Beer Marketer's Insights
Big Mo: Tampico Seen as Brand to Watch
In Breakaway Brands Survey, which measures not only public awareness of a brand but 3-yr growth trends, Tampico ranked #2 among top-5 brands that had largest gains in brand strength in 05, reported Fortune. Survey of 9,000 consumers rated 2,500 brands on “elements such as differentiation (what makes a brand stand out), relevance (how consumer feels it meets his needs), esteem (how well regarded it is) and knowledge (how much the consumer knows about it).” Mag noted that Tampico juices, while “popular with Hispanics, are a crossover hit.” Survey is done by brand and design consultant Landor Associates, using Young & Rubicam’s BrandAsset Valuator database to compile results. Under former Snapple sales veteran Scott Miller, Tampico has been upgrading image and broadening product mix.
Claims that Coca-Cola and PepsiCo soft drinks in India had high levels of pesticides led to sales drops of up to 60% in some parts of country, reported Financial Express. More than a mo later, those sales “have failed to bounce back despite the health ministry siding with” Coke and Pepsi. Sales are still off 30% in India overall, per Financial Express. Cos would not comment on sales figures. Meanwhile, US Undersecretary for International Trade Franklin Lavin sent letter to Indian gov’t to support both cos, reported AFP. Letter urged that cos be “treated fairly and in accordance with regulations developed on scientific evidence.”
Caribou Exploits Starbucks Coupon Snafu; Can You Pass Me 28 More Packets of Sugar, Please?
In rare gaffe, Starbucks is reeling from adverse publicity stemming from aborted e-coupon offer for free “grande” drinks that select employees were encouraged to forward to friends and family. After coupon really caught on, Starbucks reneged on deal, leaving opening for rival Caribou to win over disgruntled customers by offering its own drinks free to coupon bearers. Now, attorney Peter Sullivan has filed $114 mil suit in NYC on behalf of 23-yr-old woman who, as he told media, felt “betrayed” by Starbucks about-face. He’s seeking class-action status. One reaction on MotleyFool.com: “Isn’t ‘betrayed’ a ridiculous way to describe losing out on a free beverage? Bummed out? Sure. But betrayed?” … Center for Science in Public Interest lately has taken a whack at Starbucks rather than usual CSD targets, noting that 24-oz Java Chip Frappuccino with whipped cream is equivalent in calories to McDonald’s coffee with 11 of their creamers and 29 packets of sugar.
Launch of Coca-Cola’s new coffee system, Far Coast, in Toronto last week drew lots of media coverage. More quietly, tho, Coke tea/coffee ally Nestle is stepping up its own coffee efforts with Nescafe Specialty Solutions, reports Advertising Age. Nestle system “allows upscale foodservice customers to mix concentrate with water to create hot or cold mocha, latte, French vanilla and chocolate drinks,” said AA. By contrast, Coke’s Far Coast is more idiot-proof pod-based system. Nestle is reportedly targeting movie theater chains, theme parks and chain restaurants. “Among its bigger clients are Regal Cinema’s Edwards Theaters and House of Blues,” noted AA. Mag also reports that Far Coast, with tagline “Adventures by the cup,” will be supported with print ads from agency DiNoto of NY. (That’s former agency of Coke ad chief Esther Lee.) While Far Coast targets finer restaurants and hotels, Coke has developed brand named Chaqwa “to provide house blends on the go using the same machine” for quick-service restaurants. Chaqwa will have outdoor, print and in-store ads running with tagline, “Your cup is calling.” Far Coast and Chaqwa will also have interactive Web sites, with agency Mint in Seattle handling Far Coast and Office in SF handling Chaqwa, wrote AA … NY Times travel section on Sun highlighted Galco’s Soda Pop Stop in LA’s Highland Park area as “one part soda museum, two parts sugar boutique.” Failing Italian deli switched to nostalgic bevs in 90s and now is attracting hipster crowd with 500 sodas and 425 beers. Items include Red Ribbon Cherry Supreme, El Salvador’s Kolashampan cream soda and newer items with natural ingredients like Nuky Rose Soda (Fla) and Plantation Style Mint Julep (Penn). Coke is represented with Mexican version using real sugar. Check out sodapopstop.com.
