Beverage Spectrum July-Aug 2008

J U LY – A U G U S T 2 0 0 8

BIG CHANGE COMES TO

BIG TEA ALSO THIS ISSUE: FMI REVIEW BRANDS IN TRANSITION

2008 WATER GUIDE ENCLOSED

THE LABEL SAYS LIGHT. THE FLAVOR SAYS BECK’S.

• Beck’s Premier Light is the #5 Import Light Brand in supermarket sales for 2007.* • 2007 sales of Imported Light beers are up more than 10% over 2006, the category continues to grow and reached over 15% in 2007.* • Beck’s Premier Light is the lowest calorie import beer in the U.S.* • Please look for our East vs. West program which features a cross merchandising offer for sushi and Beck’s Premier Light. *IRI InfoScan Total U.S. Food - Full Year 2007 data ending 12.30.07 Always Enjoy Responsibly. ©2008 Import Brand Alliance, Importers of Beck’s® Beer, St. Louis, MO

JULY – AUGUST 2008

vol.

6 :: no. 5

24

20

Cover Story

24 :: BIG CHANGES FOR BIG TEA

Departments

8 :: BEVSCAPE

How the category leaders are ad-

Pepsi enters the Stevia battle. Jolt

justing to the new age.

heads north 14 :: CHANNEL CHECK No movement at the top for tea

Features

20 :: BRANDS IN TRANSITION

16 :: NEW PRODUCTS

Bossa Nova: Tales from the

Full Throttle broadens the set

squeezing edge.

32 :: PROMOTION PARADE 30 :: FMI IN REVIEW

Tony Hawk hawking

Fun photos from FMI.

Columns

4 :: THE FIRST DROP Open Season on the Wallet 6 :: PUBLISHER’S TOAST Barry on Bud 22 :: GERRY’S INSIGHTS A Distributor Reality Show

Beverage Spectrum is published monthly with combined issues in January/February, May/June, July/ August and November/December by Beverage Spectrum Publishing, Inc., a wholly owned subsidiary of BevNET.com, Inc. One Mifflin Place, 3rd Floor, Cambridge, MA 02138. Periodicals postage paid at Boston, MA and additional mailing offices.

Cover image courtesy of

POSTMASTER: Please send address changes to Beverage Spectrum Magazine, Subscriber Services, One

The Coca Cola Company

Mifflin Place 3rd Floor, Cambridge, MA 02138-9917.

JULY – AUGUST 08 :: BEVERAGE SPECTRUM

3

THE FIRST DROP

WON’T YOU PLEASE HELP BY READING THIS COLUMN? t’s been a pretty expensive summertime, or as I am starting to call it, the July/August Thona-Thon. The requests are rolling in for various friends’ and acquaintances who are walking, biking, running, knitting, selling or just plain asking for money for causes. I’m both a big believer in do-gooder actions and an obvious sucker, and as such, my bank account is reeling.

So far this season I’ve done my part to cure cancer, muscular dystrophy, hunger, homelessness, global warming, and elect a new president.

And as I write this, it’s still early. My wife is making noises about a half-marathon, with yet another sponsorship from yours truly.

As this Thon-a-Thon creeps on, however, I’ve become reminded of the importance of one of the great pleasures of summertime: the opportunity to enjoy drinks in their most welcome state, as the pleasant counterpunch to a sweaty activity on a hot day. And I know that for all the Thon-ers out there, finding the right drink – either mid- or post-race – can sometimes be as important as finding the right pair of shoes.

So it’s particularly relevant for this issue to focus on one of the great summer beverages, iced tea and the next one, which will discuss the new wave of sports drinks. It’s interesting because

4

tea is one of the oldest of summer drinks – it was commonly served iced almost as soon as there was ice to be had – while sports drinks, with high-tech ingredients like electrolytes – are among the newest.

For retailers, it’s particularly relevant as well because as the CSD side of the business slows down, RTD teas and sports drinks are becoming even more important to the beverage aisle. Along with water, they have been the fastest growing, most consistently innovated product sets. Teas have the advantage of offering the taste and lift that soft drinks have had in the past, as well as a kind of historical grounding and an association with food that leaves them a versatile alternative to higher-calorie products, while sports drinks fit in with the ever-important functional side of the industry.

Thus it’s no surprise that the major beverage companies are investing heavily in both categories, and that they want you to devote a lot of space to their products, and it’s also no surprise that there is a lot of innovation taking place.

What we’ve done this issue is look at how the big, dominant tea companies are trying to change their major brands to fit the times, particularly in the face of a new crop of nimble young whole-

BEVERAGE SPECTRUM :: JULY – AUGUST 08

leaf competitors. Next issue, we’ll be looking at how a bunch of new sports drinks are changing the game for the old guard, and how big brands like Gatorade and PowerADE are changing to fit in to changing consumer expectations.

To do both of these stories, we set new assistant editor Matt Casey on something of an extended series of assignments. We think you’ll find the stories he came up with highly informative and useful, but, well, it’s been hard on the poor guy. If you’d like to contribute to a vacation fund we’ve set up for him – the Matt Casey Report-A-Thon Relief Fund – please contact us as soon as possible. Our operators are standing by.

Otherwise, enjoy the issue.

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PUBLISHER’S TOAST

IT’S THE STEWARDSHIP THAT COUNTS NOW

PUBLISHER Barry J. Nathanson bnathanson@bevnet.com EDITOR Jeffrey Klineman jklineman@bevnet.com ASSOCIATE PUBLISHER John McKenna jmckenna@bevnet.com ART DIRECTOR Matthew Kennedy mkennedy@bevnet.com GRAPHIC DESIGNER Amadeu Tolentino atolentino@bevnet.com ASSISTANT EDITOR Matt Casey mcasey@bevnet.com PRODUCTION MANAGER Adam Stern astern@bevnet.com SUBSCRIPTION INQUIRIES Adam Stern astern@bevnet.com 617-715-9679

or the past few weeks, I have been inundated with calls about InBev’s purchase of Anheuser-Busch.

You can imagine the comments I’ve heard.

There’s the patriotic: “ It’s anti-American!”

There’s the spiritual: “Is there nothing that is sacred anymore?”

There’s the wonkish: “Why didn’t the government step in to prevent this from happening?”

There’s the xenophobic: “These foreign interlopers have no understanding of the American consumer and will lead the brands into decline!”

So what really happened? An astute European marketer saw, with the dollar in sharp decline, that there was an opportunity to acquire one of the gems in all of packaged goods. The price was so reasonable that they would have been crazy not to pursue A-B. These details of the finances frankly bore me. They made a smart investment. Isn’t that what our system has always been about?

As a native New Yorker, I have seen a lot of these types of deals and the ensuing uproar.

Over the years, foreign investors have gobbled up some of the most prominent real estate in New York. Rockefeller Center was among the first jewels to be acquired, leading to many other high profile purchases. The culmination of these sales was the Chrysler Building a few months ago. So what has changed? Our skyline still inspires. These buildings are still standing,

6

still have the prestige and aura they always had.

Why? Because the new owners manage them well and understand that they have been entrusted with a treasure that is not to be trifled with.

You see, it’s not who owns the property or brand. It is how they take care of those assets. I just don’t believe that, in the end, the consumer will care if InBev is the largest beer company in the world and is located overseas. They just want to have their favorite brew accessible and priced reasonably. The Budweiser family of brews will always be as American as apple pie. There will be transitional logistics, and sadly, some jobs will be eliminated. That is the way of business in all sectors. The beverage industry is not exempt from these realities.

So, instead of running for the hills, let’s raise a glass and toast the good intentions of InBev to keep the Anheuser-Busch name and brands the valued assets they are.

ONLINE RENEWALS & CHANGES www.bevspectrum.com/subscribe ARTICLE REPRINTS (500 copies or more) FosteReprints 800-382-0808 x142

BEVERAGE SPECTRUM PUBLISHING INC. CHAIRMAN John F. (Jack) Craven jack@bevnet.com PRESIDENT AND EDITORIAL DIRECTOR John Craven jcraven@bevnet.com

EDITORIAL 1 Mifflin Place, Suite 300 Cambridge, MA 02138 ph. 617-715-9670 fax 617-715-9671 ADVERTISING 1123 Broadway, Suite 210 New York, NY 10010 ph. 212-647-0501 fax 212-647-0565

BPA Worldwide Member, June 2007

Barry J. Nathanson, Publisher

BEVERAGE SPECTRUM :: JULY – AUGUST 08

Bevscape

WHAT’S HAPPENING ACROSS BEVERAGES

HFCS NATURAL? FATTENING?

