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October 8, 2013

What makes ямВavor combinations work?














Columns 4 First Drop A Call to the Bullpen 6 Publishers Toast Barry Hits Times Square 20 Gerry’s Insights Taxi Driver and Honest Tea

Departments 8 Bevscape Lots of Deals, Across Categories 12 New Products Plenty for Cocktails 16 Channel Check Inside Aseptic 22 Brewbound IPA Madness 50 Promo Parade Herradura Backs Art



Contents • Volume


11 • No. 7



On the Cover

24 New World on the Horizon What happens when CSDs aren’t the majority

40 The Trouble with Ginger Flavor Trends

28 Premium Hydration Overtakes Enhanced Water With Enhanced Water Brand News 34 Designing for Mom – and the Kids With Kids Beverage Brand News

October 8, 2013

What makes flavor combinations work?




44 The Battle for Breakfast With Meal Replacement & Smoothie Brand News 48 Recycling Report Card How the big suppliers are greening up their acts

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. POSTMASTER: Please send address changes to BevNET Magazine, Subscriber Services, 44 Pleasant Street, Suite 110, Watertown, MA 02472

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By Jeffrey Klineman

A Call to the Beverage Bullpen Red Sox fans didn’t shed tears when manager Grady Little left the team following the team’s 2003 playoff catastrophe against the New York Yankees. Little, after all, infamously left tired ace Pedro Martinez on the mound for too long in the deciding game of the American League Championship Series. Against Martinez, the Yankees staged an 8th inning rally to tie the game, eventually winning a ticket to the World Series off an 11th inning home run hit by Aaron Boone. Little was canned that fall and replaced by Terry Francona – who was also handed a brand new All-Star relief pitcher, Keith Foulke, to address the key problem the Red Sox had faced the year before – that they didn’t have anyone reliable around to man the back end of games. Francona led the Red Sox past the Yankees to the World Series the next year, with Foulke as the closer. So would Grady Little have celebrated a World Series title in Boston if he’d had Keith Foulke? It’s a question that has some relevance to the beverage game right now. The resignation of Kevin McClafferty as CEO of Marley Beverage Company is about a month old and it’s obvious that ownership contributed to his departure. One lingering question: how much that resignation was the result of a power play on ownership’s part and how much was spurred by disagreement over strategy and resources. What’s clear is that ownership is shedding the same leadership that built the brand: McClafferty’s gone, so is Chris Mamos, the national accounts director, as well as global marketing chief Lee Brody. Another 8 to 10 positions are being eliminated to bring personnel into alignment with the new “growth strategy.” Craig Thibodeau, the SVP of Sales and Distribution in North America, is an old friend of McClafferty’s and isn’t the heir apparent, but as of now he’s running the company alongside Chairman and lead investor Gary Shiffman. But – and here’s the head-scratcher – Shiffman’s growth strategy, one in which the company is bringing on another 30 to 40 full-time sales and marketing employees


in key regions, is a personnel bump that McClafferty’s team asked for before his resignation. Why didn’t the company come up with the budget earlier? It’s not like Marley was bloated with personnel; in fact, it ran extremely lean under McClafferty, with 16 sales representatives for the entire U.S. – more than 140 distributors – at the start of the year. And it did so under the mandate of ownership. Chances are McClafferty would have been drooling at the opportunity to put 30 additional pair of feet on the street to help market the brand. In about three years, McClafferty had gotten the brand to the point where it could be in position to layer in extra marketing help in select locations while also running national ads and promotions, like its Howard Stern ad campaign and music competitions. But like the 2003 Red Sox, the brand needed to open the wallet for closers. Unlike the Red Sox, however, the new growth plan shuts off national marketing in favor of local. At Marley’s size, that isn’t going to fix things, either: it’s like axing your starting rotation to bring in a bullpen. But it’s not an either/ or situation: to move to the next level, Marley needs both national and regional campaigns to go with the local sampling and positioning support that ownership says it wants to bring in. Maybe ownership had concerns that some DSD relationships had been irreparably damaged over a summertime shift of 7-Eleven distribution to broadline convenience wholesaler McClane, and used that as their reason for cleaning house. But if that was the case, why not come

out and say it? As of now, it looks like the executive team is being pushed out for failing to provide resources that ownership could have enabled them to provide. And McClafferty’s team won the accounts initially: why not give them a chance to support them better, rather than put your whole company in reboot mode? Or maybe the about-face is about company control. Plenty of investors had shown interest in partial stakes in Marley, which would have taken pressure off the financial group backing the company, but ownership so far hasn’t brought in any partners. Not that ownership is hurting for cash: Shiffman is a multimillionaire. If they’re interested in keeping ownership’s stake undiluted, though, the hard truth is that money’s still going to have to be spent, and fast, before the window closes. The land-grab model – as my buddy Gerry Khermouch calls it – is one that does require expenditure at some point to juice revenues enough to get the attention of key strategics or VC groups. The key is balancing those expenditures against execution, and that’s something that McClafferty and his team had done to great effect. Fast pushes to national networks have gone wrong in the past either because the entrepreneurs did a better job of selling to investors than they did to distributors, or because the products weren’t consumerready propositions. Marley, however, has walked that fine line, farther than most recent launches of this type, becoming a contender – a viable brand with a national network. Just like the Red Sox in 2003 and 2004, questions of spending and strategy are likely to affect the final outcomes, but this shift could easily cause this promising brand to implode. Which brings me back to McClafferty. A New Englander by birth, he’s a big Red Sox fan, one who was thrilled that the team finally won in 2004. I wonder if he’ll be rooting for Marley in 2014 like he rooted for the Red Sox in 2004. I also wonder if he isn’t thinking about what he and Grady Little could talk about over a beer, or maybe a Marley’s Mellow Mood.


By Barry J. Nathanson


Taking to the Streets (Again)

Barry J. Nathanson PUBLISHER bnathanson@bevnet.com

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

I drink a lot of beverages, to state the obvious. I’ve spent 21 years now sampling thousands of brands. It is what I do. All of our team at BevNET is in the business of imbibing. We’ve reviewed hundreds of drinks, and have had hundreds more sent in for our opinions. And yes, we know, it’s not a bad gig if you can get it. In my office I have a refrigerator that has at least 15 different brands in it at all times, and two floor cases that contain many, many more. I’m heavy-duty into variety. I got to thinking, am I the exception to the rule of enjoying so many options, or are consumers – who actually have to lay down some cash – as receptive to trying new additions their core beverage choices?

Consumers of a certain category, like teas, juices, or flavored waters, stayed within their comfort zones. If they imbibed for functionality, that would be one of their go-to options. If they ventured out, it wasn’t often enough to merit adding any drink to their must have list. Everyone liked to try new drinks, but after the initial infatuation, they continued to stay with their tried and true. To a person, they loved the look and colors of all the brands on the store shelves, and that often it led to trial, but repeat purchasing was still elusive. Efficacy claims enticed sampling also, and most perused the labels to determine if a brand was worth it. That’s a good sign. Everyone

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So I headed back to my laboratory of consumer perceptions, Times Square. As on previous occasions, I camped out in the center of the world, as we New Yorkcentric people think it is, to ask questions. I stopped and stalked dozens of people walking with drinks in hand, to see the depth and variety of what they were consuming. The options were extensive. Most of the people told me that they only had a small core of drinks that they had on a consistent basis. They said that, at most, they had six beverages that they drank with any consistency. While they liked to experiment with the new brands, they didn’t add them to their array with enough frequency. 6 BEVNET MAGAZINE OCTOBER 2013

thought sampling at retail was a great way to try a product, and they’d be receptive to purchase if they liked the taste. While all the new choices were exciting, they said there’s only so much liquid they can consume during the course of the day. They actually wished they could drink more of these selections, but it wasn’t feasible. It’s a tough world out there for beverage marketers, but the opportunity is still great. We need to expand the consumer mindset to add brands to their mix. There are thousands of terrific brands in search of an audience. I hope we can all drink to your success. PHOTO BY OTO GODFREY



The latest news on the brands you sell

DEALTIME D1•Joint Juice Company Sold to Post

Post Holdings Inc., the cereal maker behind Fruity Pebbles, Grape Nuts, and Honey Bunches of Oats, among others, now has 180 million reasons to start developing those kinds of products, because that’s how much the company paid for Premier Nutrition Corp., the company that makes functional beverages Joint Juice and Premier Protein shakes, among other products. Premier Nutrition is expected to add about $130 to $140 million in annual revenue, according to Post. The St. Louis-based cereal maker is leaving existing CEO David Ritterbush in place. Ritterbush, a Red Bull veteran who helped the glucosamine drink maker Joint Juice acquire Premier Nutrition in 2011, and then turn around and rename itself after the protein supplement maker, will continue to run PNC from California. “We are excited to enter this high growth and dynamic category,” said Bill Stiritz, Post Chairman and Chief Executive Officer. “We could not be more impressed with the terrific quality of the Premier team Dave has put together.”


D2•Fruit 66 Sold to Sun Orchard

D3•Mix1 Assets Sold

Two years of 100 percent growth can be a boon to some companies, but for Fruit 66, it became a pain in the neck – especially as out-of-stocks started to cost the company sales. “Selling through faster than you thought you would isn’t easy,” said CEO Bill Hargis. “I kept telling the board that the out-of-stocks were costing us sales and that was why we had to go forward.” That’s why, after searching for investors for a cash infusion, Hargis said he and his investors eventually settled on what he called a strategically-aligned decision to sell Fruit 66 to Tempe, Ariz.-based Sun Orchard. The juice maker, which has deep roots in supplying food service operations like hotels and schools with private-label juices, juice drinks and mixers, calls itself “America’s Independent Micro-Juicery.” The sale, which will allow Hargis and his sales team to remain on the job via a new company, 1Epic LLC, will result in the movement of most of Fruit 66s back office operations to Sun Orchard. Fruit 66 launched Epic, a line of carbonated 100 percent juice drinks designed for school vending machines, last year. They’ve come to replace the 75 percent juice sparklers that comprised the original Fruit 66 line. Another non-carbonated 100 percent juice line is sold to schools for cafeteria distribution. The brand is working on restructuring its co-packing operation to accommodate growth and its new ownership, Hargis said. Currently, the brand is co-packed in Wisconsin, Memphis, and Portland, Ore. Sale terms were not disclosed.

Hershey’s wiped the company off its books in December, but the assets of dearly departed meal-replacement beverage Mix1 apparently found their way to Phoenix, where they were recently sold to a publicly traded company.

Securities and Exchange Commission documents show that on July 5, PDK Energy bought the assets of Mix1 for $120,000 and 2.5 million shares of stock. PDK is a Mississippi-based public company formed for the purpose of “developing, marketing and distributing unique beverage brands for the youth and energy drink markets,” according to financial statements. PDK is run by Cameron Robb, according to company filings. Robb, who did not return calls, has 25 years of experience as an entrepreneur, according to the filings, including work with a variety of sports licensing businesses. The Mix1 brand name, internet domains, product specs and formulas, as well as ingredient mixes and vendor lists were included in the deal. Mix1 LLC, a private company registered in Phoenix, Ariz., was listed as the owner of the assets. Last December, candy company Hershey’s shut the doors on Mix1 rather than complete its acquisition of the company. At the time, the company owned a majority stake in the brand but its board decided the once-promising line had failed to meet expectations. Hershey’s invested $12 million in the brand, which faced a recall of 18,000 cases in 2012 and a major brand redesign. John Grdina is listed as the signatory on behalf of Mix1.