Is Bravo Foods finally getting a head of steam? After a tortuous stretch – its travails ran gamut from SEC snarl over accounting for derivatives to initial misfire on CCE alliance – Fla developer of RTD dairy items is expecting growth flurry in next few quarters. Execs indicated in 2d qtr conf call that “Operation Milk Attack” with CCE is gaining momentum, co is teaming with AriZona for marketing blitz behind Blenders smoothie line, and it’s even in talks with “major organic co-op” to partner with CCE on school product for later this year.
From revenue standpoint, Bravo is still puny – its “record” 2d qtr revenues amounted to just $3.7 mil. But potential is big for CCE alliance behind Slammers brand, which in Apr added mass channels to single-serve channels that formed basis of initial deal in Aug 05. To get ready, Bravo has been boosting capacity at Jasper Products plant in Joplin, Mo, using proceeds of recent $30 mil private placement. Still, alliance has gotten off to slow start. Industry execs already had noted earlier missteps within CCE in getting with program. More recently, partners decided it was better to slow-launch Slammers brand in CCE’s Midwest and SW regions as capacity ramped up rather than risk alienating key customers with shortages. That produced flat 2d qtr. “The last thing we want to do is disappoint Coca-Cola Enterprises or any of its customers,” said ceo Roy Warren. Meanwhile, capacity and inventory build caused cost of goods sold to rise and contributed to widened loss of $5.1 mil vs $2.5 mil loss a yr earlier. Still, sales have been growing briskly in 3d qtr and co expects “very robust” 4th qtr, Roy said. Tho retail penetration via CCE barely exceeds 5%, volume per account has shown good progress, growing from avg 2.2 cases in Apr to 3.4 cases in July.
Schools segment alone could provide rich opportunity for partners. Bravo is readying packaging options that CCE can use to “repatriate” vending machines idled by explusion of CSDs from schools. CCE is “chomping at the bit” to get hands on new 8-oz pack that will be industry’s 1st vendable, shelf-stable bottle that meets ABA portion-size guidelines, said Roy. Source close to CCE said initiative could be home run if co has surmounted technical hurdles involved in perfecting multilayer, UV-screening pack.
AriZona marketer Ferolito, Vultaggio & Sons, with its deep NY distribution operation, is another potentially powerful ally. Under deal, Bravo will mountBlenders sampling blitz at NY commuter portals like Grand Central, Port Authority and Staten Island Ferry in 1st week of Oct via AriZona distribution operation. Deal initially calls for NY crew to distribute Blenders smoothies line, but there is handshake on deal to add FV&S’ Fla operation, too, said Jack Shea, dir of new-biz development for allied products. Product range could expand to include bevs licensed from General Mills such as Cocoa Puffs and Lucky Charms. Edelman PR is helping with launch.
Against that background, SEC flap was distraction co didn’t need. Issue surfaced in summer just before co was to report 2Q data and kept top brass occupied 24/7 for past mo. Tho #s associated with flap look ugly, they are not cash-related. For qtr, Bravo reported loss on derivatives of $5 mil vs $77.3 mil for yr-earlier. Matter forced co to delay 2d qtr release and trashed stock (which has since recovered 30%). “It’s been a tough 30 days” but co now has “clear understanding” on how it should proceed on accounting issues, Roy assured investors.
At time that market may be ripe for alternatives to soaring Pepsi/Starbucks Frappuccino franchise, retort (process req’d for SS dairy) capacity constraints are looming as potential barrier. “There’s absolutely no capacity,” griped bev veteran eyeing RTD coffee launch licensed under celeb name familiar from grocery aisle. “Whatever there was, Pepsi has for Frappuccino. Right now, I’m stuck.” Both glass bottles and retort-capable co-packers are said to be in short supply. Word is such constraints account for limited launch of Coca-Cola’s licensed Godiva Belgian Blends line just in Northeast. (West Coast source says brand won’t debut there until next Apr.) And despite rumors that CCE and others are looking at licensing potent Dunkin’ Donuts brand for RTD coffees, some industry execs question whether anything beyond modest launch is possible in upscale glass packs. In Bravo Foods conference call this week, ceo Roy Warren alluded to capacity constraints that are forcing co to postpone any plans for retort-based items.
