BevNET Magazine October 2016 by BevNET.com

IMPORT BEER IN BRIEF

WHAT'S IN FAVOR WITH FLAVOR?

WHY BIG CPGs NEED TO ACT

W! NE The new Vita Coco 1.5L has 1â &#x201E;2 the sugar of OJ.*

*The leading brand of orange juice contains 23 grams of sugar and 110 calories per 8oz serving; Vita Coco contains 11 grams of sugar and 45 calories per 8 oz serving.

OCTOBER 2016 M

Contents • Volume 14 • No. 7

COLUMNS

FEATURES

ON THE COVER

4 First Drop Spinning the Cycle

22 International Roundup Heineken Consolidates, The High End Goes Abroad, Brewdog Bags the Crowd

28 When Hydration Isn’t Enough Inside Functional Waters with Brand News

6 Publisher’s Toast Tiny Bubbles 16 Gerry’s Insights The Geography of the Rebrand

DEPARTMENTS

24 What’s In Favor With Flavor? The Experts Weigh In

8 BevScape Litchfield Invests in Genius

THE EXPERTS

10 New Products KeVita Adds Vinegar Tonics 14 Channel Check Monster on the March

20 Why Big CPGs Need to Act By Michael Burgmaier, Managing Partner, Whipstitch Capital

IMPORT BEER IN BRIEF

WHAT'S IN FAVOR WITH FLAVOR?

WHY BIG CPGs NEED TO ACT

cover.indd 1

9/23/16 2:21 PM

32 Promo Parade Entertainers, Vodka and Gin

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

The First Drop

Spinning the Cycle

By Jeffrey Klineman

Are we reaching the end of the massive food investment cycle? It depends on your lens. A recent report in the San Francisco Business Times, for example, noted that overall investment in the AgTech sector had dropped by 20 percent in the first half of the year, and was trending toward a drop of more than $1 billion, total. That same number set, however, shows that over the medium term, the amount of money pouring into the sector is way up – even with a projected drop from $4.8 billion to $3.6 billion this year, it’s more than seven times the size of investment in 2011, which was a relatively paltry $500 million. So, of course, AgTech isn’t the same as investing in, say, a coffee brand. Except that sometimes it is, and that’s where some of the confusion comes from, because the lenses get blurred. An investment in a brand like Blue Bottle isn’t necessarily AgTech – or its twin, FoodTech – but if that money put into the coffee brand came from something like Google Ventures and other tech funds (and, yes, in the case of Blue Bottle, it did), then it often gets rolled into that classification, often by less discerning observers and competitors. And there’s more blurring than that – plenty of companies like Beyond Meat, Ripple, Just Mayo, and more are as much consumer plays as they are FoodTech or AgTech. That blurring, some investors told me, tends to further the notion that entrepreneurs should expect tech-worthy valuations – and it also creates an expectation among other tech-focused investment pools that they, too, should be investing in food. They bring their own particular tech lens to the deal, potentially pushing valuations even further out of whack while they’re learning the food game. That’s not to say that I think tech investors should just stick to their e-knitting. Food and Tech platforms have been successful, say, when it comes to disrupting traditional retailing channels, and AgTech may fundamentally change the ingredients that go into our food. Both are powerful and vital and worthwhile – while sticking closer to the tech ethos that leads to the creation of new kinds of networks and distribution systems. 4 OCTOBER 2016 BEVNET MAGAZINE

But that doesn’t mean they are going to be good partners for CPG entrepreneurs. Seeing the food category in broad terms has brought energy and money into the space – but one complaint is that it isn’t always smart money. Some investors are willing to over-ante just to play in the game, one investor told me, which drives valuations even higher. Others say that underdeveloped brands get funded, at higher prices, because unsophisticated investors

sky is falling. I’m not – and I agree that the biggest overriding trend isn’t changing – sugar and calorie concerns mean that the big soft drink companies are continuing to shrink and retrench in the same way that other longstanding food categories, like pastas, soups, snacks, and frozen foods – and the ongoing declines of longstanding brands in those spaces mean that they have to make room for the growing brands of today.

Stores are big, and there’s a lot of real estate to cover and upend, and established companies are clear that they’ll rely on entrepreneurial ideas to bring their portfolios into the future. just want to get into the game. Brand owners might like the cash it brings in at the start, but there’s a long trip between being an enfant terrible of a startup and an established brand that changes the world. Right now, the object that many entrepreneurs pursue is simply selling to a strategic and getting out, a cycle that may change the lives of small businesses founders, but leaves the potential for little lasting impact on any part of the food system. Of course, the big companies painted themselves into this corner, and likely aren’t going to stop trying to buy their way out of it, but if they feel they’re getting ripped off by the transactions, then they will push back on cost (see: Dr Pepper Snapple) and private equity might not see the returns that they want, slowing investment overall. And the opportunity to fence your brand to a strategic may have slowed, as well. Since there’s been a fairly prolonged surge into the space, one investor pointed out, it means that some of the biggest have had time to make their bets, at least when it comes to grocery store stalwart categories that needed updating: certainly in the beverage space, juices, teas, dairy, alt-dairy, water, coffee, beer, even CSDs and sports drinks have received a muchneeded kick in the pants. While the categories are by no means through evolving, there has been an enormous amount of turnover in conventional grocery aisles. Another investor I interviewed wondered if I’m making an argument that the

Still, I’m not sure if the recent moves we’ve seen by some of the best-funded and most resonant brands starting to spread their wings is more due to the big companies getting better at integration, or the betting action starting to slow down a bit on individual brands. Look at Annie’s and Honest for examples of brands that are starting to move horizontally throughout the store and will likely have extended play across the next century. Stores are big, and there’s a lot of real estate to cover and upend, and established companies are clear that they’ll rely on entrepreneurial ideas to bring their portfolios into the future. And there are plenty of maturing, insurgent companies that can grow long term, as well: Vita Coco is an example of an independent powerhouse that has a lot of dry powder to acquire younger companies, and also is just beginning to explore how far it can extend as a brand. Monster, as well, remains independent, well-funded, and capable of being a brand house rather than an acquisition play. But playing in categories is different from playing in the great wide open of digital disruption – and the investors from that space have already faced a collapse of their own. They may move on as quickly as they came into the space. Meanwhile, the key is to consider how a company can grow regardless of where and when the money comes in. I’m not going to say the sky is falling. It isn’t. But atmospheres can change, and you have to know how to breathe.

Publisher’s Toast

Tiny Bubbles

By Barry Nathanson

MAGAZINE www.bevnet.com/magazine Barry J. Nathanson PUBLISHER bnathanson@bevnet.com

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

Ray Latif MANAGING EDITOR rlatif@bevnet.com

Neil Martinez-Belkin STAFF WRITER nmartinezbelkin@bevnet.com

Jon Landis STAFF WRITER jlandis@bevnet.com

Chris Furnari BREWBOUND EDITOR cfurnari@bevnet.com

Carol Ortenberg PROJECT NOSH EDITOR cortenberg@bevnet.com

SALES John McKenna DIRECTOR OF SALES jmckenna@bevnet.com

Adam Stern SENIOR ACCOUNT SPECIALIST astern@bevnet.com

John Fischer ACCOUNT SPECIALIST jﬁscher@bevnet.com

Jacqui Brugliera SALES & MARKETING ADMIN jbrugliera@bevnet.com

ART & PRODUCTION Matthew Kennedy CREATIVE DIRECTOR Aaron Willette SENIOR DESIGNER

It makes me sad to comment on today’s frenetic, self- absorbed world, where technology and impersonal communication have taken over our society. That conversation is for another time, on a face-to-face basis, which is the way we should all connect with people. I’m from the 1950s, you see. It was a simpler time. Now that I’ve transported myself back into the proper era, my rant is over. On to beverage commentary. So, in the 50s there was a cute ditty of a song called “Tiny Bubbles” written and performed by the illustrious Don Ho, the Hawaiian Frank Sinatra. It captivated the nation and became a musical standard for years. Along with this song was “Bubbles on the Vine,” the theme song for the Lawrence Welk Show. Bubbles abounded on air as he opened and closed each show with a pre-pyrotechnic display of these little globes. As a culture, we couldn’t get enough of them, especially in our beverages. After all, carbonated soft drinks were basically the only choice back then. It was all so innocent then, my fascination with bubbles. Little did I realize then that bubbles would become an important part of my world. I jump forward many years to my entry into the beverage marketplace.

6 OCTOBER 2016 BEVNET MAGAZINE

In my 24 years in the industry, I’ve seen so many shifts in the composition of brands. For years, carbonation was the only choice. Non-carbs took a back seat until the “New Age” explosion of the late 70s and beyond, which brought us a plethora of exciting new products. The Arizona/ Snapple/Mistic triad created a whole new category, devoid of bubbles. These were followed by the Vitaminwater genre that ensued. With the advent of the water explosion, now the dominant category, carbonation wasn’t the choice of marketers, retailers and distributors, save for the Perriers and San Pellegrinos of the world. The pendulum has swung back and forth so many times in the quest to sate the consumer. There was always a fascination with the bubbles, and many brands jumped back into the fray. First, there were versions of their standard brand, but over the past many years, they’ve taken equal billing with the non-carbs. Looking into the arena, one now sees so many bubbled products out there. Many equate healthy to these brands, as they rightly should. I’m happy that bubbles are back, stronger than ever. I’ve always associated happiness with them. They were an integral part of my childhood and into adulthood. Long live the fizz.

BEVNET.COM, INC. John F. (Jack) Craven CHAIRMAN jfcraven@bevnet.com

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Bevscape The latest news on the brands you sell

NEW GUY IN CHARGE Stone Hires CEO After a yearlong search, Stone Brewing Company has finally identified its next chief executive. The San Diego-based craft brewery named Dominic Engels, who most recently served as the president of POM Wonderful, as its next CEO. As promised, brewery co-founder Greg Koch will transition into a new role as “executive chairman.” Fellow Stone founder Steve Wagner will remain as president, the company said via a release.