FIJI (BRIEFLY) SHUTS DOWN

In the latest volley in the high-fructose corn syrup controversy, the Food and Drug Administration has declared that products containing the sweetener can be labeled “natural,” so long as the HFCS contains no synthetic additives and was not produced by using acids.

Natural or not, a study performed at the University of Texas found that it may be more fattening than other sweeteners. Researchers found that fructose bypasses the liver, which normally determines whether the body should burn or store incoming sugars, and instead converts directly into fat at “surprising speed.” The research also found that consuming fructose made the body more likely to store fats eaten at later meals.

July proved to be an interesting month for Fiji – both the bottled water company and the country. In an effort to include the government in the native bottled water industry’s profits, Interim Finance Minister Mahendra Chaudhry imposed a 20 cent per-liter duty on all bottled water sold in or exported from the island nation.

The bottled water industry, naturally, objected.

The Fiji Bottled Water Institute claimed such a tax would cripple the industry, and filed a lawsuit to challenge it. Most water companies also shut their doors in protest, leaving hundreds of Fijians out of work, but Fiji Natural Artesian Waters proved the exception.

The company – generally known in the U.S. as, simply, “Fiji” – kept filling bottles and putting them in storage, thereby avoiding the tax. But the company lost an estimated $3 million per week while leaving its stockpile fallow, and finally shut down its 500-worker factory Wednesday, July 23.

The government repealed the tax shortly after. But keep your eyes on this story. The government and bottled water industry representatives have entered talks on appropriate compensation for the government, and there’s no guarantee those talks won’t break down.

BEER IS BACK Beer has regained a double-digit lead over wine as the favored alcoholic beverage of the U.S., according to Gallup’s latest poll.

Starting in 2001, Americans increasingly turned to wine as their choice intoxicant, a trend that peaked in 2005 when wine actually surpassed beer. Vino’s lead only lasted for one year, though, before beer stole its crown back, and the hops-and-grain brew has now racked up an 11-point lead – it’s biggest since 2002.

DO YOU MOST OFTEN DRINK LIQUOR, WINE, OR BEER? BASED ON U.S. ADULTS WHO DRINK ALCOHOLIC BEVERAGES

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BEVERAGE SPECTRUM :: JULY – AUGUST 08

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© Disney/Pixar ©2008 American Beverage Corp. Verona, PA 800.245.2929 www.ambev.com

TAKE A LOOK AT THE FUTURE OF KIDS’ BEVERAGES

INTRODUCING ICE BOPS

- Shelf stable juice slushie - Available in 4 vitamin rich flavors - Low in sugar - High in antioxidants - Goes conveniently into your freezer then is served as a slushie right out of the pouch!

- Features Disney-Pixar Wall*E

BOSTON BEER SCORES TOUCHDOWN, WINS AWARDS With stadium pouring rights all the rage for soda companies these days, it was only a matter of time before the breweries got in the act, as well.

The first to do so is the Boston Beer Company, which brews Samuel Adams. The company has launched Patriot Homebrew IPA, a new draft beer that will be sold only at the New England Patriots’ Gillette Stadium in Foxboro, Mass. How apropos.

Meanwhile, the company’s own founding father, Jim Koch, received an award last month from the American Homebrewers Association for his “outstanding service to the community of homebrewers.”

The company has long run national promotions to encourage the practice of homebrewing, including its annual Longshot Competition.

Koch received the award as Boston Beer announced a new form of

homegrown philanthropy, its Samuel Adams Brewing the American Dream program, whose mission is to partner with low and moderate income microentrepreneurs in the food and beverage industry and provide the tools they need to help them grow and succeed.

In creating this program, Boston Beer formed a partnership with ACCION USA, the country’s leading not-for-profit micro-lending organization that provides critical capital and other types of assistance to small businesses. Boston Beer and ACCION chose to pilot the program in New England.

Boston Beer donated $250,000 to the program, and plans to provide business education and financial literacy seminars to the entrepreneurs.

JIM KOCH WITH PATRIOT HOMEBREW CONTEST WINNER, ADAM WALSH OF SALEM, MA.

JIM KOCH HANDS OVER THE FIRST CHECK FOR THE SAMUEL ADAMS BREWING THE AMERICAN DREAM FUND TO BENEFICIARY, CARLENE O’GARRO.

PEPSI JUMPS AHEAD IN THE STEVIA BATTLE Over the past several years, CocaCola regularly made press announcements about its partnership with Cargill, and their joint “Truvia” stevia-based sweetener.

The gist of those announcements boiled down to “it’s coming,” but now Pepsi has beaten Coke to the market.

PepsiCo will release three new flavors of SoBe Life in Latin American countries, starting with Peru. Each will be sweetened with PureVia – Pepsi and Whole Earth Sweetener Co.’s variant on stevia – and roll into the American market after the sweetener gains approval by the FDA for use in beverages.

10

Coke and Cargill’s variant awaits the same approval. Each company will tell you their product is best, but they’re essentially the same: a distillation of rebaudioside-A – the sweettasting compound in the stevia herb. And it’s nothing new. Not even to the American market.

Stevia-based sweeteners are approved for broad use in a dozen countries, and approved for use as a “dietary supplement” in the U.S. Consumers can buy

BEVERAGE SPECTRUM :: JULY – AUGUST 08

the sugar substitute in natural markets, and several companies have already integrated stevia into beverages. Zevia, for one, leapt upon aWall Street Journal article about PureVia as an opportunity to point out the availability of its four-flavor line of stevia sweetened sodas.

The catch with Zevia and other stevia-sweetened brands, though, is the Seattle-based independent can’t call their product a beverage, or even a soda. They have

to call it a dietary supplement – and dietary supplements don’t have a great track record for appearing next to Coke and Pepsi at your local minimart.

The expected FDA decision will change that, and enable the top-two beverage producers to market diet beverages sweetened with stevia, but the product may be limited by its licoricelike aftertaste.

Pepsi said citrus flavors, heavy flavors and lightly sweetened drinks perform well with PureVia. Cola is more difficult, a PepsiCo executive told the WSJ, but he added that doesn’t mean the company has ruled it out.

The company that brings you Sun Shower™ 100% Nectarine Juices has just made some great additions to its family of nutritious and delicious beverages:

• All Natural 100% Juice Superfood Smoothies—(Stamina, Defense, Heart Healthy, Revitalize, Strength) • All Natural Superfood Fruit ‘N Yogurt Smoothies—(Strawberry-Banana, Berry Blast, Orange Passion, Pina Colada) • Super Blends—Healthful Indulgence (Iced Coffee, Chai Tea Latte, Mocha Cappuccino, Chocolate Raspberry Frappe) • All Natural 100% Juice Super Juice—(Stamina, Defense, Heart Healthy, Revitalize, Strength) • Super Juice Beverages: Light ‘N Healthy—(Stamina, Defense, Heart Healthy, Revitalize, Strength) Each new Sun Shower™ flavor features the Lifeguard™ fortification package of essential vitamins, nutrients, amino acids, electrolytes and herbs. Give your customers something new and unique that is also nutritious and delicious. Give them Sun Shower™.

www.nbijuiceworks.com

EXECUTIVE MOVES

JOLT HEADS NORTH

› Jim DePietro, a former vice president at Ideal Foods and Unilever, has joined the Steaz team as Chief Operating Officer.

It gets mighty bright in Alaska during the summer – so bright, in fact, that on the recentlypassed summer solstice, the town of Barrow was in the middle of a 13-week stretch of round-the-clock daylight.

Never one to ignore the marketing possibility of the extended workday, no matter how close to the North Pole, Jolt Cola owner C.J. Rapp managed to have Barrow temporarily change its name to Jolt. The jolly town received an airlift of 370 cases of Jolt – enough for every resident to grab a bottle and reduce the stress of being up too long on the longest day of the year.

“We will not stand idly by and let the citizens of Jolt go un-energized through their 1,992-hour day,” said Rapp.

Here’s a photo of the mayor of Barrow – make that Jolt – Michael Stotts.

› bot beverages has hired John Wolgamot as vice president of sales. Wolgamot comes to bot beverages with 28 years of sales and marketing experience primarily in the food and beverage industry. › Heineken USA announced that Christian McMahan has been named the new Chief Marketing Officer for Heineken USA. McMahan was formerly a vice president of marketing for Diageo North America and responsible for Diageo’s U.S. beer portfolio. › Kevin Conrad joined Go Fast Sports, as Executive Vice President and Director of North American Sales and Distribution. Conrad is the former Vice President of Sales and Distribution for Rockstar Energy. › Boo Koo Holdings, Inc. appointed Jack Belsito, formerly President of Snapple Distributors, Inc. as Chairman. › Distributor Remy Cointreau USA, Inc., announced the appointment of Xavier Desaulles as Senior Vice President – Sales Strategy. › Bossa Nova has hired Jana Branch as vice president of brand communication.

