As nation’s schoolkids trudge back into classroom, American Beverage Assn is launching $10 mil print and digital media campaign tomorrow to “raise awareness” among school leaders, parents and policymakers of new school vending policy endorsed in May by membership.  Coca-Cola, PepsiCo and Cadbury Schweppes are “putting their trademarks on an ad together” to help present unified message behind policy, ABA prexy/ceo Susan Neely said today.  Ads adopt humorous approach, showing youthful scholars in unlikely discussions of nutrition with tagline, “Nutrition isn’t what’s on their minds.  But we know it’s on yours.”  One ad shows football player telling teammates in locker room, “Dude, it’s all about the food pyramid.”  Three different ads will run for 2 mos in national newspapers, in newsweeklies like Time and Newsweek, in “parent-read” publications like O Magazine and Working Mother and in publications read by educators and school boards.  Since ABA approved policy, assn execs have spent 4 mos “educating the bottlers and sales and marketing force,” Susan said.  They are the “ground troops” needed to make case with schools that this is “sound policy.”  ABA is working with independent economist who will review implementation progress of policy over next few years.  Recall goal is to have policy implemented by 75% of schools by 08-09 school yr and 100% by 09-10 yr.  So far “policy has been well received” as “thoughtful” response to obesity issue, Susan noted. 

Long-rumored exit of J. Bruce Llewellyn from Philadelphia Coke bottler that he built into a behemoth moved a step closer to reality with announcement that Coca-Cola Co had agreed to buy controlling interest in his Brucephil Inc holding co by early 09.  Tho Coke already owns 31% of the co, which operates Philadelphia Coca-Cola Bottling Co, announcement surprised some outsiders who might have expected bottling giant Coca-Cola Enterprises to try to consolidate major-metro bottler, Coke’s 4th biggest in US.  After all, Phila is contiguous to CCE’s NJ territory.  That could still happen down the road, and Coca-Cola rep assured AP that deal does not signal strategic shift toward directly acquiring bottlers.  One factor may have been Coca-Cola’s desire to find way to continue minority ownership of co that claims to be 3d-largest minority-owned biz in nation.  Coke has “longstanding commitment to minority ownership” and will work to ensure that in future, rep told AP.  Morgan Stanley’s Bill Pecoriello estimated that buyout of remaining shares would cost Coke $200-250 mil.  Coke noted that transaction would be subject to regulatory approval.  

Analysts seemed mixed on whether this is a sign that Coke is proceeding with internal Project Diesel to roll up US bottlers.  Bill noted that to do so would offer efficiencies of vertical integration while remedying ongoing problems: difficulty executing promos with national retailers when not all bottlers pick up new brands, or diversifying route to market beyond just DSD (as in controversial warehouse-ship experiment on Powerade).  “We believe Project Diesel is still very much on the agenda,” he wrote.  Still, Bill acknowledged that another outcome is simply to flip Philly Coke to CCE down the line.  And Goldman Sachs’ Judy Hong wrote, “This small deal is not enough to alter our view” that Coke bottling system will remain independent.  While Philly Coke execs were referring comments to Coke, one emphasized that, rather than initiating share acquisition, “they (Coke) responded to Bruce's request to help develop an exit strategy. They did not come to us.”

Llewellyn, 79, is NY-born son of Jamaican immigrants and graduate of City University of NY who made his 1st fortune revitalizing grocery chain in devasted South Bronx, then bought into Coke Phila in 83.  He grew biz to $540 mil in annual sales (31 mil cases), employing 1,200 and operating plants in northeast Phila and Marlton, NJ. 

It was inevitable that Hansen Natural alliance with Anheuser-Busch on energy drinks would create lotsa ripples, and they’re beginning to emerge.  One is new Ace line co-developed by Hansen and Cadbury Schweppes Americas Beverages that offers alternative portfolio to some distribs who lost Monster, Lost, Unbound or Rumba brands to local A-B house. At same time, scrappy National Beverage is launching blatant Monster imitator called Freek aimed at houses dispossessed of Monster brand or otherwise looking to challenge juggernaut brand.  