BREWING UP DEALS Duvel Moortgat Planning to Buy U.S. Craft Breweries alongside the others we already own, over the long term. That might mean looking at a brand that is only distributed in 9 or 12 states and asking if we can help build that out to be national.” Duvel is looking for breweries that complement the company’s existing image as a portfolio of luxury brands, he said. “We are not interested in brands where margins and pricing is low,” Thorpe said. “We are only interested in the luxury end of the market. We are looking for premium, high-end, beautiful brands. We believe that over time, if the quality is good, you will survive.” Over the years, Duvel Moortgat has grown through international acquisition. In the last 10 years alone, the company has bought Brewery Ommegang, Brasserie d’Achouffe, Brouwerij Liefmans and Brouwerij De Koninck. Now, however, the Belgium-based brewing company is looking to strengthen its position in the U.S. craft beer market by purchasing other American breweries. “We would like to acquire two or three U.S. craft breweries over the next five years,” Simon Thorpe, the president and CEO of Duvel USA and Brewery Ommegang told Brewbound.com. “We’re looking to the U.S. to be the engine of our group growth over the next 10 to 20 years. Part of that will be achieved by growing the Ommegang and Duvel brands but part of it will also come by finding other breweries that fit our portfolio.” As a group, Duvel Moortgat produces and sells about 700,000 hectoliters (about 637,000 barrels) of beer annually, but less than 70,000 hectoliters were sold in the U.S. last year. Thorpe said the company would like to grow that to 500,000 hectoliters over the next decade. “We view ourselves as a craft brewer that happens to be based in Europe and has a brewery in the U.S.,” he said. “We want to build our existing business, but we are also looking at how we can make a U.S. business that is 500,000 hectoliters and complements the volume we have in Europe. Some of that will come from Om10 BEVNET MAGAZINE OCTOBER 2013

megang, Duvel and acquisitions.” Thorpe said he started with a list of 300 potential acquisition targets, then narrowed it to a group of 50, about 10 of which are “very interesting,” he said. Duvel is looking for craft breweries that have a long growth runway, he said. “Can they provide leverage for our brands or have they got the potential to scale,” asked Thorpe. “They need to be worthwhile. We wouldn’t go buy a brewery that is 2,000 barrels unless it has some sort of special technology.” Duvel will also be looking to strengthen its geographic position, as well, Thorpe said. With its home brewery in New York, the company could benefit by adding a brand on the West Coast, where its wholesale relationships aren’t quite as strong. “We know that we have very good relationships with our wholesalers and retailers in a line upwards from Atlanta through Maine,” he said. “So we’re looking at acquisitions from two directions. Can we help someone grow in the Northeast and is there supply chain leverage on the West Coast that can strengthen our position?” Thorpe maintains that Duvel isn’t looking to consolidate brands in an effort to achieve cost-side synergies. Instead, the company is looking to maintain the integrity of its acquired brands and aims for revenue growth. “When we approach acquisitions, we look at it as an ongoing business,” he said. “We are looking to develop the business,

STRATEGIC PRICING Thorpe counts Duvel Moortgat among the few “strategic buyers” that are looking to develop businesses over a long period of time and are willing to pay higher premiums to do so. “A strategic investor in this market will pay between 8 and 14 times EBITDA,” said Thorpe. “A financial buyer might only pay 6 or 8 times. They are looking for a much quicker investment.” Large beer conglomerates like Anheuser-Busch InBev and MillerCoors would be among those financial investors looking to make a faster return and they’ve already demonstrated their interest in craft through acquisitions likeGoose Island and Crispin Cider, respectively. But what makes Duvel Moortgat a more attractive option, in Thorpe’s eyes, is its commitment to maintaining the provenance and pre-existing structure at any craft brewery it would acquire. “Duvel [Moortgat] already owns seven breweries,” he said. “We don’t squash them altogether. “The Chouffe brewery still exists; we’ve just made it bigger, stronger and faster. Fundamentally, this is something we believe in. It is important for the branding and how consumers perceive the brand.” Thorpe said he’s had a number of informal discussions with U.S. craft brewers and he expects many of them to finalize deals with either Duvel Moortgat or other private equity and financial buyers.

BLOOMBERG BAN Strike Two for Mike The opinion of a New York State appeals court mirrored what many denizens have muttered to themselves since Mayor Michael Bloomberg first hatched his soda ban efforts: too much power. A state appeals court recently rejected Bloomberg’s proposed ban, which would have limited the sale of beverages with more than 25 calories per 8 oz. serving in package sizes larger than 16 oz. The court ruled that the law would have “violated the state principle of separation of powers.” The decision, which was unanimous from a four-judge panel, upheld a March ruling by New York’s State Supreme Court that also blocked the city’s proposed ban. The decision found that New York City’s Board of Health had stepped beyond its power to regulate public health and inappropriately supplanted the policymaking role of the legislature. The ruling also exposed some of the

loopholes from the proposed ban, which would have left unaffected groceries and other businesses not under the watch of the city’s health department and certain beverages, such as milk-based products. “The expectations did not…reflect the agency’s charge to protect public healthy but instead reflected the agency’s own policy decisions regarding balancing the relative importance of protecting public health with ensuring the economic viability of certain industries,” Justice Dianne Renwick wrote for the court. In response to the decision, Bloomberg released a statement saying that more than 2,000 New Yorkers have died from the effects of diabetes since the court’s block in March. “Today’s decision is a temporary setback, and we plan to appeal this decision as we continue the fight against the obesity epidemic,” Bloomberg said in the statement. PHOTO BY EDWARD REED COURTESY OF NYC MAYORS OFFICE

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The newest options for cooler and shelf

Tea Third Street, Inc. has launched a new line of premium, fresh-brewed, ready-to-drink iced teas. The teas come in two varieties: Unsweetened Black Tea and Unsweetened Green Tea. Both are micro-brewed from tea leaves hand-picked from the region of Nilgiri, India; no sweeteners are added to the zero-calorie blends. The products are certified USDA Organic, Fair Trade, gluten-free and Non-GMO Project Verified. Packaged in 1 L bottles, the teas have a suggested retail price of $2.49, and are sold exclusively at Whole Foods locations nationwide. For more information, please call Third Street at (303) 527-1700.

CSDs DRY Soda Co. has launched new Cherry and Pear flavors to its line of carbonated soft drinks. The products will be sold exclusively in Kroger-owned stores across the U.S. The new varieties were developed by Chef Richard Blais, DRY’s Creative Director and, like all DRY sodas, are all-natural and made with made with only four ingredients, including real sugar. The drinks have a suggested retail price of $1.19 per 12 oz. can. For more information, please call DRY Soda at (206) 652-2345.

Liquid Enhancers Nestle Waters North America has launched Nestea Liquid Water Enhancers, a line of zero-calorie liquid concentrates made with real tea leaves and natural flavors. The products are packaged in 1.76 oz. squeezable containers and come in three flavors: Iced Tea with Lemon, Iced Tea with Peach and Half & Half Iced Tea. The brand will initially be distributed exclusively at Target and a Green Tea Citrus flavor will be available beginning in November and sold in convenience and grocery stores. The liquid enhancers have a suggested retail price of $3.99. For more information, please call Nestle Waters at (508) 628-3582.

Energy Shots Living Essentials, LLC has introduced a new, limited edition, specially-marked raspberry flavor of 5-hour ENERGY. From now through December 31, 2013, Living Essentials will donate five cents from the sale of every bottle of specially marked raspberry flavored 5-hour ENERGY to Living Beyond Breast Cancer (LBBC), a national nonprofit education and support organization serving women 12 BEVNET MAGAZINE OCTOBER 2013

and families affected by breast cancer. The variety comes in a 1.93 oz. shot and has a suggested retail price of $3.29 and is distributed nationally. For more information, please call Living Essentials at (248) 536-1965.

Juice MOJO Organics, Inc. has introduced Chiquita Tropicals, a line of 100 percent juice products made from tropical fruits. The products come in four varieties: Banana Strawberry, Mango, Pineapple, and Passion Fruit. The juices contain no added sugar or preservatives, and are vegan, naturally gluten-free, nongenetically modified and kosher. The products are packaged in 12 oz. bottles and have a suggested retail price of $1.99. Chiquita Tropicals are distributed nationwide. For more information, please call MOJO at (201) 633-6519.

Smoothies Bolthouse Farms has launched three limitededition beverages for the upcoming holiday season. Bolthouse Farms Holiday Nog is made with natural milk and eggs, smooth vanilla bean and spicy nutmeg. Bolthouse Farms Pumpkin Spice Latte is a vitaminrich, low-fat drink made with real pumpkin puree, a blend of four aromatic spices and 100 percent Arabica coffee. Each 8 oz. serving is an excellent source of calcium and contains 7 grams of protein. Bolthouse Farms Peppermint Mocha is a combination of frosty peppermint and rich dark cocoa blended with 100 percent Arabica coffee. The products are packaged in 52 oz. plastic bottles and distributed nationwide with a suggested retail price of $5.99. For more information, please call Bolthouse at (800) 467-4683.

Vodka Better Brands Beverage Co., has launched Salute American Vodka, an American-made premium vodka that donates $1 for each bottle sold to approved veterans’ charities. Salute American is currently available in Arkansas, Georgia, Indiana, Michigan, Missouri, Southern Illinois and Florida. The 80 proof vodka has a suggested retail price of $19.99 for a 750 mL bottle. For more information, please call Better Brands at (855) 725-8832. EFFEN Salted Caramel Vodka is an extension of the brand’s unique and carefully selected portfolio of flavors. Inspired by the delicate combination of sweet and savory, EF-

GET REAL! GET PINK! Real Water Teams Up With Mel B. to Benefit Susan G. Komen®

“Why do I drink Real Water? Easy answer! Because it gives me real health benefits. More and more health professionals are encouraging us to have an alkaline diet, one that offsets all the acid-producing things we consume: sugar, soda, coffee, meat, processed grains, etc. From my own research I believe Real Water is the healthiest bottled water available. I am always on the go and I have tried every type of water, but Real Water is the only one that I can actually feel keeping me fully hydrated. Plus, it tastes great! Another one of my passions is women’s health, and in particular the battle against breast cancer. That is why I am thrilled Real Water will benefit Susan G. Komen. From October 1, 2013 – December 31, 2014, Real Water will donate to Komen $.60 from each specially marked case sold in support of their mission to save lives and end breast cancer forever. You can help Komen win the battle against breast cancer! Keep it Real!”


- Mel B.

FEN Salted Caramel Vodka evokes the perfect balance of sweetness enhanced with a touch of salt, according to the company. Distributed nationally, EFFEN Salted Caramel Vodka is 75 proof and has a suggested retail price of $27.99 for a 750 mL bottle. For more information, please call Beam Inc. at (847) 444-7073. Devotion Vodka, a line of sugar-free and glutenfree spirits, has launched new Wild Cherry and Coconut varieties. The new products at 80 proof and have a suggested retail price of $19.99 for a 750 mL bottle. The vodkas are available for purchase at retail stores, restaurants and bars in 24 states. For more information, please call Devotion at (877) 415-3190. CIROC Amaretto is the newest addition to the CIROC brand of premium vodkas. The cherry-almond flavor infused vodka contains a touch of vanilla and 70 proof. The spirit comes in 50 mL, 200 mL, 375 mL, 750 mL, 1 L and 1.75 L sizes. The vodka is sold nationwide and has a suggested retail price of $34.99 for a 750 mL bottle. For more information, please call Diageo at (203) 229-4876.

Rum Cruzan Rum has launched the Cruzan Distiller’s Collection, a line of super-premium, blended aged rums. The line is comprised of Cruzan Estate Diamond Dark Rum, Cruzan Estate Diamond Light Rum and Cruzan Single Barrel Rum. Each rum is 80 proof, made from tropical rainwater and highquality molasses and aged between 5 and 12 years. Cruzan Estate Diamond Light Rum is carefully charcoal filtered and contains subtle vanilla and oak cask flavors, while Cruzan Estate Diamond Dark Rum is expertly crafted to bring out the complex flavor of barrelaged rum. Cruzan Single Barrel Rum uses a unique blend of vintage rums that have been aged for up to 12 years and bottled one cask at a time. All three products in the Distiller’s Collection are available nationwide. Cruzan Estate Diamond Light Rum and Estate Diamond Dark Rum have a suggested retail price of $19.99 per 750 mL bottle, and Cruzan Single Barrel Rum features a suggested retail price of $29.99 per 750 mL bottle. Cruzan has also launched Cruzan Rum Velvet Cinn. The rum is made with original Cruzan Rum and the addition of rich, sweet dairy cream and cinnamon flavor. The product has a taste reminiscent of cinnamon toast, according to the company. The 30 14 BEVNET MAGAZINE OCTOBER 2013

proof rum is available nationally and has a suggested retail price of $19.99 per 750 mL bottle. For more information, please call Beam Inc. at (847) 444-7699.