CHILLY EMPLOYMENT AT COKE Coca-Cola has imposed a total 2008 U.S. hiring freeze due to “the challenging economic environment,” according to an internal memo that didn’t stay so internal. Beverage Digest obtained the note penned by Coca-Cola North America President Alexander “Sandy” Douglas, which said the company will not make any further hiring decisions until 2009. That ban does not extend to vitaminwater, Fuze or Odwalla.

12

BEVERAGE SPECTRUM :: JULY – AUGUST 08

Channel Check

july – august 2008

SPOTLIGHT CATEGORY

TEA 52 Weeks ending 7/13/2008 As our cover story this issue shows, the big four in the tea world are adapting to the new world of tea, changing labels and formulas to accommodate consumers’ whole leaf fantasies. But one place they aren’t changing is in the order of their sales rankings. There, they look pretty similar to how they did a year ago, or even two – just Arizona, Lipton, Snapple and Nestea, battling it out for the bulk of market. Down below, though, Honest Tea has cracked the top 20 – and with CCE getting behind it, who knows what the rankings will look like in a year?

CONVENIENCE/PET STILL WATER

Arizona

Dollar Sales

Change vs. year earlier

$295,016,200

4.4%

Lipton

$240,443,600

7.8%

Snapple

$128,683,400

-1.0%

Lipton Brisk

$84,884,050

-3.3%

Diet Snapple

$79,485,260

-6.3%

Nestea

$63,341,030

-5.3%

Lipton Diet

$51,977,740

49.2%

Lipton Pureleaf

$35,823,190

380.1%

Private Label

$22,412,230

24.2%

Nestea Enviga

$17,893,500

-17.9%

Nestea Diet

$17,579,040

3.5%

Lipton Iced Tea

$17,078,140

-56.1%

Gold Peak

$12,996,350

69.7%

SoBe

$11,698,780

-13.7%

Fuze

$8,309,921

9.2%

Heading Up: Lipton Pureleaf SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

BOTTLED WATER $5,199,599,000 3.1%

TOPLINE CATEGORY

VOLUME

52 Weeks ending 7/13/2008

ENERGY DRINKS $875,961,200 16.5%

BEER

SPORTS DRINKS

$7,676,013,000 3.8%

$1,742,420,000 4.7%

BOTTLED JUICES

TEA/COFFEE

$3,797,996,000 1.1%

$1,424,539,000 4.5%

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

14

BEVERAGE SPECTRUM :: JULY – AUGUST 08

SPORTS DRINKS

Gatorade

Dollar Sales

$618,567,400

ENERGY

Dollar Sales

-8.6%

Red Bull

$362,932,500

15.5%

$140,049,200

23.4% 11.2%

Change vs. year earlier

Change vs. year earlier

Powerade

$250,936,400

8.5%

Monster

Gatorade Frost

$135,616,900

-5.1%

Rockstar

$100,193,400

Gatorade Rain

$135,393,200

-6.0%

Amp

$32,713,830

22.6%

Full Throttle

$28,307,040

-31.8%

SoBe No Fear

$18,924,280

-43.2%

Gatorade All Stars

$134,194,200

9.0%

Gatorade G2

$93,824,900

N/A

Gatorade Fierce

$78,698,270

-15.6%

Monster XXL

$17,795,640

91.5%

Java Monster

$16,130,820

3,802.6%

Rockstar Juiced

$12,575,270

50.3%

Amp Overdrive

$12,312,010

185.6%

Gatorade X Factor

$67,030,960

-24.8%

Gatorade AM

$62,844,140

72.3%

Gatorade Tiger

$36,080,800

N/A

52 Weeks through 7/13/08 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Heading Up: Java Monster

RTD COFFEE/CAPPUCCINO

FRUIT DRINKS

Heading Up: Gatorade G2

Dollar Sales

Change vs. year earlier

52 Weeks through 7/13/08 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Dollar Sales

Change vs. year earlier

Hawaiian Punch

$120,834,700

10.6%

-6.0%

Private Label

$66,140,390

9.9%

-5.6%

V8 Splash

$62,199,700

10.3%

$41,317,650

3.2%

Frappuccino

$192,626,700

5.8%

Doubleshot

$25,201,200

Starbucks Cappucino

$12,271,480

Doubleshot Light

$10,867,130

1.8%

Snapple

Godiva Belgian Blends

$5,516,305

-36.8%

Kool Aid

$41,100,120

-3.9%

Fuze Slenderize

$25,282,730

67.2%

Welchs

$23,959,240

-22.9% 301.4%

Bolthouse Farms

$4,739,324

2.0%

Private Label

$2,074,593

148.7%

Cinnabon

$1,859,821

78.5%

V8 V Fusion Light

$20,535,310

$649,897

53.0%

Dailys Little Hug

$19,655,710

8.9%

Welchs Light

$16,302,150

-12.1%

Hillside Tullys Bellaccino

$451,742

-39.8%

52 Weeks through 7/13/08 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Heading Up:V8 V Fusion Light

IMPORT BEER

Dollar Sales

DOMESTIC BEER

Corona Extra

$444,537,600

-2.3%

Bud Light

$1,342,283,000

Heineken

$300,982,800

5.5%

Miller Lite

$687,665,000

2.2%

Corona Light

$125,838,300

2.9%

Budweiser

$661,100,000

-3.2%

Tecate

$91,411,980

10.5%

Coors Light

$635,641,300

8.3%

Heineken Premium Light

$73,111,010

18.6%

Natural Light

$266,918,700

1.1%

Modelo Especial

$59,111,180

12.2%

Michelob Ultra Light

$201,166,300

4.9%

Newcastle

$51,095,320

5.6%

Busch Light

$195,038,000

3.7%

Guinness Draught

$48,606,060

3.3%

Miller High Life

$163,825,200

4.7%

Labatt Blue

$43,918,220

-3.1%

Busch

$149,188,700

2.3%

Stella Artois

$42,743,760

41.8%

Miller Genuine Draft

$142,927,600

-7.4%

Heading Up: Cinnabon

Heading Up: Heineken Light

Change vs. year earlier

52 Weeks through 7/13/08 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

52 Weeks through 7/13/08 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Dollar Sales

Change vs. year earlier

3.6%

Heading Up: Coors Light

52 Weeks through 7/13/08 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

JULY â&#x20AC;&#x201C; AUGUST 08 :: BEVERAGE SPECTRUM

15

NEW PRODUCTS ENERGY DRINKS Wet Planet Beverages this month will roll out Jolt Energy in a 16 oz. re-sealable cap can. The popular 16 oz. size represents nearly 60 percent of all energy drink sales, providing Jolt Energy broader consumer appeal. Jolt Energy is available in seven flavors, each with a generous dose of stimulating ingredients, including Taurine, Ginseng, Guarana, Vitamin B Complex and plenty of Caffeine. In 2006, Jolt made headlines with their inventive 23.5 oz. re-sealable aluminum bottle. This product uses the same re-sealable cap and allows hours of carbonated energy. With a target price of $2.39, Jolt Energy hits its consumers with nearly 2,200mg of active ingredients in its re-sealable 16 oz. can. For more information, call (585) 381-3560.

Dr Pepper Snapple Group has introduced Venom, an energy drink for those wanting to experience thrill seeking adventures. Available in Black Mamba, regular, and Mojave Rattler (low-carbohydrate/calorie), Venom provides the bite that hardcore energy drink fans demand. Venom’s 16.9 oz. re-sealable aluminum bottle allows consumers to enjoy the product during multiple occasions, unlike most energy drinks in cans. The Venom energy blend contains caffeine, l-carnitine, guarana, ginseng and taurine, the hard-core ingredients that consumers are looking for in their energy drink. Venom Black Mamba and Mojave Rattler will be available at retailers nationwide for a suggested retail price of $2.29. For more information, call (972) 673-6688.

V&V Energy, the sparkling fruit beverage with a kick, has new packaging and is now available as a 100 percent all natural product. V&V is also currently offering two new flavors, Pomegranate Blueberry and Orange Clementine, and is still available in Mixed Berry and Citrus Twist. V&V is made with cane sugar and packaged in glass. The upscale glass packaging can be enjoyed in a work environment without the stigma of being a nightclub drink. V&V is a true gourmet beverage with energy drink properties, B6, B3, B12, C, Ginkgo, Gurarana, Ginseng, Taurine. For more information, call (212) 253-5862.

The Coca-Cola Co.’s Full Throttle is inviting guys to “Go Full Throttle or Go Home” with the launch of Full Throttle Hydration, a new, noncarbonated energy drink packed with electrolytes and charged with Full Throttle’s special energy/vitamin blend.