First, Freek.  New brand, in 16-oz cans priced comparably to main players, picks up a # of cues from Monster, including lurid green color against black background.  Instead of Monster’s claw marks, Freek shows face that represents any dad’s worst fears of his daughter’s prom date.  Can sports slogan “Evil Energy” on top band and “Maniac” below brand name.  Package image – but nothing else yet – can be viewed at freekenergy.com.  One early market is believed to be Detroit, via Intrastate Distributors, which recently lost Red Bull brand.  (No immediate comment from them.)  While National Bev has not responded to BBI queries spanning several weeks to discuss its pending new products, co’s July 17 earnings release offered hint of what was coming with quote from chmn/ceo Nick Caporella about yet-unidentified bev: “Created to ‘refill’ a need within the traditional DSD system, this new beverage is sure to ‘FREEK OUT’ its competition.”  No immediate comment from Hansen as to whether it feels the new brand cuts too close to Monster’s positioning.  Stay tuned.  Note that Ft Lauderdale soft drink marketer’s main play so far in energy segment has been value-priced Rip It, which earnings release said was due for feminine sibling soon.

Meanwhile, tho partners remain tight-lipped, details are emerging on Ace brand codeveloped by Hansen and CSAB.  New brand had been disclosed by Hansen ceo Rodney Sacks as tailored to CSAB network (BBI, Aug 8) but that’s only part of story.  From what BBI can gather, deal is as follows:  Line goes into any part of extensive CSAB-owned Bottling Group that wants to take it.  In remaining markets, it’s Hansen’s to place, most likely at Hansen distribs who saw Monster, Lost or other Hansen siblings drift to Bud house.  So what is Ace?  Named for World War II fighter aces, brand plays nostalgia card via can graphics that hint at bullet-riddled cockpit sporting Vargas-style pinup girls in come-hither poses.  (Trade materials viewed by BBI refer to girls’ “muted sexuality” – BBI suspects the sexuality came from Hansen side of development crew while the muting came from CSAB side.)  Imagery of bombs, rivets, shrapnel streaks and gunsights is intended to reach males age 14-34 but partners also hope nostalgia will bring in over-40 males who haven’t yet picked up energy habit.  To bang home message, brand apparently will tap into airshows, military conventions, model-aviation shows and the like.  

Khaki-colored can of core brand features leggy girl against ace of spades.  It contains 1,000 mg of taurine, 200 mg of panax ginseng, 2,200 mg of energy blend of glucose, caffeine, guarana, inositol and other ingredients.  Ace Lo-Cal Energy, in same formula but sweetened with glucose/sucralose mix, dials up male cues via gunmetal background color and visual of bikinied cowgirl riding a bomb, while downplaying “Lo-Cal” part of moniker.  Ace Energy + Juice, with orange background and graphic of busty nurse with swinging stethoscope, employs 10% juice blend to capture morning and mixer occasions.

Is there room in US market for classy-looking, glass-bottle spring water brand?  With ambitious packaging and marketing push, Mountain Valley Spring Co is betting there is for its award-winning, mineral-rich water. 

Tho continually producing since 1871 out of Ark source, co had pretty much let the boom in bottled water pass it by.  Mountain Valley had been part of Sammons Entreprises, $12 bil Dallas conglomerate run by insurance mogul who also owned major 7 Up bottler in SW.  He bought Mountain Valley in 86 when he was 91 yrs old and soon passed away, with control passing to a widow 40 yrs his junior.  Run by mid-level life insurance execs, the co added plastics mfg and pursued a retail strategy that left sales stuck at $14 mil at time the industry was booming.  “Despite growth in the biz, Mountain Valley hadn’t gone anywhere in 20 yrs,” said marketing vp Jim Karrh, who came in when home and office delivery producer Clear Mountain Spring Water Llc – its biggest distributor – bought co 2 yrs ago.  Within Sammons, it was “small and non-strategic,” Jim said.  Added Taylor Cranor III, former Naya and Pepsi exec who now runs retail sales: “The old ownership let things slip and missed the key consumer – natural foods – and lost distribution at retail in the premium glass category.” 