Tequila Hornitos Lime Shot is a new product made with Hornitos Plata 100 percent blue agave tequila, lime flavor and a hint of salt. This spirit transforms the salt+tequila+lime ritual into a single shot, according to the company. Hornitos Lime Shot is currently available nationwide and has a suggested retail price of $17.99 - $19.99 for a 750 mL bottle. It will also be available in 50 mL and 1 L sizes. For more information, please call Beam Inc. at (847) 444-7699.

Whiskey Campari America has launched Wild Turkey Spiced, the first spiced Bourbon in the Wild Turkey portfolio. The whiskey is 86 proof and features Wild Turkey’s signature bold flavor while highlighting spiced cues commonly found in island spirits. The product is available nationwide and has a suggested retail price of $22.99 per 750 mL bottle. For more information, please call Campari at (415) 315-8000. Early Times Kentucky Whisky has introduced a new Hunter’s Edition bottle. The special camouflage package pays tribute to sportsmen and the great outdoor traditions, according to the company. The package is a square 750 mL glass bottle covered with a dark brown and green camouflage pattern and contains 80 proof Early Times Kentucky Whisky. The product is distributed nationwide and has a suggested retail price of $11.99. For more information, please call Brown-Forman at (502) 774-6044.

Other Spirits Boyden Valley Winery and Spirits has added two new craft spirits to its portfolio: Vermont Ice Maple Crème Liqueur is a premium cream liqueur enhanced by blending Vermont estate maple syrup and craft-distilled apple brandy, produced from Vermont grown apples, for a rich maple flavor. Vermont Ice Apple Crème Liqueur combines Boyden Valley Winery’s original Ice Cider with craft-distilled apple brandy produced from Vermont grown apples. The products contain 15 percent ABV and have an suggested retail price of $29.99 for the Apple variety and $27.99 for the Maple flavor. The liqueurs are currently distributed

in several states in the Northeast, Mid-Atlantic and South. For more information, please contact Boyden Valley at (802) 644-8151. Harvest Spirits has launched Cornelius Applejack Cherry Flavored Brandy. The 70 proof spirit is made from fresh picked, New York State cherries that have been soaked in the company’s Cornelius Applejack brandy and then strained into oak barrels for further gentle aging. The product contains no added sugar or artificial flavors. Distributed throughout New York, the spirit comes in 50 mL and 375 mL bottles and has a suggested retail price of $34.99 for the 375 mL size. For more information, please call Harvest Spirits at (518) 253-5917. Campari America has introduced TROPIX, the newest variety to its X-Rated Fusion Liqueur brand. The spirit is made with ultrapremium French vodka that is blended with pineapple and coconut flavors. TROPIX is 34 proof and contains 81 calories per 1.5 oz. serving. The product is distributed nationwide and comes in 375 mL, 750 mL, and 1 L sizes. The spirit has a suggested retail price of $24.99 for a 750 mL bottle. For more information, please call Campari America at (415) 315-8000.

Cocktail Mixers Powell & Mahoney produces a line of small batch crafted, all-natural cocktail mixers that are made with premium juices, essential oils and pure cane sugar. Varieties include Ginger, Cosmopolitan, Bloody Mary, Margarita, Mojito, Low Cal Margarita, Lemon Sour w/ Bitters, Pomegranate, Peach Bellini and Blood Orange. The mixers contain 45 calories per 2 oz. serving. The products are sold at select retailers nationwide and have a suggested retail price of $6.99 for a 750 mL bottle. For more information, please call Powell & Mahoney at (978) 745-4332. Kahlua Pumpkin Spice is the newest seasonally-inspired liqueur to join the Kahlua portfolio. The new product adds a twist of pumpkin and autumnal spices the original Kahlua liqueur, which is a 100 percent Arabica coffee and sugarcane rum blend. The 40 proof spirit is available through December 31 and distributed at major retail locations nationwide. The product has a suggested retail price of $16.99 per 750 mL bottle. For more information, please call Pernod Ricard USA at (212) 372-5345.



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


ASEPTIC JUICE DRINKS 52 Weeks through 8/11/2013 SOURCE: Symphony/IRI Total food/drug/c-store/mass.

While our sources don’t necessarily sort by marketed demographic, here’s an interesting look at some of the top kids’ beverages via a look at the $1.1 billion aseptic juice drinks category. No surprise that Capri Sun is the leader here, but there are rising brands in the mix, including Honest Kids and V8 V-Fusion. For more popular juices aimed at the younger set, check our Kids Beverages’ story on page 34.


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





















Dollar Sales

Change vs. year earlier

Capri Sun



Kool Aid Jammers



Hi C



Capri Sun Super V



Apple & Eve Fruitables



Honest Kids



Private Label



V8 V Fusion



Nestle Juicy Juice Fruitifuls



Minute Maid Coolers






Motts For Tots






Apple & Eve Fruitsmarts






Capri Sun Sunrise



Minute Maid












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TEA Brand

HOT! Lipton Pureleaf Dollar Sales







Lipton Brisk






Diet Snapple



Lipton Pureleaf



AriZona Arnold Palmer



Lipton Diet



Gold Peak



Peace Tea



SOURCE: Symphony/IRI Total food/drug/c-store/mass. 52 Weeks through 8/11/13

NOT! Lipton


HOT! Starbucks Dollar Sales

Change vs. year earlier

Starbucks Frappuccino



Starbucks Doubleshot






Starbucks Frappuccino Light



Starbucks Doubleshot Light



Private label



Illy Issimo



Coco Cafe



Marley’s One Drop



Genesis Today



SOURCE: Symphony/IRI Total food/drug/c-store/mass. 52 Weeks through 8/11/13

NOT! Illy Issimo


HOT! Michelob Ultra Light


Dollar Sales

Change vs. year earlier

Bud Light



Coors Light






Miller Lite



Natural Light



Busch Light



Michelob Ultra Light






Keystone Light



Miller High Life



SOURCE: Symphony/IRI Total food/drug/c-store/mass. 52 Weeks through 8/11/13


Change vs. year earlier

NOT! Miller High Life


HOT! Java Monster Dollar Sales

Change vs. year earlier

Red Bull



Monster Energy



Monster Rehab



Monster Energy Lo Carb









Java Monster



Monster Mega Energy



Monster Energy Absolute Zero



Monster Energy Zero Ultra



SOURCE: Symphony/IRI Total food/drug/c-store/mass. 52 Weeks through 8/11/13


Private Label

NOT! Monster Energy Lo Carb

HOT! Glaceau Smart Water Dollar Sales

Change vs. year earlier



Nestle Pure Life









Glaceau Vitamin Water



Poland Spring



Glaceau Smart Water



Deer Park









SOURCE: Symphony/IRI Total food/drug/c-store/mass. 52 Weeks through 8/11/13

NOT! Glaceau Vitamin Water


Corona Extra

HOT! Modelo Especial Dollar Sales

Change vs. year earlier






Modelo Especial



Dos Equis XX Lager Especial



Corona Light



Stella Artois Lager






Labatt Blue



Labatt Blue Light



Newcastle Brown Ale



SOURCE: Symphony/IRI Total food/drug/c-store/mass. 52 Weeks through 8/11/13



NOT! Labatt Blue


By Gerry Khermouch

An Honest Accounting Back in my college days, Driver hit movie screens like a tornado. I can still remember my astonishment: the directorial virtuosity of Martin Scorsese, the volatile performance by Robert De Niro and the pungent dialogue of screenwriter Paul Schrader. My more practical buddy Tom, an Irish American from the South Bronx who was leery of Hollywood depictions of his beloved but still-gritty city, found his skepticism overcome by a single detail: when the De Niro character, Travis Bickle, gropes the cartons of milk in a deli cooler before selecting the coldest one to buy. “Gerry, that’s never been shown in a movie!” he exclaimed. A trivial detail, maybe, but that can be the power of verisimilitude. Which brings me to Mission in a Bottle: The Honest Guide to Doing Business Differently – and Succeeding. This remarkable graphicnovel-style treatment of the development of the Honest Tea brand by co-founders Seth Goldman and Barry Nalebuff offers on nearly on every page the kind of gritty, convincing detail whose absence, to me, has been the fatal flaw in nearly every marketing book I’ve ever read (Going back through two decades at Brandweek, BusinessWeek and Beverage Business Insights, I’ve read dozens of them). How nitty-gritty? Double-dealing by investors and business partners, the inthe-trenches warfare at the distribution and retail tiers, the perils of operating a production plant. The editors even allowed Goldman and Nalebuff to employ the dread term “DSD,” something BusinessWeek smacked down as useless jargon. There’s also an element of roman a clef for readers already in the beverage business: though the characters in controversial anecdotes sometimes aren’t given more than a first name (if any), you’ll love trying to match the portraits by illustrator Sungyoon Choi with people you know. You talkin’ to me? Travis Bickle memorably wanted to know in Taxi Driver. If you’re in beverages, this book definitely is talkin’ to you. BevNET Magazine readers hopefully got a taste of this in the excerpt that ran here two issues ago.


The authors seem to revel in detailing their own failures – from flameouts in teabags and kombucha to their efforts to manage their own production. The latter proved nearly disastrous, not just in draining cash and creating constant quality issues, but in less tangible ways, as when Goldman and Nalebuff learn that the plant manager, desperate to fill capacity, was recruiting as clients rival tea makers like Sweet Leaf, to whom he applied the duo’s painstakingly devised tea-brewing techniques, thereby squandering a competitive advantage. About the only other beverage industry book that I recall offering this degree of unvarnished truth is Beer School: Bottling Success at the Brooklyn Brewery, a 2005 account by cofounders Steve Hindy and Tom Potter that delved into fundamental issues like the perils of self-distribution in a similarly dramatic and detailed way. A journalist by profession, Hindy had a leg up on the writing side and I’ve recommended his book to countless beer and beverage people. But you don’t find Hindy spelling out his ingredient and labeling costs to the penny per bottle, nor offering detailed blow-by-blows of critical negotiations. Is it premature to write a memoir? I don’t think so. While Honest Tea’s story is nowhere near concluded yet, its founders have struck while the details are still fresh and, more important, their brand is still relevant. About a decade ago, SoBe creator John Bello sounded me out over possibly collaborating on a memoir, but our sad conclusion was that, as colorful and opinionated as Bello is, PepsiCo was already on the way to destroying the personality of SoBe as a brand. Jacket copy heralding a book “by the noted creator of SoBe beverages” wasn’t likely to pull in a great many readers. We don’t know the future of Honest Tea – though so far it’s looking to be better than SoBe’s – but Goldman and Nalebuff are right to strike while the iron’s hot. General business readers might be scared away by the detail offered here (though they shouldn’t), but entrepreneurs entering the beverage or other consumer products realms should

read this first. And the book makes a fabulous case history for college marketing courses and MBA programs, perhaps including those taught by Nalebuff at Yale. So what does the future hold for Honest Tea? I’d say it’s promising – but with hurdles to surmount. It’s no mean feat for Coke to have kept Goldman involved, maintaining the cultural vibe and upholding product integrity. The fit’s not always seamless: as the book notes, Coke once ordered Honest Tea not to employ package copy heralding the absence of highfructose corn syrup, and more recently Honest Tea suffered a backlash among some loyalists after its parent supported a successful effort to defeat the anti-GMO Proposition 37 in California last year. That’s still a far cry from Coke’s fumbling of prior acquisitions. Though tea purists sometimes deride Honest Tea, it still represents a big upgrade over what was available from mainstream tea brands, and surely is helping to democratize organic and Fair Trade products. Still, Coke generally defines successful new brands as those that reach $1 billion in retail sales, and even with its current brisk growth, I’m not sure Honest Tea’s trajectory points there any time soon. To get there, Goldman and his team will have to get better at cracking mainstream channels – particularly convenience stores – and that may require significant tweaking of the brand personality. They recently changed the package, for example, to make it more distinctive and approachable. Recently, Goldman has taken a more hands-on role in the marketing, but maintaining the interest of the Coke bottling system is a challenge. We should be rooting for Goldman and Nalebuff, though – not only because success would offer hope that huge companies can, indeed, absorb innovative brands without neutering them, but also because it might encourage the pair to write a follow-up. 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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Covering the business of craft