As the brand’s first non-carbonated energy drink, Full Throttle Hydration provides thirst-quenching

16

BEVERAGE SPECTRUM :: JULY – AUGUST 08

taste and maximum drinkability. Its tropical mix flavor is now available in 16 oz. aluminum cans throughout the Southeast. This product will be line-priced with other Full Throttle offerings. For more information, call (770) 565-5440.

Coke is also releasing Full Throttle Coffee, a creamy coffee and energy blend set to be unleashed in the U.S. Pacific Northwest and Southeast regions before rolling out nationally in August. Made with 100 percent premium Colombian Arabica coffee and Full Throttle’s energy and vitamin blend, Full Throttle Coffee is sure to rev up taste buds in mocha, vanilla and caramel flavors.

It will be available in 15 oz. aluminum cans. The launch of Full Throttle Coffee will be supported by an integrated marketing campaign and a sampling plan to drive awareness and trial. All introductory marketing materials will feature the tagline, “Coffee. Fully Charged”, inviting Full Throttle fans to enjoy the energy of Full Throttle in a great-tasting coffee. Packaging for Full Throttle Coffee Caramel will be bilingual, featuring both English and Spanish. For more information, call (770) 565-5440.

ENERGY SHOTS BDI Marketing, distributors of the popular Mini Thin Rush family of energy products, has announced the August 1st release of its new mocha flavored 2 oz. energy shot, Mini Thin Rush A.M. Designed to provide people on the go with a highly energizing morning pick-me-up, this product is sugar-free and contains less than one carbohydrate per serving. It provides 6 hours of energy with less liquid and without the commonly experienced crash that is characteristic with competing high-sugar energy drinks. The new Mini Thin Rush A.M. liquid energy shots will be available at retail stores nationwide beginning August 1st at the manufacturer’s suggested retail price of $2.99 each. For more information, call (212) 465-1290.

MMA BIG BRANDS, LLC., has announced the official US launch of a new FDA-approved caffeinated Mixed Martial Arts fitness beverage called JitSu Energy Shot. For more information please visit www.jitsuenergy.com WINE Terra Andina, Chile’s innovative, premium wine producer, has announced the launch of its 2007 Chardonnay Reserva in the U.S. The wine, which is 100 percent Chardonnay, was made from grapes

INTRODUCING

GOODNESS COMES TO THE DARK SIDE ©2008 FUZE Beverage, LLC. "FUZE" is a registered trademark of FUZE Beverage, LLC.

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harvested exclusively in Chile’s renowned Limari Valley region. It will retail at the suggested price of $12.99 and will be available nationwide beginning August 2008. For more information, call (212) 527-9969.

BOTTLED WATER New Primo Water is the only single-serve water bottle in the U.S. made from plants, not crude oil, a depleting natural resource. Primo single-serve bottles are made from natural Ingeo plastic made from plants grown in America. This new packaging technology offers consumers a more environmentally-conscious bottled water option without having to sacrifice convenience and portability. Primo single-serve bottles also offer consumers more options when they are done with their water. The bottles can be recycled through traditional methods, sent to degrade in a commercial composting facility or incinerated for energy recovery. Primo 3 and 5 gallon Zero Waste water bottles also provide a sustainable option because the consumer is incentivized to return the empty bottle to the store where Primo picks it up, refills and reuses the bottle. When the bottle has reached its end use, the bottle is recycled, forever avoiding the landfill. Primo single-serve bottled water is sold in a multi-pack of eighteen 16.9 oz. bottles at a suggested retail price of $4.99. Primo 3 and 5 gallon Zero Waste water bottles are available nationally for $4.99 and $6.99 respectively. For more information, call (212) 601-8450.

NOT-ENERGY DRINKS From Funktional Beverages Inc. comes Purple Stuff, a which uses rose hips, Valerian root extract and l-theanine to create a “calming beverage.” A premium healthy soda that uses crystalline fructose, Purple Stuff comes in three flavors: Berry Calming, Classic Grape and Sippin Citrus. Purple Stuff is seeking national distribution with a SRP of between $2.39 and $2.79. For more information call (877) FBI-ROKS. Houston-based Innovative Beverage Group has harnessed the calming effects of melatonin, val-

18

BEVERAGE SPECTRUM :: JULY – AUGUST 08

erian root and rose hips for drank, a new “antienergy” drink that touts itself as the key to “slow your roll.” It is available at select markets and convenience stores including 60 SPEC’s Liquors in Houston,TX and is rolling out in Baton Rouge, LA; Las Vegas, NV; Los Angeles, CA; New Orleans; LA; and Shreveport, LA. A 16 oz. can retails for the estimated price of $1.19 and an 8 oz. serving is 110 calories. For more information, call (201) 4880049 SPIRITS From Wingard Inc., the makers of V2 Vodka, come more energy spirits: R2 Energy Rum, T2 Energy Tequila and V2 Mint Energy Vodka. Pricing for the 750 ml bottles is as follows: R2 - $29.99, T2 - $34.99 and V2 Mint - $29.99. Their products are available in New York, New Jersey, Los Angeles (CA), Georgia, Miami (FL), Texas, Maryland, Massachusetts, Rhode Island, Connecticut, South Carolina, West Virginia, Illinois and they continue to expand. For more information, call (310) 854-8170.

Hiram Walker, the classic, diverse line of premium liqueurs made with all-natural flavors has two new schnapps flavors – Hiram Walker Blueberry Passion Schnapps and Hiram Walker White Peach Schnapps. Like all 14 schnapps flavors in the Hiram Walker family, Blueberry Passion and White Peach offer on-premise accounts and consumers alike a cost-effective way to add great flavor and color to both traditional and contemporary cocktails. The launch of White Peach and Blueberry Passion Schnapps is being supported with Hiram Walker’s new Simple-tini retail rack that features a recipe guide full of stylish, easy-to-mix Hiram Walker cocktails. Innovative counter unit displays, case talkers, neckers, case bins and bartender recipe cards will also be available to help promote the two new products. Blueberry Passion and White Peach Schnapps are available in 50ml, 750ml and 1L sizes and will be sold – along with other top Hiram Walker Liqueur flavors – at a suggested retail price of $9.99/750ml. For more information, call (203) 254-8225.

DeKuyper has announced a new product line that eliminates complicated mixing in order to make great tasting and unique drinks. DeKuyper Burst Bar Shots are pre-mixed shots containing all ingredients in one bottle so that all the consumer needs to do is “Open, Pour and Party!” Burst Bar Shots come in three great-tasting favors: Red Headed Burst, Kamikaze Burst and Washington Apple Burst and are based on very popular shots that you can find in just about any bar. The DeKuyper

Burst Bar Shots line is a part of the DeKuyper Burst family, one of the five families introduced in February 2008 when the brand reorganized its portfolio in an effort to simplify the category and consumer shopping experience. The other families are DeKuyper Luscious, DeKuyper Pucker, DeKuyper Signature and DeKuyper Brandy. The new 40-proof product will be sold in 5 sizes: 50ml, 375ml, 750ml, 750ml plastic traveler and 1L bottles. A 750ml bottle of DeKuyper Burst Bar Shots has a suggested retail price of $10.99, but will vary by market. For more information, call (202)683-3123.

Altamar Brands, LLC has announced a partnership with Tequila Ocho, the first ultra-premium single estate tequila to be introduced into the United States Market in vintages. What differentiates Ocho from other tequilas and makes it unique in its category is its rarity. Because of the time it takes an agave to mature, each estate’s fields cannot be replenished for almost ten years after each harvest, thus, making each vintage of Ocho an extremely limited and collectable tequila. The brand will kick off its American debut in early August 2008 with private tasting events in Orange County, Los Angeles, and San Francisco as well as a red carpet official launch on August 8 (8/8/08) in Los Angeles. Ocho is available in Plata, Reposado, and Anejo and will be sold at $60, $70, and $80 respectively per 750mL bottle.

NEW AGE FUZE Beverage has a new bottle, having converted its iconic 18 oz. glass single-serve container to a custom, 18.5 oz. PET bottle. In addition to being available in all types of retail outlets, the new bottle will also enable the brand to enter some alternative channels (such as airlines, military, foodservice, etc.) that were not possible in glass. FUZE first became available in a 16.9 oz. PowerFlex bottle at the beginning of 2007. The smaller size was created for multipack and special purpose venues such as concerts and sporting events. The performance of the 16.9 bottle, coupled with consumer research, convinced the company the time was right convert its flagship size. All 18 flavors of FUZE products will be available, including the

Slenderize, Refresh, Tea and Vitalize platforms, and they will be available nationally for an average suggested retail price of $1.79. For more information, call (201) 461-6640.