Mind you, there’s no issue for plastic-bottle drinks, just hi-end stuff in glass. Producers include Livingston Chocolate in Livingston, Tenn, O-AT-KA in Batavia, NY, and Initiative Foods in Sanger, Calif, outside Fresno. All this at time that licensed Wolfgang Puck coffee, distant #3 to Starbucks Frap and Double Shot lines, is leaving some glass-bottle demand unfilled as part of fallout from fiasco with self-heating cans withdrawn earlier this yr. Bob Groux, principal at Brand Source, which holds Puck license for RTD coffees, said he continues to seek brand buyer with resources to fully exploit demand. “We’re getting out what we can afford to get out,” he told BBI. “It’s a great brand if somebody would put something into it.” (Bob said at least some capacity is available at his producer, Initiative.) Meanwhile, too early to say how Coke’s Godiva blends are faring; some in industry were surprised to see it emerge in non-proprietary bottle at time that chocolate line is moving upscale. Also a surprise: coffee-based drinks make no mention of coffee on main label panel, in what may have been concession forced by Nestle, Coke’s partner on teas/coffees. As reported (BBI, July 14), Coke is trying to restructure deal to exclude coffee, which under current terms has to employ Nescafe or other Nestle brands. No word yet on whether that’s going to happen or whether, for that matter, Coke/Nestle could veto CCE attempt to launch Dunkin’ Donuts line.
More Positives on Green Tea
Large study in Japan found green tea cut risk for heart attack and stroke significantly for both women and men. Study of over 40,000 Japanese adults found that women who drank 5 or more cups of green tea daily cut risk for heart disease by 31% vs women who averaged less than 1 cup daily. The risk was cut by 22% for men who drank 5 more green teas per day. Risk for suffering a stroke was cut even more – by 62% for women and 42% for men drinking 5 cups per day. Since tea drinking is so prevalent among Japanese “from all lifestyles and economic groups,” AP noted this study “seems to refute criticism of previous studies, that people who drink green tea are higher-income and more health-conscious” than general population. Study done by Tohoku University in Sendai was funded by Japan gov’t and appears in current Journal of American Medical Assn.
Vital Pharmaceuticals, marketer of “extreme” energy drink Redline, is snarled in legal battle with Red Bull, with the 2 sides trading suits accusing each other of false advertising and trademark infringement. According to Miami Herald report picked up by just-drinks.com, US District Court has granted Vital the right to pursue false advertising claims vs Red Bull now that efforts to settle matter out of court have failed. Dispute began last Oct, when Red Bull’s lawyers sent letter to Vital demanding it pull Redline on ground that its packaging was too similar to Red Bull’s. Vital filed a suit in Miami seeking judgment that it was not infringing Red Bull trademark. In March, Red Bull challenged Vital on grounds that Redline’s fat-burning claim represents false advertising. Now Vital is following thru with its own threat to sue Red Bull. Just-drinks.com said it did not get immediate response from Red Bull execs in Austria and US or from Vital.
Rockstar is extending its Juiced line at end of this mo with guava-flavored sku that is getting hi marks for disguising the mediciny taste of many energy drinks from those who’ve tried it. Brand will ship in purple-and-gold cans in 16- and 24-oz sizes. In addition, it’s launching a Zero Carb extension said to have a Kool-Aid-like taste in blue-and-silver can, also in 16- and 24-oz sizes. Meanwhile, co has again redesigned can of its alcoholic Rockstar 21, again with view to insuring there is no confusion with non-alc core brand. New can drops yellow-and-black color scheme for green, black and silver hues and an altered logo, confirmed sales chief Kevin Conrad. At debut at last year’s Natl Beer Wholesalers Assn conference in Las Vegas, Rockstar 21 had aroused some concern for its close resemblance to NA versions; co moved quickly to redesign pack to better set it apart. Latest re-do takes it even further away, to avoid potential controversy over marketing of an alcoholic version of brand that, in its NA form, draws heavily upon consumers below legal drinking age.
PepsiAmericas, 2d-largest Pepsi bottler, said it now anticipates 06 earnings per share will fall in range of $1.35-1.39 vs prior guidance of $1.44-1.49. Co blamed lower-than-expected pricing going up vs higher costs of goods. PAS announcement is “isolated to PAS execution and geographic exposure,” said Morgan Stanley’s Bill Pecoriello. Like Bill, Citigroup’s Bonnie Herzog noted she does not think “PAS’ problems are transferable to the other bottlers.” As part of problem, “PAS has been experiencing lower-than-expected volume growth in its single-serve business,” noted Bonnie. While she views Pepsi Jazz launch as successful on balance, “the brand did not see the incremental purchases that were anticipated.”