Tho fewer and fewer water cos want to monkey with glass, the Clear Mtn execs figured there had to be better way to grow the biz.  They aimed for identity as glass-bottle premium brand that could provide domestic alternative to Evian, Panna and San Pellegrino.  It was a “great strategic void in the marketplace,” said Karrh.  “Frankly, most people don’t want to fool with glass; we do.”  Visits to Expo West natural foods show made it clear that “there is a niche, primarily in Whole Foods-types of operation, where taste, quality, and packaging matter to discerning consumer, and there’s more margin.”  The idea would be to get that brand seeded on-premise, primarily thru wine & spirits distributors who understand that class of trade.  With its traditional emphasis on HOD, Clear Mountain did not have much experience playing that game, so key hire was on-premise dir Howard Staley, a San Pellegrino and Miller Brewing vet who not only was able to get brand into wholesalers like Southern Wine & Spirits but whose expertise proved invaluable in redesigning packages and rethinking logistics.  

So in fall 05 the co upgraded its glass pack, moving from a stock bottle with film wrap and plastic cap to more upscale look based on silhouette of 1930s-era Mountain Valley bottle with some added embossing and metal cap. While it was also tempting to mimic the paper label of hi-end imports, Mtn Valley execs were dissuaded from that by trade customers who warned that paper tended to peel and pucker as bottles move in and out of chillers and water drums.  Instead they went with crisp-looking, durable applied label.  They also brought back a sparkling water which Mtn Valley had abandoned in the late 90s, to an enthusiastic response from the trade. They started with half-liter and liter bottles, then in June added one-third liter bottles aimed at hospitality biz, with input from on-premise dir Staley.  

The co also retained a plastic pack for the still water for uses where breakable packs won’t work, only to be surprised at degree of interest from retailers like Whole Foods.  Now, there are plans to upgrade that package, too. (For now, tho, sparkling remains available only in glass.)  Liter bottles run $1.69-1.89 at retail, a tad below prestige imports but hi enough to garner comfortable margin for everyone.  Next up, said chmn/ceo Breck Speed: compostable/recyclable PLA pack from NatureWorks, popularized mainly by Biota water so far, as option for those seeking biodegradability. 

Meanwhile, HOD biz from Clear Mountain side of co is still significant – the co is often #1 or #2 in mid-size markets that Nestle doesn’t pursue, such as Memphis and KC – and it markets the last 5-gal glass pack in country under Mountain Valley name. (3d biz unit in co is Veriplas containers; all told co generates $60 mil in sales and employs 300.)  It’s also offering new 4-gal PET bottle either under Clear Mountain name or as private label item.  At $6 in box with handles, pack can go directly to warehouses and – crushed with a single stomp of the foot – eliminates the need for deposits.  A tough sell at first, ceo Speed said it’s beginning to win some supporters as a complement to the coolers sold in many stores and as a disaster-preparedness item.

Among most-watched videos posted on AOL home page was Tonight Show disquisition from Jessica Simpson, who thinks drinking diet CSDs “gives you cellulite.”  Met with skeptical response from host Jay Leno, singer insisted to broad audience laughter that “If you drink a diet soda, it clogs those pores.”  Damage to already-soft segment may not prove serious, tho: AOL lead-in summed up conversation as “This is the Jessica Simpson we all fell in love with.  America’s goofiest blonde gives Jay ridiculous advice.”

Study Confirms Hi Protein Aids Weight Loss Key hormone in human digestive tract, peptide YY, could explain why hi-protein diets enhance satiety and promote weight loss, according to study in Cell Metabolism reported by nutraingredients.com e-letter. To test hypothesis, Brit researchers monitored set of normal mice vs set of mice made incapable of producing PYY and found that so-called PYY-null mice were 37% heavier, equivalent to 237% increase in total body fat. But afterward given daily PYY injections, the now-obese mice quickly lost weight, only to regain it once injections stopped. In additional experiment, the normal mice were grouped into those fed hi-fat normal-protein diet, hi-fat high-protein diet, lo-fat normal-protein diet and lo-fat hi-protein diet. Of the 4 groups, both hi-protein groups showed greater PYY release than normal-protein diets.