JUICE Sun Shower has a new line of all natural 100% Super Juices now being sold in the chilled juice section of retail food stores. The Super Juice line consists of five single-minded nutritional benefit driven products: Stamina, Defense, Heart Healthy, Revitalize and Strength. Each 64 oz. plastic bottle contains eight servings, which include two servings of fruit and/or vegetables and 120 calories.

Flavor profiles are as follows: Stamina (Grape Apple) – Fights fatigue and enhances energy.

Charged with electrolytes and powerful antioxidant vitamins A, C, & E. Fortified with 20-plus essential vitamins, nutrients, amino acids, electrolytes and herbs. Strength (Orange Crème) – has 20 grams of protein per 8 oz. serving. Revitalize (Apple Kiwi Mango) – Charged with electrolytes and fortified with 25-plus essential vitamins, nutrients, amino acids, electrolytes and herbs. Defense (Fruit & Veggie Berry) Provides increased energy and is fortified with 25-plus essential vitamins, nutrients, amino acids, electrolytes and herbs. Heart Healthy (Tropical Passion) – Contains essential B vitamins and bioflavonoids to promote heart health. This product costs $3.99 per bottle. For more information call (312) 768-7376.

MIXERS Stirrings, the nation’s leading innovative cocktail brand is revamping fall and holiday martinis with the introduction of their new Limited Edition Blood Orange Martini Mixer. Packaged with festive metallic labels, these limited edition products are perfect for all fall and winter gift and entertaining occasions. The Blood Orange Martini Mixer creates the ultimate cocktail experience with its distinctly bold and vibrant sweet-tart citrus flavor, and can be used to create consistently brilliant blood orange cosmos, “spooky” blood orange daiquiris and sophisticated blood orange champagne cocktails. Stirrings’ Blood Orange Martini Mixer will be available for purchase in September 2008 and will retail for $10 on Stirrings.com and through specialty retailers nationwide. For more information, call (212) 754-1400.

JULY – AUGUST 08 :: BEVERAGE SPECTRUM

19

BRANDS IN TRANSITION

BOSSA NOVA: TALES FROM THE SQUEEZING EDGE

BY MATT CASEY

ost businesses that get their start in colleges these days center on a server and a URL, but not Bossa Nova.

That company was the result of a kitchen collagoration: a few years ago, graduate-level business students and scientists at the University of Southern California gathered to find “the truth” in an array of exotic fruits. That “truth” debuted in 2005 when Bossa Nova’s line of açai juices and juice blends appeared in upscale grocery stores (read: Whole Foods). Three years later, the brand has added two more blends – bringing their core-line total to five – and secured shelf space in some 12,000 stores, along with an investment from Coca-Cola.

During the company’s impressive three-year run – fueled by its high antioxidant value and exotic Brazilian sourcing – the açai berry has risen to the tip of hip. Today, Bossa Nova competes for shelf space with Zola, Frutzzo and Sambazon, just to name a few – and the açai berry has crept out of its subcategory and started to infiltrate more mainstream brands.

But just as the açai berry has crept away from the fringe, Bossa Nova has grown away from the açai berry back toward the bleeding – make that squeezing – edge. In July, the company introduced five new “superfruit” juices which include acerola, goji berry and mangosteen, but, in a sop to their supermarket audience, they mixed them with fruits familiar to the American palate. That may appear to be a big shift on the part of the once strictly-açai company, but Bossa Nova founder Alton Johnson says the transition was all part of the plan.

That plan grew out of a 1999 business trip to Brazil when Johnson, then an international salesman of luxury goods, first tried açai berries.

The locals touted the fruit as a miracle food that would make you strong, and Johnson left possessed with the idea of building a business that would bring superfruits to the American public.

While that may sound like the classic archetype of a beverage startup, Bossa Nova’s story

20

zigs where others zag. Johnson never hauled product to stores in the back of his own car, and the company never formed its roots through upand-down-the-street-distribution. Instead, his business idea took shape when a collection of graduate students at the University of Southern California got together to study the exotic fruits Johnson brought back.

“We were able to do a couple years of pretty high level research on these fruits,” Johnson said.

“We were doing it on the cheap, so to speak.

Student to student.”

The group aimed to formulate finished products that captured “the truth” of the fruits, Johnson said, and developed a number of product sketches before he secured funding from Greenmont Capital – or “the elders,” as Johnson calls them. Greenmont’s resume boasts involvement with Celestial Seasonings, Izze and White Wave Foods, and the capital group advised Johnson to enter the market by doing one thing, and doing it well.

So, Johnson picked açai juice, shelved his other ideas, and started talking with natural foods retailers. He conducted the business more like a produce company than a beverage company, he said, and convinced Whole Foods to give the product a try.

“The product totally blew off the shelves,” Johnson said. “We went from zero stores to 5,000 stores in a matter of just some weeks.”

More success followed. The company entered into a distribution agreement with Odwalla and earned a $7.5 million investment from what would become Coke’s emerging brands group. Now the product resides in roughly 95 percent of Whole Foods on the east coast, according to Doug Taylor, a broker who covers the region for Natural Specialties. Taylor said he expects the brand to continue to surge 30 to 40 percent per year.

“The appeal of the brand is the fact that it’s natural. It doesn’t compromise ingredients, [and] the high antioxidant value,” Taylor said.

BEVERAGE SPECTRUM :: JULY – AUGUST 08

Nevertheless, now that Bossa Nova is moving away from its core product, it might have to put in some effort to keep up its momentum.

The founder of competing brand Sambazon, Jeremy Black, said Bossa Nova could face challenges trying to extend their success to other superfruits. Black should know: he’s been there before. His company imports açai berries in a variety of forms, including frozen smoothie packs, sorbets, and juices that sit on the same shelf as Bossa Nova, but Sambazon’s products were once even more agriculturally diverse. Black said his company once imported seven different exotic fruits, but trimmed its catalogue in the face of an unreceptive market.

“We were having some success with selling them to chefs,” Black said, “(but) in the end, the public had no idea what the stuff was.”

He ultimately decided Sambazon’s resources would be best used by building public awareness for açai, which has risen dramatically. Still, things have changed a bit since then; the public has also wised up to superfuits. Consumers have read articles about goji, acerola and mangosteen, and many have tasted the fruits – or approximations of their flavors – in products ranging from Naked Juices to Snapple Antioxidant Water. So, what may have been too early for Black may be just in time for Johnson.

But even with new exposure, açai is still to the superfruit lineup what David Beckham is to Major League Soccer. Sambazon continues to sell acerola juice and frozen smoothie packs, Black said by way of example, but its sales volumes don’t compete with açai. The market is clearly ready for superfruit products – they’re already there – but their marketers might not yet reap windfall profits.

Still, Black said he could see logic in Bossa Nova’s move. With açai growing crowded, the brand can step away from the increasingly-competitive arena while maintaining the “halo of superfruits.”

“I guess it’s just a question of how well the

public receives the flavor profiles and the perceived nutritional benefits of those products,â&#x20AC;? Black said.

While the new line might face an uncertain market, Bossa Novaâ&#x20AC;&#x2122;s core line is currently rushing into new stores. Johnson called his outlook for 2009 and the second half of 2008 â&#x20AC;&#x153;exciting,â&#x20AC;? as the company plans to roll out in another 20,000 stores. That roll-out will include what Johnson calls â&#x20AC;&#x153;top tier,â&#x20AC;? grocery stores like Stop & Shop and Wegmans. â&#x20AC;&#x153;The brand Bossa Nova isnâ&#x20AC;&#x2122;t available in what we could call second tier grocery stores,â&#x20AC;? Johnson said. â&#x20AC;&#x153;The downside is weâ&#x20AC;&#x2122;re not at 7-Eleven, but the upside is that weâ&#x20AC;&#x2122;re not at 7-Eleven.â&#x20AC;?

Even without a relationship with the countryâ&#x20AC;&#x2122;s largest convenience store chain, Bossa Nova is moving into the quasi-convenience channels of airports and colleges â&#x20AC;&#x201C; with a little help from Odwalla. â&#x20AC;&#x153;In their 20-year history, theyâ&#x20AC;&#x2122;ve never distributed another product,â&#x20AC;?

Johnson said.

In exchange for the distribution boost, Bossa Nova will help Odwalla develop Bossa Nova ingredients for Odwalla applications. â&#x20AC;&#x153;It was sort of a tit for tat exchange,â&#x20AC;? Johnson said.