“We interviewed a lot of talented people who were interested in this role,” Wagner said. “I was personally impressed with Dominic’s accomplishments and we connected right off the bat. He has a great skill set for the role and he is by far the best ‘cultural fit’ of anyone we talked to.” Engels held numerous positions at The Wonderful Company during the last 11 years, previously serving as the company’s managing director in Europe as well as the vice president of Wonderful Pistachios & Almonds in the U.S. Engels’ career also included stints with Spalding Sporting Goods and The Gap, according to his LinkedIn profile. “Dominic’s experience guiding companies through periods of growth, on a global scale, have us really excited about the future of Stone,” Koch added via the release.

8 OCTOBER 2016 BEVNET MAGAZINE

LEGAL

DEALTIME

DOJ Closes Bud Investigation

Litchﬁeld’s Genius Investment

The U.S. Department of Justice has officially closed its investigation into Anheuser-Busch InBev’s acquisition of Devils Backbone Brewing Company, according to a statement issued today by Deputy Assistant Attorney General Juan Arteaga. Citing conditions in a previously agreed upon settlement between A-B InBev and the DOJ — one that permits the world’s largest beer company to proceed with its acquisition of SABMiller — Arteaga said the “competitive implications of ABI’s acquisition of Devils Backbone are too uncertain at this time to warrant further investigation.” The decision also pointed to “distribution relief” agreements negotiated during the July MegaBrew settlement as proof that the DOJ is looking out for independent craft brewers, even as A-B InBev acquires smaller beer companies across the U.S. and abroad.

The Litchfield Fund, a family owned and operated investment fund, has added organic coconut smoothie brand Genius to its portfolio. Tom Malengo, chief business officer at The Litchfield Fund, said he was impressed by Genius’ recent brand revamp and gains in distribution and founder Alex Bayer’s vision for the company. Malengo declined to disclose the amount of the investment. “There are so many great ideas and great products but what it comes down to is execution,” said Malengo. “We figured out very quickly Alex knew what this business was, what he was doing with it, and where he was he going to go with it. We were really impressed.” Malengo added that he expects the company’s two new SKUs – coffee and vanilla protein – will help build the brand’s presence on shelves in the coming months. “Flavor distinction is very key on store shelves, especially since we [now] have more than one SKU,” Bayer said at the time. The investment follows a handful of notable happenings at the Torrance, California-based brand, most visibly a packaging revamp that saw it change its name from Genius Juice to simply Genius. Bayer indicated the switch came out of consumer confusion over having both “juice” and “smoothie” on its labels. There have also been changes to Genius’ production process, switching from high pressure processing (HPP) to traditional pasteurization in response to recent issues surrounding HPP’s ability to control bacterial spores in low acid products. The company recently experienced a spike in placements, securing national distribution with UNFI and KeHe and entering retailers including Whole Foods’ Rocky Mountain region, Natural Grocers, Central Market, Akin’s and Chamberlin’s, Royal Blue Grocery and all 36 Earth Fare grocery stores.

“The division will be carefully monitoring ABI’s compliance with its distribution obligations under this settlement,” Arteaga wrote, adding that the DOJ would also “carefully scrutinize any future craft acquisitions by ABI.” “The ABI/SABMiller settlement provides the division the opportunity to review certain of ABI’s future craft acquisitions – including acquisitions that may fall below the Hart-Scott-Rodino Act’s reporting thresholds,” he wrote. So what would an investigation into any future ABI craft acquisitions look like? “The division will consider whether these transactions, either singularly or collectively, are likely to harm competition by, among other things, giving ABI the ability to prevent its craft rivals from effectively getting their products to the market or the ability to increase high-end beer prices which, in turn, would enhance ABI’s ability to raise prices in the premium and subpremium beer segments,” Arteaga wrote. And if the DOJ ever found that A-B InBev was using its acquired craft breweries to unfairly stifle competition within the craft and high-end beer segments, it would “consider all its enforcement options — including re-opening its investigation of ABI’s acquisition of Devils Backbone – and all appropriate relief.”

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New Products The newest options for cooler and shelf

Juice R.W. Knudsen Family has launched five new vegetable juice blend and beverage varieties, including Organic Tomato Sriracha, Organic Tomato Red Bell Pepper, Organic Carrot and Organic Beet at natural and conventional retailers. The company also launched its Organic Carrot Ginger Turmeric juice at natural retailers nationwide. The juice blends contain no preservatives. All varieties are USDA certified organic and Non-GMO Project Verified. Packaged in 32 oz. glass bottles, the drinks retail for $3.49-7.49, depending on variety. For more information, please call R.W. Knudsen at (530) 899-5010. Old Orchard Brands has launched Organic 100% Juice. Made with organic and non-GMO ingredients, the new line comes in four flavor varieties, including Apple, Apple Cherry, Peach Mango and Wild Berry. The products contain no added sugar and no artificial flavors, colors or preservatives. The beverages are USDA certified organic and Non-GMO Project Verified. Each 64 oz. bottle provides eight, 8 oz. servings and has a suggested retail price of $3.49. For more information, please call Old Orchard at (616) 233-0500

Sports Drinks Gatorade has launched an organic line extension. The brand’s G Organic series is a line of USDA certified organic drinks formulated with seven ingredients: water, organic sugar, citric acid, organic natural flavor, sea salt, sodium citrate and potassium chloride. The line comes in three flavor varieties — Lemon, Mixed Berry and Strawberry — each containing 120 calories and 29 grams of sugar per 16.9 oz. bottle. They are available for sale at Kroger and Amazon.com and have a suggested retail price of $1.69 per bottle. For more information, please call PepsiCo at (914) 253-2000.

Water Green Sheep Water has launched a carbonated line extension. The new products are made with glacial aquifer-sourced water and packaged in Ball 10 OCTOBER 2016 BEVNET MAGAZINE

Corp.’s 16 oz. Alumi-tek bottles. The bottles are 100 percent recyclable. The products are available in coolers and the bottled water aisle at select retailers and retail for $1.99. For more information, please call Green Sheep at (305) 771-1357.

Functional Beverages Vita-Rite LLC has launched VBURST Vitamin shot, a liquid nutrition beverage. Packaged in 20 oz. bottles, the drinks come in two formulations and three flavor varieties: the antioxidant blends are available in orange lime and tropical mango flavors, and the fitness blend has a strawberry lemonade flavor. Each contains 16 vitamins and minerals. The antioxidant blend also contains grape seed extract, green tea extract, and panax ginseng. The fitness blend includes five amino acids: leucine, Isoleucine, valine, L-glutamine, and L-proline. The products are sweetened with monk fruit and have no sugar or calories. The beverages are available in over 120 retail locations across the Northeast. A 6-pack retails for $8.99 and a 12-pack sells for $17.99. For more information, please call Vita-Rite at (315) 212-6799. KeVita, a producer of fermented probiotic and kombucha beverages promoting digestive and immune health, has launched three new flavor varieties in its line of Cleansing Probiotic Apple Cider Vinegar Tonics: Meyer Lemon, Ginseng Mandarin, and Elderberry. Meyer Lemon is available nationwide. Ginseng Mandarin and Elderberry are available at Whole Foods Market stores in exclusive partnership with the retailer. All three products are handcrafted with apple cider vinegar, KeVita’s proprietary water kefir culture, 4 billion colony forming units of live probiotics, 100 percent of the recommended daily intake of Vitamin C, and 25 calories per 8 oz. serving. The beverages retail for $3.49 per 15.2 oz bottle. For more information, please call KeVita at (805) 200-2250.

Coconut Water COCO5, a brand of all-natural flavored coconut water beverages, has revamped its packaging. Originally developed for professional athletes, the drinks are now positioned as lifestyle beverages. The products are sold at grocery stores in the Midwest and have a suggested retail price of $1.99. For more information, please call COCO5 at (312) 243-1115.

Smoothies Genius has added a new coffee-flavored variety to its line of organic coconut-based smoothies. Made with coconut water and coconut meat, the drinks

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New Products contain coffee, cocoa and vanilla extract and are sweetened with stevia. Each 12 oz. bottle contains 230 calories and 16 grams of sugar. The drinks are available at Whole Foods locations in the retailer’s Southern Pacific, Midwest, Rocky Mountain and North Atlantic regions. The beverage retails for $6.79 per bottle. For more information, please call Genius Juice at (818) 263-6213.

Tea Runa, a line of organic and non-GMO teas and energy drinks, has launched a new product created in partnership with actress Olivia Wilde’s Conscious Commerce, a creative company and incubator whose mission is to integrate conscious consumerism into every market and retailer. The company helped create Runa’s new Unsweetened Mint Honeysuckle Tea, a product made with guayusa tea leaves from the Ecuadorian Amazon and real honeysuckle extract. A portion of the proceeds from sales of the tea will go toward The RUNA Foundation, a U.S.-based public charity with a mission to search for new ways to create value in tropical forests that benefits local communities and forest ecosystems. The beverage is available at retailers nationwide, including Whole Foods Market, Wegman’s and Safeway for a suggested retail price of $1.99 per 14 oz. bottle. For more information, please call Runa at (401) 466-4202.

Wine Ravenswood Winery has released the 2015 vintage of its Besieged label. The founding label of Ravenswood’s Storyteller Series, Besieged is a blend of Petite Sirah, Carignan and Zinfandel grapes with notes of blackberry, black cherry, and plum spiced with cardamom. Created in limited edition by the “Godfather of Zin” and founding Ravenswood winemaker, Joel Peterson, the wine arrives in time for Halloween and features a label designed in a nod to the winery’s first harvest, when a circling flock of ravens taunted Joel from overhead. The wine has a suggested retail price of $15.99 and will available in limited release through winter of 2017. For more information, please call Ravenswood Winery at (707) 933-2332. Sonoma-Cutrer has launched the fourth release in its Winemaker’s Release series, a collection of limited-production wines, The winery’s Owsley Vineyard Single Block Pinot Noir is produced using

12 OCTOBER 2016 BEVNET MAGAZINE

grapes from the Owsley Estate Vineyard, one of six owned by Sonoma-Cutrer. Fermentation involved a combination of three different methods: oak tank, stainless steel tank and new French oak barrels with the heads removed. Each was allowed to ferment separately for several weeks before being blended and aged in 16 months in the French barrels. The wine is available in select U.S. markets with a suggested retail price of $49.99 for a 750 mL bottle. For more information, please call Brown-Forman at (502) 585-1100.

