Beverage Spectrum April 2007

APRIL 2007

FORGET GLOBAL:

Think Local!

ALSO THIS ISSUE: KIDS BEVERAGES CSDs YOU NEED FMI PREVIEW RTD COFFEE: THERE’S A MONSTER ABOUT TO STRIKE!

Channel Check

april 2007

SPOTLIGHT CATEGORY

Carbonated Soft Drinks 52 Weeks ending 3/24/2007 Line extension alert! Look at how Diet Coke with Lime and Diet Cherry Coke are dropping… maybe, just maybe, they’ve gotten the picture, particularly with actual marketing driving some growth for Coke Zero. Meanwhile, it looks like the great Fresca relaunch is finally losing steam – after moving up to sales of 100 million cases last year, sales last month were off nearly 9 percent. Need a growing brand?

How about Canada Dry Ginger Ale, which was way up last year.

Probably because the stock market was making everyone queasy.

CSDs

Dollar Sales

Change vs. year earlier

Coca-Cola Classic

$1,906,707,569

-2.4%

Pepsi

$1,533,758,606

-3.5%

Diet Coke

$1,199,717,984

-0.1%

Diet Pepsi

$800,998,162

-0.7%

Mountain Dew

$743,454,313

2.1%

Dr Pepper

$594,324,208

-0.3%

Sprite

$574,932,561

-4.2%

Caffeine Free Diet Coke

$345,288,212

-6.6%

Dr. Pepper

$277,268,715

1.9%

Diet Mountain Dew

$254,810,235

10.8%

Caffeine Free Diet Pepsi

$225,027,607

-5.2%

7-Up

$221,855,099

10.1%

Sunkist

$185,306,282

12.5%

Sierra Mist

$185,742,570

5.6%

Coca-Cola Zero

$140,613,865

40.3%

Sprite Zero

$149,351,554

1.1%

Canada Dry

$163,427,113

6.7%

Diet 7-Up

$107,183,390

1.1%

A&W

$92,040,176

8.5%

$100,158,576

7.0%

Fresca

52 Weeks through 3/24/07 SOURCE: AC Nielsen/Citigroup Total U.S. food/drug/mass

TOPLINE CATEGORY

VOLUME

52 Weeks ending 3/25/2007

CSD’s

ENERGY DRINKS

$13,277,600,000 -0.9%

$679,015,400 39.6%

BOTTLED WATER

SPORTS DRINKS

$4,724,931,000 14.5%

$1,533,035,000 9.8%

BEER

TEA/COFFEE

$8,955,334,656 2.9%

$1,254,807,000 27.7

BOTTLED JUICES $3,612,043,000 4.6%

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BEVERAGE SPECTRUM // APRIL

2007

SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

RTD COFFE/CAPPUCINO

Frappuccino

Dollar Sales

$178,510,600

Change vs. year earlier

RTD TEA

Dollar Sales

Change vs. year earlier

9.3%

AriZona

$271,077,900

17.5%

Lipton

$192,953,100

172.1%

Snapple

$118,683,100

20.3%

Doubleshot

$27,141,450

3.9%

Starbucks

$10,544,480

N/A

Bolthouse

$10,468,100

6,563.9%

Lipton Brisk

$84,002,950

7.6%

Diet Snapple

$83,806,540

-3.9%

Nestea

$57,961,280

287.3%

Lipton Iced Tea

$56,963,440

33.8%

Private Label

$31,118,270

9.9%

SoBe

$13,783,870

-9.5%

Nestea Cool

$9,304,213

-82.1%

Doubleshot Light

$9,155,667

10,032.6%

Godiva Belgian Blends

$5,164,594

N/A

Wolfgang Puck

$536,982

-90.9%

Caffe D Vita

$353,279

72.9%

Havana

$286,870

-26.9%

Hillside

$273,200

156.5%

52 Weeks through 3/25/07 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Heading Up: Nestea

ENERGY DRINKS

Dollar Sales

SPORTS DRINKS

Red Bull

$286,138,800

20.0%

Gatorade

$681,317,800

-0.3%

Monster

$101,095,200

83.3%

Powerade

$203,172,900

9.9%

Rockstar

$79,440,740

58.5%

Gatorade Frost

$141,192,800

2.6%

Full Throttle

$46,465,360

64.3%

Gatorade Rain

$129,502,700

614.2%

SoBe No Fear

$35,874,790

54.3%

Gatorade All Stars

$113,096,000

21.8%

Gatorade X-Factor

$91,538,850

-6.7%

Heading Up: Doubleshot Light

Change vs. year earlier

52 Weeks through 3/25/07 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Dollar Sales

Change vs. year earlier

Amp

$24,121,430

15.7%

SoBe Adrenaline Rush

$17,782,300

-17.0%

Gatorade Fierce

$83,249,350

-20.3%

Tab

$15,447,160

812.1%

Powerade Option

$16,083,410

91.2%

Monster XXL

$7,175,925

336.8%

Gatorade Xtremo

$15,645,760

-29.7%

Private Label

$5,562,469

353.9%

Gatorade Ice

$12,112,300

-28.7%

4 Weeks through 3/25/07 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Heading Up: Powerade Option

DOMESTIC BEER

IMPORT BEER

Heading Up: Tab Energy

Dollar Sales

Change vs. year earlier

52 Weeks through 3/25/07 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Dollar Sales

Change vs. year earlier

Bud Light

$1,384,677,376

3.9%

Corona

$483,963,552

5.4%

Budweiser

$752,655,680

-5.4%

Heineken

$299,681,984

6.6%

Miller Lite

$714,206,912

-0.1%

Corona Light

$124,431,008

11.6%

Tecate