That arrangement and Johnsonâ&#x20AC;&#x2122;s bag of beverage formulas leaves a clear path forward for Bossa Nova. The company will leverage its relationships to expand distribution and make small adjustments to its business model as needed. The brand intends to add multi-serve packs to their line-up in the near future, and plans to add targeted consumer advertising to its arsenal â&#x20AC;&#x201C; new territory for a company that previously relied on word-ofmouth. Additionally, Johnson said the company can introduce new lines to grocery chains whenever the market is ready. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s easily another ten [product ideas] that are primed, weâ&#x20AC;&#x2122;re just waiting for the right time to bring them to light,â&#x20AC;? Johnson said.

BOSSA NOVAâ&#x20AC;&#x2122;S ALTON JOHNSON

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21

GERRY’S INSIGHTS

AN INSPIRED IDEA t the InnoBev conference in June (co-sponsored by the publisher of this magazine), a so-called “Dragon’s Den” paraded a trio of starry-eyed beverage entrepreneurs before a panel of hard-nose distributors for a cold shock of reality.

In a perfect touch, the moderator was Brit Richard Hall, sporting the requisite accent as well as a flinty edge of dispassion that one associates with hired assassins and reality-TV show hosts.

Aside from its ability to throw a clearer light on several new brands, what I loved about the concept was how it captured what I believe is a fundamental – and, as we’ll see, highly productive – tension between beverage marketers and the folks who get their brands onto retail shelves. If you look at those marketers as wideeyed, idealistic Don Quixotes, then distributors and bottlers are the stocky, earthy Sancho Panzas whose role is to keep them grounded. A year ago, at a different event, Honest Tea’s Seth Goldman hilariously encapsulized the contrast between the two sides by playing a profanity-laden tirade that an unidentified distributor had left on his voicemail. The ingenious Dragon’s Den at InnoBev essentially embellished that theme.

So we had a former GE Capital guy, Dan Ratner, present his $5-a-bottle cosmeceutical, Cell-nique, before such seasoned operators as Lewis Hershkowitz of New York’s Big Geyser and Gerry Martin of New England’s Polar Beverage (“Gerry Margin,” as he’s called by some who do business with him). Both companies have demonstrated a knack for spotting (and investing in) promising beverages that go on to become household names. So how did Ratner fare? To his credit, the Cell-nique guy didn’t come off as a complete nood-nique. But the panelists were blunt, if always respectful, on his strategy’s shortcomings. “Nice-looking package,” Hershkowitz allowed, but “very limited in where it could go.” With the 25percent margin Ratner is offering to distributors, “your economics are off,” he warned; distributors want 35 percent. “Limited-distribution item,” echoed Martin, adding that Cell-nique would need to commit significant resources to explain to consumers why they should pay $5 for this brand.

(Closer to $6 in New York and San Francisco, Hershkowitz noted.)

It wasn’t much different for the other two entrepreneurs. “This is a very crowded cat-

22

egory already,” Hershkowitz warned Pixie Mate marketer T.J. McIntyre. “You’ll be on the same shelf as Snapple.” Though SoNu developer Brad Winter clearly regarded his shrink-wrapped black bottle as an on-shelf show-stopper, “black concerns me,” mused Hershkowitz. “I don’t see that as a refreshing color … I would have thought this was an alcoholic malt beverage.” Martin again hammered away at the need for in-market support. “You’ve got to make some noise,” he warned. “Come back with some marketing specifics.”

It’s the kind of conversation that plays out often, if not always so politely (as Goldman’s tape proved). Credit the three entrepreneurs for being spunky enough to endure such criticism publicly. And make no mistake: it’s precisely this kind of interaction, uncomfortable as it can be, which has allowed so many entrepreneurs – often complete beverage novices – to create and refine concepts that prove more enduring than most of what the big players bring out. Let’s face it: indies like Polar and Big Geyser have only survived because they’ve perfected the art of latching onto new trends, scrambling to place smart bets on new brands that might someday replace the successful brands they’re continually losing to Coke, Pepsi and other big companies. No question, in their dealings with hapless entrepreneurs, they can come off as bullies (which is why the reality show concept worked so well at InnoBev). But through the constant risks they have taken to discover hidden gems, they have developed a pretty good idea of what it takes to succeed, with distributors, with retailers, with consumers.

Contrast that with the major bottling and beer distribution networks, whose executives not only have been discouraged from taking the initiative but, in the case of Anheuser-Busch, with its demands for exclusivity, financially penalized for doing so. One great, unintended consequence of that can be seen now that many of these wholesalers are being asked to diversify their portfolios with craft beers and non-alcoholic beverages. In many cases, they’re finding themselves to lack the instincts to pick promising brands and assemble them into coherent portfolios. That certainly undermines any feedback they can offer their core suppliers or outside entrepreneurs on new brands. It’s not much

BEVERAGE SPECTRUM :: JULY – AUGUST 08

different with the soft-drink bottling networks.

Despite selling teas and waters for 15 years now, many bottlers essentially are still captives of the big CSD concentrate companies and have never developed much of a vision for noncarbs or energy drinks. Against that you have the hurlyburly of the independent distribution segment, or what’s left of it today. You might say that, like democracy, it’s turbulent and it’s sloppy, but it does seem to work.

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

People are drinking healthier these days. Organic foods are realizing 20% annual sales growth; an increase of $5 billion dollars per year. These consumers are looking for a great tasting beverage with less sugar and fewer calories.

From the makers of BevNet’s Best Non-Carbonated Beverage of 2007 comes Pure Teas, an All-Natural Organic Unsweetened Tea. Bombilla™ is currently looking for national retailers and beverage distributors to sell our products.

Lyndhurst, NJ 07071 • (609) 213-4300 • www.drinkbombilla.com

© Bombilla & Gourd Inc. 2008

Top

of the Tea 24

BEVERAGE SPECTRUM :: JULY – AUGUST 08

BY MATT CASEY

aking the Nestea Plunge is different than it used to be. For years, the brand based its RTD market presence on its “Cool” line – a sweet mixture that contained more high-fructose corn syrup than actual tea – but don’t look for it today. Coca-Cola recently took the product off the shelves and replaced it with something sleeker and decidedly more tea-like.

The new Nestea comes with cleaner tea flavor and a 50 percent boost in antioxidants, but the brand’s image has changed just as much as its formula. Nestea traded an evil-looking (and sometimes skeletal) snowman mascot for straight-walled bottles and clean labels that focus the customer’s attention on tea leaves.

That move came about after the company did research that found that Nestea had fallen behind changing trends in the RTD tea category.

“Our perception as innovative and modern had started to slip,” said associate brand manager Carl Henrickson.

Nestea’s not alone. The brand’s straight-walled bottles and high-end, natural, whole leaf ingredients is only the most recent rebranding and reset at the top of the $1.5 billion (and growing) RTD tea sector that’s pumping cash into the hands of beverage companies and clever retailers alike. The segment has nearly doubled in the last three years. Consumers found a new interest in lower calorie and healthier beverages and tea has become a pop-culture touch-stone. Those shifting trends first benefitted cutting edge startups like Honest Tea and Sweet Leaf, who used high end ingredients and an upscale fell to push their products out the door in ever-growing volumes. Coca-Cola currently owns a stake in Honest, but acquisitions can only carry a company so far, and the big tea brands – Nestea, AriZona, Snapple and Lipton – have all seen fit to re-jigger themselves in the face of a changing market.

The brands have approached that re-jiggering with different timetables, and from different angles. Nestea stuck Cool so deep in cold storage that they removed any reference to the product from nesteacool.com, but Lipton preserved Brisk – their Cool equivalent – selling it alongside a premium, glass packaged line. Snapple also launched a parallel, premium tea brand to accompany their sugar-laden core product, and AriZona….

Well, they’re playing their next step close to the vest.

The New York-based independent had the luxury of being ahead of the rest of the pack – way ahead. As the brand that picked up on the iced-tea excitement Snapple created in the early 1990s, AriZona broke ground by bringing green tea to mainstream American consumers in 1996, and planted their flag on a hill that it would take other major tea brands a decade to notice.

Since then, the company has added more variants on green, black, white and herbal teas, as well as a handful of sodas, flavored waters, energy drinks and smoothies. As a result, the brand hasn’t had to hit the

reset button to fit the current market trends. In fact, according to company spokeswoman Leigh Parrinello AriZona hasn’t really changed its methods. Ever.

“I think that we just do our own thing. They love what they do here… They’re still passionate about it.”

Parrinello said.

NESTEA TRADED A SNOWMAN MASCOT FOR STRAIGHT-WALLED BOTTLES.

Despite that persistent passion, the company appears to be poised to take some kind of new angle on the tea category this fall.

AriZona hasn’t released a new RTD tea product since January 2007, when the company added a single mixture of black and white tea in a 24 oz. can, and Parrinello said the company plans to launch new lines in September. How many, or what they might be, the company’s not saying, but their web site entices customers to be ready for “Bold new flavors [and] surprising packaging innovations.”