Whiskey Jameson Irish Whiskey has released Jameson The Cooper’s Croze. A super-premium whiskey, the new expression is part of Jameson’s The Whiskey Makers Series, a range of three whiskeys, each highlighting a specific part of the whiskey making process. Using virgin American oak, seasoned bourbon and Iberian sherry barrels, the non-chill filtered whiskey carries the charred oak character with vanilla sweetness from the seasoned bourbon barrels with rich fruit flavors and a fine balance of floral and spice notes. The spirit is available at participating retailers for a suggested retail price of $69.99. For more information, please call Pernod Ricard USA at (212) 372-5400. St. Augustine Distillery has launched Florida Double Cask Bourbon, the first bourbon to be put into barrel in the state of Florida since Prohibition. The whiskey is a dark amber, malted bourbon distilled and bottled on-site using local ingredients to capture the distinctive flavors of the region. The spirits in this first bourbon release range from 16 to 28 months. The distillery’s production team utilized several industry veterans to assist in this release. Jake Norris, Founding Distiller of Stranahan’s Colorado Whiskey, developed the mash bill. Dave Pickerell, former Master Distiller of Maker’s Mark, designed the production facility and guided the final blending. The bourbon retails for $50 and is available at select retailers. For more information, please call St. Augustine Distillery at (904) 825-4962.

Rum Mount Gay Rum has released a new small-batch release of tasting rums. Origin Series: Volume Two, The Copper Stills Collection, is the latest addition to the brand’s limited-edition Origin Series. The pairing rums are identical in ingredients, fermentation and maturity, but differentiated by one thing -- distilla-

tion. One rum is 100 percent distilled in a copper pot still and the other is 100 percent distilled in a copper column still. Like Volume One of the Origin Series -- which featured Virgin Cask and Charred Cask varieties -- Volume Two will be presented in bespoke packaging as a 375 mL bottle pairing and comes with a detailed booklet that gives an overview of the creation of the two rums. The collection is available at premium liquor and spirits stores across the U.S. for a suggested retail price of $95. For more information, please call Mount Gay at (246) 428-8757. Havana Club Puerto Rican Rum introduced a new Añejo Clásico expression. The rum is made with bases that are mellowed in oak casks for one to three years before being chosen for selective filtration and blending. Upon blending, the rum is returned to oak casks for a second mellowing period of at least three months for additional smoothness. The result is a golden liquid with robust notes of sweet fruits akin to pineapple and apricot, complemented by oaky notes with hints of almond and vanilla, according to the distiller. The spirit is available nationally at select retail locations and has a suggested retail price of $21.99 for a 750 mL bottle. For more information, please call Bacardi Limited at (305) 573-8511.

Other Spirits Graton Distilling Company has released its second craft spirit: D. George Benham’s Vodka Vodka. The spirit is made with grapes, organic white wheat, rye and red cracked wheat that were individually distilled then blended. After distillation, the vodka was proofed down with artisanal well water and then gently filtered through neutral charcoal to amplify the smooth texture prior to bottling. The spirit is distributed in California and has a suggested retail price of $35. For more information, please call Purple Wine + Spirits at (707) 829-6100. Louisville-based Copper & Kings American Brandy Co. has launched a limited release apple brandy. The distillery’s 3 Marlenas Tequila Barrel Aged Apple Brandy is a non-chill filtered spirit unadulterated by any post distillation infusion of apple flavors or apple essences. It was matured for two years in tequila barrels. The 100 proof spirit is available at select liquor stores for a suggested retail price of $40 for a 375 mL bottle. For more information, please call Copper & Kings at (502) 561-0267.

BEVNET MAGAZINE OCTOBER 2016

Channel Check

SPOTLIGHT CATEGORY

Energy Drinks & Shots

What’s HOT & what’s NOT in stores now

SOURCE: IRI, a Chicago-based market research firm (@iriworldwide) 52 Weeks through 8/7/16

ENERGY DRINKS Brand

Dollar Sales

Change vs. year earlier

Red Bull

$2,949,067,776

Monster Energy

$1,532,950,016

7.00%

$708,153,408

8.40%

Monster Energy Zero Ultra

$494,121,376

18.83%

NOS

$412,799,488

3.24%

Java Monster

$403,331,488

17.67%

Monster Rehab

$315,066,560

1.61%

Monster Energy Lo Carb

$310,710,368

-1.94%

Red Bull The Summer Edition

$261,837,616

143.64% -1.06%

Red Bull Sugar Free

0.57%

Rockstar

$261,081,856

Monster Mega Energy

$249,849,648

1.78%

Red Bull The Blue Edition

$203,398,784

11.17%

AMP Energy

$152,250,272

7.43%

Monster Energy Absolute Zero

$140,514,720

-9.79%

Rockstar Pure Zero

$132,795,888

18.50%

Red Bull The Red Edition

$128,953,128

0.38%

Full Throttle

$128,738,832

-6.62%

Monster Energy Ultra Sunrise

$124,518,776

64.50%

Rockstar Punched

$122,086,880

13.79%

Rockstar Sugar Free

$115,884,592

1.89%

ENERGY SHOTS Brand

Dollar Sales

Change vs. year earlier

5 HOUR ENERGY

$1,053,699,328

0.19%

STACKER 2 XTRA

$16,878,182

-1.16%

TWEAKER

$15,519,628

32.77%

PRIVATE LABEL

$13,716,354

-7.59%

STACKER 2

$9,263,933

-8.86%

RHINO RUSH

$7,505,871

39.03%

STACKER 2 EXTREME

$7,473,044

51.13%

K CHILL

$7,439,560

N/A

STACKER 2 6 HOUR POWER

$4,990,140

-30.92%

$4,003,516

62.03%

STREET KING

$2,923,122

-70.12%

VITAL 4U SCREAMIN ENERGY

$2,920,750

1.96%

RIP IT ENERGY FUEL

$2,437,134

-3.27%

$2,347,710

-6.39%

VPX REDLINE XTREME

$1,702,231

-3.29%

ENERGY 2000

$1,613,774

-13.20%

NITRO 2 GO

$750,030

-14.22%

FUEL IN A BOTTLE

$725,483

-73.69%

VPX REDLINE POWER RUSH

$546,693

32.74%

It’s enough to make a grown Monster cry: Monster Energy, that is, which from this latest reading of IRI numbers is on the cusp of overtaking Red Bull for the lead in dollar sales of in the energy drink category, and that’s not even counting its new responsibility for Coke’s NOS and Full Throttle lines as well, which would put it far ahead of the Austrian independent. Of course, the whole category continues to soar, but Coke distribution may be what finally pulled Monster ahead. In the U.S., at least – there’s the rest of the world to consider, of course. Meanwhile, 5-Hour continues to be the category for energy shots.

TOPLINE CATEGORY VOLUME Beer

$34,053,564,765

4.0%

Bottled Juices

$7,139,604,480

2.07

Bottled Water

$14,498,398,208

8.71

Energy Drinks

$12,020,868,096

6.48

Tea/Coffee

$5,336,584,192

9.18

Drink Mixes

$865,110,720

(2.67)

SOURCE: IRI, a Chicago-based market research firm (@iriworldwide) 52 Weeks through 8/7/16

