BevNET Magazine April/May 2013

April 30, 2013

Growlers change the game for coffee, beer.

HOW MIX-TO-DRINK WHY COLD BREW BEVERAGES ARE COFFEE IS ON THE RISE GOING MAINSTREAM

EXPO WEST & CBC CONFERENCE COVERAGE

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Columns 4 FIRST DROP Influential Raindrops 6 PUBLISHERS TOAST Say Hello to the Enhancers 26 GERRY’S INSIGHTS The Worrywort’s Optimism

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Departments 8 NEW PRODUCTS Westward Ho! 14 BEVSCAPE Kroger Leans In; Meet Brew Hub 22 CHANNEL CHECK Water 50 PROMO PARADE Field of Dreams

Conference Coverage 42 CRAFT BREWERS CONFERENCE SUMMARY

11 • No. 3

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Features 28 COVER STORY TAPPED FOR SUCCESS Can the Growler Go Mainstream?

32 COLD BREW RISING with Coffee Brand News 38 POWER ENHANCEMENT with Mix-to-Drink Brand News

46 EXPO WEST COVERAGE

COVER PHOTO WITH GROWLER BRANDING, DESIGN, AND GLASSWARE PRINTING

BY TAPHANDLES (TAPHANDLES.COM) TRÖEGS GROWLER PHOTO COURTESY OF TRÖEGS BREWING CO. GRADY’S COLD BREW PHOTO COURTESY OF NICK FERRARI BevNET Magazine (ISSN 2165-6061, USPS 24-552) is published bi-monthly except monthly in March, June, September, and October by BevNET.com, Inc. 44 Pleasant Street, Suite 110, Watertown, MA 02472. Periodicals postage paid at Boston, MA and additional mailing offices.

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By Jeffrey Klineman

Slow Build to Influence In this issue, we’re looking at some of the most immediate trends in the beverage business, from the growth of cold brewed coffee concentrates as an alternative to ready-to-drink bottles, to the evolution of what some call “mix-to-drink” products made with powders and liquids, to the expanding use of the “growler” bottle as a way of bringing home craft beer for immediate consumption.

These topics might seem a bit premature for a magazine like this one, which has always kept its eye on the realities of mass distribution plays while addressing the needs of the entrepreneurial side of the beverage business equation. But we don’t think so. The past two years have brought on tremendous change in the beverage industry, and products and systems of going to market that may once have been considered on the fringe will be have great influence over the future of the entire business.

Consider the growler as a nexus of the influence of coffee and craft beer. These jugs are emblematic of consumer movements toward local and fresh, of the idea that the products that are in the consumer’s own fridge are of gourmet, on-premise quality, of the notion that they are somehow on a face-to-face (or face-to-tap) basis with the producer or distributor. This is local, small-build, concentric circles that grow in a largely hub-and-spoke manner, and it’s similar to the juicing craze as well (and we’re getting to that in issues to come, don’t you worry) in that there are similar emphases put on both in-store – or in juice bar – and at-home consumption. The products are expensive but there’s innovation in terms of freshness, in terms of functionality (more enzymes and vitamins, more alcohol, more caffeine), in terms of taste.

And many of the problems accompanying the growth of those categories are similar as well – on an execution basis, how do you keep the coffee, the juice, the beer

fresh as it moves from region to region; from a marketing standpoint, how do you move into new territory when there are strong independent regional brands in which consumers feel ownership stakes?

At a cost level, how do you afford all that cold-channel distribution? There are better minds than mine working on these problems, but I bet they’re also up more nights worrying about them, as well.

Meanwhile, think about the mix-ityourself nature of the powder and add cold brew to that as well. Again, there’s a larger trend here, that of customization and at-home production. Just as people want to know their producer, a lot of times, they want to be that producer, even when it comes to their otherwise

pre-made drinks. The customizability of a coffee syrup into a cold drink, a hot drink, a sweet or milky one, the act of creation when a tube of powder is shaken into a bottle of water, the triple-strength Mio blast, they’re all the consumer declaring mastery over the product. This isn’t even taking into account the growth of at-home production of CSDs that we’re seeing through the Sodastream, or even the longer-term revival of homebrewing.

Finally, think about the overall time it takes for a trend to build into a product.

What seems like something that happens overnight – Greek Yogurt, Energy Drinks – is a commercial manifestation of a long-term movement. So health and wellness, satiety, and protein eventually wrought the opportunity for greek yogurt, while an increasing awareness of the power of caffeine via Starbucks, the growth of action sports, and our longer, never-ending work weeks helped make the time right for energy drinks.

The movements manifesting into the products we’re talking about this issue are aligned with forces like foodieism, tracking food from farm-totable, the craft movement and the Etsy economy, the push for local products and the ability to identify them anywhere you are, because of the international availability of local, crowd-sourced knowledge.

These ideas are bigger that any one product. But the products that come out of them are proving to be very interesting, indeed.

Are these the final form of the CPG offerings we’ll see based on these trends? We can’t answer that, but we can help put the picture together. Look at coffee, where the next wave is coming from so many independent stores, gradually improving the top level of offerings to one that is better than – but complementary to – Starbucks itself. It’s not a storm, yet, but you can see the color of the sky starting to change.

PHOTO COURTESY OF TAPHANDLES (TAPHANDLES.COM)

4 BEVNET MAGAZINE APRIL/MAY 2013

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MAGAZINE

By Barry J. Nathanson

www.bevnet.com/magazine

Barry J. Nathanson PUBLISHER

Say Hello to the Enhancers

bnathanson@bevnet.com

Jeffrey Klineman EDITOR-IN-CHIEF jklineman@bevnet.com

Ray Latif MANAGING EDITOR rlatif@bevnet.com

Ginny’s been my friend since junior high, and I she and I have always had many interests in common. First amongst them is our passion for the US Open tennis tournament. Every year we catch a few sessions, in addition to the ones we go to with our families. It’s a ritual: I meet her at Penn Station when her train from Princeton arrives. We then take the Long Island Railroad to the Open. Before we enter the grounds we stop at a kiosk and buy a few bottles of Poland Spring. After all, we get five bottles for the price of one inside.

Once seated, Ginny proceeds to open a bottle, take out a tubular sleeve, and pour the contents into her bottle. She’s been doing this for years, and I never really took notice, or connected it to my life’s profession, beverages. After all, I’m good at separating church and state. She would always describe it as her enhancer.

Over the past few years, though, I’ve become more aware of the “enhancers” that are taking a larger role in our industry. “Enhanced beverages” have been a major part of the industry for many years now. From the original SoBes and Vitaminwaters to present day functional products, these drinks now dominate the retail landscape. They are major drivers of volume in many categories – the addition of vitamins, herbs, aloe, and electrolytes is a major factor in the growth and excitement surrounding beverages.

With this explosion of brands, the inevitability of taking the next step was obvious and we’re now seeing the consumer embracing concentrates, powders and liquids, in many formats, that give them the choice to mix to their delight. I am a big fan of the concept. When I order an Arnold Palmer at a restaurant, I always request the mix at 2/3 lemonade. Why shouldn’t we all have that capacity, to formulate our drinks to our heart’s content?

Once, the enhancer category was relegated to large containers of powders, with economics the driving factor in the pur-

chase. Now we’re exposed to a plethora of brands in fancy packaging of all shapes and sizes. The cap delivery system drinks are a great example of this. Look for them to explode over the next few years. The portability factor, which I’ve written about many times over the years, is also a huge driver for this category.

There’s still a philosophical question – if you take away the liquid, is it still a drink? I think Ginny would say yes.

Chris Furnari BREWBOUND EDITOR cfurnari@bevnet.com

Max Rothman REPORTER mrothman@bevnet.com

SALES John McKenna DIRECTOR OF SALES jmckenna@bevnet.com

Adam Stern SENIOR ACCOUNT SPECIALIST astern@bevnet.com

ART & PRODUCTION Matthew Kennedy CREATIVE DIRECTOR Aaron Willette GRAPHIC DESIGNER BEVNET.COM, INC. John F. (Jack) Craven CHAIRMAN jfcraven@bevnet.com

John Craven CEO & EDITORIAL DIRECTOR jcraven@bevnet.com

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NEW PRODUCTS

The newest options for cooler and shelf

CSD Rob’s Really Good Beverages has introduced Rob’s Fizz, a line of zero-calorie sparkling drinks. The new products follow the company’s transition last year to an entirely zerocalorie portfolio of drinks.

The three-SKU line comes in three flavors – Tart Cherry, Grapefruit and Coconut Pineapple – each of which is sweetened with a blend of erythritol, monk fruit extract and organic stevia extract. The drinks have a suggested retail price of $1.49, in line with the rest of the company’s beverages, and are distributed in select markets. For more information, please call Rob’s at (435) 783-6348.

Lorina has launched a new Coconut Lime variety to its line of all-natural, artisan sodas.

The beverage is made with water from a natural spring, natural fruits flavors and pure crystal sugar. As with other varieties of Lorina sodas, the new flavor is packaged in 11.1 oz., 25.4 oz., and 33.8 oz. glass bottles and is distributed in gourmet and conventional stores throughout the U.S. Lorina Coconut Lime has a suggested retail price of $5.99 for a 33.8 oz. bottle. For more information, please call Lorina at (305) 779-3085.

Tea ITO EN has launched TEAS’ TEA Lattes.

Authentically brewed with premium whole loose tea leaves and nonfat milk, the line comes in two lightly sweetened varieties: Black Tea Latte, a beverage brewed with tea leaves from Sri Lanka, and Matcha Latte, which is made with a powdered green tea traditionally used in Japanese tea ceremonies.

Each 16.9 oz. bottle contains 80 calories per 8 oz. serving and no fat. The lattes have a suggested retail price of $1.99 and will be distributed in natural and mainstream retail channels nationally. For more information, please call (707) 327-6413.

Energy Drinks Roaring Lion has launched new resealable 16.9 oz. bottles as well as two new varieties - Au Natural and Zero - to its line of energy drinks.

Au Natural is sweetened with natural sugars while Zero contains trace amounts of Stevia.

Roaring Lion’s new varieties and bottles are currently available in select markets around the U.S. and have a suggested retail price of $2.29 8 BEVNET MAGAZINE APRIL/MAY 2013

per bottle. For more information, please call Roaring Lion at (818) 720-9161.

XYIENCE has launched Xenergy + Hydration, Xenergy + Tea and Xenergy + Lemonade. The new products are zerocalorie, sugar-free and vitamin-fortified and made with all natural flavors and colors.

Xenergy + Hydration contains no caffeine; Tea and Lemonade offer 10 mg of caffeine per ounce. The beverages are packaged 15.516 oz. cans and in debuted in the Western and Midwestern U.S. The suggested retail price of the drinks is $2.29 to $2.79. For more information, please call Xyience at (702) 430-5400.

Enhanced Water Fruit2O has introduced two new flavors Cucumber Lemon and Watermelon – to its line of fruit-flavored waters. The new additions expand the Fruit2O line to 10 flavors.

Both new flavors are available at supermarkets nationwide for a suggested retail price of $2.89 for a 16 oz. bottle. For more information, please call Fruit2O at (866) 260-0398.

Juice Pepsi Co has launched Naked Power Garden Tomato Kick Pepper to its line of Naked juice smoothies. The product is made with celery, carrot, orange, and lemon and contains 190 percent of the daily recommended value of vitamin C. Naked also reintroduced its Naked Protein Zone Banana Chocolate smoothie, which is made with bananas, cocoa beans, white grapes and coconuts. The beverage contains 30 grams of protein, a good source of potassium and vitamin C. Both varieties are packaged in 15.2. oz. plastic bottles and have a suggested retail price of $3.29. For more information, please call PepsiCo at (626) 873-2604.

Kids’ Drinks Honest Tea has introduced Honest Splash, a new line of 70-calorie juice drinks that are designed for older children. Packaged in 12 oz. resealable plastic bottles, the products contain 30-31 percent juice and are sweetened with organic fruit juice as opposed to added sugar.

Honest Splash comes in three varieties - Berry Good Lemonade, Goodness Grapeness and Super Fruit Punch – and sold as individual single serve bottles and 6-packs, which have a

NEW PRODUCTS

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suggested retail price of $5.49. Honest Splash will be sold exclusively at Target until the end of June, when the drinks will roll out to other retailers. For more information, please call Honest Tea at (301) 652-3556.

Sneakz is a milkshake made with one full serving of vegetables, including sweet potatoes, carrots and broccoli, in each 8 oz. Tetra Pak. The product contains 8 g of protein and 2 g of fiber, as well as a rand of vitamins and nutrients. The drink comes in a Chocolate flavor and is distributed in Colorado and Southern California at retail chains including King Soopers, Natural Grocer’s Vitamin Cottage, Hy-Vee and Jimbo’s. The suggested retail price of Sneakz is $2.29. For more information, please contact Sneakz at (858) 431-6872.

Functional Drinks Reed’s, Inc. has added four new flavors to its Reed’s Culture Club Kombucha line.

The flavors are Pomegranate Ginger, Passion Mango Ginger, Cabernet and Coconut Water Lime. The beverages have a suggested retail price of $3.49 for a 13.5 oz. bottle and are currently distributed in natural foods and mainstream supermarket channels along the West Coast. For more information, please call Reed’s at (800) 99-REEDS. Lifeway Foods has re-introduced Helios Organic Greek Kefir to its line of kefir products. The non-fat kefir features the same probiotic, nonfat and organic benefits as the first-generation Helios kefir beverages along with a boost of protein – 16 grams per 8 oz. serving. The enhanced line of cultured milk smoothies also boasts a new Pear & Honey flavor. All flavors in the line (with the exception of Original and Vanilla) have been infused with honey, creating Coconut & Honey, Raspberry & Honey, Strawberry & Honey, Pomegranate-Blueberry & Honey varieties.

The products are packaged in 32 oz. plastic bottles and have a suggested retail price of $4.22. Helios Organic Greek Kefir will be distributed beginning in June at natural and specialty stores nationally. For more information, please call Lifeway at (877) 281-3874.