As IPA Train Keeps Rolling, Some Brands Hope to Hop Back On Would an IPA by an other name still taste as hoppy? And more, if it weren’t labeled as an IPA, would anyone buy it? It’s a question many craft breweries are exploring and some, it seems, are banking on the continued growth of the style and the name, which is a shorter version of India Pale Ale. The country’s leading craft beer style, IPA dollar sales of $128,005,155 are up 35.7 percent in U.S. supermarkets through July 14, according to data from IRI, a Chicago-based research firm. Not surprisingly, the number of IPA offerings currently being sold in supermarkets is also up. IRI counts 838 different SKUs in the channel, 440 more than in 2009. The growth of the IPA, with its distinct, hoppy flavor, has coincided with the growth of influential California breweries like Stone, Lagunitas, and many others, and the popularity of the style seems to have pushed craft’s largest players, like Boston Beer Company, Sierra Nevada and New Belgium to answer the call by brewing up even more hop-forward variations. Just last year, Boston Beer – the country’s largest craft brewery – released its “IPA Hopology” variety 12-pack, complete with six different styles of IPA. The company has even explored hybrid products, like its Whitewater IPA, which blends traditional American IPA and Belgian Wheat beer styles. In February, New Belgium Brewing released its Rampant Imperial IPA, a higher proof version of the traditional IPA. Since its rollout, Rampant has quickly ascended to the top of IRI’s list of new craft beer brands with more than $1.3 million sales at U.S. supermarkets through July 14. Even Sierra Nevada, a stalwart producer of bitter brews and current manufacturer of country’s best selling IPA, Torpedo, is releasing a new fall twist on the style, Flipside Red IPA. Amidst the barrage of new IPA introductions, there is a new trend: companies retrofitting their brands with IPA labels. Flying Dog renamed its Double Dog Double Pale Ale to Double Dog Double 22 BEVNET MAGAZINE OCTOBER 2013

IPA earlier this year. Earlier this week, Odell Brewing confirmed that it would rebrand its Red Ale to Runoff Red IPA. So what is driving beer companies towards IPAdentification? Chris Lohring, the founder of Boston’s Notch Brewing, believes the branding choices are being made because because consumers are well-educated on the style. “When a consumer sees IPA, they know it means hoppy,” he said. “It’s easier to communicate. IPA has replaced hoppy as a descriptor.” Lohring, who wrote a lengthy blog post on the history of the IPA and its current meaning earlier this year, said he believes craft brewers are making a conscious marketing decision when choosing to rebrand their products as a certain type of IPA. “Pale Ale is no longer sexy,” he said. “I get a lot of people at a beer fest who will come up and say ‘I’ll have your IPA,’ like it is some sort of requirement that every brewery has one.” Lohring, who makes a lower alcohol IPA named Left of the Dial, believes most of the recent rebrands and new IPA introductions stem from increased consumer demand for the style. Matt Brophy, the Brewmaster for Flying Dog, denied that its Double Dog name change was done for marketing purposes. “I created the recipe years ago and it was an early enough time when there weren’t a whole lot of imperial or double IPAs,” he said. “I think that double IPA more accurately represents the content of that package.” It’s the same answer Amanda JohnsonKing, a spokeswoman for Odell Brewing, gave the Denver Post when asked about the rebrand of its Runoff Red Ale. “Red IPA wasn’t really a style when we released this beer, but it better describes the style and character,” she told the paper.

So are craft breweries simply updating their language to better inform customers, or are they creating confusion? “It’s a slippery slope to box everything neatly into a style,” said Brophy. “There are legitimate beers out there that represent certain characteristics that craft beer drinkers are looking for. If you are going to have a hop-forward beer and you want to let people know about it, you have to put IPA on the label. “ Lohring fears that overusing the IPA moniker could drive consumers to develop “one-dimensional” buying habits. “Styles exist as reference points for consumers to make a purchases based on what they want a beer to be,” he said. “If we debase styles to the point where consumers don’t understand what it means, we’ve lost the ability to educate them about the variations in craft beer.” But that doesn’t mean he’s not on board with the trend. “Every country has some kind of a style that represents that country,” he said. “For the USA, it is IPA and I think that is okay. We have found something that the consumer likes and if we are known as IPA-land, I think that is great.”

BY NEIL KIMBERLY Rick Hill was an amazing boss. Between endless cups of coffee and sneaked cigarettes in his office he preached a new way for beverages to do business. Rick had taken the dusty old Barq’s brand and created what would be called a viral phenomenon today. That was the “Soviet Union Going Out of Business Sale” – a communist memorabilia on pack promotion. He made Root Beer cool. Cool enough for CocaCola to buy the brand in 1998. When Rick was my SVP of Marketing at RC Cola, we had to try to figure out how to fight Coke and Pepsi. An overwhelming prospect. “It may take 100 years, but Coca-Cola will fall,” Rick told me. “Everyone is ultimately vulnerable because change is inevitable.” Rick was never a guy to avoid a punchy line – or an outlandish one. I filed the thought under “Rick’s Outrageous Sayings” and moved on. And here we are now, almost 20 years later, and Rick is starting to look less outrageous. Coke and its traditional carbonated cousins are still the dominant beverage form, but that domination is coming to an end: Based on current trends the next six years will see the dominant position held by CSDs erode. Bubbly sodas will no longer be the revenue and volume leaders of the U.S. Liquid Refreshment Beverage industry. Back at BevNET Live in 2012, this estimate came up in conversation with other attendees, and we began to discuss the impact of this change, and the opportunities this will present to the ever-present innovators and entrepreneurs of the beverage industry. The BevNET team and I have since begun crunching the numbers and this series


of columns, beginning now and going into the new year, is a synthesis of that data, my own, and discussions of The New World with colleagues, friends and associates. We’re going to try to figure out what this new world will look like.

THE ROUTE TO THE NEW WORLD First let’s talk about how we got here, at the brink of this titanic shift. Every year, the Beverage Digest team gathers high level price and volume data from each major player in the beverage industry to build a view of the U.S. marketplace that is not restricted within the availability of syndicated data from Nielsen or IRI, but provide an All-Channel view the market. They cover the three beverage segments of most interest to people selling refreshment beverages: • Carbonated Soft Drinks (Coke, Pepsi, Dr Pepper – but not Energy Drinks) • Bottled Water (not packaged in bulk sizes) • Alternative Beverages (Teas, Juices, Sports Drinks, Energy Drinks, etc.) That data has, as we’ve all observed, already described the decline of the carbonated beverages. Despite innovations like Coke Zero, we’ve seen a 20 point fall in the share of this beverage market over the past decade. But the past ten years have also been good for the beverage industry. Consumers are drinking more than ever – and they are prepared to pay more than ever for drinks, as well. Consumption is increasing faster than population growth, and pricing is increasing faster than inflation. But the industry has fundamentally changed. In the past decade Carbonated Soft Drinks, that iconic American libation, have lost their unassailable position at the top of the beverage world. That slow decline is now taking shape as a major structural change. Drinkers actually embraced this new order before distributors, retailers and the largest beverage companies. But we will all take our cues from that new order.

THE FORECAST So let’s look at a trend over ten years and project it forward. The beverage marketplace has grown 1-2 percent annually. But CSD’s have

been losing share at a rate of between 1 percent and 2 percent annually, as well. This trend was slowed at the height of Bush Recession, but has resumed in the years since. As a result, the CSD share of the Beverage market in 2012 was 57 percent: 20 share points lost since 2002. Extend this trend out from 2012, and a combination of growth in Non-CSD Beverages, and 2017 is the date when CSD’s fall below 50 percent of the market for volume; 2018 is when it will happen in revenue. And every year that the trend continues, $2 billion in retail sales change from CSDs to the Water and Alternative Beverages categories – although oftentimes, when the fundamental cracks appear, the erosion can speed up. All this, of course, prompts the question

there will be between $2B-$3B in incremental demand seeking non-carbonated refreshment: that’s the equivalent of a new AriZona Beverage Co. annually. Undoubtedly this change has been consumer-led. The large CSD companies continue to focus all their available resources against finding a way to grow their business. They have already acquired their manufacturing and distribution systems, increased their pricing, changed their packaging, tried different marketing tactics, and are in the process of attempting to create no calorie, naturally sweetened versions of their brands. But save for the recession of 2008, it appears little can arrest the decline. Meanwhile, interest is migrating to product types that are either stealing share or growing their own.




288 Million

313 Million


192 oz. Cases Sold

13 Billion

15.4 Billion


Retail Sales

$86 Billion

$117 Billion


8 oz. Servings/American








% CSD by Volume



% CSD by Retail Sales



U.S. Population


“So what?” The big beverage companies are already big players in Bottled Water and Alternative Beverages. Surely it’s just the same players… but with a different tune? It would be churlish to believe that the major businesses will not evolve to respond to these market conditions. However, the record of the Big Beverage companies in competing outside their core competencies is not stellar. The internally generated innovations of the big beverage companies have rarely been successful, and there remains a steady conveyor belt of new products and ideas coming from beverage entrepreneurs who are able to more effectively respond to emerging consumer needs. As the market skews ever more away from CSDs as alternative beverages grow

It looks like Rick was right: Change has arrived. But as a beverage entrepreneur, how do you use these changes to position yourself to win in 2017? Who can join the list of successful beverage startups that have made the New World possible? That’s what we’re going to explore in the months to come. What the change will look like, which categories, product forms and packages are likely to benefit, and how retailers, distributors, and manufacturers are going to be impacted. What the consumer will see in the store, what the distributor will put in the cooler, what the marketer will try to get on the truck, and what the supplier will have to come up with for ingredients. This is going to be a big change, and I look forward to having us prepare for it together.


By Ray Latif


Amid rising consumer disdain for high-calorie beverages, a convergence in demand for simple refreshment and functionality is starting to give rise to a broad, catch-all category: premium hydration. At its core are products that are generally thought of as enhanced waters, but it has more room at the margins, including alkaline waters, electrolyte enhanced waters and beverages, naturally functional products like coffeefruit-based Bai or any number of coconut waters, mix-to-drink twist-cap bottles, even carbonated products like Sparkling Ice and its current raft of imitators. In particular, coconut water products and electrolyte-infused waters, led by market leaders Vita Coco and Smartwater, respectively, have found success by promoting hydration as a key function of their beverages, particularly as a way to bridge the gap between health and refreshment.