14 OCTOBER 2016 BEVNET MAGAZINE

ASEPTIC JUICES Brand

Dollar Sales

Vita Coco

SPORTS DRINKS Change vs. year earlier

Brand

Dollar Sales

Change vs. year earlier

$202,071,456

14.99%

Gatorade Perform

$3,279,811,840

Juicy Juice

$61,975,272

0.70%

Powerade ION4

$788,642,624

1.83%

Minute Maid

$49,786,924

-17.87%

Gatorade Frost

$636,247,872

43.36%

Apple & Eve

$44,638,508

38.21%

Gatorade

$365,913,664

5.54%

Capri Sun

$34,962,180

-1.41%

Gatorade Fierce

ONE

$26,413,694

8.78%

Gatorade G2 Perform

Zico

$22,829,540

25.96%

Powerade

$241,211,232

7.77%

Private Label

$19,441,054

50.32%

Powerade Zero ION4

$207,194,432

6.11%

Naked

$6,755,988

-15.13%

BODYARMOR

$75,535,904

141.20%

Motts

$6,719,482

11.52%

Gatorade G2

$53,248,932

4.93%

BOTTLED WATER Brand

Dollar Sales

-0.45%

$314,298,816

19.50%

$299,940,000

-6.30%

SPARKLING WATER Brand

Dollar Sales

Private Label

$2,378,302,464

Change vs. year earlier 9.89%

Private Label

$429,641,344

Change vs. year earlier

Dasani

$1,092,079,872

5.60%

Sparkling Ice

$367,088,992

7.98%

Aquafina

$1,052,927,872

6.20%

Perrier

$214,743,936

14.85%

Nestle Pure Life

$895,703,872

0.43%

La Croix

$198,520,656

62.08%

Glaceau Smart Water

$856,631,232

14.62%

San Pellegrino

$121,288,552

7.49%

Poland Spring

$676,300,800

9.40%

Polar

$106,812,880

22.90%

Glaceu Vitamin Water

$499,540,832

4.80%

Sparkling Ice Lemonade

$64,560,324

-11.25%

10.62%

Deer Park

$435,054,112

6.15%

Schweppes

$61,435,084

19.96%

Fiji

$361,380,192

25.91%

Topo Chico

$58,127,112

24.70%

Ozarka

$344,456,416

-3.34%

Canada Dry

$39,338,836

25.57%

COFFEE Brand

Dollar Sales

TEA Change vs. year earlier

Brand

Dollar Sales

Change vs. year earlier

Starbucks Frappuccino

$1,074,818,048

12.32%

AriZona

$666,636,800

-1.49%

Starbucks Doubleshot

$579,253,376

24.67%

Lipton Pure Leaf

$590,643,136

19.60%

Starbucks

$52,160,936

-26.81%

Lipton Brisk

$339,592,064

-2.06%

Starbucks Doubleshot Light

$21,203,090

60.69%

Lipton

Starbucks

$7,876,101

N/A

$318,256,192

1.43%

Gold Peak

$300,979,744

41.16%

Snapple

$226,236,000

5.26%

$195,300,128

4.40%

Starbucks Frappuccino Light

$7,431,618

-11.28%

High Brew

$7,283,675

270.28%

Illy Issimo

$5,743,810

-48.91%

AriZona Arnold Palmer

$193,175,680

-6.31%

Private Label

$5,486,163

-4.09%

Diet Snapple

$176,380,992

-2.38%

Gevalia

$4,723,524

141.6%

$57,223,016

29.53%

Lipton Diet

Honest Tea

CRAFT BEER Brand Samuel Adams

Dollar Sales

DOMESTIC BEER Change vs. year earlier

Brand

Dollar Sales

Change vs. year earlier

$342,540,433

-8.3%

Bud Light

$6,024,736,675

-0.5%

Blue Moon

$341,743,731

0.4%

Coors Light

$2,427,926,588

1.7%

Sierra Nevada

$262,821,886

4.1%

Budweiser

$2,104,824,431

-1.3%

New Belgium

$197,280,765

2.4%

Miller Lite

$2,055,566,652

Leinenkugel

$177,481,958

-2.2%

Michelob Ultra Light

$1,232,807,179

23.6%

Lagunitas

$152,922,779

28.5%

Natural Light

$1,031,058,350

-2.3%

Shock Top

$146,985,575

-10.5%

Busch Light

$859,104,194

0.2%

Shiner

$137,910,840

-0.3%

Busch

$614,057,166

-2.1%

2.6%

Deschutes

$76,885,170

16.1%

Miller High Life

$440,894,557

-3.0%

Goose Island

$68,482,670

44.1%

Keystone Light

$424,187,762

-4.7%

SOURCE: IRI, a Chicago-based market research firm (@iriworldwide) 52 Weeks through 8/7/16

BEVNET MAGAZINE OCTOBER 2016

Gerry’s Insights

The Geography of the Rebrand

By Gerry Khermouch

Like other New Yorkers, I take a mordant pleasure in observing realtors’ branding machinations in their efforts to make undesirable neighbors desirable. So I’m always amused to travel through the Hell’s Kitchen district west of Midtown, once an area of tenement slums feasted on by a notorious Irish gang called the Westies which used to decapitate rivals and shake down the Intrepid aircraft carrier. Lately it’s the locus of luxury development. But back before renters and buyers could be convinced that tenements in Hell’s Kitchen qualify as luxury housing (for classy amenities like windows and doors, I suppose), realtors rebranded the nabe Clinton and all vestiges of the Hell’s Kitchen moniker were expunged, so as not to conjure images of irreligion, filth and mayhem among newcomers who no longer seemed to work in saloons, slaughterhouses and stables. Now that the area has come back, guess what’s happening? Suddenly, the Hell’s Kitchen name is back in vogue, appealing for conveying a slight aura of raffish danger now that the chances that you’ll actually be mugged or decapitated have diminished. When I traverse the area now I pass joints with names like Nell’s Kitchen and Hell’s Chicken, unthinkable a decade ago. I can see newly minted New Yorkers proudly informing the folks back home that they now reside in Hell’s Kitchen. Best to have your wits about you when you head out for crepes, they’ll warn. Nobody refers to the area as Clinton any more. It’s such a helluva cool place now that even BevNet holds its New York conference there (right by the helpless Intrepid!). This is all interesting to me because we tend to think of brand names, much like our own names, as fixed and unalterable. Building brand awareness is viewed as akin to putting pennies in a piggybank, incrementally accumulating equity that it would be a crime to squander. Given the future investments involved – and past investments repudiated – such changes often seem to be driven by urgency, if not outright desperation.Yet maybe we shouldn’t take such an inflexible view of brands. Maybe there’s a case to be made that beverage marketers should more readily consider a change when the evidence suggests the name isn’t doing its job. In the past I’ve made the case that this might have been the case with the unfor16 OCTOBER 2016 BEVNET MAGAZINE

tunately named FRS, a quercetin-based energy drink whose three initials proved difficult to remember but whose antecedent – as an acronym for “free-radical scavenger” – was just as confusing for those who don’t frequent GNC and Vitamin Shoppe stores. Before investors had squandered over $100 million in an unavailing effort to build that brand they perhaps should have inaugurated a new name, as the current owner has said he’s considering in working on a relaunch. There can be any number of reasons for considering a rebrand. Sometimes the brand has simply been overthought, as the creators of the SodTerra line of sparkling teas concluded in changing the name to the simpler, more memorable Sound Tea. Ditto the Spanish-inflected Agua Enerviva, a generalmarket energizing water that’s now simply Agua. Sometimes it’s a question of a brand name sounding less medicinal and more versatile in the span of entries it can support, as happened with a brand switch from FluroWater to WaNu or the move by Reliant Recovery Water to downplay the “Reliant” name in favor of a greater emphasis on the functional explicator “recovery.” Sometimes, of course, the name change is anything but optional, as is happening now with the regional kombucha brand Barefoot Bucha, under pressure from Barefoot Wine marketer Gallo. Looking to get something out of the regrettable situation, the boochers have gotten their fans involved in the search for a new name via a crowd-sourcing campaign. Often, a brand that seemed perfectly satisfactory falls victim to changing consumer sentiment. There likely was some urgency behind the move by brisk-selling Bellywashers kids drinks to the new brand platform Good2Grow, but it must have seemed clear that moms, if not quite ready to abandon buying sugar water for their kids, certainly don’t want to advertise that notion with a name like Bellywashers. Admittedly, the change was hedged by the fact that the key part of the brand’s appeal among the kids themselves is the character heads that sit atop each bottle, but the move still must have caused some sleepless nights for brand owner Jim Scott. And “desperate” may not be overstating the situation at SodaStream, which marshaled a Super Bowl-size spend behind its home soda makers only to realize that

consumers – especially the affluent ones it’s seeking – are fleeing CSDs in droves. Now it has moved aggressively to reposition itself as a home sparkling water maker. It’s too early to declare a rebound, but there are signs that the move has bought the company a second chance in North America. I wouldn’t be surprised, once a turnaround is confirmed, if the company moves to completely scrap SodaStream as its corporate and brand name (and with it SODA as its NASDAQ trading symbol). SODA brass has acknowledged it’s considering the move. Are there any examples of rebranding efforts that paid out big-time? The one that comes immediately to my mind is SoBe. Recall that the brand started as the art-deco-inflected South Beach Beverage, playing on a Miami Beach identity, but struggled until it segued to the vaguely Asian sounding SoBe and adopted such zen iconography as twin lizards in a yin-yang configuration. Not long after, PepsiCo paid $385 million for the brand. Hard to argue the move didn’t pay off! Of course, as I’ve written before about branding, gauging what will work is largely a guessing game, so you need to stay flexible. To go back to the real estate game, who would have thought that Dumbo (“down under the Manhattan Bridge overpass”) or NoLIta (“north of Little Italy”) would stick? No less a branding expert than Snapple turnaround ace Mike Weinstein has wondered to me whether his suburban New York town, Larchmont, situated just north of an affluent area called The Manors, might not benefit from the acronym NoManors.Yet an effort last year to rebrand the South Bronx as the Piano District drew a torrent of derision and even the enclave where I live, in the low 100s on the Upper West Side, was the object of a failed rebranding effort, back when nobody supposedly wanted to live above 96 Street. So we were briefly dubbed with the Soho-esque moniker SoCo (“south of Columbia University”) before the area’s own momentum sent prices soaring into the stratospheric realm and the phrase never was heard again. Which goes to show, I guess, that a compelling-enough concept sometimes can succeed in spite of its brand. Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.

Under Pressure, Here's What Big CPGs Will Do By Michael Burgmaier The hurt is accelerating for big CPG. Every single one of the largest eight food and beverage companies had U.S. sales declines in Q1 2016 vs. 2015. This is the “Who’s Who”: Nestle. PepsiCo. Unilever. AB Inbev. Coca-Cola. Tyson. Mondelez. Danone. Together, the sales of this group in this short time period — just one quarter — declined a whopping six percent, or $5.5 billion. To put this in perspective, in all of 2015, the top five largest CPGs lost $13 billion in sales. Which was already pretty darn bad. But it looks even worse because all this decline is happening while spending on food and beverage is increasing. In 2015, the U.S. consumer packaged goods (CPG) industry grew over three percent from $648 billion to $670 billion – the strongest growth rate registered in four years. The winners here were the little guys. Almost half of that $22 billion went to small ($100 million to $1 billion in IRImeasured sales) and mid-size companies ($1 billion to $5 billion). For the large players, the pain is real. The numbers show that consumers are willing to pay and are spending but their money is flowing away from the CPG giants. The largest reason, perhaps, is the crossing of consumer distrust of big food and their associated legacy brands with the long-term and accelerating movement towards healthier, “cleaner” foods. Inevitably, that leads consumers to brands created by and driven through smaller, more nimble companies. We know the stock market rewards growth and punishes declines — even 20 OCTOBER 2016 BEVNET MAGAZINE

declining growth rates — so for the big guys, doing nothing is not an option. But they see these long-term trends, and are acting. While innovating, incubating and reformulating from within embody a set of tactics that are available internally for the big strategics, like Kraft announcing the removal of artificial colors from their signature Mac n’ Cheese, let’s focus instead on the big-ticket, highly-visible moves that have accelerated dramatically over the past few years: Large companies acquiring smaller ones and also investing in relatively early-stage, fast-growth companies.

very, very s…l…o…w…l…y… Entrepreneurs know that innovation requires action and taking risks. Standing still kills. But the risks with innovation are real. The fact is that the vast majority of new brands fail. One stat consistently cited by a large strategic is that less than 95 percent of brands ever reach $10 million in retail sales. They all don’t die, but most do. Also, many of today’s successful brands and products look nothing now like they did when they began. Plum Organics, for example, markets a leading baby food primarily sold in shelf-stable pouches. It started out as

Select Strategic Investments Target

Investor

Date Closed

Transaction Amount ($MM)

Acre Venture Partners (Campbells)*

Jun-16

$10

LA Aloe

Coca-Cola*

Jun-16

Kite Hill

301 Inc. (General Mills)*

May-16

Back To The Roots

Body Armor

Dr Pepper Snapple Group

Apr-16

BAI Brands

Dr Pepper Snapple Group

Apr-16

Tio Foods

301 Inc. (General Mills)*

Mar-16

1.25

Good Culture

301 Inc. (General Mills)*

Mar-16

2.1 NA

Numi

J.M. Smucker

Jan-16

301 Inc. (General Mills)*

Jan-16

Metcalfe's Skinny

Diamond Foods

Jan-16

Yasso

Scotsburn Dairy

Oct-15

8.1

Hain Celestial*

Oct-15

27.2

Coca-Cola*

Aug-15

150

Body Armor

Dr Pepper Snapple Group

Aug-15

Daily Greens

WhiteWave

Jan-15

Rhythm Superfoods

Chopt Creative Salad Suja

*Plus additional investors • Source:Capital IQ

It’s perhaps the most important thing the large companies are doing, for many reasons. Larger companies tend to move

a tray of frozen food ice cube-like blocks. This was a great brand in a product format extremely difficult to scale.