Sambazon has added two new varieties to its line of organic superfood smoothies and a new line of cleanse products. Energy Mocha Java blends yerba mate and Fair Trade coffee with antioxidants from açaí ber10 BEVNET MAGAZINE APRIL/MAY 2013

ries. The product contains 80 mg of organic caffeine per bottle. Blended Breakfast combines fresh strawberries and bananas with chia, quinoa, amaranth and soy milk for a smoothie packed with fiber, protein and healthy omegas. Both products have a suggested retail price of $2.99 per 10.5 oz. bottle. The smoothies are distributed nationally. Sambazon has also introduced Sambazon Purifying Cleanse, a three-day cleanse package consisting of three organic superfood beverages: “Prepare,” a blend of Acerola cherry, lemon and cayenne; “Eliminate,” a juice made with kale, cucumber, parsley, and Peruvian yacon; and “Recharge,” a blend of wild harvested Brazil nuts, cashews and cocoa. The juices are vegan and gluten-free and packaged in 33.8 oz. Tetra Paks. Sambazon also includes a supplemental meal plan that was designed by celebrity dietician Ashley Koff. Each cleanse package has a suggested retail price of $14.99. The product is distributed exclusively at Costco locations in California and Texas. For more information, please call Sambazon at (949) 498-8618.

ALO has introduced ALO Light, a new line of reduced-calorie, reduced-sugar aloe juice drinks. The drinks are sweetened with a blend of cane sugar, erythritol and stevia and have 50 percent less sugar and calories than the brand’s original line-up of drinks.

The products contain 30 calories per 8 oz. serving and come in three varieties: Exposed (original with honey), Bright (orange and passion fruit), and Refresh (cucumber and cantaloupe). ALO Light has a suggested retail price of $1.99 per 16.9 oz. bottle and are distributed at conventional and natural food markets throughout the U.S. For more information, please call ALO at (650) 616-7777.

Ubons BBQ Bloody Mary Mix is a nonalcoholic, all-natural, gluten-free and fat-free product. The mix incorporates traditional bloody mary flavors with bits of garlic, onion flake, celery seed, cayenne, flavors from Ubons famous Memphis-style BBQ sauce, and flavors of fresh dill pickles. The product is packaged in a 1 L glass bottle and has a suggested retail price of $8.99 For more information, please call (662) 716-7100.

Wine Chamisal Vineyards has announced the 2012 release of its Stainless Pinot Noir. The

wine was conceived as a companion wine to Chamisal’s popular Stainless Chardonnay. Produced without the use of any oak or malolactic fermentation, Chamisal’s 2012 Stainless Pinot Noir was sourced from vineyards throughout the Central Coast, with a majority of the blend coming from the home Chamisal Vineyard. The wine mixes the high tone red fruit flavors from vineyards in northern San Luis Obispo County with the denser, more structured characteristics of the Edna Valley to yield an expressive, flavorful and food-friendly wine. Only 1,200 cases of the wine were produced. 2012 Chamisal Stainless Pinot Noir retails for $24 per 750 mL bottle. For more information, please call (805) 541-9463.

Whiskey Louisville Distilling Company has introduced Angel’s Envy Rye, a super-premium whiskey that is made from 95 percent rye and 5 percent malted barley. The whiskey is aged for at least six years in new American charred oak barrels and finished in hand-selected Caribbean rum casks, which began as small

French cognac barrels, for up to 18 months.

The 100 proof spirit is available in select states including: California, Florida, Illinois, Kentucky, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Tennessee and Texas.

The suggested retail price for a 750 ml bottle is $69.99. For more information, please call Louisville Distilling at (818) 903-4789.

House Spirits Distillery has launched Westward Oregon Straight Malt Whiskey. The spirit is made from 100 percent malted barley grown in the Pacific Northwest. It is fermented with Scottish and American ale yeast, double pot distilled and matured in two-char American oak for at least two years. The 90 proof whiskey is packaged in hand-numbered 375 mL bottles and is available for sale in Oregon and California. Each bottle has a suggested retail price of $49.99. For more information, please call (503) 235-3174.

Dewar’s has launched Dewar’s Highlander Honey in the U.S. The Scotch whisky is crafted by the infusion of hand-selected Scottish honey along with natural flavors into

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the original Dewar’s White Label blend. The whisky is then filtered through oak cask wood chips. The 40 proof spirit is available at fine wine and spirits retailers nationwide and has a suggested retail price of $23.99 per 750 mL bottle. For more information, please call Dewar’s at (786) 264-8295.

Castle Brands has introduced Jefferson’s Presidential Select 21 Year Old Straight Bourbon Whiskey, the latest addition to its line of “Ridiculously Small Batch” whiskies and its “Presidential Suite” (Jefferson’s Bourbon, Jefferson’s Reserve, Jefferson’s Presidential Select and Jefferson’s Rye). The whiskey is aged in new oak barrels for 21 to 24 years and bottled at 94 proof. Inspired by its namesake Founding Father, the spirit consists of 15 lots of bourbon aged from 21 to 24 years. The resulting blend is a uniquely robust and extremely flavorful bourbon with deep, concentrated notes of vanilla, toffee and leather that finishes extraordinarily smoothly. Castle produced 2,000 cases of Jefferson’s Presidential Select 21 Year Old Straight Bourbon Whiskey, which is priced at $119.99 for a 750 mL bottle and is available for purchase at fine spirits retailers across the country. For more information, please call Castle at (646) 356-0200.

Jim Beam has launched Jacob’s Ghost, a new white whiskey that celebrates the spirit of founding distiller – Jacob Beam – by perfecting the white whiskey he first distilled more than two centuries ago. Aged for a year in white oak barrels, Jacob’s Ghost is an 80 proof white whiskey that elicits the woodinfluenced flavors and hues of a traditional bourbon but offers a lighter body and more adaptable character. Jacob’s Ghost is available nationwide for a suggested retail price of $21.99 per 750 mL bottle. For more information please call Beam at (847) 444-7657.

Vodka Hangar One Vodka has introduced its newest packaging, which evokes the brand’s experimental process and hand-crafted heritage. Using locally grown fruits sourced from farms across the U.S., the vodka is produced in a WWII aircraft hangar in Alameda, Calif. and distilled in small batches using artisanal methods including fresh fruit infusions and distillation in Holstein Stills. The process inspired Hangar One’s new package, which 12 BEVNET MAGAZINE APRIL/MAY 2013

features an apothecary-style bottle with embossed measurements along the side and a black stopper cap- reminiscent of a measuring beaker. The labels feature hand-drawn visuals for each offering, which include “Straight,” Mandarin Blossom, Buddha’s Hand Citron, Kaffir Lime and Maine Wild Blueberry. Hangar One vodka is 80 Proof, has a suggested retail price of $29.99 and is available nationally. For more information, please call Hangar One at (970) 846-2196.

SVEDKA Vodka has introduced two new flavors to its portfolio: SVEDKA Orange Cream Pop and SVEDKA Strawberry Colada. SVEDKA Orange Cream Pop is a nostalgic blend of Swedish vodka, icy orange cream and vanilla flavors. SVEDKA Strawberry Colada is a tropical blend of vodka infused with strawberry, coconut and pineapple flavors. Both products are available nationally and are packaged in 50 mL, 375 mL, 750 mL, 1 L and 1.75 L bottles. The 750 mL bottle has a suggested retail price of $12.99.

For more information, please call SVEDKA at (212) 972-0277.

Campari America has extended its line of SKYY Infusions vodkas with SKYY Infusions Moscato Grape. The spirit blends Moscato grapes with premium SKYY Vodka.

The vodka is available in 50 mL, 375 mL, 750 mL, 1 L and 1.75 L bottles. The 750 mL bottle has a suggested retail price of $18.49.

For more information, please call Campari at (415) 315-8000.

Other Spirits Pernod Ricard has launched Avión Espresso Liqueur for distribution throughout the U.S. The spirit combines Avión Silver Tequila with fine Italian espresso. The product is 70 proof and is available in 750 mL bottles for a suggested retail price of $24.99. For more information, please call Pernod at (914) 848-4782.

Papa’s Pilar is a new super-premium rum inspired by Ernest Hemingway. The inaugural Dark & Blonde varieties are born from trums of the Caribbean, Central America and the U.S. and then solera aged and blended in a unique process. The Dark variety is an 86 proof rum is both pot and column stilled and boasts hand-selected rums up to 24 years old. Papa’s Pilar Blonde rum includes column stilled aged rums 3-5 years old and

is 84 proof. Both spirits are packaged in 750 mL bottles and throughout Florida. The suggested retail price of the Dark and Blonde varieties are $39.99 and $29.99, respectively. For more information, please call the Hemingway Rum Co. at (212) 370-0770.

Island Distillers has introduced Hawaiian Moonshine. The spirit is a version of an original Hawaiian liquor called okolehao, which was made from ti root and sugar cane and first produced in the late 18th century.

The 100 proof moonshine is packaged in a 750 mL bottle, made of stoneware with a resealable swing top and a screen printed label. The produce is distributed in Hawaii and has a suggested retail price of $33. For more information, please call Island Distillers at (808) 492-4632.

Pernod Ricard has introduced Absolut Mexico in the U.S. The vodka pays homage to Mexican culture and multicultural heritage and features the original Absolut Vodka in a specially designed bottle that celebrates the spirit of Mexico. The bottle is adorned with three legendary icons from ancient

Mayan culture – a Hurakan (Hurricane), a Kukulkan (Serpent) and a Balam (Jaguar).

Absolut Mexico is available in 750 mL bottles for a suggested retail price of $19.99 and distributed in select retail outlets for a limited time. For more information, please call Pernod at (914) 848-4782.

Pernod Ricard has launched a new line of ready-to-drink Malibu cocktails in cans.

The drinks blend Malibu Caribbean rum with coconut liqueur and cranberry, pineapple or sparkling cola flavors. Each 200 mL can contains 5 percent alcohol by volume and has a suggested retail price of $2.49 for a single can and $9.99 for a 4-pack. Pernod has also added Malibu Blue Hawaiian and Malibu Piña Colada Light flavors to its line of 1.75 L cocktail pouches. Malibu Piña Colada Light contains 75 calories per 1.5 oz. serving. The pouches are also now made. Using stronger materials, including an additional pouch layer inside of the external pouch, allowing the liquid inside to stay cooler longer, and a new spout with a reinforced safety latch designed to reduce leaks and spills. For more information, please call Pernod at (914) 848-4782.

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BEVSCAPE

The latest news on the brands you sell

LEGISLATION Durbin, Markey, Blumenthal Release Energy Drink Report Three federal legislators have released a report that accused energy drink companies of making products that sport inconsistent labels and are marketing highly caffeinated products directly at young people.

The report contained several recommendations for the energy drink industry in order to reduce confusion and increase transparency about ingredients, but also came at a time when leading energy drink companies are already moving in

that direction. Nevertheless, the direction of the companies’ marketing efforts is likely to become a hot-button issue.

The report, What’s all the Buzz about?, included the compiled responses of 14 energy drink companies that had received letters from the offices of Rep. Ed Markey (D-MA) and Sens. Richard Durbin (D-IL) and Richard Blumenthal (D-CT) into their products’ ingredients, marketing strategies and regulatory positioning. According to the report,

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A new report on the market for fruit and vegetable juices finds that while dollar sales and consumption of juice drinks has since 2007 remained stagnant, consumers are increasingly embracing new and innovative juice products and flavors – and mainstream retailers are paying attention.

The report, published by market research firm Packaged Facts, stated that over the last five years, consumption of regular orange juice has declined by 3.6 percent while that of frozen orange juices has slid by 14.7 percent. In the meantime, health and wellness trends and consumer marketing about healthier lifestyles have pushed the growth of juice bars and smoothie chains, and in turn, given way to the rise of new premium and super premium juice products.

And while natural and specialty retailers were once the exclusive domain for innovative and exotic juices, traditional grocers are now stocking their shelves with a range of coconut waters, blended juice drinks and “superfruit” smoothies.

Packaged Facts expects the trend of mainstream retail adoption of these products to continue as the demand for healthy juice drinks continues to grow.

Along these lines, Packaged Facts forecasts that three factors that are likely to lead and accelerate growth in the juice market, despite weak momentum in recent years.

• The increase in the number of large households as a result of the rise in the population of multicultural consumers will have a disproportionate impact upon growth in the overall market for juices and juice drinks.

• An intensive effort by juice marketers to introduce a broader array of low-calorie products based on safe alternatives to sugar in response to consumer concerns about the high sugar content of their products by.

• Marketers will continue to innovate and launch new, premium, high-profit, better-for-you juice products that attract health-conscious millennials and baby boomers seeking out the latest flavor fad.

there are inconsistencies in labeling and classification, widespread marketing to adolescents, and unsafe caffeine levels within the energy drink category.

“It’s time for energy drink makers to stop masking their ingredients, stop marketing to kids, and start being more transparent with their products,” Markey said.

The report found that comparable drinks are classified as both conventional beverages and dietary supplements, which they believe could lead to consumer confusion and regulatory conflicts. It also explains that caffeine levels in these products are often above the caffeine level affirmed as safe by the FDA (approximately 71 milligrams of caffeine per 12 fluid oz.) and occasionally not disclosed on the packaging

“All consumers, especially parents, have a right to know that these drinks claiming to enhance stamina and strength can be highly risky,” Blumenthal said In response to their findings, the legislators advise energy drink manufacturers to label products with a clear description of the caffeine level (in milligrams), display a “prominent precautionary statement” for products with unsafe caffeine levels, stop marketing to children and adolescents, and report to the FDA any serious incidents resulting from energy drink consumption.

But Rockstar, Monster and Red Bull, the leading energy drink companies, either already disclose or are moving to disclose their caffeine levels; most companies already also feature a warning statement of some kind.

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DISTRIBUTION Body Armor Gets DPSG Distribution in NJ, NorCal Lance Collins’ last ride is now going to be on a Dr Pepper truck.

Body Armor, the brand started by Fuze founder Collins and backed by heavyweight investor and Vitaminwater sales chief Mike Repole, announced that the nutrientenhanced “superdrink” will be distributed by the DPSG network in New Jersey and Northern California.