$84,746,752

5.7%

Heineken Light

$62,500,268

2,555.0%

Modelo Especial

$54,410,948

24.1%

$48,850,360

-3.7%

Coors Light

$619,028,480

3.3%

Miller Genuine Draft

$169,151,696

-7.3%

Budweiser Select

$120,838,352

-14.8%

Coors

$61,154,308

-9.9%

Labatt Blue

Icehouse

$58,168,564

-1.0%

Becks

$48,677,868

6.9%

Yuengling Lager

$36,013,272

15.7%

Newcastle Brown

$48,469,940

18.7%

Bud Ice

$23,940,302

-3.15%

Guinness Draught

$48,171,512

8.8%

52 Weeks through 3/25/07 Heading Up:Yuengling Lager SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Heading Up: Heineken Light

52 Weeks through 3/25/07 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

APRIL

2007

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13

STILL THE LEADER RTD Coffee is still dominated

by Starbucks.

But there’s a Monster about to strike.

By Jeffrey Klineman

C

coffee market – home and on-the-go – reaching more than $19 billion last year, more entries are bound to come. Waiting in the wings might be some version of Coke’s much-feared Georgia Coffee, a top-ranked brand in Japan. But with the departure of former Coca-Cola Japan/innovation guru Mary Minnick, that possibility seems less likely indeed.

The North American Coffee juggernaut is still using Pepsi’s powerful distribution system to push the category’s most recognizable brand name into stores, and unless retailers are chasing variety, this may be one area where a lack of choice isn’t necessarily a bad thing. But watch out for that Monster – a second brand that captures two important demographics can’t be all bad.

44.6%

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23.5%

20

21.8%

13.9%

10

12.1%

3.9%

3.5%

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2.2%

1.8%

1.6%

CO

-3.4%

-3.6%

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2007

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Source: AC Nielsen - All Outlets Combined C, G, D, Mx (excl. WM) - 13 Weeks Ending 8/26/06 (G, D, Mx excl WM) - 13 Weeks Ending 9/9/06 (Convenience All Cats excl Energy)

AK

SH

BEVERAGE SPECTRUM // APRIL

40

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38

One company that’s trying to go in big is Hansen’s. This month, they are tucking a Frappuccino-like coffee drink under the fastgrowing Monster energy label, and releasing three flavors into their instantly-recognizable 16 oz. claw-marked can.

Hansen’s Java Monster is an attempt to fuse the energizing characteristics of coffee and energy drinks and harness it to the brand’s overall momentum and brand cachet.

“Look at the knockoffs,” says Geoff Bremmer, Monster’s Brand Manager. “They’re all in their frou-frou glass containers, trying to look like Starbucks. We aren’t Starbucks, we are Monster, and that’s what this is all about.”

50 Meanwhile, with demand for coffee flavors growing and the entire

EN

an’t anyone around here figure this out already? With its longtime counterpart, tea, taking off in RTD format, CSDs in decline and super-caffeination on the rise via energy drinks, why haven’t ready-to-drink iced coffees become a regular staple of the coffeelover’s shopping list?

Sure, the product is up 20 percent, but that's off an incredibly small, not-quite $250 million base, according to year-end data from Information Resources, Inc. It is still a small fraction of the market for tea and energy drinks.

At this point, however, anyone can see it’s a battle for second place, as the North American Coffee Partnership of PepsiCo and Starbucks owns the category; between Frappuccino, its creamy, milkshake-like coffee drink, and Doubleshot, a powerful, potent blend of espresso and cream, the partnership owns nearly 90 percent of the category. With thousands of new Starbucks stores scheduled to come online in the near future, the product is strongly associated with the fast-growing trade-up symbol.

But with such a small base, it’s an open market, and people are starting to jump in: witness the fact that Coke is competing with itself to establish coffee credibility, as its second-largest bottler, Coke Consolidated, is now distributing Cinnabon ready-to-drink coffee in 41 states, while Coke itself is looking to get a boost this summer from a product line co-branded with Starbucks competitor Caribou.