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“Hydration is a very contemporary opportunity that’s out there,” said Neil Kimberley, a longtime beverage consultant. “I think it probably comes back to the idea that it’s not so much about enhanced water as it is about some form of hydration. And then it’s about, ‘is this an updated form of modern hydration that is not for a sports occasion?’ Then I think you get into this kind of space.” Consumers have been drinking more beverages in general, Kimberley noted, particularly as hydration becomes a more significant part of their daily needs, and a big part of that boost in consumption has come from bottled water. Moreover, as U.S. consumers increasingly shun carbonated soft drinks, research from Nestlé Waters North America and published by Zenith International, a consulting group focused on the food and beverage industries, found that 51 percent of consumers choose non-flavored bottled water in favor of CSDs, while 12 percent opt for sweetened or enhanced water. At a cost that hovers around $3-6 for a 24-pack of brands like Poland Springs and Dasani, manufacturers have made it extremely easy to buy and consume commodity water. However, higher margins in single serve premium water and hydration beverages have made the products an attractive option for retailers. And in more and more instances, lines have been blurred to include a wider range of beverages. “[The growth of] bottled water and the whole idea of premium hydration starting with Vitaminwater and then going through products like Smartwater and Sobe Lifewa-


ter and then into coconut water, and maybe even Body Armor is an example, is something that’s starting to get grouped together by retailers, and I think that’s becoming the decision set for the consumer,” Kimberley said. “It is taking away share from carbonated soft drinks, specifically diets, and, probably, there’s some trading going on inside the actual premium set itself when you look at the declines of Vitaminwater and the increases in Smartwater.” The irony of Vitaminwater’s current position is that the brand was once touted as the better-for-you (and higher margin) alternative to highly sweetened carbonated soft drinks and artificially flavored sports drinks. Along with its first-to-market status, Vitaminwater’s fortified formulation and a lighter sweetness profile (than most CSDs, anyway) were significant pieces of the proposition. Moreover, the

isotonic flavor, sans the salty aftertaste of Gatorade, gave the brand a solid following among female consumers, who have played a major role in the growth of the enhanced water category. In recent years, however, the billiondollar brand has faced a highly publicized torrent of criticism from public health advocates who claim that Vitaminwater’s positioning as a healthy beverage is not only flawed, but dangerous. A 2009 lawsuit filed by consumer advocacy group The Center for Science in the Public Interest (CSPI) alleges The Coca-Cola Co, Inc., which markets the cane sugar-sweetened drinks, has engaged in “deceptive and unsubstantiated claims” in the labeling and marketing of the products. “Vitaminwater is Coke’s attempt to dress up soda in a physician’s white coat,” said CSPI litigation director Steve Gardner said in a statement about the lawsuit. “Underneath, it’s still sugar water, albeit sugar water that costs about ten bucks a gallon.” Lawsuits aside, sales of Vitaminwater are in the midst of sustained slide, pointing to a consumer that wants something else. According to Symphony IRI, a Chicago-based market research firm, the brand is down over 16 percent in dollar sales and over 20 percent in unit sales in all multi-outlets combined including C-Stores for the 52 week period ending on Aug. 11 2013. A significant part of that decline is likely rooted in cannibalization from Vitaminwater Zero, the brand’s zerocalorie line. That noted, Zero isn’t faring much better than its stable mate: the

brand is down 10 percent and 17.25 percent in dollar and unit sales, respectively. While Coke is attempting to make up ground through deep discounting of Vitaminwater in grocery channels (10 for $10 deals have become commonplace for the line), it appears that Vitaminwater is continuing to lose market share to a variety of low-calorie/sugar beverages, including Talking Rain’s Sparkling ICE. Despite a formulation that seems out of line with the industry’s current tilt toward natural ingredients (Sparkling ICE is made with artificial sweeteners and colors), the line of zero-calorie carbonated drinks is on pace to reach $400 million in annual sales by the end of 2013, according to the company’s CEO, Kevin Klock. Klock believes that the rise of Sparkling ICE is rooted in Americans’ desire for simple refreshment, preferably in the form of zero-calorie and easy- to-understand beverages. While part of ICE’s simplicity is that it is as analogous to a diet soda as it is to a flavored water, its growth is nevertheless re-

flective of a consumer that wants something beyond water that isn’t a traditional soda. It’s interesting because that’s a place the industry has been before. Five or six years ago, fearing “water fatigue” and aware of the (since realized) possibility that bottled water alone would be a commodity product, Coke, Nestle, and PepsiCo all rolled out flavored, zero- or low-calorie, carbonated versions of their leading water brands. Perhaps the brands were wrong, certainly the timing was off, but, it seems, the instinct was correct. So if flavor and boredom are part of the impetus behind premium hydration, what else is driving it? Much of the seismic shift created by the global health and wellness movement has given way to consumers clamoring for function-infused enhanced water products, according to a recent Euromonitor International report. Euromonitor, a London-based market research firm, found that while concerns over high sugar and high calorie content

drove declines in total volume and dollar value of flavored water in the U.S. in 2012, consumers’ interest in functional benefits has led to a 5 percent growth in overall dollar sales of functional waters and a 6 percent jump in volume. But in the meantime, there’s a high end as well, where premium-sourced bottled waters, like FIJI and Evian, are increasingly featuring pricing and positioning that is more similar to premium hydration products. Consumers are looking for any kind of value-added benefit in their water products – including exotic sourcing – and marketers are employing the pretext of premium hydration as a means of attracting new buyers. According to Kimberley, retailers are the final piece of the puzzle, setting shelves to reflect those trends. “And as that premium hydration idea is taken on, retailers seem to be resetting their shelves that way, and I think that that’s where the consumer group is and there’s a lot of interest and activity,” Kimberley said.



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Enhanced Water

POPwater, an all-natural sparkling beverage with 30 calories and 7 grams of sugar, aims to be a healthier alternative to soda and other artificially-flavored beverages. POPwater, which is currently distributed by Haralambos Beverage Corp. and found at Los Angeles BevMo! stores and Amazon.com, is available in four flavors: Orange, Pineapple, Apple and Grape. blk. Beverages has announced its first

brand extension. The new brand, blk.+, includes the same fulvic-enhanced, allnatural mineral water, but now offers four new natural flavors: black lemonade, mango splash, tropical punch and blueberry acai. blk. Beverages contain no artificial dyes or colorings. The darker color derives from the combination of fulvic trace minerals and mineral water. Regardless of flavor differences, all blk. Beverages have electrolytes and no carbs, calories or sugars. The beverages can be found at retail stores throughout the country and Amazon.com. Alkazone Antioxidant Water is kosher

certified and enriched with electrolytes, according to the company. The water is ultra-purified with a pH alkalinity of 9.5 and contains potassium, the natural antioxidant selenium, magnesium and calcium. Alkazone is currently distributed by UNFI, KeHe and Island Natural and can be found in Fairway Markets, Whole Foods, ShopRite and other retailers. ACTIVATE Drinks recently launched a

PSA-style campaign entitled “Stop Vitamin Cruelty,” which highlights its core brand message of vitamin efficacy. The campaign portrays vitamins characters slowly deteriorating in water and can be found can be found in a 30 second digital spot, a Facebook app, billboards, taxi toppers and bus displays in Los Angeles and New York City, according to the company. ACTIVATE contains no sugar or calories and is sweetened with stevia. The brand recently expanded distribution to New York, Boston, Connecticut and New Jersey. The brand also launched ACTIVATE Alkalized Water


+ Electrolytes, an enhanced pH+ level water with electrolytes. Blossom Water launched in May in

Westwood, Mass., just outside of Boston, and has already entered 100 stores and 13 Whole Foods markets in the the greater Boston area. The 16 oz. bottles contain only 45 calories and come in four flavors: Lemon Rose, Plum Jasmine, Grapefruit Lilac and Pomegranate Geranium. Following its launch, Blossom Water entered a distribution agreement with Great State Beverages, which serves eastern Massachusetts (including Cape Cod, Martha’s Vineyard and Nantucket) and New Hampshire. LaCroix, a 100 percent natural sparkling

water, is entering convenience stores with its flagship can and 12 oz. glass bottles. The brand team will be available at the upcoming NACS Show in Atlanta at booth #1646. AQUAhydrate has reached distribution deals with Kroger and Safeway. This summer, the company launched a new 500 mL 6-pack nationwide. AQUAhydrate is a high-performance water without the sugar calories found in traditional sports drink or vitamin-enhanced beverages, according to the company. The water, which contains electrolytes and a pH level of 9+, aims to help restore and balance the body during intense performance and exercise. New York Spring Water (NYSW), the makers of spring water and functional products announced new distribution partnerships with Carlson Distributing of Salt Lake City, Savannah Distributing of Savannah, Ga., R.S. Lipman of Nashville, Tenn., Wasatch Distributing of Ogden, Utah, and Winkel Distributing of Richfield and Hurricane, Utah. With the new partnerships, NYSW has secured placement in Kroger stores in Atlanta, Giant Carlisle, Giant Landover, Harmon’s Neighborhood Grocery, Reams Food Stores, Holiday Oil, select 7-Eleven locations and independent stores. Beverage veterans Clark Wright and Craig Robert-

son, who joined the NYSW team in June, led the company’s partnership efforts. HEROEC H20 will introduce new labels and a new flavor in the next few months. The new labels will better reflect the benefits of the water and allow the consumer to understand that the product is a healthy, all-natural energy water within seconds, according to the company. HEROEC H20 will also introduce Pink Lemonade as a new flavor. All proceeds of these sales will go directly to breast cancer awareness. Victoria’s Kitchen has introduced new

packaging for its Almond Water. With a full shrink sleeve label and a new branding design, Almond Water is positioning itself as an alternative to lemonades and iced teas. The new design showcases the brand’s French heritage with an authentic and traditional aesthetic that will help consumers identify their three flavors, according to the company. Less than two years after its official launch, Almond Water is now carried in nearly 1,000 retail locations nationwide. H20m Water with Intention has

launched a premium 1L spa bottle; the newest addition for the eco-conscious luxury brand. The bottle features H20m’s signature mandalas and the brand’s intentions of love, peace, joy, perfect health, gratitude and prosperity. H20m’s California natural spring water was a gold medal winner at The Berkeley Springs International Water Tasting and has been featured in TIME Magazine and The Wall Street Journal. It was selected by STYLE.com as one of the top five “Great Enchanced Waters.” H20m’s bottles are made from post-consumer recycled materials and are available online and in natural health outlets. Qure Water, a 9.5+ pH alkaline water,

continues to expand on the East Coast with Wegman’s and Hannaford stores. The water is made with ionic alkaline minerals that have a powerful and shelf-stable pH.

Alka Power, which is distributed by Nature’s Best and UNFI, has added a 6-pack of 1.5 L bottles. The water is available at Whole Foods in the South Pacific region, Gelson’s Markets, Mother’s Markets, Clark’s Nutrition, New Frontiers, Frazier Farms and other natural and vitamin stores. AQUATION is a xylitol-infused, natural,

alkaline and high-electrolyte enhanced water that promotes healthier teeth and fresher breath without fluoride, according to the company. Xylitol is a natural alternative to flavor enhancers and sweeteners and has become a fluoride alternative in the dental community. AQUATION has announced the upcoming launch of its “Donate a Toothbrush” campaign. The campaign will help provide a tool to prevent oral disease in third-world countries through partnerships with New Jersey-based Donate a Toothbrush and Oklahoma-based World Dental Relief. With existing distribution in 18 states, including Whole Foods, Earth Fare and Walgreens, AQUATION is months away from releasing a new product line. AMAZON Beverages has new packaging, a new formulation, new distribution partners in New York, New Jersey and Connecticut and a new marketing campaign featuring Brazilian models such as Adriana Lima. AMAZON Beverages combines Amazon superfruit extracts with coconut water and tea. The company says that the product can be enjoyed throughout the day, from morning workouts to a late night a nightclub. The beverages are available at local supermarkets, convenience stores and Amazon.com. Avitae, a caffeinated water, has two SKUs: 45 mg and 90 mg. According to the company, the 45 mg bottle has about the same amount of caffeine as a diet soda and the 90 mg bottle has about the same amount of caffeine as a cup of coffee. Avitae is available at about 2,000 Walgreens, Wegmans, Giant Food Stores, Safeway in the Washington D.C. region, Meijer, Whole Foods in the mid-Atlantic region and others.


When marketing kids beverages, companies typically have two consumers in mind: the kid, who they hope will be drawn to the packaging and flavor, and the mom, who they’re looking to satisfy with the ingredients and price point. While there’s no singular, comprehensive method, many of the kids beverage brands lean toward packaging that catches the eye of its young drinkers. This has been true for older kids beverage brands, such as Capri Sun, and newer beverage brands that also market their health, such as Vita Coco Kids and Aquaball. However, other brands with a more established name have gone a different route. Odwalla and Honest have already carved out their places in the marketplace with years of pushing their flagship offerings. Now both brands offer kids beverages without significant alterations in design. No wide-eyed animals or extra-curvy lettering to be seen here. Odwalla Smoothies for Kids uses a Tetra Pak “drink box” and Honest Kids uses a pouch, but the branding still resembles what’s already known and marketed. Beverage brands are still testing these different approaches, but which one is right? Should a kids beverage brand market its packaging toward the kid or the mom?