Some of those “bold new flavors” might not be so new. A side effect of the company being so far ahead of the tea category is that not all AriZona products found a receptive consumer when they released it. The RX line of herbal teas, for example, included five functional flavors when it hit the market in 2000 – long before vitaminwater caught fire with American consumers.

The line survived, but only after the company dropped three flavors that consumers might be more interested in today. Similarly, Arizona launched a short-lived red tea in 2004 – something that may be better suited for the market now.

But AriZona wouldn’t be anywhere if it wasn’t for

JULY – AUGUST 08 :: BEVERAGE SPECTRUM

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Snapple. Arizona founder Don Vultaggio told Time Magazine in 2004 that he got the idea to start a tea line when he was trying to sell a few cases of beer to a retailer, and a Snapple truck backed up to the store.

Today, the contents of that truck would include Snapple’s 15-variety super premium teas.

The glass-packaged line – started in 2006 and completed last year – features lightly-sweetened black teas, as well as green, red, and white teas with and without fruit flavors. Wendy Frye, a

SNAPPLE’S 15-FLAVOR SUPER PREMIUM LINE LAUNCHED WITH NECTARINE WHITE TEA.

marketing director with Snapple, said the company created the line after market research found that consumers sought beverages that boasted health benefits.

“In this particular line, the functional benefit and the tea type were more important than the overall product,” she said – something that’s evident in the line’s packaging.

Most Snapple packages scream the brand name. Not so with the super premium line. The variety of tea appears as the largest script on the front of the bottle, and the Snapple logo sits jauntily off high and to the left – almost appearing as an afterthought.

Despite the line’s quiet brand presence – or maybe because of it – Snapple departs from other tea giants. First, they offer RTD red tea.

Second, they take a different angle on black tea.

Instead of hocking generic black tea with varying fruit notes and levels of sweetness, Snapple offers the simple, classic flavors of Earl Grey,

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English Breakfast, and Orange Pekoe.

All this change in the tea category could open new opportunities for retailers, as they can segment their tea shelves to target a broader spectrum of customers. Some consumers want a sweet drink, some want tea-based antioxidants, and some want a bottle of the kind of tea they might brew at home. Retailers can maximize their tea revenue by finding the right mix of tea products in their store – which is something Lipton and Snapple would like to help them with.

Frye suggests that retailers arrange all their Snapple products – whether tea or fruit drink – in one place “to get the full family look.” Lipton suggests a similar tactic, according to Christiane Paul, marketing director for the Pepsi/Lipton partnership. She said the partnership offers a variety of planograms to stores that cluster the brand’s tea lines together – though those lines are marketed to very different audiences.

“We knew there was a group of consumers out there that really liked clean pure tea with high tea credentials,” Paul said. “What makes them special is just their knowledge about tea and… their more health conscious behavior.”

To reach that consumer, Lipton reformulated its “Original” line last year, and reintroduced it as “Pure Leaf.” The reset plays up the drink’s “tea credentials,” according to Paul, by stripping out the HFCS and cleaning up the bottles’ appearance. The old bottles included the Lipton brand name amid an ice-like pattern in the glass. The new bottles maintain the same shape, but with a smooth, unblemished surface. Now the packaging relies on the label – which features the words “Pure Leaf ” larger than the Lipton logo – to communicate the brand’s message.

Image aside, the partnership has also added green tea to a traditionally all black line – something that plays directly into the modern, health-seeking consumer.

“Green tea has been around for a gazillion years and has been known for having all kinds of great health properties,” Paul said.

But, Paul said, not all mainstream American consumers are acclimated to the taste. To broaden the audience, the Lipton/Pepsi research and development department added honey and orange notes to the brand’s two green tea varieties.

Nestea took a similar approach, adding orange and lime to their green tea flavor.

But Lipton still offers a total of three lines.

Lipton’s Brisk will capture consumers just looking for flavor. Their core line boasts high antioxidants, and Lipton’s high-end tea drinkers, the

BEVERAGE SPECTRUM :: JULY – AUGUST 08

company hopes, will reach for Pure Leaf.

The customers that do reach for Pure Leaf, though, may not be the same crowd that reached for a Brisk in decades past, according to Joe Simrany, president of the Tea Association of the U.S.A. Simrany said new, younger consumers are flooding into the tea market as they leave the soda segment, searching for a better use of their caloric intake. To reach those consumers, the biggest companies in the category “are doing some tremendous things,” Simrany said, but

LIPTON’S “ORIGINAL” LINE REBOOTED AS PURE LEAF.

added that tea has already been something of a rising tide.

Tea rooms have sprouted across the U.S., growing from about 200 to about 2,400 in just ten years. Additionally, Simrany said, smaller beverage companies like Honest Tea and Sweet Leaf Tea have cut a path into more sophisticated RTD teas.

“They’re comfortable taking uncomfortable positions, sometimes,” Simrany said. “After they open the door, others want to run in.”

And Simrany said he expects tea’s rise to continue – though he admits he’s biased. Some corners of the tea segment haven’t been fully mined, he said. The large firms have only scratched at traditional teas – something that the Teas’ Tea brand is exploring. And Suntory, he noted, is packaging teas with “all the appearance of a Red Bull approach.”

“I like what I see going on out there,” Simrany said, “and I think it has a long way to go.”

Brand News: Cha Dao Tea, Inc Cha Dao, America’s unique brewer of distinctively fresh, refrigerated ready-to-drink teas, took home two first-place awards from The World Tea Expo’s Ice Tea Shake-off Competition held June 1, 2008 in Las Vegas, Nevada.

Adagio Teas Anteadote line of unsweetened RTD teas has grown to five varieties – Green, White, Oolong, Jasmine and Black – is now USDA Organic. New distributors include UNFI East and West. The teas will be on display at the upcoming Expo East show in Boston.

Bombilla & Gourd, Inc. Bombilla debuted their Pure Tea line, unsweetened and organic, with Big Geyser Inc. in New York City and will launch with distributors on both coasts beginning in Q2 2008. The product serves consumers looking for functionality and taste without calories or artificial sweeteners.

Pixie Mate Organic Energy Teas are launching in three flavors: Authentic Yerba Maté, Lemon Ginger Black Tea Maté and Green Tea Yerba Maté. Pixie Maté uses high grade teas in these blends along with unsmoked and stemfree yerba mate. Each tea contains only 6-7g of sugar per serving and no ‘natural flavors.’

RTD TEA

green tea and added Tom First to its board of directors.

This latest batch of news comes on the heels of an $18 million round of funding from Catterton Partners.

Eclipse Beverages Eclipse Beverages announced its Sparkling Iced teas in four refreshing flavors: Sunburst, Strawberry Field, Peachy, and Jasmine Delight.

Guayaki Sustainable Rainforest Products Guayaki added Pure Heart to its line. It features rainforest yerba mate, hawthorn and yarrow – herbs known to enhance cardiac performance. This blend is combined with organic raspberry juice.

Vida Tea Vida Tea won first place for best sweetened RTD green tea in the World Tea Championship at the World Tea Expo.

TeaZazz Sparkling Tea TeaZazz Sparkling Tea started 2008 with expansion into large chain accounts such as Albertsons and Smart & Final. TeaZazz is available throughout Northern and Southern California, and now in Las Vegas.

XingTea / New Age Beverage XingTea is a line of all natural premium green teas made with pure cane sugar and natural flavors in a 23.5 oz. can.

XingTea is looking for good DSD partners, and has listings at many top grocery, convenience and deli chains.

ABF Beverage, LLC. Herbal Mist announced Haralambos Beverage as its exclusive distributor covering the greater Los Angeles market, and that the South-west division of 7-Eleven has authorized four flavors of the Herbal Mist line.

Tradewinds Beverage Company Tradewinds built a new plant to accommodate its surge in business, with the brand being accepted at Walgreens, Sam’s Club, Wakefern, Food Lion, and many other retailers.

Beverage Innovations, Inc. Beverage Innovations latest creation, VENGA functional infusions, combines antioxidant rich teas with 100 percent natural and exotic fruit juices and then inject life enhancing vitamins, minerals and nutraceuticals. VENGA comes packaged in a sleek bottle. The brand includes six functional beverages; Energize, Daily Dose, Rehydrate, Calorie Burn, Brain Storm and Health Zen.

Hansen Beverage Company Hansen’s Natural Iced Teas are available in eight varieties and available nationwide. Each variety is packed with antioxidants and contains no preservatives, artificial flavors or colors.