“They’re a great distributor, a great bottler,” Collins said. “It’s hard to pull a strong network together to service the chains, especially since the industry is consolidating. We’re lucky to have them on board.”

Body Armor is putting together a strong field marketing push behind the new distribution, which starts in New Jersey next week and in north of Santa Barbara on May 1, Collins said. Additionally, the company has begun to add cultural celebrities to join its team of athletic endorsers like Mike Trout and Rob Gronkowski.

“You have to create brand awareness,” Collins said of the celebrities. “But obviously, our field marketing efforts are three times what our athletic programs are.”

The new route to market for Body Armor is creating strange bedfellows: the new arrangement will put competitors Neuro, Bai, and Body Armor, three well-known health-enhancing functional products, all with brightly colored liquids and proprietary packaging, and all with strong ties to the former Vitaminwater sales and marketing organization — on the same trucks.

“We can’t compare our brand to any other brand,” Collins said, calling the brand his last ride through the beverage business. “There’s no guarantees in the business, and you’ve got to make things happen.”

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APRIL/MAY 2013 BEVNET MAGAZINE 15

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LEGAL ISSUES Judge Tosses Out "All–Natural" Lawsuit Against AriZona AriZona Beverages can breathe a sigh of relief now that a federal judge has tossed out a long-running class-action lawsuit claiming that the company misrepresents its products as “all-natural.” In his ruling, U.S. District Judge Richard Seeborg decertified the class of consumers in the suit and stated that the plaintiffs did not introduce any evidence to prove their allegations that high fructose corn syrup (HFCS) and citric acid are artificial ingredients.

The lawsuit was one of several filed in recent years against beverage companies, ranging from entrepreneurial companies like Xing Tea marketer New Age Beverage Co. to PepsiCo and the Coca-Cola Co., Inc. each of which use the terms “natural” or “all-natural” in marketing and labeling for some of their brands. Plaintiffs in many of the cases allege that consumers are misled about the origins of the ingredients in the products.

In the AriZona lawsuit, which was first filed in March 2010, Judge Seeborg rejected the plaintiffs’ claim that “HFCS is not natural because patents have been issued for the process of producing it” and “that if HFCS were a naturally occurring substance such as ‘a new mineral discovered in the earth or a new plant found in the wild’ it would not be patentable,” is rhetoric as opposed to a valid argument, particularly considering that U.S. patent law is not permissible as evidence under federal guidelines.

Judge Seeborg also rejected the plantiffs’ allegations that AriZona is confusing consumers who do not know what “allnatural” means. The plaintiffs argued that testimony from co-founder Don Voltaggio about his decision to drop the phrase “a hundred percent natural” in AriZona’s marketing and begin using the terms “All Natural Tea,” “No Preservatives,” “No Artificial Color,” and “No Artificial Flavor” was an admission that the company’s labels confused the public. The judge stated that the testimony “does not demonstrate that it is probable that a significant portion of the consuming public could be confused by the ‘all natural’ labeling of

defendants’ products.”

And while AriZona produced a range of evidence to counter the claims of the lawsuit, including an expert witness to testify that that HFCS and citric acid are indeed natural as well as letters from its suppliers indicating that the ingredients are natural, the judge noted that the plaintiffs failed to present a viable case and that their attorneys had not sufficiently addressed basic and mandatory legal standards.

“Defendants have established that they are entitled to summary judgment by showing that Plaintiffs have not introduced any evidence showing that HFCS or citric acid are artificial, nor have they produced any evidence from which damages may be assessed,” Judge Seeborg said.

“Nor, at this late stage in the litigation, could plaintiffs obtain such evidence as discovery is closed.”

In a rather scathing rebuke, Judge Seeborg called the plaintiffs’ counsel “dilatory” and said that their efforts “did not begin to approach due diligence.”

“Plaintiffs had more than six months after the entry of the scheduling order to identify an expert, and failed to do so,” he said. “They then waited for nearly five more months after their deadline for doing so had passed to file a motion requesting that expert discovery be extended.

While the ruling was a significant win for AriZona, the result of the case and, in particular, Judge Seeborg’s rationale in dismissing the lawsuit, could work to the advantage of other beverage companies defending themselves in similar class-action lawsuits. Justin Prochnow, an attorney with Greenberg Traurig LLP, who specializes in labeling and regulatory issues affecting the beverage industry, noted that the biggest takeaway from the case was the judge’s reasoning that a processed ingredient does not necessarily mean that it should be precluded from being called “natural.”

“The case gives other companies a good road map for defending themselves against possible arguments [in other lawsuits],” Prochnow said.

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SHUTDOWNS Ex Drinks Ceases U.S. Operations Ex Drinks is an ex-beverage company… at least in the U.S. The company, which marketed a range of functional beverages, announced that it would cease sales in the U.S. The company notified BevNET and other business contacts of the news via a short e-mail, which offered no specific details on the decision.

“Ex Drinks, LLC was hopeful to move forward based off the collective hard work, substantial growth and success,” the company said in the e-mail. “Regretfully, we are no longer able to bring Ex Drinks to the US market.”

Owned by Otho and Deborah Behr, a husband-and-wife team who are also the heirs to the Behr Process Corp., makers

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of the Behr line of paints, the company operated as the exclusive U.S. distributor of the Extreme Drinks Company, a subsidiary of UK-based The Extreme Sports Company. Ex Drinks sold natural beverages in several categories including relaxation, enhanced water and energy.

Pitaya Plus Discontinues Juice Line It may be a disappointing end to a once promising beverage brand, but Pitaya Plus founder Chuck Casano said that discontinuing his company’s line of pitaya drinks is for the best. Casano and his team are now focused on the growth and development of its raw, organic frozen smoothie packs while continuing to support its social mission in working with independent pitaya farmers and single mothers in poverty-stricken communities in Nicaragua.

Although Pitaya Plus rapidly gained distribution and retail placement across the country, the company, which has three full-time employees, was unable to adequately support marketing and promotion of the brand. As a result, the juice line suffered from weak velocity, which combined with high manufacturing costs, led to Casano’s decision to discontinue the drinks.

“We are extremely grateful for all of the support from our customers over the past two years, however, the current model is not sustainable,” Casano said in a statement.

Casano also noted that he sees weakening demand for pasteurized super premi-

um juices (Pitaya Plus was a pasteurized product) as consumers – particularly in the natural channel – are shifting toward brands that offer raw and high-pressured processed products. Moreover, competition in the ever-expanding category is “mindboggling,” he said.

While Pitaya Plus drinks faced a steady downward decline in sales, Casano said that the company’s foodservice line of frozen pitaya smoothie packs has rocketed in growth. The products are currently sold to over 100 cafés and juice bars in Southern and Northern California and New York City, and will soon launch in all 83 locations of Juice it Up!, a chain of natural juice bars. Pitaya Plus will introduce a consumer retail version of the packs in Whole Foods stores in Southern California this summer.

With Ex Drinks and Pitaya Plus drinks as the latest brand to fall, the steady flow of companies shutting down beverage lines, and, in some cases, entire business operations - including Mix1, Bossa Nova, Bean & Body and Brain Twist, the marketer of Slap Energy drinks - has become an alarming trend.

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VITAMINSQUEEZE.COM Contact: Bill McKay I bmckay@ecosentialsllc.com APRIL/MAY 2013 BEVNET MAGAZINE 17

DEALS

RETAILER NEWS

White Rock Buys Fizzy Lizzy

Kroger "Leaning In" on Natural, Organic Beverages

As one of the best-known carbonated soda alternatives to emerge in the last decade, Fizzy Lizzy has always had a profile that far exceeded its overall sales; the all-natural juice drink has been celebrated in venues ranging from the pages of a profile in the New York Times Magazine to BevNET’s own Best Of awards.

But it’s hard work running a small beverage company, and after 13 years, founder Liz Morrill and her husband and partner, Aaron, have finally taken an exit, selling the company to venerable New York soda company White Rock Beverage.

“Aaron and I have loved it,” Morrill told BevNET. “But we have also found we want some time to do other stuff. That was increasingly getting away from us.”

Morrill said she is considering pursuing a teaching career, while Aaron Morrill has other investments and is also writing music.

“It was the most incredible experience in the world,” Morrill said, adding she felt that the brand was in good hands with White Rock, which has been in operation since 1871.

As the largest supermarket chain in the country, Kroger is used to meeting the needs of millions of customers on a daily basis.

But it’s also facing competition on all sides – the treasure seekers of Costco, which recently passed Kroger as the country’s secondlargest retailer, and the big-basket shoppers frequenting WalMart, the country’s biggest retail chain.

Perched just below all three companies, however, are Whole Foods and Trader Joe’s — perhaps not in terms of size or store count, but in attracting the highly desirable group of natural and specialty consumers.

It’s those consumers, who will spend more for food that fits with a lifestyle vision, that Kroger, Costco and Wal-Mart are targeting; for several years, Wal-Mart has emphasized an organics program, while Costco has also increased the number of organic offerings it has while focusing on trend-seeking consumers.

Now, however, Kroger, the country’s largest collection of grocery stores, is ramping up its own efforts to put the shine on the organic apple. The company has formed a strong internal strategy under VP of Natural Foods Mary Ellen Adcock to try to remake itself in the minds of natural and organic consumers as a place where they can go to discover new, on-trend drinks and other products. It is also increasing its own private label natural and organic offerings.

“As a company, our strength to this point has been leveraging our size and scale for the established mainstream grocery piece,” Adcock told BevNET. “We want to enhance our leverage with emerging brands and be more first-to-market with innovation.”

On the beverage end, the company has entered an agreement with product incubation company L.A. Libations to act as its “category captain” for the emerging beverage category.

As such, the group, which does business with a broad swath of emerging brands, from Coke/VEB offerings Zico and Illy to independent players HiBall, Just Chill, and FRS, to its own brand, Aloe Gloe, will be assisting the grocery giant with strategic space and merchandising allocations for the category. LA Libations will also have a set of coolers called “Taste of Tomorrow” in more than 80 stores under the Kroger-owned Ralph’s banner, offering consumers a grab-and-go look at some emerging beverage categories.

The partnership between the two companies began when L.A. Libations offered an assessment of the emerging beverage category to Kroger brass last year – at the time, the company broke the nascent beverage world down into five parts: chia, healthy energy, aloe, relaxation and probiotics. The larger coconut water category wasn’t included because, as co-founder Danny Stepper said, “that category has already emerged.”

The new beverages curated by L.A. Libations are expected to help buttress Kroger’s own in-house “Simple Truth” private label organic and all-natural lines. While there are just a few beverage offerings in that group, including natural sparkling drinks and

18 BEVNET MAGAZINE APRIL/MAY 2013

teas, the brand’s “Free from 101”guideline, which is a list of 101 artificial preservatives and ingredients that its products don’t include, will serve as the basis for new branded product additions as well. It’s a list that Adcock said compares favorably with Whole Foods’ own list of unacceptable ingredients.

“Our list is more robust,” she said.

Consumers have responded, according to Kroger, which said recently that Simple Truth sales had been 33 percent higher than their original target.

With more than 2,400 grocery stores and almost 800 more convenience stores under its corporate umbrella, the push across all Kroger-owned groceries to increase natural and organic products is going to have to be coordinated through several different grocery formats: in some stores, there are natural store-within-a-store segregated sets, while in others natural or organic alternatives sit on-shelf next to conventional versions of the same products.

But it will be pervasive, because the competition is aiming for the same group of consumers.

“From our standpoint, customers have told us it works both

ways,” Adcock said. “But what they’ve really done is tell us they like what we have, and they want more.”

On the beverage front, a lot of the “more” that consumers want may, in the long term, flow through L.A. Libations.

While the plan is to start with the Ralph’s stores in the Los Angeles area, the intent is to eventually scale through all of Ralph’s and, finally, larger geographic regions, Stepper said.

It’s a unique arrangement: in helping set up the emerging beverage category for Kroger, L.A. Libations is the only outside firm helping to run Kroger’s push for natural and organic innovation. The company will continue to build across all product types, Adcock said, but beverage is a key introduction point for the company.

“Sales are increasing across all categories, but we’re really leaning in through beverage,” she said. “We are looking at categories where there’s the most innovation and that are growing categories – some are more accelerated than others, like beverage – dairy is another, snack is another – but the demand for the whole set of offerings is definitely increasing.”

APRIL/MAY 2013 BEVNET MAGAZINE 19

BEER - CONTRACT BREWING Brew Hub Plans $100 Million Contract Brewing Network Hoping to take advantage of the growth of craft beer, a start-up company plans to spend $100 million on building five new contract brewing facilities over the next five years.

The company, Brew Hub LLC, was started by former Anheuser-Busch executive Tim Schoen. It is majority-owned by Yucaipa Companies, a private equity firm started by billionaire Ron Burkle.

Craft beer has had double-digit sales growth for seven straight years, and many existing craft breweries are trying to expand their capacity to meet the growing demand for their products; Brew Hub would provide an alternative for contract partners eager to grow production volumes but currently struggling with capacity constraints.

“As we worked on the concept over the last two-and-a-half years, it became evident that we could become the ultimate resource for brewing services as well as marketing and distribution services,” said Schoen.

Construction of the first Brew Hub facility begins next month in Lakeland, Florida. That space will have an initial capacity of 75,000 barrels and Schoen hopes to begin brewing by the summer of 2014.

The Lakeland facility will also serve as a blueprint for future Brew Hub locations; Schoen is currently eyeing a number of regions, including the Northeast, Mid-Atlantic, Midwest, Texas and West Coast, as potential areas for Brew Hub facilities.

In addition to manufacturing resources, Brew Hub also plans to offer a range of incubation capabilities to help differentiate it from more traditional contract breweries like Third Street Brewhouse, Minhas Craft Brewery or the recently established Two Roads Brewing.

“It’s truly a partnership,” Schoen said. “It’s all about brand building and establishing a brand locally or regionally. Because of our backgrounds, we also have a global reach and are able to create strengths for our partners.”