Aquaball, produced by health-focused beverage company True Drinks, comes in a round, 12 oz. bottle in the shape of a grenade, but with a friendly-looking guise. The beverage was launched in January, but True Drinks had already reached an agreement with licensed Disney and Marvel Comics in April 2012. This allows the company to dress its friendly grenades with Disney and Marvel characters that are relatable to kids: Mickey Mouse and friends, the characters of Monsters University and Planes, the recently-released movie about a crop-duster with a fear of heights. As new movies and TV shows are released, Aquaball has the flexibility to quickly alter its packaging and remain up to date. “We’re able to wrap our product with some of the most loved characters globally that kids are familiar with,” said Kevin Sherman, the CMO of True Drinks.

a point of differentiation in an otherwise unhealthy industry. “There are a lot of high-caloric, highsugar drinks that are marketed toward kids, and then there’s bottled water,” Leonard said. “And in between, there’s wide open space.” Honest is also targeting that open space, but has taken a different approach with its Honest Kids line. The pouched drinks contain 40 calories and 9 grams of sugar per serving; higher in both categories compared to Aquaball, but still lower compared to many other kids beverages, including the new Odwalla line. Seth Goldman, the co-founder and TeaEO of Honest Tea, said that he wanted to create a brand that was fun and accessible. He wanted a look that was both natural and approachable, without excluding any ages or limiting the brand’s potential. “That term ‘kids’ can be pretty broad,”

“It’s growing in all channels,” Goldman said. As Goldman chooses not to limit his consumer demographic, which he approximates between 5 years old and middle school, the Aquaball team has clearly stated a different vision. ‘We think you need to be specific in who you’re targeting and the demographic you go after,” Dorfman said. “We’re very clear that our demographic is for children between the ages of 3 and 10. That’s our consumer.” Look around the industry and you’ll find other examples existing across different parts of the spectrum. WAT-AAH!, a functional bottled water for kids and teens, displays an open-mouthed kid shouting “DRINK WATAAH!” Vita Coco Kids displays a cute monkey puncturing a coconut on a cartoony beach. Orgain Healthy Kids, a line of organic nutri-

Since its recent launch, Aquaball has already entered 22,000 retail locations, such as Walgreens, Albertson’s, Stop & Shop and Safeway. Sherman said that in the first half of 2013, Aquaball has already accumulated $1.7 million in sales; 400,000 in the the first quarter and $1.3 million in the second. While Lance Leonard, the CEO of True Drinks, Jason Dorfman, the national sales director of True Drinks, and Sherman credit much of this quick success to the packaging style and the agreements with Disney and Marvel, they continue to cite the importance of the ingredients. Sweetened with stevia, Aquaball has zero calories and zero grams of sugar. They said that this combination has served as

Goldman said. “If we call it ‘Honest Tots,’ we’ve limited who can sell to.” While Goldman said that he wishes the pouch were easier to open (there’s even a how-to-page on the Honest website), he does believe that the pouch is a package that can mesh with older age groups than juice boxes. He said that a juice box is seen as more of a toddler product in the minds of consumers and that middle school kids don’t want to be seen with cartoon characters. This method has lately proven its viability. In the latest 52 weeks ending on June 16, Honest Kids accumulated nearly $27 million in sales, a 32.14 percent increase from the previous year, according to IRI data.

tion shakes, also displays a cute monkey. O.N.E. Kids looks like a standard coconut water package that was attacked by a kid with a crayon. In Zone splits up that age group with three different lines, all featuring branded characters. It seems that both branding strategies can work in their own way, depending on the company. Yet regardless of the packaging — Disney-themed or simply approachable — many companies agree that what matters most is what’s inside. “The mom has become a much more savvy consumer,” Sherman said. “They’re not going to buy something because it looks bright and fancy. They want to know what’s in it.”



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Kids Beverages

Green Mustache, a new brand of premium,

organic fruit and green vegetable-based juice smoothies for children, made its debut at Natural Products Expo East. Founded by a mom who experienced challenges getting her daughter to eat enough vegetables, these juice smoothies are formulated for optimal nutrition while still being palatable for finicky children, according to the company. Each 10 oz. bottle provides one serving of fruits and one serving of vegetables. Green Mustache will be available in four flavors: Strawberry Banana, Tropical Twist, Orange Mango and Mixed Berry. The drink is USDA-certified organic, non-GMO Project Verified, vegan and gluten-free and has no added sugars, preservatives and artificial colors or flavors. It will be initially available in the New York metro area with broader national distribution to follow in the future. Youthtopia’s Alley Oop sports drink has

two new flavors: Straw-Mango and Slam Punch, which will join Citrus Grind. The beverage recently secured distribution with Blast Brand Management of South Florida. Alley Oop proves its proud support of the Diabetes Research Institute by wearing the institute’s logo on every package. Also, Ted Ginn, Jr. of the Carolina Panthers and his father, Ted Ginn, Sr. have joined the Youthtopia team as product endorsers.

for Kids, to add three new flavors: Fruit Punch, Grape and Berry. All three new varieties feature 50 percent less sugar than traditional 100 percent juice, according to the company, 60 calories per serving and 100 percent of the recommended daily value of vitamin C in a 64 oz. bottle. Litl’ Squirts has launched its line of all-

natural, fruit-infused Maine spring waters in Maine, New Hampshire, Vermont and Massachusetts. Litl’ Squirts is low in calories and sodium and has 15 percent of the recommended daily value of niacin and vitamins B6 and B12, according to the company. The beverage comes in three flavors, Blueberry Lemonade, Raspberry Apple and Blueberry Apple, meets The American Beverage Association’s school guidelines, and contains no corn syrup, food coloring or artificial flavors. Also, Litl’ Squirts has been approved by the John Stalker Institute’s ‘A’ List. VBee! is a recently-launched functional beverage line for kids from New York Spring Water (NYSW). The product uses NYSW’s twist-cap technology and blends pure, natural NYSW with vitamins B3, B5, B6 and B12. VBee! is available in three flavors, Watermelon, Green Apple and Blue Raspberry, contains zero calories and can be found in retailers in the Northeast, Midwest and Southeast.

Tum-E Yummies are fruit-flavored drinks

with a spill-proof sport cap, vitamins B6, B12 and C, 50 calories per serving and no sodium. In 2014, the company plans on introducing a new look and label. Apple & Eve has added Strawberry Lemonade and Very Cherry to its Fruitables line. Fruitables offers one combined serving of fruits and vegetables with one third less sugar compared to leading regular juices, according to the company. They have 60 calories per serving and contain vitamins A, C and E. Apple & Eve has recently launched Organic Quenchers, its new line of organic juice drinks. Quenchers have 40 calories per serving, 50 percent less sugar than leading regular juices, according to the company, and no added sugar, high fructose corn syrup or artificial sweeteners. They are available in three flavors: Berrylicious Lemonade, Fruit Punch Burst and Razzberry Apple Splash. Old Orchard Brands has expanded its

reduced-sugar apple juice line, Old Orchard 38 BEVNET MAGAZINE OCTOBER 2013

Sunny Delight Beverages Co. is launching

four new flavors: Lemonade, Grape, Peach and Watermelon. The new flavors, which contain 100 percent vitamin C and come in 56 oz. bottles, are available at Walmart stores and other select grocery stores. Bug Juice International has added two flavors to its line of kids juice drinks: Dragon Berry and Bubble Gum Berry. These flavors will come in the company’s standard 24-pack and will be available through local wholesalers. Frubob is a natural fruit float that contain 100 percent real fruit pieces bobbing in juice. The drink has no sugar added, offers two full servings of fruit per portion and has been approved by the Alliance for a Healthier Generation. Frubob is available in 12 oz. PET bottles and comes in four flavors: Peach, Pineapple, Mango and Strawberry. HONEST Kids by HONEST Tea was reformulated this year to eliminate organic cane sugar

and increase the juice content while keeping the pouches at 40 calories per 6.75 oz. All five varieties — Berry Berry Good Lemonade, Goodness Grapeness, Super Fruit Punch, Tropical Tango Punch and Appley Ever After — are now sweetened only with fruit juice. This change increased the amount of juice from 5-30 percent, depending on the variety, to 30-42 percent juice. The company has also introduced an HONEST Kids multi-serve line that includes three varieties available in a 59 oz. bottle: Berry Berry Good Lemonade, Goodness Grapeness and Super Fruit Punch. Tummy Tickler from In Zone Brands is a 100 percent apple juice that features spillproof tops of characters from Disney and Marvel, such as Mike, Sully and Squishy from Disney Pixar Monsters University. These character tops are included in the Tummy Tickler 18-pack, double case and triple case. Tummy Tickler is available in major grocery stores, drug stores, convenience stores and super stores, comes in 6 oz. bottles and has no added sugar, high fructose corn syrup, colors, flavors or preservatives. One serving of

Tummy Tickler is equal to three-quarters of a cup of fruit, according to the company. Sneakz Organic has launched a chocolate milkshake that delivers one full serving of vegetables via sweet potatoes, carrots and broccoli. A second milkshake flavor is set to launch in 2014. The brand has been picked up by retailers such as Sprout’s Farmers Markets, Wegmans, Babies R Us, Vitamin Cottage, Hy-Vee, Bristol Farms and Whole Foods in the Rocky Mountain region. The product comes in a shelf-stable Tetra Pak. AquaBall is a zero-calorie, naturally flavored

and naturally sweetened water drink for kids. The beverage is sweetened with stevia, enhanced with vitamins B6, B12, B3 and C, comes in a 12 oz. bottle and contains no artificial flavors and colors or high fructose corn syrup. AquaBall is available in Fruit Punch, Grape, Orange and Berry flavors and features characters and superheroes from popular cartoons and movies. It can be found at retailers nationwide in single units and 12-packs, with 6-packs arriving in January 2014.


THE TROUBLE WITH GINGER What Makes Flavor Combinations Work By Max Rothman

TalkingRain, the makers of Sparkling Ice, darlings of the beverage industry, ascended in quick fashion with its relatively basic yet effective business formula. A steady mass suggested retail price of $1.19 to $1.29. Zero calories. Tall, slim, colorful bottles. More than 25 years of persistence and understanding of the marketplace. However, these traits alone couldn’t elevate the product as quickly as it has. The uptick also required an understanding of the flavors in demand. Kevin Klock, TalkingRain’s CEO, said at BevNET Live in December 2012 that when he recognized the success of Sparkling Ice Orange Mango, he quickly adjusted. The Sparkling Ice line now has nine different flavors, with most of them combining two well-known flavors, like orange and mango, to create something new. Examples include Peach Nectarine, Coconut Pineapple and Pomegranate Blueberry. And according to representatives of flavor houses, these kinds of flavor blends comply with a key flavor trend: combining the old with the new. It’s a strategy that may not be ornate or cutting edge, but it remains effective and, in the eyes of the consumers, new enough. “Consumers, they claim they want new and unique,” said Eric Spenske, marketing director for beverages at Givaudan, a global flavor manufacturer. “They want new and unique executions of the same old flavors.”


