged its Protein Rush brand in 12-oz PET bottle, offering zero-sugar, consumer-friendly item that melds 7 varieties of protein to deliver 28 g, at price just a bit above Muscle Milk. And it's ready to push aggressively behind 16-oz canned Bang energy/sports drink hybrid showcased at NACS c-store show a year ago (BBI, Oct 11). Line blends patented creatine-glutamine peptide, CoQ10 and branched chain amino acids (BCAAs) and contains zero sugar - positioning it to "deliver the final blow to the archaic sugar-laced sports drink market," as Owoc inveighed. Bang has gotten off to promising start at nutrition retailers Vitamin Shoppe and GNC, he said. It intros Blue Razz flave at this year's edition of NACS next month. Also in product mix are Redline Xtreme and new Redline Xtreme 3-oz shot.

Coming soon in BBI: broader update on LA distribution scene, including strategies at Haralambos, Statewide, Avenzar, Gourmet & Purveyors.

Looks like GlaxoSmithKline Plc has finally found buyer for its Lucozade and Ribena brands, and it's the one rumored all along: Japanese alc-bev giant Suntory. Deal, for reported $2 bil, will get GSK out of consumer bev segment that wasn't a great fit with core activities and that failed to receive focus needed to expand it globally. Recall, a few years back co had enlisted US team to undertake major US launch as challenger to Gatorade (BBI, Jun 25 2010), but never pulled trigger as corporate priorities and personnel changed. According to reports in Reuters, Bloomberg and elsewhere, Suntory Beverage & Food Ltd prevailed with pre-emptive bid that was generous enough to forestall auction process. GSK had put bev biz on block back in Apr (BBI, Apr 26). Reuters noted that Lucozade and Ribena, intro'd in 1927 and 1937 respectively, have combined annual sales of just over 500 mil pounds, putting transaction at multiple of 2.7X revenue, at high end of recent soft drink deals that have strayed more in 1.5-2X range. But they carry strategic significance for Suntory as way to counter sluggish demand in its home market, where it derives 80% of its sales, mainly its beers and Yamazaki whiskey. It also adds heft to UK presence, a few years after its $3 bil acquisition of Orangina Schweppes increased its clout in France and Spain. Among synergies anticipated from deal, it will offer established channels that Orangina can use to enter developing markets. Hard to assess yet whether plans for US launch of Lucozade may make a comeback.