Brew Hub will initially target three tiers of craft breweries, ranging in size and capability.

“Large, medium and small brewers will all have a different set of needs and wants from us,” he said.

While the rules aren’t fully hardened yet, Schoen defined a large brewery as one that produces over 100,000 barrels annually while a small brewery would make less than 25,000 barrels.

One potential obstacle to Brew Hub’s plan to become a major player in beer production is that there is already a move among many brewers to add capacity for themselves. Schoen agreed that a significant amount of new brewing space that will soon be coming online from large craft players like Sierra Nevada, New Belgium and Lagunitas Brewing will help to alleviate some of the capacity issues, but he said there’s a need for more. He also questioned whether that new capacity was properly positioned in the right locales.

“Ultimately it is going to come down to which brands have relevancy in different geographies,” Schoen added. “There are inherent risks putting the capital out, but will those brands be relevant in certain geographies? That is the nature of the consumer business. Whenever you put capital in a different geography, it’s a risk.”

Schoen, who boasts 28 years as the vice president of global sports and entertainment marketing for Anheuser-Busch, said he also plans to leverage his branding expertise and existing distributor relationships, as an extension of Brew Hub’s client services.

Brew Hub brewing operations will be led by Paul Farnsworth, a longtime brewing industry expert who has consulted for over 100 breweries in 10 different countries. As chief brewmaster, Farnsworth will oversee all aspects of design, layout, construction and day-to-day operation of the new brewing, production and warehouse facility in Lakeland.

BEER - EXPORTS American Craft Beer Exports Increase 72 Percent in 2012 U.S. consumers apparently aren’t the only ones with a thirst for craft beer.

Based on results from a recentlycompleted industry survey, The Brewers Association (BA) today reported record exports of American craft beer in 2012.

U.S. craft brewers shipped 72 percent more beer than in 2011, generating an estimated $49.1 million in sales. That’s up from $23.4 million one year ago.

In a statement, BA chief operating offi20 BEVNET MAGAZINE APRIL/MAY 2013

cer Bob Pease said he was pleased with the continued growth of craft beer exports.

“Consumers continue to view American craft brewers as leaders in innovation and among the standard bearers for quality; maintaining that perception is a priority for the craft brewing community,” Pease said in the statement.

Canada and Western European countries were the largest export markets, accounting for 124,384 barrels shipped.

Barrel shipments to Canada increased by 140 percent.

Many popular craft beer brands like Stone Brewing Company, Oskar Blues and Brooklyn Brewery are enjoying higher profiles overseas. Brooklyn Brewery’s number two market (behind New York City) is Sweden and Oskar Blues recently invested in what the company calls an “international can,” featuring text in seven different languages.

BEER - RETAIL NEWS Symphony IRI: Craft Continues Strong Growth in Supermarkets By spreading its footprint in supermarkets and convenience stores, craft beer continued its strong growth in 2012, seizing a greater share of the beer category.

Dan Wandel, senior vice president of beverage alcohol client solutions for Symphony IRI, a Chicago-based market research firm, validated craft’s growth with statistics he shared as the featured guest of Power Hour, a online seminar hosted by Pete Johnson of the Brewers Association.

Wandel analyzed numbers within two different platforms: multi-outlet (MULO), which includes food, drug, club, dollar and military stores, and multi-outlet and convenience (MULC).

In MULO, craft’s dollar sales increased 17.1 percent from the previous year, dollar share in the category increased by 7.6 percent, case sales increased 13.4 percent from the previous year, and case share in the category increased by 4.7 percent.

Meanwhile in MULC, craft beer sales increased by 18.5 percent from the previous year, dollar share in the category increased by 4.3 percent, case sales increased by 14.4 percent, and case share in the category increased by 2.6 percent.

A significant factor in this growth, Wandel said, was the continued success for craft in October, November and December, or what he calls “the OND period.”

“Make no mistake,” Wandel said, “the OND period of time is craft’s biggest selling season.”

Craft’s share of sales in supermarkets during this three-month period has steadily risen. In 2009, the segment had 4.3 percent share of total alcohol sales (including wine and spirits), 4.9 percent in 2010, 5.5 percent in 2011 and 6 percent in 2012.

In the beer category alone, the craft segment’s dollar share in supermarkets has also risen, from 9.5 percent in 2009, to 11 percent in 2010, 12.4 percent in 2011 and 13.8 percent in 2012.

This growth will likely continue, Wandel said, despite the also rising price per case. In 2010, craft cases averaged a price of $32.97, increased to $33.38 in 2011, and finished at $34.44 in 2012.

Successful new offerings served as another key factor in craft’s continued growth last year. While the actual level of innovation with these products is debatable, the sales figures were undeniable.

“I’m here to tell you today that the beer category really answered the call and stepped it up in terms of innovation,” Wandel said.

While Anheuser-Busch InBev dominated with its two new darlings, Bud Light Platinum ($97,146,640 in sales) and LimeA-Rita ($46,087,584), new craft offerings made their own mark in supermarkets. Deschutes Chainbreaker White IPA tallied $2,601,975 in sales, New Belgium Shift Pale Lager tallied $2,151,305, and Sam Adams Whitewater IPA logged $2,066,139.

COLD FILL ENERGY SHOTS FROM 1.5 OZ TO 10 OZ CARBONATED ENERGY DRINKS IN 8.4 OZ CANS FLAVORED/FORTIFIED WATER ENHANCERS CAPSULES TABLETS AND POWDERS ENERGY MINTS

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APRIL/MAY 2013 BEVNET MAGAZINE 21

CHANNEL CHECK

What’s hot – and what’s not – in stores now

SPOTLIGHT CATEGORY

BOTTLED WATER 52 Weeks through 2/24/2013 SOURCE: Symphony/IRI Total food/drug/c-store/mass.

High-end water continues to grow as Smartwater and Fiji strongly outpaced gains for the rest of the category. That said, evian appears to have slowed ahead of new bottle innovation and other varieties that Symphony IRI lumps into the category, like the Vitaminwater family, SoBe and Capri Sun are also showing some share erosion. Meanwhile, the category continues to show movement at the high and and at the low – Private Label and Pure Life have developed into the share leaders by quite a bit.

Brand

Dollar Sales

Private Label

$1,659,150,000

13.31%

Nestle Pure Life

$940,171,600

0.39%

Dasani

$905,262,500

6.33%

Aquafina

$893,547,800

3.25%

Glaceau Vitaminwater

$662,929,300

-9.48%

Poland Spring

$557,218,200

4.17%

Glaceau Smartwater

$497,581,500

25.82%

Deer Park

$412,163,100

14.08%

Ozarka

$320,555,200

0.22%

Glaceau Vitaminwater Zero

$253,612,600

-0.48%

Ice Mountain

$247,326,100

7.73%

Fiji

$233,051,300

17.81%

Arrowhead

$227,958,600

-2.73%

Propel Zero

$218,581,700

-4.07%

Zephyrhills

$211,451,000

4.32%

SoBe Life Water

$202,012,800

-5.37%

Crystal Geyser

$114,638,600

-5.63%

Capri Sun Roarin Waters

$105,925,100

-18.72%

Evian

$95,410,660

-1.88%

Niagra

$86,243,320

24.58%

TOPLINE CATEGORY VOLUME 52 WEEKS THROUGH 2/24/2013

22 BEVNET MAGAZINE APRIL/MAY 2013

Change vs. year earlier

SOURCE: Symphony/IRI Total food/drug/c-store/mass.

BEER

$29,262,560,000

5.07%

BOTTLED JUICES

$7,005,736,000

-2.61%

BOTTLED WATER

$11,471,470,000

6.17%

ENERGY DRINKS

$9,690,171,000

11.01%

SPORTS DRINKS

$5,675,002,000

4.88%

TEA/COFFEE

$4,140,959,000

5.23%

Tea Brand

HOT! Peace Tea Dollar Sales

Change vs. year earlier

ENERGY SHOTS Brand

HOT! Street King Dollar Sales

Change vs. year earlier

AriZona

$678,528,300

-2.78%

5 Hour Energy

$1,175,493,000

-0.01%

Lipton

$369,325,300

-4.86%

Stacker 2 6 Hour Power

$19,725,700

-26.95%

Lipton Brisk

$305,079,300

-5.95%

Private Label

$19,131,710

17.56%

Snapple

$210,195,800

-4.89%

Stacker 2 Xtra

$18,234,580

3.97%

Diet Snapple

$199,067,500

14.15%

Stacker 2

$11,069,720

110.42%

AriZona Arnold Palmer

$191,865,200

14.13%

Worx Energy

$10,772,260

-26.94%

Lipton Pureleaf

$174,874,000

11.36%

E6

$4,962,403

-4.21%

Diet Lipton

$147,554,700

6.58%

Gold Peak

$122,120,300

32.40%

Peace Tea

$78,156,890

33.62%

SOURCE: Symphony/IRI Total food/drug/c-store/mass.

52 Weeks through 2/24/13

ENERGY DRINKS Brand

Dollar Sales

Tweaker

$4,073,934

148.33%

Street King

$3,494,858

2,488.97%

VPX Redline Power Rush

$3,194,927

-6.31%

NOT! Lipton Brisk

SOURCE: Symphony/IRI Total food/drug/c-store/mass.

52 Weeks through 2/24/13

NOT! Stacker 2 6 Hour Power

HOT! Monster Rehab

SPORTS DRINKS

HOT! Gatorade

Change vs. year earlier

Red Bull

$3,179,110,000

7.93%

Monster Energy

$1,898,765,000

10.77%

Monster Rehab

$414,562,400

112.87%

Brand

Gatorade Perform

Dollar Sales

Change vs. year earlier

$2,767,218,000

0.93%

Powerade ION4

$882,399,600

4.95%

Gatorade G2

$509,321,100

-10.09%

$424,786,100

39.93%

Rockstar

$324,623,500

8.81%

Gatorade

NOS

$266,311,100

6.03%

Powerade Zero ION4

$235,398,900

16.15%

$146,560,700

12.23%

Java Monster

$254,895,200

20.08%

Gatorade G2

Monster Mega Energy

$230,444,800

14.16%

Gatorade Frost

$102,139,500

-3.56%

AMP

$181,681,200

0.82%

Gatorade Cool Blue

$69,115,980

12.05%

Red Bull Total Zero

$170,675,700

N/A

Gatorade Fierce

$65,714,740

36.37%

Gatorade All Stars

$55,911,140

1.35%

Rockstar Sugar Free

$143,510,100

-0.55%

SOURCE: Symphony/IRI Total food/drug/c-store/mass.

52 Weeks through 2/24/13

NOT! Rockstar Sugar Free

SOURCE: Symphony/IRI Total food/drug/c-store/mass.

52 Weeks through 2/24/13

DOMESTIC BEER

HOT! Michelob Ultra Light

CRAFT BEER

Brand

Dollar Sales

Change vs. year earlier

NOT! Gatorade G2

HOT! Lagunitas

Brand

Dollar Sales

Change vs. year earlier

Bud Light

$5,974,820,000

2.09%

Samuel Adams

$294,985,200

7.45%

Coors Light

$2,303,235,000

5.80%

Sierra Nevada

$174,241,100

16.44%

Budweiser

$2,146,570,000

-3.96%

New Belgium

$125,185,600

10.27%

Miller Lite

$1,924,492,000

2.12%

Shiner

$104,272,900

13.62%

Natural Light

$1,187,720,000

-0.11%

Deschutes

$47,873,610

11.25%

Busch Light

$829,625,900

1.71%

Widmer

$41,208,620

-5.64%

Michelob Ultra Light

$710,890,000

15.20%

Redhook

$38,136,670

9.41%

Busch

$701,172,700

-3.31%

Lagunitas

$32,641,910

55.42%

Miller High Life

$513,989,500

-4.33%

Magic Hat

$32,509,210

5.90%

Keystone Light

$507,500,500

-6.31%

Kona

$27,805,190

19.99%

SOURCE: Symphony/IRI Total food/drug/c-store/mass.

52 Weeks through 2/24/13

24 BEVNET MAGAZINE APRIL/MAY 2013

NOT! Keystone Light

SOURCE: Symphony/IRI Total food/drug/c-store/mass.

52 Weeks through 2/24/13

NOT! Widmer

61/070,381, 61/132,424, 12/383,244, PCT/US2009/001775, 61/070,381, 61/132,424, 2009226019, PCT/US2009/001775, PI 0909187-4, PCT/US2009/001775, 2,718,231, PCT/US2009/001775, 200980118258.9, PCT/US2009/001775, CN102036572A, PCT/US2009/001775, 09722985.0, 2268160, 11102843.2, PCTUS2009/001775, 1148648A, 208133, PCT/US2009/001775, 7031/DELNP/2010, PCT/US2009/001775, MX/a/2010/010050, PCT/US2009/001775, WO2009/117152, 61/070,392, 61/132,409, 12/383,241, 2009-0297491-A1, PCT/US2009/001774, WO 2009/117151, PI 0909185-8, PCT/US2009/001774, 2,715,018, PCT/US2009/001774, 200980118257.4, PCT/US2009/001774, CN102036661A, 2268274, PCT/US2009/001774, 09723157.5, 2268274, PCT/US2009/001774, 11102893.1, PCT/US2009/001774,7340/DELNP/2010, PCT/US2009/001774, MX/a/2010/010214, PCT/US2009/001774, 61/132,953, 12/456,926, US-2009-0317532-A1,PCT/US2009/003761, 2010/008475, PCT/US2009/003761, 2100628.6, 507/DELNP/2011, PCT/US2009/003761, 61/398,192, 13/134,927,US-2012-0016026, PCT/US2011/001099, WO 2011/162802, 61/340,944, 13/065,510, US, 2011-0236364, PCT/US2011/00538, 61/340,944,WO2011/119228, 61/633,431

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By Gerry Khermouch

The Optimism of a Worrywart Back in the late 1970s, when a weak economy was raising the budget deficit to worrisome levels, President Jimmy Carter’s Pabst-swilling younger brother Billy came up with a beer-based plan to pay down the deficit: Billy Beer. It was packed in red, white and blue cans, and promised to devote some share of the proceeds to paying down the deficit. The brand’s slogan: We can drink our way out of this mess.