In 1st major presentation not tied to quarterly earnings report, new prexy/ceo Brent Willis said private-label giant Cott will target biggest rather than trivial growth opportunities within noncarb segments while moving away from co’s more freewheeling entrepreneurial roots to style marked by rigorous stage-gate monitoring systems and weekly exec assessments.  Speaking at Prudential’s annual Back-to-School conference in Boston, Brent described his 1st 100 days in office – which ended last week – as spent almost entirely on the road visiting customers and employees, even as he sold corporate jet and installed rigorous measurement and assessment systems to move away from haphazard decision-making of past. These days, all execs go to Tues meeting at which they are measured vs spreadsheet-enumerated top 3 goals.  Another key change: any rising commodity costs from now on should prove “neutral” to co because Brent intends to pass them directly on to customers, just as his branded rivals do.  Following old PL paradigm, “we were the 1 company that didn’t pass costs along to consumers,” he said.  With consumers no longer making buying decisions solely on price gap vs branded rivals, there’s no need to absorb those costs, he asserted.

Since coming aboard, former InBev exec Brent has made it clear he won’t be a passive manager, remaking top exec team and centralizing org so that only top-line-building activities like sales, marketing and customer-management remain autonomous.  New hires last mo included international chief Wynn Willard, ex-Nabisco hand, and “chief people officer” Abilio Gonzales, from Microsoft.  Meanwhile, several Cott vets have headed for exits.  Brent said he expects to bring aboard a chief tech officer and vp/strategy & planning within 10 days.  

Tho Brent sees plenty of life left in CSDs, co will aggressively pursue burgeoning noncarb and energy segments, but with greater discipline.  No longer will system be clogged with “small SKUs.”  Now focus is on “big positions in big segments that are hi-growth and hi-margin.”   While speed to market will be crucial – he cited quick launch of Orient Emporium tea line (BBI, Jul 27 and Aug 31) – product development execs now will have to navigate stage-gate process to get their innovations thru.  Promising ideas that work in 1 market will be quickly transferred to others.  Among recent intros cited by Brent were pomegranate-flavored CSDs for Loblaw’s in Canada, energy drinks in Canada’s Couche-Tarde c-stores, Finding Nemo flavored, sparkling and enhanced waters via Disney/Pixar alliance (BBI, Jun 16 and 23), smoothies sold in UK Starbucks stores.  Meanwhile, all CSD packaging is being upgraded for major retailers like Wal-Mart and Safeway.  

Co happy to take prudent risks, Brent said.  For instance, aluminum costs, hedged thru end of yr, won’t be hedged in 07.  Cott and packaging vendor Crown Cork & Seal anticipate drop in aluminum costs that could shave $15 mil off cost of goods.  HFCS likely will rise, but PET should fall.  If those calculations don’t pan out, “we will fully pass on these price increases to our customers – unlike us in the past, but like our rivals,” Brent vowed.

Continuing with dramatic broadening of its palette, Fuze Beverage is prepping launch of recovery bev using Rehab name licensed from popular taking-the-Sunday-cure-in-the-pool event at Hard Rock Hotel & Casino in Las Vegas, which is equity partner.  At same time, co is finally ready to hit the button on long-awaited plastic complement to familiar wrapped-glass bottles for core line.  This at a time that co is going out – via a separate sales force – with Glaceau challenger Water Plus as it seeks position as diverse bev supplier with more profitable items that can balance hi-cost core items. 

Imminently launching recovery drink joins rush of bevs positioned as healthier alternative to conventional energy drinks or sports drinks (the latter with big biz – if unsung by their marketers – as hangover cures).  Fuze Rehab Recovery Supplement (the R in Rehab is an Rx symbol, as in club’s logo) comes in 12-oz slim iridescent-blue can with white panel touting its ability to “Refresh, Recover, Revive.”  Active ingredients include 120 mg of caffeine, 27 mg of panax ginseng, 251 mg of added electrolytes, along with co-enzyme Q-10 and green tea.  Drink clocks in at 150 calories per can, and has what’s described as cherry/tangerine taste.  Tho initially slated for West Coast launch kicked off at Vegas club, interest among distribs has been enough for it to go out to select markets stretching all the way to East Coast, said sales chief Bob Miller.  Brand, which wired-in Hard Rock folks will work to get integrated into popular TV shows like OC and Entourage, joins Fuze energy portfolio anchored by licensed NOS brand.  As reported, NOS is shipping screw-cap 11-oz and 22-oz resealable blue plastic bottles that echo the form of Holley NOS canisters (BBI, Aug 15). 