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There’s nothing new about peachflavored beverages in the water or tea categories. However, by combining peach with nectarine, as TalkingRain has done, the company is keeping consumers from being too bored – or from taking too far of a leap into the unknown. For now, at least, the non-alcoholic beverage industry hasn’t quickly embraced the latest flavors of the spirits industry, regarded by some as a leading source for flavor innovations. These basic flavor blends don’t represent massive steps in a new direction, but that’s part of the point. “The long-established familiar with the exotic flavor combination is still alive and well,” Spenske said. “I don’t think I’m going to outlive that approach.” Other brands have taken notice and acted accordingly. POM Wonderful, for example, released three new SKUs in April that contain its original pomegranate juice with an added fruit juice blend. POM Hula features pineapple and apple juice. POM Mango features mango and pear juice. POM Coconut features coconut water and pineapple juice. Last August, Vita Coco swapped its Coconut Water with Tangerine SKU for Coconut Water with Orange. The move seems to represent Vita Coco’s understanding that if coconut water is esoteric enough for the standard American consumer, a classic flavor like orange makes more sense than tangerine. “I think that consumers, quite often, they are somewhat conservative and would rather not look too far from their comfort zone,” said Bob Verdi, the business director of health and wellness for Virginia Dare, a Brooklyn, N.Y.-based flavor and extract company. This stance explains why an ingredient such as ginger remains on the cusp of proliferation rather than firmly entrenched in the mainstream. Verdi said that ginger can be too polarizing as a beverage ingredient if it adds too much spice. However, he envisions eventual mainstream potential for ginger with less heat that instead balances a more mainstream flavor. Because of its polarizing characteristics, Verdi isn’t promising success for ginger, but he recognizes the appeal. “It’s trending and works in a lot of products,” Verdi said. A significant part of ginger’s appeal is


based in its flexibility as an ingredient. The ingredient serves as the foundation of Reed’s Ginger Brews, a line of seven ginger sodas by Reed’s Inc. In February, the company announced that its revenues in 2012 increased 20 percent to more than $30 million. In December 2012, BluePrint, the makers of fresh-pressed raw fruit and vegetable juices and juice cleanses, debuted its Ginger Limeade. NextFoods, a functional foods company and the manufacturer of GoodBelly probiotic juice drinks, introduced its Goodbelly Carrot Ginger juice in March. Of course, ginger continues to serve as a key component of ginger ales. Verdi said that Canada Dry and Seagrams continue to expand their respective footprints with their ginger ales.

abundance of misses, that industry continues to blaze trails: Spenske said that vodka brands were the first to market sweet, indulgent flavors that resemble nothing more than new takes on vanilla, such as birthday cake, whipped cream and marshmallow. “That category was able to break a lot of paradigms,” Spenske said. “Just when everybody thought that the flavored vodka category was completely saturated, out comes this whole new set of products.” Still, spirits flavors are starting to affect some RTDs more intensely. Spenske said that the evidence of its latest influence in the non-alcoholic beverage space can mostly be found with coffees. In August, Sambazon introduced its Energy Peppermint Mocha, a thick and creamy beverage that

Spenske’s take on ginger isn’t as optimistic. He said that he’s keeping his eye on ginger beyond ginger ale and also believes that it has future potential. However, he also said that ginger remains on the fringe for a reason. “It’s still a fairly challenging flavor to work into many drinks in a balanced way,” he said. But if, as Spenske believes, companies are wary of the possibility that a combination incorporating a flavor as common as ginger could be too challenging for consumers, it’s fairly easy to see why the non-alcoholic beverage industry hasn’t established flavor trends at nearly the same rate as the spirits industry. And despite an

contains chocolate soymilk, peppermint and shade-grown coffee. In May, Cold Stone Creamery launched its own line of iced coffees that have a smooth and creamy mouth feel and rich flavors such as Mocha and Vanilla. Even Starbucks released its own new iced coffee line in February that contained Vanilla and Caramel flavors. With these indulgent releases and a host of similar offerings from the coffee category, Spenske said that the flavor creations of trendy cocktail bars and clubs will continue to move faster.“There’s definitely a level of innovation in the spirits industry that maybe hasn’t existed as much in the non-alcoholic categories,” he said. Don’t expect ginger coffee anytime soon.

We’re all for updating iconography, but are we headed for the days of Snap, Crackle & Chug? It sure seemed that way in the spring and summer, when cereal companies like Kellogg’s and General Mills rolled out liquid breakfast products intended to take their brand equity from the table and transfer it to an on-the-go proposition. For Kellogg’s, it’s come from Special K, which has recently expanded its $100 million line of Special K Protein Shakes to include new Special K Breakfast to Go and Special K Coffee House Breakfast Shakes, putting a bottled mix of cereal, liquefied protein and fiber into the hands of a growing number of (mostly female) consumers. Not to be outdone, Cheerios parent company General Mills has also been trying out its own dairybased nutritional shake, BFast, in the Northeast. It shouldn’t be surprising to see traditional breakfast food producers chasing the liquid breakfast market, however; that’s because it’s becoming a can’t-beat-them-so-you-join-them-proposition. “Smoothies and Nutritional Supplements being consumed by more people [for the purpose of replacing a meal] at the breakfast occasion,” notes Lauren Masotti, a client executive for 44 BEVNET MAGAZINE OCTOBER 2013

beverage with polling firm Kantar Worldpanel. “Smoothies have nearly doubled in the amount of people drinking for this reason.” And the big food conglomerates are racing beverage companies to liquify breakfast. That’s because, overall, breakfast has grown in importance both in-home and for fast food and other foodservice operations, where grab and go smoothies and shakes are growing alongside hot products and cereals. The need to fill the breakfast belly coincides with key technological and branding advances – so that as these companies have realized that the addition of protein to juice could cause a major disruption to the breakfast event for consumers who have become increasingly time-pressed, the ability to add that protein and fiber has also improved. “There are some changes in culture that are making this a slightly better opportunity than it was a few years ago,” said Howard Telford, a beverage analyst with the consulting company Euromonitor. “Busier lifestyles are always a trend here in the U.S. People are always in a rush, so anytime you can help people out there’s a benefit.” That’s not to say that beverage companies hadn’t spent a lot of time thinking about breakfast already – from Java Monster (and

firm. Kantar’s polling reveals that 38 percent of a contiguous before that, Rumba) to Mountain Dew’s new “Kickstart” drink, set of product categories like weight loss drinks (i.e. Special K, one of the major innovations in the beverage space has been an Slim-Fast) and 31 percent of nutritional supplement beverages attempt to cross-breed the energy need state with the vitamin (i.e. Muscle Milk) are consumed at breakfast. Meanwhile, the C content of most juices. That kind of incremental gain, Telford traditional beverage drink, orange juice, has been in decline notes, has been most interesting to the big companies. for years, as consumers look for other nutritional benefits But there’s a larger wave on the way, one that PepsiCo CEO beyond vitamin C. Indra Nooyi pointed to a few years ago when she started to “You can look at this as people being exposed to that idea of refer to the “snackification” of certain types of beverages: liquid a beverage as a meal replacement,” said Euromonitor’s Telford. meals are on the rise, with representative RTD categories like “It might not be specifically branded that way, but it’s also about smoothies and nutritional supplements steadily increasing in opening people’s minds up to the idea of a beverage for breakfast.” dollar share and shelf space. That remains something of a long game for beverage comFor many entrepreneurial beverage companies, it’s the converpanies, it should be noted. Much of the push at the RTD level gence of technology and nutritional demand that has created the remains at the incremental change level, according to analysts, opportunity for breakfast drinks to move off the perimeter of the who see more importance in the addition of caffeine to a juice placemat and into the center of the plate. That’s a new developthan into the development of a new meal replacement format. In ment, and one that is in line with ongoing changes in beverages’ other words, beverages at breakfast are ability to provide what consumers want still more likely to be just beverages, but from the breakfast occasion. One of the major innovations things are changing. “It’s been a Holy Grail need state For example, traditional breakfast because there’s been very few items out in the beverage space has juices like orange or grapefruit have there that satisfy the consumer,” said been an attempt to cross-breed been declining for years, a change that Greg Fleishman, a food and beverage Kantar’s Masotti ascribes to changing consultant who has worked in marketthe energy need state with the attitudes toward those key products. ing positions with companies like Samvitamin C content of most juices “Fruit Juice is competing against a bazon, Coke and Kashi. “It’s always a wider assortment of beverages than in viable occasion, but until recently, we’ve the recent past,” she said. “People are never seen things come together that less likely to be consuming 100 percent could be mastered as convenient, tastorange juice for its taste, nutritional benefit and replenishment. We ing good, satisfying nutrition needs and filling you up.” do see vegetable juice growing at breakfast – consumers view it as The first new age beverage company to start to crack that code, Fleishman argued, was Muscle Milk, the fast growing high- more of a healthier choice and nutritional benefit to orange juice.” Nevertheless, while more drinks might be replacing breakfast, protein product he called “Slim-Fast for dudes.” the branding isn’t necessarily showing them to be aimed that Supposed to be post-workout recovery drink, according to way: many meal replacement brands feature an emphasis that is Fleishman, the product’s ability to provide protein and satiety on more on lifestyle than a focus on a specific meal – which may be the go meant that it was “co-opted for breakfast.” why some of the bigger juice brands and supplement companies “Muscle Milk indicated that you could have a nutritious drink haven’t taken a more direct shot at the breakfast occasion (and at breakfast time,” he said. “With Special K on the other side for why there aren’t any products branded as, say, dinner replacefemales, the train tracks were really laid out.” ments). Still, breakfast’s place in beverage might be underscored Earlier this year, Fleishman helped Sambazon roll out a even more more by the fact that breakfast foods like oatmeal are breakfast smoothie of its own that featured not just protein but migrating back upstream a bit, as is evidenced by products like also filling “ancient grains” like amaranth and chia, along with Sneaky Pete’s and Oatworks. Both incorporate oatmeal to creits base superfruit Acai, as a way to try to get to that Holy Grail ate a heart healthy, fiber-packed product – one that isn’t geared need state that he’d described. toward breakfast by any stretch. But Sambazon wasn’t the only juice company angling to re“The format takes a back seat to the claims they’re able to place the morning meal. A few months before that rollout, juice company Bolthouse Farms debuted a pair of breakfast smoothies make about ingredients,” Telford said. “I feel like the major selling point with a Sambazon – even with a Naked or Odwalla – is and a protein-enhanced coffee drink. That put it in front of its on the ingredients and the wellness claims, and not the daypart.” premium juice competitors Naked and Odwalla as the first to Nevertheless, those wellness claims and ingredients are take a direct step into the breakfast space. increasingly tied to every meal, and there’s a strong cultural That doesn’t mean, however, that those brands weren’t aimemphasis on that first meal, as well. Down the road, the battle ing for the breakfast space themselves. In fact, with protein and for breakfast will likely only intensify. Just look at a recent report vitamin-enhanced smoothies as a major part of their business, a on beverage innovation from supply firm Beneo, which identified full 20 percent of the smoothie space is consumed at breakfast, liquid breakfast solutions as a top trend. according to polling from the Kantar World Panel. Naked and “There’s a lot more segmentation now,” Fleishman said. “At Odwalla protein smoothies remain strong sellers. Naked’s Profirst it was how do you do a drinkable bowl of cereal, then a tein Zone was up 35 percent, to $66 million, year-over-year in drinkable donut, then energy, and also the V8 style savory beversupermarkets, drugstores, mass retailers and c-stores, according ages that are popping up as well. There’s not a lot of overlap to IRI, a Chicago-based information company. between drinkable cereal and more nutrition, but [juice and That’s just part of a picture that reveals a mealtime that is smoothie companies] are trying to overcome that.” very important to niche beverage categories, according to the OCTOBER 2013 BEVNET MAGAZINE 45


Meal Replacement Smoothies

Chia\Vie by Bare Nutrition, LLC has

Project Fresh Whole Deep Blends are

been focusing on expanding distribution beyond the natural channel and is now available at participating Costco, Target, Kroger and HEB stores. In addition to bringing LA Libations, LLC to their team, Chia\Vie says that it has inked a strategic marketing partnership with a prolific Hollywood movie studio, which will be announced soon. The beverage pairs ground chia with fruit to provide a smooth, filling and satisfying shelf-stable beverage, according to the company.

fresh pressed daily at the FreshBev Craft Juicery in New Haven, Conn. Through a proprietary process, the nutritional profile (including fiber and protein) of the organic fruit and vegetables used in these blends is maintained to create a satiating, rich beverage with a silky consistency, according to the company. Project Fresh is available in 35 Whole Foods stores throughout Connecticut, Massachusetts, Rhode Island and Maine.

Sambazon, makers of acai and or-

ganic Amazon Superfoods, offers Chocolate+Almond+Coconut Milk from its on-the-go Freshie line. The beverage delivers 8 grams of vegan protein per serving and more than 90 acai berries per bottle, blending the sweetness of chocolate and coconut milk with a touch of almond. The beverage, which is marketed as an ideal snack or light meal, also contain omegas, antioxidants and protein to keep consumers full longer. Coco Libre by Maverick Brands has

recently reformulated its Coco Libre Protein line to include rBST-free and grass-fed milk protein. All four flavors are available in 11 oz. PET bottles, have no added sugar, contain 140 calories per bottle and are made from organic coconut water and natural ingredients. The beverage has 18 amino acids, 23 vitamins and minerals and 5 electrolytes. Each bottle contains as much protein as three eggs, as much calcium as two cups of milk, as much potassium as one banana and as much magnesium as two cups of broccoli, according to the company. Oatworks is a natural smoothie made from 100 percent fruit that serves as a quick option for busy, on-the-go consumers who want the health benefits of oatmeal, but don’t have the time to make it. One ready-to-drink, 12 oz. serving of Oatworks contains beta glucan, fruit and nutrient-rich calories to provide a sustained release of energy and as much soluble fiber as two bowls of oatmeal, according to the company.