That exhortation sometimes pops back into my mind when I read about the huge increments of capacity – and new entrants – coming aboard in craft beer. The craft business is booming, but to a growing number of observers, the recent and planned additions reflect an irrational exuberance, the sure sign of a looming bubble.

At the company I work for, primarily a publisher of beer newsletters, we’ve been worrying about irrational exuberance for a couple of years now. Most of our staff has been around long enough to recall the last bubble, in the early 1990s. Things got ahead of themselves, the nation found itself awash in too much craft beer (and too much bad craft beer at that), even as the major brewers, struggling to get a foothold, resorted to their usual slashand-burn tactics on the pricing front. The result wasn’t pretty: confusion reigned, the price umbrella collapsed and a bunch of players got shaken out. At the recent Craft Brewers Conference in Washington, several craft veterans alluded to that history in warning of a looming shakeout.

Of course, during every bubble, the optimists can offer a host of reasons why references to past debacles are misguided, why this time really is different. And there are differences. One is the identity of the people opening the new breweries. Back in the early or mid-1990s, I recall attending a craft brewers’ conference whose ranks of aspiring brewers included quite a few lawyers and doctors who demonstrated no obvious interest in beer except coveting what they perceived as a cool lifestyle and easy buck. Uh-oh, I remember thinking. These days, the launch teams of new breweries invariably include passionate, knowledgeable home brewers. And what in the 1990s was a pretty exclusively 26 BEVNET MAGAZINE APRIL/MAY 2013

U.S. phenomenon now appears to be a global phenomenon, with the Europeans, remarkably, often imitating American innovations, and several American brewers actually developing meaningful export businesses. Also, this time around, the quality of the beer is rarely in question.

Most of all, though, the ranks of craft beer drinkers have vastly expanded, both domestically and overseas. In theory at least, if the pool has widened enough, the new capacity, or a lot of it anyway, will be safely absorbed. We’ll be able to drink our way out of this mess, as Billy Carter memorably put it.

In my role as a regular contributor to our Craft Brew News letter, I’ve tried to test this hypothesis systematically, and have been encouraged by my findings. For instance, at the Great American Beer Festival in the fall of 2011, I made it a point to prowl the aisles devoted to geographic regions that historically have been behind the curve on craft beer, like the Southeast and Great Plains states, particularly their rural areas. I found myself visiting with brewers like Toasted & Tapped of tiny Flowery Branch, Ga., to hear that a ginger tiptoeing into IPA territory was greeted by customers who demanded to know why the beer wasn’t hoppier, and that the local women were gravitating to an 8% ABV Belgian-style trippel. I heard similar stories from brewers in places like Papillion, Neb. (population 1,000), and Oklahoma City. It seems like Whole Foods and the Food Network have become great levelers now, and we’re all foodies. That’s great for the prospects for craft beer.

Then there’s the woman thing. In New York, several of the craft beer meccas I frequent offer a promotion where, if you drink 100 different beers, you get a tiny plaque on the wall or similar token of recognition. I’d begun to notice that more and more of the plaques had femaleseeming names on them – even though I’d assumed that swilling a vast amount of expensive beer for the sake of obtaining a dubious trinket had to be a guy thing. Yet at George Keeley the front-runner was an Oklahoma-born young woman who’d tried around 800 different beers in a handful of

years, all this after hating beer growing up in her (then) light-lager-dominated hometown. A regular at Pony Bar had stopped counting when she hit 780. Women definitely are in the craft franchise en masse these days. Except for my wife (God love her!), that certainly wasn’t the case in the early 1990s, before the last crash.

The next frontier may be ethnic Americans, whose beer preferences to date have been mainly limited to easydrinking lagers and Guinness. I swear I’m beginning to see some glimmers of progress there. Heck, ethnic kids lately have picked up skateboarding from their white suburban peers, so why can’t their dads pick up the craft beer habit? I’d like to think pungent food lovers can learn to enjoy pungent beer. We’ll see.

Will this all be enough? Maybe to absorb the new capacity that we already know about. If the frenzy keeps up? Then I don’t see how. For worrywarts like me there are plenty of troubling signs. On the macro side, New Belgium’s sales are eroding just as that Colorado brewer gets ready to break ground on a 400,000-barrel brewery in North Carolina. Ulp! On the micro side, I noticed that my friend at Flowery Branch in rural Georgia ultimately didn’t make it. He may have had some serious hopheads and Belgian beer lovers among his patrons, but apparently not enough of them. It makes me wonder whether, for any but those looking to open up a small brewpub or nano, the train has left the station. Personally, I like the solution adopted by Van Havig and Ben Love, local brewing stars in Portland, Ore., who certainly could have gone big if they wanted to. They’ve teamed up on an operation ironically called Gigantic that’s big in name only.

Let the other suckers overexpand, is their reasoning, we’ll keep it modest, manageable and fun. So let’s hoist a glass of their End of Reason quad in the hope that the wonderful craft industry hasn’t lost its.

Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.

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Growle Garner Interest

WHERE PERMISSIBLE

By Max Rothman

28 BEVNET MAGAZINE APRIL/MAY 2013

ers

The freshness of beer, for many drinkers, serves as the variable that separates adoration from frustration.

Straight from the tap brings the truest form, they say. So while cans have been all the rage, as evidenced by the continued success of Oskar Blues and the recently announced canning by Sam Adams, craft beer drinkers also treasure draft. And when they crave freshness from the comfort of their couch, rather than from a pricey trip to the bar, more and more, those consumers want growlers.

Resealable bottles or jugs typically sized at 32 or 64 oz., Growlers have lagged behind cans and bottles amidst craft beer’s surge; while the interest has long been there, they haven’t become a major takeout option for the simple reason that they remain illegal in many states. This is typically for legacy reasons: sanitation regulations that are difficult to monitor or antiquated, post-prohibition laws.

However, where growlers are legal, they’re starting to catch on. Total Wine & More, a chain liquor store with an affinity for craft beer, announced in March that 20 of its stores across the country will feature growler stations by the end of 2013.

GROWLER PHOTO COURTESY OF TAPHANDLES (TAPHANDLES.COM)

APRIL/MAY 2013 BEVNET MAGAZINE 29

to take place; nevertheless, there are already a few encouraging “That’s an easy decision for us,” said Edward Cooper, Total signs. Williams said that there are already several growler bars Wine’s V.P. of public affairs and community relations. “Growlers operating and succeeding in New York City, and he knows of are what customers are asking for.” many retailers, aside from Total Wine, that are interested in sellCooper said that most of the stores filling growlers will run ing growlers. When growler bills reach legislators, they commonalong the coasts, however Total Wine wants to be the first to hit ly receive near-unanimous support, such as the one in Montgomthe market if growlers become legal in other states pushing for ery County, Maryland that passed the state’s House of Delegates their availability, such as Delaware, North Carolina and Florida.

134-0. Brewpubs and microbreweries have long associated their “I think what’s going to happen,” Cooper said, “is you’ll see operations with growlers, and according to Paul Gatza, director availability of growlers ultimately being in most of the states.” of the Brewers Association, 99 brewpubs and 310 microbrewerFor now, the Total Wine chain, which Cooper said features ies opened in 2012. As craft beer and growlers surge, so could more than 2,500 different types of beer, will fill growlers at The the channels that offer them.

Brewery District, a store-within-a“They’re not just buying beer,” store concept that will offer between Williams said of the growler 12 and 24 draft beers to fill one-liter consumer. “They’re buying other and 64 oz. growlers. The Brewery “ THAT’S AN EASY things with it. I want that whole District will also feature flat screen market basket ring in my store.” panels with information about the DECISION FOR US,” SAID Chad Melis, marketing direcbeers on tap and details about the EDWARD COOPER, TOTAL tor for Oskar Blues of Longmont, breweries and the brewing process.

Colo., said he, too, believes that These panels follow the widespread WINE’S V.P. OF PUBLIC the growler reflects another belief that craft, already growing, will romantic quality of craft beer, it’s gain an even greater market share of AFFAIRS AND COMMUNITY all-important local feel: putting the overall beer category once conRELATIONS. “GROWLERS on a backpack, riding your bike to sumers have a better understanding the local brewpub and supporting of the industry and its differences ARE WHAT CUSTOMERS your neighbor with a purchase. from domestic beers.

Growlers, he said, are becoming With Total Wine stores typiARE ASKING FOR.” an increasingly common part of cally averaging 25,000 square-feet, that local support.

Cooper said that there will be more “As we’ve grown and gone into than enough room for growler more states, we’ve seen this trend inventory and prominent displays. of growlers at retail, which is not something that we grew up The Brewery Districts will feature several draft-only beers and with here in Colorado,” Melis said. could potentially serve as a point of differentiation for the stores, Oskar Blues began as a brewpub that didn’t package beer; particularly because of the relative scarcity of the format. it exclusively offered draft and growlers. Now, the brewery is “If I have a growler program and I start serving draft, that’s widely known for its cans, especially for Dale’s Pale Ale. Yet going to separate me from everybody else on the street corner,” growlers remain a part of the brewery’s fabric; it currently said Bump Williams, a beer industry expert and the CEO of offers growlers of the aforementioned Dale’s, Mama’s Little BUMP Williams Consulting Company.

Yella Pils, Old Chub Scot Ale, Deviant Dale’s IPA, G’Knight When Williams thinks of growlers, he thinks of the adjoining Imperial Red IPA, Gubna Imperia IPA and Ten FIDY Imperial romanticism — the glugs of every pour, the branded glass to Stout, according to the brewery’s website. match the beer, the fizzing head, the ability to bring a growler Yet despite the growing interest in growlers, Melis believes that home, keep it in your fridge and know that it’s all yours. they’re more suitable for occasions than for a single drinker.

“It’s not an easy thing to do,” Williams said of maintaining the “If you’re looking for a solo experience that may go over growler business, “but it’s a great marketing tactic.” multiple days, you know, I think a 6-pack of cans is a better While the marketing push is continuing, as Williams menoption,” Melis said. tioned, there are some obstacles in place before growlers Cooper has another take. He said that while growlers should become the package of the future. Many opponents of growler be shared and that they’re often purchased for occasions, he also legislation claim that regulating and following sanitary trade practices would present too great a challenge. As a result, sever- believes that the biggest beer fans consistently refill their growlers and enjoy the contents over a period of a few days. This serves al states still don’t allow filling. Also, the sheer size of growlers as a trial period and a fix for their craft cravings. As Cooper and can make them incompatible for some retail channels, such as Melis travel the country and continue hearing more about growlminiscule convenience stores. Additionally, the freshness lends ers, they realize that the appeal of growlers packs a wide scope itself to immediate consumption -- after about two days, cans with significant on- and off-premise potential. or bottles are a better choice.

“We wouldn’t be in the growler business if our customers As with the gradual adoption of craft beer itself, for the growlhadn’t demanded it,” Cooper said. ers to become a glass chorus, some more cultural changes have

30 BEVNET MAGAZINE APRIL/MAY 2013

BY JEFFREY KLINEMAN In the rarified world of high-end coffee, there’s a broad discussion of whether the post-Starbucks rise of independent coffee shops and specialty roasts comprises a third wave or fourth wave of coffee culture in the U.S. Regardless of the wave number, however, there’s something gathering out there on the horizon; it’s cold brewed iced coffee, and it’s headed for a store near you, and likely sooner than you think.

Consider the impact of the second wave: Starbucks and its competitors, like Peet’s and Caribou, fomented a taste revolution among coffee consumers, creating an understanding that better-made Java could be sold as an affordable luxury at

32 BEVNET MAGAZINE APRIL/MAY 2013

both cafés and at home. That success created an opportunity for brand extensions into RTD that gave rise to the Frappuccino and the Doubleshot. That’s a billion dollars, and also a generational shift: just as the millennials are the first generation of “digital natives,” they’re also coffee natives, the first group of kids to grow up with the expectation that they could

get high-quality coffee on every corner, whether the weather is cold or hot.

Now, subsequent companies are refining the Starbucks idea, building a higher level of quality, sustainability, and personality onto an American coffee zeitgeist that’s already designed for snob appeal.

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“It’s gonna be cool when all of these brands start overlapping and developing a craft coffee section of the grocery store.” - Kyle Buckley, Grady’s Cold Brew. quality is higher than it was in the past,” says Chameleon Cold Brew co-founder Chris Campbell. “It didn’t taste like the crop out there now that are done really slowly, expensively, using really high quality coffee. As well, there’s the extra caffeine that comes into it. You put that together into a handful of scrappy brands that naturally appeal to the skinny-jean Brooklyn crown as well as the people who believe in taste, and that leads to traction.”

Chameleon Cold Brew pulled in investment capital earlier this year and has been growing across the country, getting its 32 oz. and 16 oz. bottles into Whole Foods and independent specialty retailers via UNFI and Green Shoots distribution. The company is one of several that are growing independent of a brick-and-mortar presence; but those companies also are beginning to edge into the fray as well, with popular – and venture capital backed – coffee roasters like Stumptown and Blue Bottle joining other stores like Gorilla Coffee and La Colombe with cold-brewed line extensions.

“I think the category is taking off as we speak,” said Kyle Buckley, one of three partners behind bottled, New Orleansinflected concentrate brand Grady’s Cold Brew. “It seems to be doing well for the people involved right now, but it’s still really a regional thing. It’s gonna be cool when all of these brands start overlapping and developing a craft coffee section of the grocery store.”

That “craft coffee” idea that Buckley mentions is the one that has many buyers excited. Just as small beer brewers have gradually created a category for better34 BEVNET MAGAZINE APRIL/MAY 2013

tasting, small-footprint craft beer through a mix of consumer education, increased availability, and cultural attenuation, so too are the coffee brewers trying to convince the Starbucks consumer that there might be something even better than the ubiquitous chain.