But small brands need the system too. If large companies did not acquire small ones, investment capital would not easily flow to smaller, emerging brands, and innovation would stall. Simply put, the big boys buying the small ones matters. The purist from Boulder may not like that “their” brand “sold out”, but if “their brands” never could or had plans to sell, how would they have been able to raise money from investors expecting a return commensurate with the risk? So, for all of us who love and crave the innovation, these acquisitions are a very good thing. The chart below lists some recent, high-profile acquisitions.

nies in which they have invested; some do not; and some won’t say (investing with a path to acquire is commonly referred to as a “two-step” deal). Beyond format, the questions are obvious: 1. Why are the large CPGs doing this? 2. As an entrepreneur, should I look to these CPGs as investors for my company? The first answer is easy: The large CPGs are doing this because they need to reverse the hurt. The second is more complicated: In general, we at Whipstitch Capital are advocates for smaller companies working with and talking to large strategics. But

Select Strategic Acquisitions Target Pure Organic Justin’s Renew Life Oatmega BarkThins

Acquirer

Date Closed

Kashi

Jun-16

Enterprise Value ($MM) $18

Hormel

May-16

286

Clorox

May-16

290

Amplify Snacks

May-16

Hershey

Apr-16

300*

General Mills

Jan-16

100*

ThinkThin

Glanbia

Nov-15

217

Snikiddy

Utz

Nov-15

Epic Provisions

Boulder Brands

Pinnacle

Nov-15

975

Stumptown

Peet’s Coffee

Oct-15

Quorn

832

Monde Nissin

Sep-15

Wallaby Yogurt

WhiteWave

Aug-15

125

Sunrise Growers

SunOpta

Jul-15

450

WhiteWave

Jun-15

550 775

Vega Applegate

Hormel

May-15

Blake’s All Natural

ConAgra

May-15

Krave

Hershey

Jan-15

250* *Market Estimate • Source:Capital IQ

Another accelerating trend is large CPGs investing in smaller companies. This, too seems to be happening more than ever before, in many different ways. Some large CPGs have created visible (branded) investment arms (like Kellogg’s 1894 Ventures, General Mills’ 301 Inc., and Coca-Cola’s Venturing and Emerging Brands group). Others have created funds run by people outside of the CPG space, like Mars’ Digitalis Ventures and Campbell’s Acre Venture Partners. Some invest but don’t have a branded fund or group name (J.M. Smucker, for example) while others invest and just don’t announce anything (that’s the beauty of the NDA) and then others invest as limited partners in a traditional venture capital fund. The complications grow, as well: some invest with an option or right to acquire the compa-

as visible from the complexity above, the types of deals can be extremely diverse in nature and very complicated. We always suggest you get good advisors in place, ask hard questions and think through (and then protect your company) as much as possible with every negative (and positive) scenario. It’s simple advice, but not easy to implement. Still, if you are an emerging, fast-growth CPG brand interested in eventually selling to a larger company, think about what is happening in the CPG world today, what brands are being acquired or invested in and why, and ponder your next strategic move. Perhaps you will be in one of these charts next year! Michael Burgmaier is a Co-Founder and Managing Director with Whipstitch Capital, a specialized investment bank that provides mergers & acquisitions and private placement advisory services to consumer products companies.

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www.morretec.com BEVNET MAGAZINE OCTOBER 2016

INTERNATIONAL ROUNDUP Heineken USA Establishes Five Points Trading Company In an effort to focus on the development of Heineken’s emerging international brands, and their integration within the U.S. market, Heineken USA this month announced the creation of Five Points Trading Company. The new venture, aimed at “incubating a range of popular global beers in the U.S.,” will assume importer responsibilities for the Red Stripe, Tiger, Birra Moretti, Affligem, Murphy’s, Prestige, Sagres and Mort Subite brands. In a statement sent to BevNET, a Heineken spokesperson said the new trading company would prioritize sales of the Red Stripe, Tiger and Birra Moretti brands in the U.S., while Heineken USA continued to focus on driving the growth of its core Heineken, Dos Equis, Tecate and Strongbow business. Import contracts for the smaller brands were set to expire at the end of this year, Heineken said, prompting the creation of Five Points Trading Company and the decision to acquire the distribution rights from a variety of U.S. importing companies. Total Beverage Solutions had been importing Affligem and Birra Moretti products, while United States Beverage had been importing the Tiger and Murphy’s brands. Saraiva Enterprises imported the Sagres brand to a handful of markets throughout the U.S.

22 OCTOBER 2016 BEVNET MAGAZINE

Red Stripe, meanwhile, had been majority owned by Diageo until last year, when Heineken acquired a 57.9 percent stake in that brand’s parent company, Desnoes & Geddes. Prior to the transaction, Heineken already owned 15.5 percent of D&G, which trades on the Jamaica Stock Exchange as “Red Stripe Jamaica,” and Diageo paid City Brewing in Wisconsin to contract produce the popular Jamaican product for U.S. markets. Five Points Trading Company will operate as a separate division out of Heineken USA’s headquarters in White Plains, NY, a spokesperson said. Importer transitions will be effective on January 1, 2017, Heineken said. “Five Points Trading Company will provide a nexus for new thoughts, perspectives and cultural exploration, while tapping into the legacy and import expertise of Heineken USA,” Heineken GM Charles Littlefield said via a press release.

Craft Imports: BrewDog USA Raises $1 Million $1 million down, $49 million to go. In just three days, Scottish craft beer maker BrewDog raised $1 million from more than 1,200 investors to help fund its new, $50 million U.S. craft brewery operation in Columbus, Ohio. The Equity for Punks campaign gave non-accredited U.S. investors an opportu-

by chris furnari nity to purchase shares of the company’s U.S. business at $47.50 each; BrewDog is requiring investors to purchase a minimum of two shares. “This unprecedented response to our first crowdfunding round in the States shows the demand for our beer in America, and sets us up with a community of likeminded individuals ready and waiting to help us make our U.S. business an explosive success,” the company wrote on its website. This isn’t the first time BrewDog has turned to crowdfunding to help fuel its growth: Over the last five years, the company has raised more than $33 million from 46,000 investors via four equity crowdfunding rounds to finance its European brewing and expansion initiatives. In the U.S., BrewDog is taking advantage of new JOBS Act regulations that enable small businesses to offer equity stakes to non-accredited investors. BrewDog’s Ohio facility is slated to open in late 2016, the company said.

High End Goes Abroad Anheuser-Busch InBev has purchased the 225-year-old Belgium-based Brouwerij Bosteels. American financial news and services website TheStreet.com, citing Belgian press reports, pegged the deal at $225 million. Bosteels, which is famous for its Tripel Karmeliet, Kwak and Deus brands, will

join ABI’s “growing portfolio of European craft and specialties beer,” according to a company statement. That portfolio, part of the company’s ZX Ventures division, already includes popular craft brands like Italy’s Birra Del Borgo, Camden Town from London, Cervejaria Colorado in Columbia, Cervejaria Wäls in Brazil and Cerveza Bocanegra in Mexico, among others. The focus, according to Korneel Warlop, an A-B InBev spokesman, will be to grow Bosteels’ presence in European export markets while also continuing to export small volume to the U.S. “With Bosteels already available in European markets such as France, the Netherlands and Italy, we will work together to continue offering its products at the pace of their brewery capacity while ensuring the highest quality of the beers,” Warlop wrote to Brewbound.

pany. A-B InBev is based in Belgium but the ZX Ventures division operates out of a New York office.

Dutch Brewer Bavaria to Acquire Belgium’s Palm Brewery

Dutch beer maker Bavaria N.V. in June announced it had acquired a 60 percent majority stake in Palm Belgian Craft Brewers and planned to fully absorb the company by 2021. “We are proud of this cooperation and the merging of two wonderful familyowned companies that each have a centuries-old history,” Jan-Renier Swinkels, who heads the board of Bavaria N.V., said in a press release. Swinkels, whose family has owned the nearly 300-year old brewery for seven generations, described the acquisition as a strategic move to make Bavaria “the ultimate portfolio player” – incorporating Palm brewery’s brands and givBrand Dollar Sales Change vs. year earlier ing them broader Corona Extra $1,650,277,432 12.2% international Modelo Especial $1,122,073,970 26.2% distribution. Heineken $741,694,595 1.3% “This is an Dos Equis XX Lager Especial $338,278,249 7.4% important mileStella Artois Lager $307,176,505 19.3% stone for us,” Corona Light $274,473,816 10.1% Palm brewery Tecate $145,247,652 -3.9% owner Jan Toye Pacifico $85,672,318 12.1% added. “In order Modelo Especial Chelada $79,986,293 40.3% to maximise our Labatt Blue $77,443,029 1.6% international distribution Tecate Light $74,043,306 36.0% power, we went Labatt Blue Light $70,283,136 2.6% in search of a Guinness Draught $66,247,324 2.1% strategic partner, Becks $63,288,572 -0.8% and Bavaria Heineken Premium Light Lager $54,436,831 -8.5% immediately felt Fosters Lager $54,277,727 -0.4% like a perfect fit.” Negra Modelo $51,383,775 9.5% Founded in Newcastle Brown Ale $47,341,546 -19.4% 1686, Palm has Guinness Extra Stout $42,639,738 2.2% an annual brewDos Equis XX Ambar Lager $32,642,450 -4.4% ing capacity of nearly 1 milSOURCE: IRI, a Chicago-based market research firm (@iriworldwide) lion hectolitres 52 Weeks through 8/7/16 (about 850,000 barrels) and produces a wide variety of brands including Backed by investments from Dutch Palm, Rodenbach, Brugge, Steenbrugge, private equity firm Waterland, Bosteels Cornet, Arthur’s Legacy and Estaminet. Brewery grew production to more than Bavaria – which already has a distribu145,000 hectoliters last year. tion network spanning 120 countries – proIn a press statement, brewery chief jected the two companies would together Antoine Bosteels said he was happy for produce more than 6.5 million hectolitres the opportunity to transfer ownership of the brands to another Belgian beer com- (about 5.5 million barrels) of beer in 2016.