Orgain is the best-selling nutritional shake in the natural channel and is in more than 20,000 accounts nationally, according to the company. Orgain recently gained distribution into all Walgreens locations across the U.S. OnJuice now offers free shipping on cleanses delivered in Florida. The company says that its most popular juice, Sublime, is perfect for breakfast or an in-between meal. The juice is packed with spinach, cucumber, parsley, green apple, ginger and lime and contains vitamin A, vitamin C and iron. The company also says that Sublime can serve as a great addition before or after your workouts by influencing recovery and easing muscle tension. Premier Protein shakes are now available

at Kroger and Albertsons stores and will soon be available at Walmart. The shakes, which are available in Chocolate and Vanilla flavors, come in shelf-stable Tetra Pak cartons and contain 30 grams of protein, 1 gram of sugar and 160 calories. The snack-size version of the shakes offer 18 grams of protein, 1 gram of sugar and 100 calories. Core Power is marketed as not just a high

protein recovery drink for fitness enthusiasts and active individuals, but also as a meal replacement for people on the go. Core Power, which is nationally distributed and comes in 26 gram and 20 gram protein varieties, is made with lactose-free milk that comes from the family-owned American dairy farms of fairlife, LLC.


WHY BEVERAGE SCHOOL? Get up to speed on the beverage industry Learn about common missteps for startups Hear from experts in various fields Affordable & on窶電emand


By Max Rothman By now, most consumers and retailers understand and approve of the idea of recycling. They’ve heard about carbon footprint and composting and other buzzwords with environmentally-friendly connotations. In 2011, Americans recycled about 35 percent of trash, according to the U.S. Environmental Protection Agency (EPA). That’s not a number to scoff at, but it’s also a number that many key figures in the sustainability business believe should rise. It’s also become a goal of those in the manufacturing business, as well. It’s a belief that has been embedded in the missions of groups such as the Carton Council of North America, Ball Corporation, the Can Manufacturers Institute and the Glass Packaging Institute. These groups, to name a few, have established concrete goals of raising their respective packaging format’s recycling rates. They say they’re making progress through various forms of education, production refinement and infrastructural improvements. They know that recycling and waste reduction have become imperatives at many points along the journey to the shelf. “I think the landscape has changed a little bit,” said Elisabeth Comere, the director of environment and government affairs for the U.S. and Canada divisions of Tetra Pak, a carton packaging company. “You have much greener requirements from our supply chains.” And those supply chains are sizeable. According to MarketsandMarkets, a global market research and consulting company, the beverage packaging market will grow from an estimated $97.2 billion in 2012 to $125.7 billion by 2018. So it should come as a relief that the companies that comprise these industries, which make metal, plastic, carton and plastic packaging, among others, say they believe in not just sustainable packaging, but also in sustainable education for consumers and brands. But there’s a complex web, and it incorporates political and social behaviors, consumer education and local action to create more recycling opportunities. “There is not a one size fits all solution,” said Bjoern Kullman, director of sustainability at Ball Corporation, a leading supplier of metal packaging. Kullman said that while Ball continues to work with suppliers to improve the efficiency of their processes, more work can be done. In 2013, 65.1 percent of cans have been recycled. He said that by 2015, people in the industry want that number to reach 75 percent. He thinks that this number could be reached because of the compatibility of cans with the sustainability movement. According to numbers presented by Ball, cans are the most recycled beverage container in the world. They’re 100 percent recyclable and can 48 BEVNET MAGAZINE OCTOBER 2013

be recycled and returned to a store shelf as a new can in 60 days. According to Megan Daum, the vice president of sustainability at the Can Manufacturers Institute, cans have become 15 percent lighter over the previous two decades. She said that about 34 cans can be made from one pound of aluminum and that a can’s wall is about .0037 inches, or the thickness of a strand of hair. She also said that each recycled can greatly reduces the energy and carbon footprint of the next can. “We like to think about the environmental and economic benefits being tied together,” Daum said. That’s one of Daum’s key points as she continues to travel, educating students and companies across the country. From March 2012 to last July, she’s spoken at the Sustainability in Packaging conference, the Innovations in Food & Beverage Conference by Packaging Digest, a beverage industry webinar, Interbev, and the Greener Package podcast, among others. She also has spoken to students with a focus on sustainability at Michigan State University and Virginia Tech. In her speeches, she continues to explain that while cans are highly recyclable and have shown some of the most encouraging recycling rates of any beverage container medium, all packaging forms remain in this fight together. Some are further along than others, however: Like cans, glass packaging is 100 percent recyclable, and unlike any other beverage packaging option, glass can be recycled endlessly without loss in quality or purity, according to the Glass Packaging Institute (GPI), the trade association representing the North American glass container industry. In 2011, according to the EPA, more than 41 percent of beer and soft drink bottles, nearly 34 percent of wine and liquor bottles and 15 percent of food and other glass jars were recycled. In sum, 34.2 percent of glass containers were recycled. The numbers from plastic packaging show even more room to grow. A 2011 study by Moore Recycling Associates Inc. found that 94 percent of Americans have access to plastic bottle recycling and 40 percent of the population can also recycle other types of plastic containers like yogurt cups, dairy tubs and lids. Despite this fact, the American Chemistry Council found that in 2011, only 29 percent of plastic bottles were recycled. The picture is even more complex for paper-based containers. Tetra Pak, a carton packaging company, is approaching sustainability through product innovation. The company’s cartons, which are made with renewable paperboard or thin layers of polyethylene, a common plastic, combine strength, light weight and shape to form a product with a continually descending carbon footprint. Comere said that Tetra Pak’s cartons are currently made with 70 to 75 percent renewable sources. She said that by 2020, the company aims for cartons that are 100 percent renewable. But the problem for Tetra Pak has been getting communities on board for its kind of package. Tetra Pak’s website says that in 2012, the global recycling rate for used beverage cartons was

22.9 percent. The company wants to increase that number to 40 percent by 2020. Some countries have bought into the idea: Luxembourg and Belgium have recycling rates of more than 80 percent. Germany is above 70 percent. Like Ball and the CMI, Tetra Pak hopes that cooperation from inside its own industry can help improve results. The Carton Council, established in 2009, is a group of carton manufacturers (including Tetra Pak) that delivers long-term solutions to divert cartons from landfills and promotes recycling technology and local collection programs. Through the council’s website, visitors can scan the country for carton recycling locations, watch instructional videos and read about the carton recycling process. What’s obvious is that sustainability operations aren’t the only way to increase the recycling rate. Some in the packaging industry believe that an improvement in the recycling infrastructure could go a long way toward making progress. “We primarily focus on infrastructure,” Kullman said. “Studies for the last 15 or so years have shown that if we use 94 gallon carts instead of 18 gallon bins, people recycle more.” Daum said the issue isn’t curbside opportunities, but public ones, as well: if enough people know where they can recycle and that there simply aren’t enough places away from home that allow people to recycle. With the growing popularity of portable containers, the beverage industry is complying more and more with the on-the-go nature of consumers. Daum, and others like her, believe that recycling needs to catch up to this fact. She used parks as an example: If you’re walking in the park with an empty, recyclable container, and you approach a trash can, it’s likely you’d prefer throwing out the container over waiting until you reach the next recycling bin, she said. If consumers have a better understanding of why they should wait for a recycling bin and local governments prioritize the proliferation of recycling bins, she believes that the recycling rate could significantly increase. Kullman said that for these numbers to rise, representatives of all packaging forms must work together to better inform consumers, beverage suppliers and distributors, to name a few. “We have a more holistic approach today to be more effective,” Kullman said. Comere said that she thinks beverage brands are also responsible for stepping up and delivering a message of sustainability. “People don’t buy a carton,” Comere said. “They buy a specific drink in a carton.” When these companies do take more responsibility in delivering a message of sustainability, through marketing or on the package, and as environmental education continues to spread throughout the country, and local governments use their resources to make more of an effort, perhaps then the majority of consumers will do more than just understand the benefits of recycling; they’ll take action.

We have a more holistic approach today to be more effective.



Promotions, events and specials for the industry

Herradura Issues $100K Challenge to Artists to Transform Tequila Oak Barrels into Works of Art

WAT-AAH! to Activate Marketing Efforts for ‘Drink Up’ Initiative

Tequila Herradura will be sharing its history, heritage and passion for crafting the finest tequila with art aficionados nationwide through the “Herradura Barrel Art Collection.” Leveraging its long established art platform in Mexico, Herradura invited and challenged 80 artists in eight U.S. cities (New York, Los Angeles, Chicago, Atlanta, San Francisco, Austin, Miami and Santa Fe) to recraft, transform and reinvent a Tequila Herradura barrel into a work of art. A jury-selected piece of work from each of the eight cities will be awarded $10,000 and an invitation to the final competition being held in Miami in early December, where the finalist barrels will be auctioned off and the creator of the winning Herradura Barrel Art piece will receive a $100,000 prize, one of the largest monetary prizes in the contemporary art world. All works of art will be judged based on originality, creativity, overall quality and the inclusion of elements and values that represent Tequila Herradura. As part of its commitment to supporting the arts, Herradura will auction the barrel art and donate all proceeds as well as an additional $70,000 to Creative Capital, a renowned arts organization, dedicated to supporting innovative and adventurous artists nationwide through funding, counsel and career development services. Creative Capital will use these funds to bring its acclaimed Professional Development Program workshops to artists in the participating cities free of charge. Art lovers in the eight cities will have the opportunity to see the art firsthand as the pieces will be showcased at select venues in each city in early 2014.

WAT-AAH!, a brand of functional bottled water aimed at kids and teens, joins the Drink Up initiative launched by the Partnership for a Healthier America (PHA) and its honorary chair, First Lady Michelle Obama to encourage people to drink more water more often. The nationwide initiative conveys the simple message that water is one of the best and easiest sources of hydration and reminds everyone of water’s inherently beneficial properties such as providing energy, stamina and ability to focus. WAT-AAH! is set to activate numerous marketing integration efforts as part of its initial commitment to the Drink Up initiative. The goal is to help raise awareness while engaging kids and teens in the Drink Up message. Working closely with PHA, WAT-AAH! will utilize its “Back-2-School” marketing campaign to feature the Drink Up logo and official hashtag #DrinkH20 to drive traffic to its newly launched site – YouAreWhatYouDrink.org. The media outlets will include print and online ads in popular teen magazines and sites as well as poster installations in the thousands of schools and districts where WAT-AAH! is currently sold. Since its launch in 2008, WAT-AAH!’s mission has been to improve their target demographics’ water consumption habits and communicate water’s unsurpassable health benefits through branding as well as fun and contemporary marketing. The brand has also actively supported the First Lady’s health agenda specifically with its nationwide Move Your Body campaign as well as the brand’s recently announced collaboration with Hip Hop For Public Health and PHA for their Songs For A Healthier America Program. “WAT-AAH!’s support of this effort is part of its ongoing commitment to educate kids and teens about the importance of drinking water in maintaining a healthy lifestyle.” said Rose Cameron CEO/Founder of WAT-AAH!. “We are excited to take an active role and work closely with the Partnership for a Healthier America to develop fun and exciting programs that will resonate with today’s kids and get them to drink more water more often.”


DECEMBER 5 Paradise Point Resort & Hotel San Diego, CA For More Information and Registration Visit:

www.brewbound.com/events ABOUT THE CRAFT BEER SESSION The Brewbound Craft Beer Session is a business conference addressing the topics that most directly impact the decisions craft brewers are faced with as they look to grow their brands. The event focuses on the business side of craft, offering brewers a unique opportunity to learn from and network with industry experts.

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