“It’s the same reason why, 30 years ago, craft beer started to emerge on the scene,” said industry veteran Joth Ricci, who was recently hired as the president of Stumptown Coffee Roasters. “The beauty of beverage – and it’s always been this way – is that it’s always reinventing itself with the new thing, the next flavor, the next way of doing things. Coffee is a big business with a lot of consumers – just like they did with Starbucks 20 years ago, this third generation group is the evolution of the next wave of coffee.”

And while Starbucks seems to hold a stranglehold nationally, the change is happening faster than you might think: independent stores and tiny chains (fewer than six stores) now account for more than 45 percent of the brick-andmortar coffee specialty stores in the U.S. – although only about 30 percent of the revenue – according to the Specialty Coffee Association, a trade group. As some of those cult roasters have gained notoriety, they have also begun to look a bit more at the opportunity that they can find in the grab-and-go cooler or the dairy aisle, in addition to their stores.

The cold brewed phenomenon, both instore and ready-to-drink, has been picked up by high-end and even mainstream food and lifestyle magazines, Campbell pointed out.

“When people start showing up in Bon Appetit, that’s a trend,” he said.

There have been several approaches to this new craft coffee segment; to date, the most widely distributed brands have been Chameleon and Grady’s, both of which are concentrates that come in large bottles; so too do less-well-known brands like Secret Squirrel, Dave’s, and many others.

Products from independent coffee shops have come in more disparate formats: some include smaller bottles – popular versions include Stumptown’s 10.5 oz. “stubbies” and La Colombe’s glass bottles of Pure Black cold brew, which offers two 8 oz. servings. – while others have taken concentrate and put it into Tetra Pak (like Gorilla Coffee) or have aped the emerging craft beer growler scene by offer the big bottles for delivery.

“What’s fun about it is everyone is taking their own approach,” Ricci said.

“The quality is not being rubber-stamped, either.There’s an artisan quality to every one of those products that makes them unique and different.”

The growler brands point out that they fit with the trend of consumers wanting to “have it their way” by customizing their products. From a base of concentrate, they can add water, milk, sugar, flavorings, while reconstituting a well-made cup of coffee. Meanwhile, the single-serve oriented brands have shown the ability to extend the footprint of brick-and-mortar stores, some of which have strong brands of their own.

The offerings of both Stumptown and Blue Bottle were highly anticipated by the gourmet press and foodie community, but they have taken divergent paths. Blue Bottle has largely scuttled RTD for now, with spokesman Byard Duncan calling it a pilot program; meanwhile, with Ricci, who has worked for both Columbia distributing and for Jones Soda, it’s obvious that Stumptown has ongoing RTD plans.

Still, while there’s cultural momentum and growing interest, there are many obstacles to a the next wave of RTD being a tidal one: because the products need to be kept cold, distribution remains an expensive question, particularly for a category whose multi-serve bottles don’t lend themselves to the same fast turns in the store that single-serves do. Shelf lives for the products are strong – ranging between 90 and 180 days for many of the products – but usage occasions are bound to station-

ary settings rather than on-the-go. There is also the shelf-set problem: in order to get extra shelf space and to really turn, sales veterans say, these companies will need more traditional, single-serve SKU’s.

“Increasing our geographic reach is one of our biggest challenges,” Buckley said. “Right now we are primarily in the Northeast, but we would obviously like to be everywhere. We compete with coffee shops and individuals who brew coffee fresh every morning, so our cold brew has to taste freshly brewed straight off the shelf (and for the entire shelf-life).”

Additionally, even the juggernauts are aware that iced coffee has a growing profile overall, and they aren’t going to concede the turf simply because they’re happy with what the Frappuccino has wrought.

Earlier this year, Starbucks launched single-serve coffees (not cold-brewed – but they’re Starbucks, and what it loses in craft it more than makes up for in distribution).

Meanwhile, other brands like Marley Beverages’ One Drop, Coke-affiliated Illy Issimo and fast-growing newcomer Real Beanz continue to try to grab their own piece of the single-serve business, while

hybrid drink Coco Cafe has been accepted into many new channels, as well.

And just as craft beer met with an early boom-and-bust cycle, it’s not like cold brew hasn’t been tried before: Adina, a product backed by beverage veterans John Bello and Greg Steltenpohl, sold a high-quality cold brew – although it failed to emphasize that process at the time.

There’s also an active line of Wolfgang Puck cold-brewed iced coffees that has claimed some shelf space. Still, to date, there hasn’t been a product to set the world on fire, although entrepreneurs in the space think the time is right.

That’s because cold brew itself is on the rise, in stores and at home. Those same independent stores have turned “cold brewed” into a catchphrase for stronger, cleaner-tasting takeout coffee.

That’s been enough to get Steltenpohl himself back into the cold brew business as part of his new venture, Califia Farms, which recently introduced carafes of a high-quality non-dairy cold brew made with the “milk” of California almonds.

There’s challenge, but there’s promise, and there’s also a sense that the time has

come. The popularity of cold brew as a takeout product is emblematic of that sense, according to Ric Rhinehart, the executive director of the Specialty Coffee Association, Rhinehart notes the millennial consumer is going to make the shift more pronounced, as its members have grown up in a coffee culture, one that may be just as likely to enjoy iced coffee in hot weather as it is hot coffee when it’s cold.

“Coffee has been around for some 600 years, but people only figured out some 15-20 years ago that it can quench thirst, and only in the last 5 with cold brewing,” added Grady’s Kyle Buckley. “It’s amazing to me how many places don’t serve iced coffee because of its association with its hot brethren. Why don’t you see iced coffee at movie theaters, ballparks, concerts? I think you will now.”

Still, he concedes, location helps. If you’re relying on trends, you can’t beat being based in New York, “where people are obviously obsessed with their coffee and have been drinking it cold for a long time,” Buckley said. “It’s a little different when I bring it back home to Missouri, but it’s only a matter of time.”

APRIL/MAY 2013 BEVNET MAGAZINE 35

BRAND NEWS

Coffee

Califia Farms. Califia has introduced Califia Farms Iced Coffee with AlmondMilk. The cold brewed drinks are a blend of coffee made from Fair Trade, organic Arabica Beans and Califia’s Pure AlmondMilk, and pure cane sugar. The products are vegan, Non-GMO project Verified, soy- and dairy-free, and contain no saturated fat or cholesterol. Packaged in a 48 oz. multi-serve plastic bottle, the coffee comes in three flavors: Cafe Latte, Double Espresso, and Mocha. Each contains 10-15 grams of sugar and 80-100 calories per 8 oz. serving, depending on the variety.

retail outlets for the brand include Gelson’s, Bristol Farms and Jimbo’s in California, a variety of independent retailers in the Seattle area, and its first international outlet at C’est Bon Notenbar in Amsterdam.

ZICO. ZICO has reformulated its Latte va-

riety. The product contains five electrolytes, the potassium of a banana, and natural caffeine from coffee. It is gluten-free, lactosefree , and dairy-free and has 50 percent less sugar and calories per oz. than the leading bottled blended coffee drinks, according to the company.

All Market, Inc. Coco Cafe has launched

two new flavors - Mocha and Vanilla - for its brand of coconut water and espresso latte drinks. Coco Cafe Mocha is blend of coconut water, coffee, milk, cocoa powder, and sugar. Coco Cafe Vanilla blends coconut water, espresso, low fat milk, vanilla, and sugar.

The products are packaged in 11.1 oz. Tetra Pak cartons with a Dreamcap.

Cold Star, Inc. Cold Star has launched new can packaging for its line of CAF Fusion coffee –infused energy drinks. The products are now packaged in shelf-stable, singleserving 8 oz. cans.

Viva Beverages. Viva has revamped its

Marley’s One Drop coffee drink. The brand moved from a 9.5 oz. glass bottle to 11 oz. sleek cans. The new design features an image of reggae legend Bob Marley set against gold and colored backgrounds. The package reflects the premium Jamaican coffee in the cold drink. The copy of the back of the package shares details about Bob Marley’s philosophy and 1Love, a public charity created by the Marley family. Flavors include coffee, mocha and a new light vanilla variety that that boasts 35 percent fewer calories than regular Marley’s coffee. The line is distributed nationally at 7-Eleven and other convenience and grocery chains.

Chameleon Cold-Brew. Chameleon has gained capital investment from Houstonbased, Fortitude Capital, LLC, which has provided capital for production expansion and distribution, and new products. Chameleon has also signed new distributors with KeHe Distribution and Monterrey Provision Company for Southern California. New

36 BEVNET MAGAZINE APRIL/MAY 2013

North American Beverage. North Ameri-

can Beverage has introduced a new line-up of unique, innovative, and sophisticated flavors for its line of ready-to-drink Havana Cappuccino products. The line comes in Espresso Latte Classico, Mocha Colada, Vanilla Amaretto varieties and two diet options, Diet Mocha Colada and Diet Vanilla Amaretto.

The drinks are 99 percent fat-free and packaged in 11 oz. slim cans.

Secret Squirrel. Secret Squirrel is a new cold brew coffee concentrate brand that is made with organic and Fair Trade coffee beans that are roasted and brewed in Los Angeles. Packaged in a 16 oz. glass bottle with a screwtop cap, the concentrated formula produces seven 8 oz. drinks per container and can be blended with milk or water.

Onli Beverages. Onli recently launched

its newest flavor, Swiss Hazelnut Sparkling Coffee, in Whole Foods Market locations throughout Florida. Onli Beverages are allnatural, sparkling beverages that were inspired by the discerning palettes of master chefs.

Slingshot Coffee Company. Slingshot

Cold Brew is hand brewed and bottled in small batches using only two ingredients — quality, in-season, organic coffee beans roasted locally by Counter Culture Coffee; and filtered tap water from City of Oaks, Raleigh, North Carolina.

Starbucks. Starbucks has launched Star-

bucks Iced Coffee, a new four-SKU line of lightly sweetened coffee and milk drinks, at select grocery retailers in Boston, Hartford, New York and Philadelphia. The company

will continue roll to out the new iced coffees nationwide over the next three months. Packaged in 11 oz. glass bottles, Starbucks Iced Coffee is available in three varieties: Coffee + Milk, Coffee + Milk (Low Calorie), and Vanilla. A fourth flavor, Caramel, will be available exclusively along the East Coast from Washington D.C. to Maine.

Rainforest Beverages. Perk! is a sparkling chilled coffee that contains 150 mg of caffeine, zero grams of sugar and zero calories. The product comes in three flavors - Mocha, Vanilla, and Carmel - and is available in over 120 retailers in the Raleigh-Durham, N.C. area.

Perk! is packaged in a slim 16 oz. plastic bottle.

Gorilla Coffee. Gorilla Cold Brew is a ready-to-drink cold brew coffee made with only two ingredients - coffee and water. The product contains no preservatives is shelfstable and packaged in 11 oz. resealable Tetra Pak containers.

Killer Buzz. Killer Buzz has released three

new ready-to-drink Coffee + Energy Drinks: Luscious Latte, Mocha Madness and Hypnotic Hazelnut. Consistent with all beverages in the Killer Buzz family, the new Coffee + Energy Drinks have the added functionality of Giant Hornet Amino Acids (GHAA), a proprietary blend of amino acids. The products are available in 32 markets, and recently launched in Dallas/Ft. Worth and New York City.

Seaworth Coffee Co. Seaworth was inspired

by a love of the sea and a pure passion to create the best organic handcrafted, cold-brewed coffees and sweeteners around. The company was founded by local Orange County surfers, Bryan Marseilles and Darren Peralta who set out to create a top-quality, organic cold-brew coffee that would reflect their favorite pastime and the good-spirit of the Golden State.

Seaworth’s all organic products are served at fine restaurants, independent retailers and online at seaworthcoffee.com.

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APRIL/MAY 2013 BEVNET MAGAZINE 37 4/9/13 2:06 PM

AIMING FOR ENHANCEMENT

By Max Rothman Adapting to the millennial generation’s desire for variety and convenience (dubbed “the chill hustle” by MTV trendspotter Nick Shore at BevNET Live Winter 2012), a multitude of brands have altered their approach to beverages. It’s not just what the beverage is—it’s what you can add to the beverage.

As a result, powder and liquid enhancers have further cemented their positions in the beverage industry, symbolizing the new-age thirst for portable interaction and healthy products.

“The do-it-yourself flavor is what the millennials are looking for,” said Bill McKay, CEO and founder of Ecosentials LLC, makers of Vitamin Squeeze.

38 BEVNET MAGAZINE APRIL/MAY 2013

With these consumer desires in mind, Vitamin Squeeze, a concentrated powder that the company suggests adding to water, is one of several examples of beverage enhancers that have molded themselves into what they believe resembles the millennial ideal.

McKay said that Vitamin Squeeze offers 120 percent of the daily recommended Vitamin C requirement, 100 percent of vitamins B3, B5, B6 and B12, 50 percent of vitamin D, and doses of zinc, antioxidants and electrolytes. These health factors, he argues, complement a way to enhance your water without turning it into a CSD. This combination has led to at least some growth in sales and distribution; Vitamin Squeeze, which McKay said

had a revenue between $1 million and $2 million in 2012, can be found in 2,500 stores nationwide, including Safeway, Super Value, Albertson’s and H-E-B, among others.

“Customized flavor and the reduction of calories and sugar was big on my mission list and certainly on trend,” McKay said.

The hope of many brands following this form factor, or something close to it, is that it could lead to a MiO-like payout.

MiO is the liquid water enhancer launched in 2011 by Kraft Foods, the same one that rolled up more than $200 million in sales last year, according to a November story by Ad Age. The brand also featured a 30-second Super Bowl advertisement in February, affirming its status as the best-selling product in the beverage enhancer category. The commercial coincided with the release of MiO Fit, a sports-centric SKU that helps consumers turn water into a sports drink.

Following in MiO’s footsteps, Coca-Cola launched Dasani Drops in September. This liquid flavor enhancer doesn’t hide its obvious targeting of MiO’s market share, but that may not matter. With a distribution footprint and other resources as expansive and wide-reaching as Coke’s, Dasani Drops could develop into MiO’s primary competition. After announcing the release of the product, John Roddey, the vice president of Coke’s water, tea and coffee business, said that the soda giant sees potential in the nascent beverage enhancer category.