BEVNET MAGAZINE OCTOBER 2016

WHAT’S IN FAVOR WITH FLAVOR? The Experts Weigh In. By Ray Latif

Premiumization has changed the beverage industry. Beverage companies are going to great lengths to meet consumer expectations for products that are an improvement upon past offerings. The trend is best exemplified by brands attempting to one-up each other – and their own past efforts – with better-for-you, functional and clean-label drinks. The push toward healthier beverages has also intensified innovation on the flavor front. Companies are consistently looking for new and interesting ways to entice consumer palates, particularly within fastgrowing and emerging beverage categories. Meanwhile, the industry as a whole is trying to keep up with millennial consumers, whose thirst for unconventional and exotic flavors is seemingly unquenchable – and highly influential among older age groups. How are beverage companies and their supplier partners keeping up? We asked executives from five leading flavor suppliers for their views on the changing landscape for non-alcoholic beverages, including where demand is most prominent and how they source inspiration for new flavors.

What’s your take on the landscape for flavor trends in the non-alcoholic beverage industry and how it has and will continue to evolve? Donald Wilkes, President & CEO, Blue Pacific Flavors:

We are seeing a new apothecary beverage trend of elixirs and tonics with bitter to sour taste profiles, all less sweet than traditional CSD or RTD beverages. The flavor trends are driven by interest in authentic, adventurous and experiential new flavors. There is a movement from sweet to bitter and traditional or exotic fruit and citrus like yuzu, Cuties mandarin or Meyer lemon combined with botanical essences like organic elderflower and dandelion, to single origin root and warming spice extracts like Sumatran clove, Vietnamese cinnamon and Ceylon ginger.

Sheila Harte, Director of Beverages, Bell Flavors & Fragrances:

Consumers are more educated than ever before through sources like social media and cooking channels. They are able to easily learn more about different cultures and cuisines from around the world. This exposure leads to consumers that are more willing to try new things than ever before. India, for example, offers bold and exotic flavors like cumin, curry, rose water, and cardamom. Consumers

are not afraid to try that mango lassi with cardamom. Another popular Indian flavor, tamarind, works well with cola. 24 OCTOBER 2016 BEVNET MAGAZINE

Catherine M. Armstrong, Vice President – Corporate Communications, Comax Flavors

Simon O’Brien, Marketing Manager, ADM/WILD Flavors & Specialty Ingredients

We see the landscape for flavor trends continue to expand with cultural influences. We are seeing flavors from Brazil, Cuba as well as Asia becoming increasingly popular. We are also continuing to see heat/spice flavors pop up. Sriracha is now

There are two overarching flavor trends we’re following closely today: better-for-you beverages and the art of craft. Better-for-you [encompasses] consumers’ increasing demand for natural health and wellness food and beverages including plant-based ingredients, our love for more and more protein, nearly anything organic, and clean label. One aspect of the art of craft that we’re particu-

an everyday kitchen staple. There is also still a strong demand for seasonal flavors.

larly interested in is the continued push towards premium flavors and taste experiences in regional and local nonalcoholic beverages.

David Ames, Owner, Sovereign Flavors

The flavor trend that we have seen the past 12 months and it looks to continue for the next 12-24 months is the theme of keeping beverages with clean, simple labels. The key drivers are the upcoming (U.S. Food & Drug Administration) labeling requirements, Vermont’s non-GMO initiative and the consumer push for simple, clean labels. We have gone from energy-type beverages with more than a dozen vitamins, minerals and botanicals a few years ago to simple carbonated flavored essence waters. Flavored essence waters are very easy for the consumer to understand. We have seen the traditional citrus flavors that have dominated this category move to a combination of two or more flavors that are being used.

Is there a theme that links flavor with innovation in non-alcoholic beverages? Wilkes: With a rising demand for organic beverages, innovation will be tied to the avail-

ability in the supply chain of raw materials for flavors that meet USDA criteria. This is becoming an important point of differentiation. Harte: The well-trav-

eled kitchen encompasses a kitchen influenced by the world. Due to the improved relations with Cuba, beverages with Cuban

influence are of interest. India has inspired many beverages with unique spices. Global street food is food and beverages found in regions across the world being offered at food carts/trucks. Consumers are bringing these authentic flavors from city streets into their kitchens from regions like Marrakech, Mexico City, and Montreal. Armstrong: Many enhanced beverages require innovative masking and mouthfeel type flavors in order to improve their taste.

O’Brien: One of the other

aspects of the art of craft that we’re closely following is the growing movement towards more purposeful and holistic eating and drinking experiences. This theme is driving significant innovation, and our own consumerbased research reveals that people are paying closer attention to product color, flavor, taste, mouthfeel, body, texture, linger –- and the whole experience they’re having with the food and beverage choices they’re making. Ames: Most popular flavors originate from the success of other products on the market. For instance, right now, we are doing a lot development with grapefruit in non-alcoholic applications. The driver of grapefruit as a top flavor in non-alcoholic beverages is due to the success of grapefruit in the alcohol category.

We see a lot of new, non-traditional flavors that find success in the alcohol, confection, dairy industries that will transfer well into the non-alcoholic beverage category.

Among non-alcoholic beverage categories, where is the greatest demand for new and innovative flavors?

What are some of the challenges or opportunities in working with fastgrowing beverage categories, including:

Wilkes: We see the greatest demand for new innovative flavors in the area of plant-based beverages, fermented beverages, high-protein drinks, coffees, teas and sparkling waters.

Wilkes: One of the challenges with cold-brew is its lack of aroma and complex structure of traditional coffee which tends to be preferred by older coffee drinkers. The cold-brew process doesn’t extract the oil phase of coffee, which dramatically affects the finished beverage aroma. Cold-brew extraction tends to minimize acid, which makes it smooth to drink but also challenging to identify because acid is a key taste differentiator in coffee bean origins. With the growth of cold-brew coffees, we see a mashup of traditional vanilla or mocha with Hispanic influenced chili spices.

Harte: New and innovative flavors are in demand in a variety of beverage categories: hand-crafted sodas, flavored waters, tea, coffee, juices, drinkable yogurts, probiotic/digestive beverages, and shakes and smoothies. Spicy and sweet combinations are popular in shakes and smoothies. Savory flavors are emerging in meal replacement juices and drinkable yogurts for people onthe-go. We are seeing sodas being infused with vegetables like beets and fruit flavors. Armstrong: In terms of innovative flavors, I think the greatest demand is in the health and wellness category. Consumers are searching for more healthy options but it still needs to taste good. O’Brien: The plant-

based space, especially plant-based proteins, is exploding as well as enhanced waters and other functional performance beverages.

COLD-BREW COFFEE

PROTEIN-INFUSED BEVERAGES Armstrong: We are working a lot with plant proteins. The challenge is most certainly the offnote tastes and mouthfeel for protein-infused beverages as well as dairy alternatives. This category provides a huge opportunity for us with masking and enhancement technologies. O’Brien: There are a

wide variety of protein options – from dairybased to plant-based – and each has benefits

and downsides. The challenge is to find the right protein formulation for each product and then find the right balance of flavor enhancement to create an end product customers will enjoy. Wilkes: The biggest challenge for beverage developers when flavoring protein-infused drinks is understanding how that flavor will be impacted after the thermal processing and over the shelf-life of the beverage. Typically, we have found that certain proteins are resistant

BEVNET MAGAZINE OCTOBER 2016

WHAT’S IN FAVOR WITH FLAVOR?

to absorbing key flavor components, which will impact the overall flavor perception and consumer acceptability over the course of the beverage’s shelf life.

lenges. With no sugar added or any natural or artificial sweeteners, the flavors typically lack key components to “bloom” authentically such as sugars and fruit

SPARKLING WATER Armstrong: The sparkling water category gives us the opportunity to showcase new exotic flavors including both herbals and floral flavors.

O’Brien: Kombucha’s unique flavor and format can be a challenge for flavor application, so for best results we recommend working directly on the base beverage so that you get a properly balanced finished product.

DAIRY ALTERNATIVE BEVERAGES

Wilkes: One of the challenges with flavoring traditional kombucha is the nature of the acidity when compared to flavoring traditional beverages that use citric acid or other fruit acids. The unique acetic acid or vinegar acid profile from the kombucha fermentation process makes it challenging to balance flavor, particularly if it needs to be USDA certified organic.

26 OCTOBER 2016 BEVNET MAGAZINE

O’Brien: We have a well-

defined and established global and regional trends program. We also rely on a wide range of disciplines and look across a broad array of different food, beverage and non-food categories alike to help developers cut through the clutter of niches, fads and micro trends to find the big bet trends that will help sustain their brands for the long term. Harte: There are a lot of

Today, we need to look no further than our own cities to get inspiration for new flavors because of our multicultural communities and the growth of a creative network of chefs, food technologists, food scientists, consumer bloggers, food truck devotees and foodies.

O’Brien: Limiting sugar and calories can be a challenge here to avoid

Wilkes: Creating recognizable and dimensional fruit flavors without the use of added sugar creates a myriad of chal-

Wilkes: I have been fortunate to travel extensively over the past 35 years and much of my personal inspiration comes from experiencing unique cultural culinary treks or tasting exotic fruits, spices and seasonings from Sumatra to Sri Lanka.

acids. Without these, the typical acid profile is from carbonic acid, which has a drying effect on the tongue and lacks the functionality to create a true-to-fruit flavor profile. KOMBUCHA

creating a product that is too close to a traditional carbonated beverage in nutritional value.

Where do you look for and find inspiration for new flavor profiles?