Meanwhile, Fuze founder Lance Collins says co is just a week away from test-run of plastic bottle for core line.  He described new pack as maintaining distinctive profile of glass packs but in slightly squatter form that may be more appealing to males.  Bob cautioned that line initially is being aimed at narrow niches for which breakable bottles are unsuited, but said they could go considerably broader if demand warrants.  With many consumers placing a premium on convenience of plastic bottles, this could provide further boost to already surging Fuze brand.  New packs actually are slightly more expensive to produce than wrapped glass bottles, tho lower weight will reduce shipping cost.  So they should contribute to growth, but not necessarily profitability, of line. 

Occasionally bitter rivals a few years ago, when John Bello’s SoBe was challenging Mike Weinstein’s Snapple for new-age hegemony, the 2 well-known bev aces have thrown in the towel on their 1st bev plays since selling out to Pepsi and Cadbury, respectively. 

Bello’s play, of course, was Firefighter food/bev brand, launched in wake of 9/11 attacks to play on heroics displayed by firefighters in aftermath of tragedy while funneling share of proceeds to equipment.  Launch aroused great interest as attempt by Bello to prove that the magic he brought to NFL Properties and SoBe was no fluke.  Dogged by series of miscalculations, it didn’t pan out that way.  John’s bev team took initial wrong turn in challenging colas before moving toward hydration and energy bevs that had more likely tie to firefighting, and also failed to anticipate fractiousness they’d encounter among firefighter groups who were to help market the brand.  Now John has officially thrown in towel, with his bev chief, Bruce Burke, moving to Bello’s burgeoning Soup Man enterprise and execs winding down the last vestiges of Firefighter operation. 

Meanwhile, Weinstein and partner Brian O’Byrne, operating as Inov8, have similarly laid to rest their revival of No-Cal trademark.  True, brand name has great benefit of explaining itself, but many had questioned whether it would resonate with any who are able to navigate store aisles under their own power.  And, as Mike now acknowledges, bang-up taste and packaging weren’t enough to offset the partners’ main miscalculation: that far from benefiting from travails of full-cal CSDs, diet CSDs would head down the same dismal trail.  

Predictably, the twin failures have occasioned snickers from some former rivals.  So even those geniuses don’t always get it right!  Of course they don’t!  Failure is the precious coin of innovation, and no one is exempt from feeding a few of those coins into the meter every once in a while.  But we’re glad to see that both Mike and John – neither of whom needs to work again  – are staying in the game.  Inov8 has sparked some interest with spring-water-based energy drink, Hydrive, while Bello is helming altsoda marketer Izze as chairman.  Better luck on these to 2 proven bev innovators. 

After testy battle at H.J. Heinz Co, Nelson Peltz of Trian Group and Inov8 Beverage Co’s Michael Weinstein have won board seats to pursue activist agenda.  Peltz, who owns 5.5% of Heinz stock, has been looking to shake up board to cut costs and boost profits.  One of directors ousted to make way for Nelson and Mike was former Coors Brewing chmn Pete Coors … Coca-Cola and partner Habib Gulzar Non-Alcoholic Beverages Ltd drew Afghan president to opening of $25 mil plant in Kabul, where Coke, Sprite, Fanta will be produced.  President Hamid Karzai called investment “important step forward to economic growth, self sufficiency and better future” of nation … Pepsi has big fan in Luke Ravenstahl, who at age 26 just became mayor of Pittsburgh.  NY Times profile of Luke, who is youngest mayor of major US city, noted he averages 12 Diet Pepsi’s per day.