Another recently-released option, Crystal Light Liquid, which contains no sugar or caffeine and is gluten-free, is available in six flavors: Strawberry Lemonade, Blueberry Raspberry, Iced Tea, Mango Passionfruit, Peach Bellini and Pomtini. With a manufacturer’s suggested retail price of $3.99 per 1.62 oz. bottle, these flavors could appeal to millennials looking for lurid combinations over traditional flavors like grape, orange or cherry.

Banking on its brand name and high hopes for this category, even venerable Kool-Aid has gotten into the mix: it announced on April 15 that it will launch Kool-Aid Drink Mix, a sugar-free, squeezable liquid drink mix that comes in 1.62 oz. bottles (24 servings). Sugar-free Kool-Aid may sound disastrous, but this is a new age for the American pastime. And besides, an enhanced and reimagined Kool-Aid Man will be on hand to help market it.

However, aside from powders and liquids, other forms of beverage enhancers exist, such as Tubulars Vitamin Milk Straws by Unistraw, which was featured at the Natural Products Expo West in March. While the product treads uncharted waters (a definite risk for a startup), it takes an innovative approach toward encouraging dairy consumption with straws of four flavors: chocolate double, strawberry drops, banana bee buzz and peanut butter twist.

“As a drinking experience, we can provide fun that no other delivery system can,” said Brian Direen, chief business officer of Tubulars.

While the idea may seem kitschy, the straws also follow the theme that old standards don’t cut it anymore. Developing a unique identity and product line while still competing with MiO could catalyze distribution and sales, especially in the beverage enhancer category, which is really just mimicking the millennial life.

“People are customizing everything from their facebook page to their iPhone. They want their food customized and they want their beverages customized,” McKay said.

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www.flavrzdrinkmix.com APRIL/MAY 2013 BEVNET MAGAZINE 39

BRAND NEWS

Powders/Liquid Enhancers

Ecosentials LLC. Vitamin Squeeze Powder

Water Enhancers provide essential vitamins and come in eight total flavors among three varieties - Multi-Vitamin, Energy and Weight Control - to appeal to a wide range of tastes and needs. Each Vitamin Squeeze Powder Water Enhancer variety contains vitamin C, vitamin B3, B5, B6 and B12, vitamin D, electrolytes, zinc. The three Energy flavor SKUs are enhanced with 60 mg of natural caffeine per serving. The Weight Control variety includes svetol green coffee bean extract. Vitamin Squeeze Powder Water Enhancer MultiVitamin is available in Fruit Punch, Acai Grape Pomegranate, Strawberry Watermelon and Lemonade flavors. Energy is available in Black Cherry, Blood Orange and Blueberry Pomegranate Acai flavors. Weight Control comes in a in a Pink Grapefruit flavor.

The products are made from natural ingredients and contain zero calories, sugars and carbohydrates. They are free of gluten, preservatives and artificial sweeteners. Packaged in .85 oz. bottles, Vitamin Squeeze produces a dozen, 8-16 oz. servings.

Stur. Stur is a liquid water enhancer made with seven essential vitamins, natural sweeteners, flavors and colors. The product contains no sugar or calories and is currently distributed in health food and grocery stores. Stur has launched an updated package design and will introduce four new flavors in the coming months.

Premama, Inc. Premama, a specialty women’s company, develops and distributes advanced prenatal supplement drink mixes with clinically-studied, patented vitamins and minerals. Its family of products include Premama Essentials and Premama Plus.

Both supplement mixes are fortified with more than 11 pharmaceutical-grade prenatal nutrients, including Ferrochel iron bisglycinate chelate to minimize iron-induced constipation, Quatrefolic folate to help support a healthy pregnancy, a potent 30 mg of Vitamin B6 to help soothe occasional bouts of morning sickness, and Vitamin B12 to control feelings of fatigue. Premama Plus also contains Omega-3’s life’sDHATM and ALA, Co-Q10, and Choline.

40 BEVNET MAGAZINE APRIL/MAY 2013

Eruption. Eruption has gained over 10,000 points of distribution in the US and Canada.

The company recently launched a 3-pack to offer consumers a new value-priced option.

Navitas Naturals. Navitas Naturals Coconut Water Powder is made from the juices of fresh, young organic coconuts. The coconut juice has been removed and freeze-dried to preserve the flavor and nutrients in the powder, which is certified organic, raw, vegan, gluten-free and kosher. The powder contains five key electrolytes to support rapid hydration: sodium, magnesium, calcium, potassium and phosphorus. Packaged in a 5.8 oz. re-sealable and recyclable pouch, the product is available at thousands of stores throughout North America including Whole Foods Markets, Wegmans, Sprouts and HEB, and online at NavitasNaturals.com and Amazon.com.

Euro-Pro Operating LLC. Ninja Blended

Boost is a nutrient-infused, taste-free powder supplement that can be added to a variety of blended drinks. The powder contains over 25 vitamins, minerals, nutrients and antioxidants and is naturally sugar- and caffeine-free. The powder supplement comes in individual sticks and is packaged in boxes of 20 sticks.

Maxim Manufacturing & Marketing.

Maxim has launched Coco Pro Whey Protein with Coconut Water Recovery. The product is an all-natural blend of the coconut water powder and whey protein, and lightly sweetened with pure cane sugar. Coco Pro should be consumed within 30 minutes after exercise for optimum benefits by mixing one scoop with 6-8 oz. of water or milk, according to the company. Coco Pro can also be used to curb appetites between meals. The powder is packaged in a 21 oz. canister.

AeroShot Energy is an air-based energy

shot in powder form. Each shot contains 100mg of caffeine and B Vitamins. The product comes in three flavors – lime, raspberry and green apple – and has a suggested retail price of $2.99

ENORMOUS CRAFT GROWTH ON DISPLAY AT CBC

The sheer size of this year’s conference reflects the industry’s spectacular growth over the last seven years.

Photo © 2013 Jason E. Kaplan

By Christopher Furnari

Washington D.C. played host to the Brewers Association’s annual affair.

This year, the event boasted some impressive numbers: 6,400 attendees, 440 exhibitors and 90 different educational seminars.

The sheer size of this year’s conference reflects the industry’s spectacular growth over the last seven years. During that time, about 1,000 new breweries have launched, industry-wide volume has grown to 13.2 million barrels and total retail dollars have eclipsed the $10 billion mark.

In other words, it’s a very different craft beer landscape than ten years ago.

Ten years ago was also the last time Kim Jordan, the CEO and co-founder of New Belgium Brewing, delivered the CBC’s keynote address. This time, when Jordan took the stage, even the audience looked different: In 2003, there were fewer than 1,000 industry professionals in the seats before her.

Jordan wasted no time applauding the success of her brewing brethren.

“I’m not sure why we (craft brewers) are described as over-indexed,” she said. “We are the best thing that has happened to this industry since the repeal of prohibition.”

But Jordan’s tone was still cautionary.

Her keynote speech addressed a variety 42 BEVNET MAGAZINE APRIL/MAY 2013

of industry concerns including product quality, sustainable business practices, finite resources and even brewery expansion projects.

“We need to be absolutely vigilant about how our beers look, smell and taste,” she said.

Jordan didn’t stop at quality.

“Each of us needs to have a welldeveloped and honest plan,” she said of brewery expansions projects similar to the one New Belgium has embarked on in North Carolina.

For Jordan, part of having a well-developed expansion plan also means having a well-defined identity. She implored audience members to ask themselves a few key questions as they grow.

“What will our brand stand for in a far-away market?” she said. “What do I have to do to ensure quality? What is the purpose of growing into these markets?”

Jordan also expressed concern for a dwindling amount of brewery resources like raw ingredients, trained staff members, shelf space and distributor focus.

“We are all likely to feel the pinch of this exuberance and marketplace flux,” she said.

Still, Jordan was hopeful that craft could achieve the Brewers Association’s stated goal of 10 percent market share by 2017.

“We will get to 10 percent and we will no doubt grow beyond that number,” she said. “Along the way I hope we ask ourselves, are we growing what we hoped to grow? Will it make us smile about one another?”

A Glance From Gatza So what does that growth picture look like for craft? Brewers Association director Paul Gatza provided the snapshot in his own presentation.

Craft grew 15 percent by volume in 2012, adding 1.8 million new barrels from 2011. Part of the growth derives from the increasing number of breweries. There are currently 2,347 craft breweries: 1,132 brewpubs, 1,118 microbreweries and 97 regional craft brands. There are also 1,254 breweries in planning—the highest mark in the industry’s history. Pricing picked up about 3.5 percent across the industry.

Seasonal options, despite the fact that they aren’t all seasonal, remain the bestperforming style of craft beer. Gatza said that seasonals currently own 19 percent of the industry’s dollar share and a 13 percent volume growth percentage. IPAs come in second place, owning 16 percent of the industry’s dollar share and, to little surprise for those following new releases, grew by

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39 percent. Pale ales own a 13 percent dollar share, but they grew just 6 percent in volume. Variety beers own a 9 percent dollar share with a 6 percent growth percentage. Amber ale owns an 8 percent dollar share with 2 percent volume growth.

Lagging behind, amber lagers own a 6 percent dollar share yet decreased volume percentage by 3 percent, and wheat beers own a 5 percent dollar share yet decreased volume by 4 percent. Gatza said that he believes wheat beers will continue to fall off and bock beers will take their place.

Gatza highlighted a number of other statistics from 2012 in his address: • There were 43 brewery closings in 2012, and with so many new brewery openings, Gatza said that he expects that number to rise in 2013.

• There were 97 craft breweries that produced more than 15,000 barrels in 2012 — the highest number in the industry’s history.

• There were 189,050 barrels of beer exports in 2012 – easily the highest number in the industry’s history.

• The top five states for 2012 brewery openings were California (56), Colorado (29), Texas (25), Washington (25) and Michigan (19).

• The top five states for fewest people per brewery are Vermont (25,030), Oregon (27,171), Montana (27,484), Colorado (32,033) and Alaska (32,283).

• Craft beer’s market share by volume increased from 5.7 percent in 2011 to 6.5 percent in 2012. The industry’s dollar share grew from 9.1 percent in 2011 to 10.2 percent in 2012.

• Small brewing operations in the U.S. produced 108,440 jobs; 60,521 were fulltime jobs and 47,919 were part-time jobs.

Beer of the Month But amidst all of the noise about growth, there were concerns. BevNET correspondents spoke to many CBC-goers who, despite being bullish on future growth within the segment, were concerned at the number of new breweries looking to enter the space.

And it isn’t just the amount of new brands that had some attendees nervous. Quality beer, expansion projects and distribution goals were a few of the concerns brought up

by Magic Hat founder Alan Newman.

“The problem is not so much the over-selection [of brands] as it is the lack 44 BEVNET MAGAZINE APRIL/MAY 2013

Paul Gatza highlighted a number of statistics from 2012 in his address.

Photo © 2013 Jason E. Kaplan

of representation and quality control,” he said. “I don’t know that there can’t be too many small, local breweries. That is what turns on the population to beer. The problem is when you start using outside markets to fill your capacity.”

From Newman’s point of view, too many breweries are adding capacity and filling it by expanding into new markets, developing a “beer of the month” mentality in those markets that he likened to a game of musical chairs.

“One day the music is going to stop,” he said. “I can’t tell you why it’s going to stop and nobody can ever tell you what will be the incident that sets off the change.”

That applies to retailers as well as locales. Newman said one of the biggest challenges is building his Traveler Beer Company brand – part of the Alchemy & Science incubator project – at the onpremise level. He believes that rotational draft models have made it difficult for new craft brands, like the Traveler line, to keep tap handles and earn repeat customers.

The on-premise world of craft was explored during a presentation that featured Bill Pecoriello, the CEO of GuestMetrics. Culling data daily from thousands of on-premise locations, with more than 1 billion transactions collected annually, GuestMetrics offers information that could help brands, new and established alike, approach the marketplace by identifying numerical trends.

Pecoriello argued that the on-premise arena — and especially casual dining — is particularly raw and could significantly drive craft beer’s growth in the coming years.

The casual dining segment is underperforming the craft growth that we’re seeing in other parts of on-premise,” Pecoriello said.

His presentation included some interesting takeaways for craft brewers looking to tap

into that underserved casual dining market.

Checks that feature just alcohol average $20 and those that feature just food average $26.

Checks that feature food and any beer average $73.

When the check features food and craft beer, its average price is $86, and when the check features imported beer, its average price is $97.

Pecoriello also presented some trends in beer styles. Lagers account for 67 percent of beer units sold in on-premise accounts, followed by ales at 20.4 percent and cider/flavored malt beverages (FMB), premium alcoholic beverages (PAB) and seasonals at 12.6 percent. Despite the dominance of lagers, the style contracted in units sold by 5.2 percent, while units of ale — a style that is closely identified with craft beer in many analyses – grew 4.2 percent; units of cider, FMB, PAB and seasonal grew 2.9 percent.

But there are larger trends – consumer, industry, cultural - beyond the on-premise purchases that Pecoriello highlighted.

CBC attendees spoke with BevNET about what they’re watching out for in 2013. A few of the more common responses included the emergence of session beer and continued style innovation as a means of product differentiation.

“Very flavorful beers and lower alcohol levels,” said Steve Grossman of Sierra Nevada. “Four percent beers that have good hop character, incredible drinkability but great interest I think is a good trend that we are going to see coming on quite a bit more in the states.”

BevNET will be watching those trends, and others, until craft brewers reconvene at next year’s conference, to be held in Denver, Colo. from April 8-11 in conjunction with the 2014 World Beer Cup.

CONFERENCE OVERVIEW

EXPO WEST RECAP Categories Blur From Hybridization

By Max Rothman Lining the aisles of Natural Products Expo West, which recently concluded in Anaheim, Calif., few booths touted products with a singular appeal. Rather, juices were packed with extracts. Coconut water was melded with teas, protein and coffee. Key, growth-driving ingredients rarely stood alone.