O’Brien: The goal is to

have the cleanest tasting base possible, so depending on the alternative used, there can be off-notes that need to be addressed through selecting flavors that don’t amplify or highlight the off notes and by utilizing proprietary taste modification technologies

places to look to find inspiration for new flavor profile. Look worldwide at trends. For example, what are the popular beverages in Japan right now?

Armstrong: Anywhere and everywhere! We always look to the conventional methods of data research, industry reports and such, but we love to explore and experience! From a food truck to a trendy bar or travel our team Ames: Our inspiration

IMAGE VIA: www.mscheezious.com

is constantly looking for flavor inspiration.

for new flavor profiles comes from our customers who are living in the specific beverage space. We also bring to the table trends we see in other food categories that may be applicable in certain beverages.

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O L ESM O KY.C O M H O W L AT U S @ O L ESMO K Y

WHEN HYDRATION ISN’T ENOUGH The Rise of Functional and Enhanced Waters By Neil Martinez-Belkin U.S. sales of bottled water will surpass those of carbonated soft drinks for the first time this year, with much of the former category’s booming business coming at the expense of the latter’s. Within the greater growth of bottled water on the whole has been the rise of the fastgrowing functional bottled water category, a segment that global market research company Euromonitor recently predicted to “grow very fast, with an expected $3 billion absolute growth between 2015 and 2020.” It’s a space where brands have been pretty innovative of late in offering consumers more than H2O hydration, ranging from caffeine to antioxidants to probiotics to protein and more. Here’s a look at three subcategories gaining traction in the functional and enhanced waters segment.

28 OCTOBER 2016 BEVNET MAGAZINE

The continually growing consumer demand for probiotic food and beverage products has recently pushed Ganeden the leading probiotic ingredient manufacturer - and its patented Ganeden BC30 probiotic strain into the functional waters space. A category that was virtually non-existent a year ago, several probiotic waters have since emerged from established beverage brands like Suja Juice, Karma Culture, Rawpothecary and Uncle Matt’s Organics. Uncle Matt’s, a Floridabased organic juice company made its initial move into probiotics in 2015 with the launch of two orange juice blends infused with Ganeden BC30. A year later, the company doubled down on its presence in probiotics, this time with a three-SKU line of high pressure processed, citrus peelinfused organic waters. “We’re going to go where the consumer is telling us to go

and lower calorie, lower sugar beverages is what’s trending in the grab and go section,” said Uncle Matt’s founder and CEO Matt McLean. C.J. Rapp, the co-founder of Karma Culture, utilized his company’s patented KarmaCap to manufacture a first-tomarket shelf-stable probiotic beverage that dispenses the Ganeden BC30 probiotic into flavored water. Rapp says the line extension has been advancing at a significantly faster pace than its flagship vitamin-infused waters, already available at 9,500 retail locations nationwide. “The timing of the launch comes at a point where the category is evolving and exploding and retailers are looking for high-quality probiotic products,” said Rapp. “There are many instances where a shelf stable probiotic is a real benefit to the consumer and it opens up new forms of distribution and merchandising at retailers.”

Consumers’ comfortability with caffeine and their pursuit of its functionality without sugar, calories and the artificial ingredient list of traditional energy drinks is driving the growth of the caffeinated water space. Euromonitor senior beverages analyst Virginia Lee identified caffeine as “a white space opportunity in the small but rapidly growing functional bottled water category” in her report on the category earlier this year. Lee added that the space “may have a chance to take some share from sports drinks and low-calorie cola carbonates, as well as to attract older energy drink consumers.” Avitae, which first launched in 2008 as a healthier alternative to coffee, sports drinks and energy drinks, has been banking on just that. While the brand may have been a bit ahead of its time when it launched with two unflavored caffeinated water SKUs, it appears to have gotten a second wind since a company overhaul in 2013. The addi-

tion of flavored varieties and a SKU amped up to 125 mg of caffeine has significantly accelerated the brand’s national distribution footprint. “The market is now ready for this, awareness is growing, and the brand has been picking up speed organically,” says Avitae CEO Norm Snyder. This past spring the brand introduced Sparkling Avitae in a play looking to tap into people’s affinity for bubbles amidst big declines in sales of diet soda. Hint, a decade old still and sparkling essence water brand, also sees opportunity in the segment. A year ago the brand introduced ‘Hint Kick’, a three-SKU line of enhanced waters infused with 60 mg of caffeine from coffee bean extract. What began as an experimental launch of sorts with Hint’s corporate customers, which include the offices of Google, Yahoo, Twitter and Facebook, “bypassed all expectations” according to Hint CEO Kara Goldin. The line has since begun rolling out into the brand’s other retailers.

For Blossom Water, the brand’s recent authorization at more than 1,000 Kroger-owned stores – twice its existing distribution footprint – serves as further validation for the floralinfused essence water space. It’s also eliciting the company’s first institutional capital raise, which Blossom Water president and co-founder Steve Fortuna says the company is embarking on in the fall. “The category has proved itself,” says Fortuna. “We’re beyond the question of whether floral essence waters appeal to the consumer. The answer is they do, so now it’s time to knock down more distribution points.” Blossom Water isn’t alone. H2rose, a rose water-infused beverage made with saffron and other natural ingredients, secured a national distribution partnership with KeHE Distributors a month prior to Blossom Water’s announced deal with Kroger.

The validation of the space comes two years after segment pioneer Balance Water, a non-flavored spring water infused with eleven different Australian botanicals, was first approved at more than 1,500 Kroger-owned stores, including Ralphs, Fred Meyer, Dillons, King Soopers and Fry’s. “We love that these other brands are coming onto the market because it gives more credibility and establishment to this category,” says Balance water co-founder Martin Chalk. While antioxidants – among other reported benefits are certainly at the core of flower essences and flower extracts – the botanical beverage brands have been cautious in claiming functional benefits of the product, instead leaning on consumers’ emotional connection to flowers – and the flavor and fragrance attributes of floralinfused beverages.

BEVNET MAGAZINE OCTOBER 2016

Brand News

Functional & Enhanced Water

Phenoh has introduced a refreshed package and a three-flavor line of functional, plantbased alkaline hydration beverages: Active Mixed Berry, Invigorating Green Melon, and Energizing Tropical Fruit. PHenOH 7.4’s alkaline hydration system is infused with premium essential electrolytes and organic plant-based nutrients. Protein2o launched a product refresh this

spring that included a transition to 100 percent whey protein isolate, a new package design and the addition of a fifth flavor, Tropical Coconut. The brand has reported a 250 percent increase in sales volume since the transition. In May the brand gained distribution in Rite Aid stores nationwide. Victoria’s Kitchen is continuing the expan-

sion of its new 50-calorie line in 12 oz. slim cans. Earlier this year the brand launched its new format in New York, as well as in its current top markets. Hint has launched a brand extension called Hint Kick, a three-SKU line containing 60 mg of caffeine from coffee bean extract per bottle. Available in Apple Pear, Black Raspberry and Lemon Cayenne flavors, Hint’s new offerings are available in the brand’s traditional 16.9 oz. bottle. AquaNew’s Watt-Ahh is 100 percent pure

water in a stable crystalline-like structure containing a reservoir of electrons. The polarized water enhances flavor and functional efficacy of any ingredient added. The WIT Technology used to make Watt-Ahh was showcased by Informa’s Global Health and Nutrition Network as one of top five innovations that exhibited at the 2016 Ingredient Marketplace held in Orlando, Florida. DRINKmaple has officially launched its newest product, DRINKmelon Organic Watermelon Water – now available in stores in the Northeast. Produced in Vermont, DRINKmelon is a single-ingredient, plant-based functional beverage and the only 100 percent organic, shelf-stable watermelon water available in major grocery stores today. The launch coincides with widespread distribution gains of the brand’s original beverage and namesake, DRINKmaple Organic Maple Water, which has added several retailers nationwide.

30 OCTOBER 2016 BEVNET MAGAZINE

Blossom Water, a brand of floral-infused essence waters, has secured new retail authorizations at 1,075 grocery stores under the Kroger banner. The brand’s entry into Kroger-owned stores will span 35 states across the country in Kroger’s Pacific, Rocky Mountain, Southwest, Southeast and Midwest regions. To support the growth, the company says it will embark on its first institutional capital raise this fall. VROU Water has added a Coconut Pineapple flavor to its five-SKU line of naturally flavored micronutrient waters, joining Watermelon Basil, Lemon Ginger, Cucumber Lime, and Orange Guava. Widely available at Whole Foods Market, VROU Water is consumed by the likes of many New York Rangers, popular musicians, fitness enthusiasts and other celebrities. CORE. In an effort to help support the increased demand and popularity of CORE Hydration, the brand is launching two new packs in early Q1. For when a 30 oz. bottle just isn’t enough, CORE is releasing a new 1.3 L pack and for ease of pantry loading, CORE will be releasing a 6-pack of 500 mL CORE Hydration bottles. AQUAhydrate continues to help consumers get more from their water with the launch of an innovative 1 Gallon package focusing on the grocery, specialty, and convenience channels. The Gallon jug has quickly become one of the fastest-growing premium high pH packages. good2grow. Launched with select retailers

in 2015, good2grow Juicy Waters line has two enhanced waters with real organic fruit juice. Both flavors are generating sales dollars that put them in the top 11 SKUs within the juice category in convenience stores. As part of the national rollout, the company is targeting placement in the water cooler door to fuel even more growth for retailers. Generosity Water is the only mineral

enhanced alkaline water on the market with a pH balance of 10.0. For each bottle sold, two people in developing communities receive clean drinking water for a month through a give back model that consists of financial support to the building of sustainable wells within these communities. With

this model, as well as a vast distribution network that will soon include Sysco, Seacoast Distributing and UNFI, the company continues to saturate Southern California while expanding its popularity and reach. Agua Fruit Essence is expanding distribu-

tion with Dora’s Naturals in Metro NY, NJ, CT as well as continuing expansion in the Northwest. Sheetz, a key c-store distribution channel for the brand, continues in its momentum with plans for additional expansion in 2017. Agua Fruit Essence is The NEW Beverage providing “Hydration for the water-bored” with powerful electrolytes and zero calories available in six thirst quenching flavors. Britewater, a lightly caffeinated electrolyte

enhanced water, has secured placement in over 200 Vons and Pavilions locations in Southern California. This new addition puts britewater in over 320 Albertsons, Vons and Pavilions locations throughout Southern California. The brand can now be found in over 350 locations throughout the state and also on Amazon.com, which plans to expand into Arizona, Nevada and New Mexico by 2017.