Froid – Ready-to-drink coffee and chai product Froid has spread rapidly from its premier West Coast market to a growing organic market in the East. With distributors like Haddon House, Nature’s Best, Tree of Life and UNFI, Froid is now carried in a number of stores across the nation, including ACME, Wegman’s, HGB, Hannford, Food Emporium, and Harris Teeter.

placed in more than 800 stores, including Zeytinia Gourmet Markets, Amish Fine Foods, 7Eleven, Key Foods, and others.

Coca-Cola Co. – Coca-Cola North America (CCNA) and Caribou Coffee plan to launch a new line of premium ready-to-drink iced coffees in the U.S. this summer. Caribou Coffee is the second-largest specialty coffee company in the United States with 423 coffeehouses in 17 states and the District of Columbia. The ready-to-drink iced coffee launch with CocaCola North America is the third brand licensing arrangement for Caribou Coffee. Earlier this year, the company partnered with General Mills

New York Coffee Company – The makers of Iced ‘Spresso will debut a 50-calorie version of their ultra-light latte in a bottle before this summer, according to company founder Keith Chamish. The company currently has six distributors in the Tri-State region and has been

40

BEVERAGE SPECTRUM // APRIL

2007

to launch a line of Caribou Coffee snack bars and with Kemps for a Caribou Coffee premium ice cream. Additionally, Coke introduced Godiva Belgian Blends, with three flavors, Dark Chocolate Mocha, Milk Chocolate Mocha and French Vanilla Latte, last summer.

Frappio – Frappio calls itself a new “hybrid or fusion” beverage developed to offer benefits to the consumer along with great taste. It combines a Tibetan herb called Ashwangandha and caffeine to help consumers handle stress and reduce hunger. The beverage is being sold through DSD distributors who utilize Frappio’s sales staff to launch the beverage in their geographic locations. Retailers are offered free product along with their initial purchase. Channel strips are utilized with the tag line: “Frappio gets you through the day.”

Skyler Haley – Achievone is a high-protein coffee beverage. It contains 20 grams of protein, 19 essential vitamins and minerals, and is high in calcium. Made with premium Columbian coffee and available in four flavors, Achievone has been very successful in the Health and Fitness, Diabetics and Bariatric groups.

TSR Imports, LLC – TSR Imports product BibiCaffè, a bottled sparkling espresso drink with hints of vanilla and caramel, recently gained additional distribution in Southern California.

BibiCaffè is now available through Real Soda in Real Bottles, based in Torrance, CA. Imported from Italy, BibiCaffè features all natural ingredients, no preservatives, no artificial colors and no high fructose corn syrup. It is pasteurized and naturally caffeinated. BibiCaffè is packaged in a 6 oz. glass bottle with a red label. BibiCaffè is distributed through most of the western states, and the company is currently looking for additional distribution partners in the Midwest, Northeast, and East Coast to increase availability.

PepsiCo – Last year, PepsiCo and Starbucks (the North American Coffee Partnership) introAPRIL

2007

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888-33-SHOCK OM SHOCKCOFFEE.C

duced Starbucks Iced Coffee, a line of readyto-drink coffee drinks featuring Starbucks Italian Roast coffee with just a hint of milk and sweetness in a slim 11 oz. can. Available in both regular and light versions, the product is currently available in Starbucks retail stores and in convenience and grocery stores nationwide. In addition, the North American Coffee Partnership also introduced two line extensions within its bottled Starbucks Frappuccino and Starbucks DoubleShot brands, Starbucks Strawberries and Crème Frappuccino crème drink and Starbucks DoubleShot Light espresso drink.

Adina – Adina World Beat Beverages has just debuted a new line of all-organic, premium fairtrade ingredient, single-sourced RTD coffees.

The line is scheduled to hit the shelves by early June. All of Adina’s coffee and cacao suppliers maintain certification of fair trade and fair wage practices. Additionally, Adina will be partnering with Organic Valley Farms Cooperative to be its milk supplier. Organic Valley Farms has been a leader in shared ownership and fair price polices with domestic farmers in the US. With only 110 calories per 8.5 oz. bottle – far less than most competitors -- the four Adina Organics introductory flavors are Sumatran Iced Vanilla Latte, Mayan Iced Mocha, Ethiopian Iced Espresso and Indian Iced Chai Latte.

Hansen’s – Monster maker Hansen’s is rolling out Java Monster in April. Java Monster invites RTD Coffee consumers into the energy drink category by offering familiar coffee flavors with added energy drink functionality, while inviting energy drink consumers into the RTD Coffee category by combining the aggressive attitude and functionality of Monster with RTD Coffee.

The product will come in 16 oz. cans in three varieties: Loca Moca, Mean Bean, and Big Black.

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BEVERAGE SPECTRUM // APRIL

2007

Shock Coffee — Shock Coffee a hyper-caffeinated coffee with more than 50 percent more caffeine than other gourmet coffees, is now available in select 7-Eleven stores in Northern California and Northern Nevada. In addition to being available online, local consumers can now purchase Shock Coffee’s Hyper-Caffeinated RTD Triple Lattes and Mochas at these 7Eleven outlets.