To meet evolving consumer demands, brands are reinventing themselves, becoming more difficult to classify, yet also increasing their ability to provide multifaceted functionality and flavor in a basic, convenient manner. These hybrid products, which formed a significant base of the conference, are signaling the trends of tomorrow’s SKUs. “We don’t believe in a monochromatic world,” said Sambazon CMO Greg Fleishman.

Instead, Fleishman said, consumers want to achieve as much as they can within a single bottle. They want their greens and fruit, along with satiety and energy.

Sambazon’s two newest products — Energy Mocha Java and Blended Breakfast — were made with this growing trend in mind, aiming to service customer needs and always considering convenience.

Sambazon’s Mocha Java, an extension of its Energy line of drinks, is made with Fair Trade acai, coffee, yerba maté, guarana and Peruvian cocoa. Blended Breakfast, flavored with strawberry and banana, is made with fiber, gluten-free amaranth and quinoa, acai and chia.

And while these products are loaded with health benefits and a hybridization of ingredients, Sambazon also markets their identities. The packaging avoids over-thetop cluttering of information, leading to greater clarity.

This push for comprehensible branding, some argue, is essential to selling hybrid products.

“I think you can’t be too many things to the consumer,” said Mark F. Shaw, 46 BEVNET MAGAZINE APRIL/MAY 2013

president, founder and CEO of Maverick Brands, marketer of Coco Libre products. “If you try to be five different things, it’ll fail.”

To respond to the need for multifaceted functionality and simplicity, Shaw outfitted Coco Libre Protein, a fourSKU line that debuted at Expo West, with a label featuring the brand name in large letters along with the word “protein.” The line, which blends coconut water and 20 grams of whey and milk protein isolate, features four flavors — Chocolate, Vanilla, Coffee and Almond.

Shaw said that the new, gluten-free line, which packs the protein of three eggs, the calcium of two cups of milk, the magnesium of a cup of broccoli and 22 vitamins and minerals, will target consumers who don’t want to bring eggs to the gym but still need a high source of protein, among other benefits.

“We’re sort of putting it as the überbeverage,” Shaw said.

With the rise of brands like Vita Coco, ZICO and O.N.E., coconut water was one of the most commonly found beverage styles at Expo West. Startups from diverse backgrounds presented their takes on coconut water, and many brands showcased variations of the original.

For one, Steaz, which is known for its assortment of iced green teas and energy products, debuted a green tea made with coconut water. The beverage contains certified organic and Fair Trade green tea blended with organic coconut water and organic cane sugar.

AMAzon Waters, launched at Expo West in 2011, produces flavored functional waters with 10 percent coconut water and extracts. The brand also makes coconut teas, which are made with 80 percent tea (rooibos, green, white or black) and 20 percent coconut water.

Ed Newman, VP of Sales for AMAzon Waters, said that he never intended on

making the coconut teas. He originally intended to produce the functional waters and watch them drive his business. When he saw how strongly coconut water was performing, however, he felt that he had to join the party. Thus coconut water, previously far from the plans, became a core part of AMAzon Waters.

Newman said that with help from investors who were connected to coconut plantations in Brazil, the coconut tea came to life. And while the drink is somewhat esoteric compared to other beverages in the natural channel, the brand as a whole recognizes the need for a consistently appealing taste and an easily recognizable product.

“You can’t let it get too complicated,” he said. “Is still has to taste good and be priced right.”

B.J. McCaslin, co-founder of Coco Cafe, believes that by blending coconut water with coffee, his company has meshed desirable functionality with great taste. And to expand upon the success of its original latte flavor, McCaslin, along with co-founder Elan Eifer, spent much of the show sampling Coco Cafe’s newest varieties, mocha and vanilla. McCaslin noted that consumers are increasingly seeking out products that meld popular (and on-trend) ingredients and flavors into a single product; he believes that it’s a big part of his company’s rapid growth.

And he’s not alone. This trend, fully displayed at Expo West from industry veterans like Sambazon to younger brands like AMAzon Waters, could continue fueling America’s growing interest in good health and having everything at once.

“I think you’re going to see, generally across the board, hybridization of every single category,” Shaw said. “Whether it’s juice, protein, chia, I think you’re going to see a blending, because consumers want general health benefits.”

June 4 & 5, 2013 Metropolitan Pavilion New York, NY for more information visit www.bevnet.com/live

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EXPO WEST RECAP Retailing Strategies Shift

By Jeffrey Klineman One might imagine that there would be a focus on natural and specialty retailers among the brands working the aisles of a natural products exposition, but at Natural Products Expo West, it quickly became clear that a growing number of beverage companies have started bypassing those channels – and Whole Foods itself – altogether in an attempt to capitalize on the very same health and wellness movement that the grocer helped to launch to prominence.

To that end, several companies have looked at trends growing in the natural channel and run right around that channel as the key to their merchandising strategy. There are three key reasons for this: new access at conventional supermarkets, which have given brands access through not just store-within-a-store natural sets but also departments like Produce and Deli, extra competition at Whole Foods, where a bottleneck of similar products coming into rapidly growing categories – and a sometimes frustrating change in the company’s shelf resets – has some natural brands rethinking the edge they give the retailer when it comes to dictating pricing terms and commanding exclusives, as well as a change in the kinds of products that interest conventional grocery consumers.

“It’s so competitive in Whole Foods, depending on the category,” said Brian Ross, the CEO of Cheribundi. “They have 10 Kombuchas, for goodness’ sakes.”

Certainly, this is not to discount the edge Whole Foods has when it comes to launching a new specialty or natural brand and fostering its growth. At Expo West, the founders of the Harmless Harvest coconut water brand, which has been a poster child for expansion through that retailer’s system, were happy to say they were launching a new tea line exclusively into Whole Foods.

“Nobody beats them when it comes to execution,” said Justin Guilbert, one of the brand’s co-founders.

But if one coconut water brand is

48 BEVNET MAGAZINE APRIL/MAY 2013

thriving in Whole Foods, another, Zola, is happy to thrive outside that store, taking its canned coconut water into Safeway’s national embrace, and getting the opportunity to be a strong seller of a product that appeals to natural consumers through a conventional grocery channel.

“Look, everyone would love to have a national rollout in Whole Foods,” said Matt Collins, Zola’s chief operating officer. “But you leverage what you have and grow where you are.”

Zola is just one of several brands in hot categories that are finding their way through conventional groceries rather than whole foods. Aloe Gloe, one of the top sellers in the fast-emerging aloe product category, has rather deliberately avoided Whole Foods as a channel for growth. A new three-stage cleanse product from Whole Foods stalwart Sambazon was also introduced at Expo West, only it had been developed by Sambazon in concert with the team at warehouse retailer Costco – a place where what Sambazon CMO Greg Fleishman called “treasure hunters” are prone to shop.

Those treasure hunters – always on the lookout for the new and unique – have been at the core of the Whole Foods demographic for years, but it is becoming apparent that just because a product is all-natural, it’s not restricted to Whole Foods consumers.

Marley Beverage, for example, debuted at the Natural Products Expo show three years ago and maintained a large booth this year.

“But our consumer isn’t necessarily the Whole Foods consumer,” said CEO Kevin McClafferty. “That’s a change from what we thought it would be starting out.”

Nevertheless, said Steven Kessler, one of the co-founders of organic tea brand Steaz, the edge that Whole Foods brings to the product manufacturer is the opportunity to hit an audience of shoppers that is almost all geared toward the class of products found in the store, suggesting that marketers would want to “fish where the fish are.”

But, he added, there are fish migrating: where there once might have been 10 shoppers out of 100 in conventional grocery who would be seeking on-trend natural and specialty items, he said, now there might be 20 in the same group of 100.

And conventional retailers are seeking to grow that group even more, either through store-within-a-store sections for on-trend natural products, or by allowing them new ways into the store, like produce, where Cheribundi, Zola, and others are located.

Through merchandising, as well, conventional grocery stores are also making it easier for consumers to locate the kinds of on-trend products that they would normally have to turn to Whole Foods to find, noted Richard Tait, CEO of Golazo, an allnatural energy drink and sports drink line.

One example of that growing push by conventional grocers to try to attract Whole Foods-type product initiatives – and, by extension, sophisticated consumers – could be found at Expo West in the ranks of grocery giant Kroger.

The country’s third-largest retailer

overall, Kroger has begun to staff up its natural foods selection and merchandising operation. The company has added Mathis Martines – late of new product friendly natural chain The Fresh Market – to help guide innovation in the natural set.

Additionally, the company has brought L.A. Libations – the same company that makes Aloe Gloe – on board as a “table captain” for emerging beverages, helping the multi-chain company build out new categories like chia, aloe, natural energy, relaxation and more.

Meanwhile, the Whole Foods influence itself is slightly different than what it might once have been because some of the products that it fostered within its stores have become so widely available on a national basis.

“It’s brand-dependent,” said Green Shoots distribution founder Nat Noone.

While products that might seem unique or innovative might be good ones to launch at Whole Foods, he said, “if Vitaminwater was launching now, it might launch in conventional.”

While those products aren’t necessarily simply chasing the natural consumer – and they may indeed turn to Whole Foods and its fellow natural retailers as a source of ongoing validation and growth – the conventional channel is fast becoming more important in terms of establishing product viability.

As one final example, Kevita, a twoyear-old sparkling probiotic company, has been attracting attention from major strategic beverage companies CocaCola and PepsiCo, founder Bill Moses acknowledged when asked about investor inquiries.

“They see a rising tide of functional beverages 2.0,” he said.

The company launched in Whole Foods, and gained a lot of attention there.

But about six months ago, it pulled in a round of investment and more than 1,000 doors in another key grocer.

“What really lit the fuse,” Moses said of ramped up interest from investors and consumers alike, “was getting distribution through Safeway.”

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The Powerful Energy Ingredient APRIL/MAY 2013 BEVNET MAGAZINE 49

PROMO PARADE

Promotions, events and specials for the industry

Baseball Legends to Participate in Pepsi MAX MLB Field of Dreams Game

Solixir Fights the “Working Dead”

For the second year, Pepsi MAX will host the largest gathering of MLB legends at the 2013 Pepsi MAX MLB Field of Dreams Game. This year’s game will take place in Rochester, NY on Saturday, May 18 at Frontier Field, featuring an AL vs.

NL match-up with MLB legends and the consumer winners from the Pepsi MAX MLB Field of Dreams promotion.

The MLB greats taking the field representing the American League include: Wade Boggs , Rickey Henderson , Reggie Jackson , Pedro Martinez and Frank Thomas ; while the National League team will include: Johnny Bench , Trevor Hoffman ,Fred McGriff , Mike Schmidt and Ozzie Smith .

“I’ve been preparing for the Pepsi MAX MLB Field of Dreams Game,” said Frank Thomas , Pepsi MAX MLB Field of Dreams American League team member.

“The guys on the AL and NL rosters are some of the greatest players of all time, and I am excited to take the field with Johnny, his friends and the other AL legends.”

In 2012, Pepsi MAX created a reallife “Field of Dreams” at Huntington Park in Columbus, OH for the inaugural Pepsi MAX MLB Field of Dreams Game and will transform Frontier Field for this year’s event.

“Pepsi MAX is excited to bring to life our vision for the Pepsi MAX Field of Dreams Game in Rochester, N.Y.,” said Heidi Sandreuter , Senior Director, Pepsi Sports Marketing. “We have been planning this for several months and look forward to creating an unforgettable day for Johnny, Stephen, the fans, and the community.”

50 BEVNET MAGAZINE APRIL/MAY 2013

Solixir, a new all natural functional drink brand, announces the launch of their innovative marketing and advertising campaign titled “The Working Dead,” hit the streets of Chicago on April 1, 2013.

A play off of the popular television series “The Walking Dead” and other recent Zombie trends in the media, including movies like Warm Bodies (February 2013) and World War Z starring Brad Pitt (June 2013), Solixir’s shock and awe campaign employs advertising dominations at Chicago’s elevated rapid transit system or the “El,” working its way around Chicago’s historic commercial center the “Loop,” to make a big impression in a small area—an area that over a half a million people commute to and from daily.

The campaign will expose Solixir to a new audience who can associate their needs with the four situation specific formulas of the Solixir functional drink system: Awaken, Restore, Relax and Think. The campaign will also layer promotions, social media interaction, contests and the uniformed Solixir “Dept. of Optimal Performance” to take the Chicago Loop building by building, block by block, saving the Working Dead with Solixir one can at a time.

The campaign utilizes an “Activation Plan,” mirroring Solixir Founder Scott Lerner’s military background as an exmarine officer. “In the military, there is a precise way to conduct an operation in an urban environment. You go block by block, building by building. You take real estate and then hold it. That is really what we are trying to do, to focus

our resources and saturate the Solixir brand in the Chicago Loop,” says Lerner.

Lawrence Neisler, partner at Wilburn Thomas, Solixir’s ad agency of record, said, “Our activation strategy for Solixir, a small start-up, is for them to look and play like a big established brand. We were able to take them to a place most big brands would never dare go by using a negative, in our case the zombie as a metaphor for the consumers varied need states throughout their work day, with the product strongly positioned as the anecdote. This campaign leverages popular culture and uses theatrical elements to engage new consumers by allowing them to be part of the story.”

Tactics of Solixir’s “Working Dead” campaign include: • Staged “Outbreaks” Working Dead zombies will be placed in high traffic areas including popular Chicago “El” stops including Washington/ Wabash, State/Lake, Dearborn/Washington and Dearborn/Monroe.

• Decontamination Zones and Office Sweeps Solixir will utilize guerilla tactics such as designated “Street Teams” to engage consumers inside and outside of offices with “office sweeps.” On the street sampling will also be conducted in designated decontamination zones.

• Twitter Involvement Twitter followers can stay updated on where the latest Working Dead zombies can be spotted at with Solixir’s handle @solixir.

• Facebook Contest Facebook users can submit photos of their zombie like state and tag Solixir.

Each week Solixir will post a photo winner, who will win a year’s supply of Solixir. After six weeks, one finalist will be chosen and featured as a Working Dead zombie on Solixir’s bus shelter advertising across Chicago in June 2013.