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Sovereign Flavors Inc 4020 W. Chandler Ave. Santa Ana, CA 92704 T: 714.437.1996 F: 714.437.1998

Karma Probiotics continues to expand na-

tionwide as it moves into Kroger, Fred Meyer, Ralph’s, Fry’s Food & Drug, Rite Aid and Meijer stores. The shelf-stable beverage is available in three varieties - Berry Cherry, Apple-Cinnamon and Blueberry-Lemonade - and two billion probiotic cultures are kept in the patented KarmaCap until activation. To complement the probiotics, each bottle of Karma contains vitamins A, E, and B Complex (B3, B5, B6 and B12). Essentia ionized alkaline water continues to grow, adding a new single serve 12 oz. bottle to its lineup. The new package will be sold in twelve packs. The brand continues to build on its leadership position in the alkaline water segment, reporting Year-To-Date IRI growth of 108 percent. Hoist is now selling in 30 states nationally, in

over 10,000 grocery and convenience stores. The brand’s balanced formula of water, sugar and electrolytes is formulated to provide “rapid hydration” to the consumer. For more information, please go to www.drinkhoist.com BEVNET MAGAZINE OCTOBER 2016

Promo Parade

XYIENCE Energy Drink Launches New College Football Integrated Marketing Campaign Featuring ESPN College Football’s Samantha Ponder

Promotions, events & specials for the industry

Buffalo Trace Distillery Welcomes Millionth Visitor

Buffalo Trace Distillery welcomed its one millionth cumulative visitor last month. The distillery has been keeping track of visitation since it first opened for tours in 1999, and recently began actively counting down the visitors in anticipation of reaching the milestone. Some careful calculations led the team to narrow down which week they would likely host the one millionth visitor, and with some planning, the team was able to organize a festive day for everyone. On Aug. 31, the unsuspecting visitor, from Lexington, was greeted by Buffalo Trace team members who gathered in the Visitor Center to welcome the lucky person with cheers, a balloon drop and a special prize pack The celebration continued throughout the day with cupcakes and surprises for visitors, commemorative T-shirts for employees, and more. Visitation at Buffalo Trace has grown leaps and bounds ever since first opening for tours 17 years ago. Regularly welcoming visitors from all 50 states as well as more than 25 other countries, the Distillery has more than doubled its annual visitation over the last five years. In the last year alone, visitation at Buffalo Trace Distillery increased by more than 23 percent. With this milestone reached, and with prospects for visitation not slowing anytime soon, Buffalo Trace will count onward to its two millionth visitor.

32 OCTOBER 2016 BEVNET MAGAZINE

To kick off the 2016 college football season, XYIENCE, a zero-calorie energy beverage, announced the launch of a new integrated marketing campaign featuring ESPN College Football’s Samantha Ponder, who is a contributor to “College GameDay,” “College Football Live” and “ABC Saturday Night Football.” Ponder will serve as XYIENCE’s brand spokesperson for the second consecutive year. XYIENCE’s college football marketing campaign consists of these components: • New TV commercials starring Ponder entitled “Pond Pondering with Sam Ponder” debuted in September during ESPN’s “College GameDay” and on the ABC primetime telecast of Notre Dame at Texas. They will air throughout the season.

• A social media contest inviting fans to submit their own “Pond Pondering” video script. Winners will have their “ponderings” voiced over by Ponder and the content will be used for new XYIENCE videos. • An online sweepstakes that will award a trip for the winner and a guest to the college bowl game of his or her choice in the continental United States including airfare, hotel and tickets to the game. • An in-store point-of-sale (POS) program including static clings, standees and shippers featuring Ponder and national sweepstakes promotional messaging. • Experiential marketing and sampling activations at some of the nation’s largest college football tailgating destinations.

Rafa Márquez, in Partnership with Nestlé Nesquik, Inspires Kids’ Dreams On The Soccer Field Rafa Márquez, captain of the Mexico National Team, partnered with Nestlé Nesquik for a day of soccer play on a professional field in Guadalajara, Mexico to help local children realize their biggest soccer dreams. While creating a video to encourage kids to be the all-star of each game, Rafa inspired one child to fulfill his epic dream of becoming a goalie.

The Nesquik soccer campaign is about nourishing possibilities and educating parents on the nutritional benefits of low fat chocolate milk after an intense game or practice. Studies suggest that low fat chocolate milk has the ideal 3:1 ratio of carbohydrates to protein, making Nesquik a smart post-game beverage to restore tired muscles.

Sipping On Gin & Juice - Tanqueray Unveils New Content Partnership With Entertainment Icon Snoop Dogg Tanqueray Gin has launched a new strategic partnership with entertainment icon Snoop Dogg. The partnership brings to life the brand’s focus on a Gin & Juice cocktail strategy celebrating the success of Snoop Dogg’s 1993 classic hit ‘Gin & Juice.’ Avid Tanqueray fan Snoop Dogg has been brought on to creatively oversee the Tanqueray Gin & Juice campaign. Through this partnership, Snoop will be developing Tanqueray signature cocktail recipes, incorporating Tanqueray into his show experiences, collaborating for various Tanqueray events throughout the year, and releasing exclusive content and art projects inspired by the global legacy of the ‘Gin & Juice’ song. Snoop Dogg’s signature serve, The Tanqueray No. TEN ‘Laid Back,’ puts an elevated spin on the traditional ‘Gin & Juice’ serve, Tanqueray is utilizing fresh pressed juices to compliment the refreshing, whole citrus flavor profile of Tanqueray No. TEN GIN creating a sophisticated cocktail option.

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Promo Parade

Sean “Diddy” Combs and the Makers of CÎROC Ultra Premium Vodka Embody the Spirit of the Hustle with “Let’s Get It” Sean “Diddy” Combs and the makers of the CÎROC Ultra Premium Vodka have unveiled new brand creative and launched a motivational campaign: ‘Let’s Get It’. The campaign, inspired by Combs and features DJ Khaled and French Montana, sparks a movement to empower and encourage entrepreneurs and creators to pursue their passions and realize their dreams. The campaign is a collaboration between Combs, CÎROC and emerging influencers committed to inspiring the next generation to ‘Get It’. The vibrant creative centers on the iconic “circumflex,” which symbolizes upward mobility, aspiration and the brand’s French heritage. The new CÎROC movement kicked off with the world premiere of ‘Let’s Get It,’ a two-minute short film starring Combs on Billboard.com. The film, narrated by Combs and directed by Emmy Award

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winner Zach Heinzerling, tells the inspiring story of Combs’ business success, highlighting the grit and glam of his journey. The film features DJ Khaled and French Montana, and celebrates the determination and passion of rising stars and talented entrepreneurs including: “Moguls In the Making” CFDA / Vogue Fashion Fund Nominated Designer Chris Stamp, Accessories Designers and DJs Coco and Breezy, Jewelry Designer and Beauty Entrepreneur Kristen Crawley, and New York Harlem Dance Legend Nikko. The film also introduces the CÎROC family of influencers, a group of movers and shakers hand-selected by Combs that includes: DJ Austin Millz, Model Eugena Washington, Musician and Philanthropist Tennille Amor, Celebrity Stylist Ty Hunter, Fashion and Entertainment Entrepreneur Lance Fresh, Lifestyle Expert

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2 Oct. 15, 2016

5. Number of Issues Published Annually

Kenny Burns, Actress Mikaela Hoover, Style Host Brittany Hampton, and Sports Statistician Justin Zormelo. Sean “Diddy” Combs previewed his commitment to the ‘Let’s Get It’ ethos when he presented at the 2016 MTV Video Music Awards on Sunday night. He reminded the audience to hustle hard, dream big and remember that everything is possible. The brand released a follow-up spot to ‘Let’s Get It’ that spotlights DJ Khaled and his major keys to success for future moguls in the making. In addition, CÎROC announced that it is partnering with COMPLEX Media to create a new video channel dedicated to the ‘Let’s Get It’ movement. “COMPLEX Hustle” will mentor, inspire and advise the creative class of millennial strivers. More information about this project will be released soon.

October 2016 Date

9/15/2016 I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fines and imprisonment) and/or civil sanctions (including civil penalties).

In-County Nonrequested Copies Stated on PS Form 3541 (include sample copies, requests over 3 years old, requests induced by a premium, bulk sales and requests including association requests, names obtained from business directories, lists, and other sources) Nonrequested Copies Distributed Through the USPS by Other Classes of Mail (e.g., First-Class Mail, nonrequestor copies mailed in excess of 10% limit mailed at Standard Mail ® or Package Services rates) Nonrequested Copies Distributed Outside the Mail (Include pickup stands, trade shows, showrooms, and other sources)

Total Nonrequested Distribution [Sum of 15d (1), (2), (3) and (4)]

Total Distribution (Sum of 15c and e)

Copies not Distributed (See Instructions to Publishers #4, (page #3))

Total (Sum of 15f and g)

Percent Paid and/or Requested Circulation (15c divided by 15f times 100)

9936

8531

278

240

9914

8771

99.35%

100%

* If you are claiming electronic copies, go to line 16 on page 3. If you are not claiming electronic copies, skip to line 17 on page 3.

12. Tax Status (For completion by nonprofit organizations authorized to mail at nonprofit rates) (Check one) The purpose, function, and nonprofit status of this organization and the exempt status for federal income tax purposes:

x Has Not Changed During Preceding 12 Months

Has Changed During Preceding 12 Months (Publisher must submit explanation of change with this statement.) PS Form 3526-R, July 2014 [Page 1 of 4 (See instructions page 4)] PSN: 7530-09-000-8855

PRIVACY NOTICE: See our privacy policy on www.usps.com.

34 OCTOBER 2016 BEVNET MAGAZINE

PS Form 3526-R, July 2014 (Page 2 of 4)

PS Form 3526-R, July 2014 (Page 3 of 4)

PRIVACY NOTICE: See our privacy policy on www.usps.com.

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