Nurture by Nature Inc. Nurture by Nature offers a line of Organic RTD Yerba Mate in sleeve wrapped 16 oz. glass bottles. Nurture

by Nature is 100 percent fresh brewed yerba mate, no mate/tea blends or extracts. Nurture by Nature is distributed regionally through UNFI and is now available at Whole Foods and other fine retailers.

FUZE Beverages FUZE introduced a new Black & Green Tea that combines the robust black tea flavor with light acai-berry and apple flavors.

Sweet Leaf Tea Sweet Leaf Tea recently introduced an organic mango

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BEVERAGE SPECTRUM :: JULY – AUGUST 08

ITO EN (North America) INC. Following the successful launch of TEAS’ TEA Mint Green, ITO EN launched, Pure Black-Darjeeling. With the popularity of TEAS’ TEA Oolong tea, a family size 2 L has also been introduced.

Skae Beverages International LLC Skae Beverages recently added Diet Blue Tea with Lemon, Diet Blue Tea with Peach, Green Tea with mango and Black Tea Mo-tea-to.

ZredT, LLC ZredT, LLC introduced USDA Organic certified ZT Rooibos red teas in four ready-to-drink varieties: Unsweetened, Lemon, Ginseng & Honey and Vanilla. All four provide a minimum 100mg of antioxidants from rooibos, 20 percent RDA soluble fiber and only 5 to 10 calories per 16 oz. serving.

CONVENTION SCRAPBOOK

FMI

By Adam Stern

he 2008 FMI Show held at the Mandalay Bay Convention Center in Las Vegas from May 4 – 7, showcased over 25 beverage companies and their brands to supermarket retailers and wholesalers.

Talking Rain was busy promoting their new enhanced activWater at the show. Packaged in the same 19 oz. container as their Twist and Twist Organics line, the product is 100 percent natural and available in six SKUs including “Revive” – Tangerine Ginger, “Resist” – Pomegranate Berry, “Focus” – Dragonfruit, “Vigor” – Triple Berry, “Power” – Strawberry Kiwi and “Balance” – Black Berry.

We spotted the following new and updated products at the show.

• A. Lassonde, Inc.’s Tropical Grove Iced Teas and fruit juices are now available in aseptically packed 70 percent renewable packaging and will soon be launching a line of tetrapak wines.

• Adams Flavors, Food & Ingredients has launched their first RTD brand. Laozi Tea, an organic line of green, red, black, and white teas is available in five flavors including Prickly Pear Hibiscus Fusion, Passion Fruit Tangerine Fusion, Black Berry Rooibos Fusion, Ginger Rosemary Lemon Fusion, and Apple Blossom Fusion.

• AdvancedH2O has added an Orange flavor to their existing purified kids’ water, Color Coolerz brand.

• Ardea has now launched Nutrisoda in 12 oz. bottles primarily for on-premise accounts in five SKUs including Immune, Calm, Focus, Energize, and Radiant.

• Campbell Soup Company has added an Acai Mixed Berry flavor to their V8 Fusions line.

• The Coca-Cola Company showed off a scientific approach to merchandising to specific stores through its “Shopper Segmented Merchandising” program. The strategy is based on various methodologies such as beverage purchasing behavior, where each store has its own “DNA.” The process customizes, matches, and promotes specific brands to help retailers fulfill shopper’s needs. In addition to their “Look of Success” strategy, new products were prevalent: Simply Orange has two new SKUs including Simply Orange with Pineapple and

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Simply Orange with Mango launching on August 18th. Jugos de Valle, a producer of non-carbonated beverages in Latin America and acquired in 2006, has a new line of nectars available in nine flavors including mango and peach. POWERade ZERO has replaced POWERade OPTION. Minute Maid has two new SKUs including Pomegranate Flavored Tea and Pomegranate Lemonade.

• CytoSport Muscle Milk is now available in a 14 oz. PET bottle and has added Chocolate Malt and Strawberries n’ Cream to the line. Muscle Milk Light is also now available. CytoMax has seven functional beverages in new PET packaging including Citrus, Orange Tangerine, Tropical Fruit, Pomegranate Berry, Acai Berry, Dragonfruit and Goji Berry Green Tea. • Groove Energy, an 85 percent organic all natural energy drink made with Austrian spring water launched at the show.

• IN ZONE Brands has launched a new innovative package extension to the TummyTickler juice line which is now available in a 4 oz. 8+1 pack for grocery.

• Kid’s Only, a PET water with Marvel Comics characters will be launching a Batman SKU this summer.

• NBI Juiceworks has been rather busy lately in launching three lines of “Drenchers.” The first is an all natural 100% super juice available in “Endurance” – Grape Apple, “Power” – Protein Juice Orange Cream, “Restore” – AppleKiwi-Mango, “Immunity” – Fruit & Veggie Berry, and “Heart Healthy” – Tropical Passion.

A Fit ‘N Lean line with 10 Calories per 8 oz. glass is also available in the same five SKUs. Finally, a four SKU line of fortified Coffee/Teas titled “Drenchers Super Blend” is available in Iced Coffee, Mocha Cappuccino, Chai Tea Latte, and Chocolate Raspberry Frappe.

• Sport Energy launched five months ago is available in Cran Grape, Mango Cream, Raspberry Cream, and Tropical.

• Sunsweet has introduced PlumSmart – a 100% all natural plum juice.

• Totally Organica Beverages, an organic line of flavored sparkling water is now available and in eight SKUs including Lemon Lime, Cranberry, Berry, Green Apple, Raspberry, Pomegranate, Melon, and Mint.

BEVERAGE SPECTRUM :: JULY – AUGUST 08

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JULY â&#x20AC;&#x201C; AUGUST 08 :: BEVERAGE SPECTRUM

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PROMO PARADE Minute Maid Supports U.S. Olympic Team

Paulaner: Oktoberfest Begins in August

Supporting the athleticism and nationalism the Olympic Games are known for, Minute Maid will be the official juice beverage sponsor of the U.S. Olympic Team at the 2008 Olympic Games in Beijing.

Minute Maid has been an Olympic sponsor since 1984.

Beginning this month, Minute Maid is inviting consumers in the United States to “Bring Home the Goodness” and learn more about 2008 U.S. Olympians with limited-edition packaging in celebration of the Beijing 2008 Olympic Games. The Olympic logo and select U.S. Olympic athletes will be featured on 64-ounce cartons of Minute Maid chilled orange juice, lemonades and fruit drinks. The athletes will also be featured on in-store material in retail locations nationwide.

During the 2008 Olympic Games, the Minute Maid presence will be felt in the Olympic Green where the brand’s juices and juice drinks will be enjoyed by athletes and spectators alike throughout the Olympic Games, which kick off August 8 and run through August 24. Minute Maid juices also will be served at all three U.S. Olympic Training Centers and in the Athlete Village during the Olympic Games.

To help on-premise and off-premise retailers get into the spirit for the two-month Oktoberfest selling season, Paulaner is offering Oktoberfest-themed POS and festive German décor. This exciting ‘Celebrate Paulaner Oktoberfest’ promotion is strategically designed to promote engagement with consumers by promptly getting them into the Oktoberfest mood, while building sales and profits.

Beginning in August, both on- and off-premise retailers can help bring a “taste” of Oktoberfest to their accounts by utilizing Paulaner POS, which will help create the look and feel of an authentic Oktoberfest celebration. To further entice consumers, while reinforcing Paulaner’s strong ties to Oktoberfest, a certificate for a Paulaner beer in the Paulaner tent at the 2009 Oktoberfest in Munich, Germany will be available, where legal. This certificate is sure to be a memorable stand-out for consumers who are thirsty for the true Munich Oktoberfest experience.

To further assist retailers in kickstarting the Oktoberfest selling season, ‘Celebrate Paulaner Oktoberfest’ will be branded on all paper POS, including Oktoberfest pennants, window posters, coasters, case card/easel, table tents, and stickers. Additionally, Paulaner is offering consumer mail-in rebates, where legal, for $8 off a case (or equivalent) and $4 off every 12-pack (or equivalent).

Pacifico Rides the Celestial Omnibus Pacifico Beer will soon be debuting a fleet of vintage, hand-painted 1960s Volkswagen buses to serve as the beer brand’s official vehicles. Pacifico, which was first discovered by west coast surfers on trips to Baja California, Mexico, has continued to gain popularity since being introduced in the U.S. in 1985 and now ranks as the No. 6 imported premium priced beer in the country.

These classic VW buses will be used at retail locations, bars and restaurants to increase Pacifico’s presence in local markets.

Rather than wrapping the buses, Pacifico has selected various artists to hand-paint each vehicle with unique designs that reflect the Pacifico aesthetic seen in the beer’s new Mexico Via Pacifico multimedia advertising campaign, which focuses on off-the-beatenpath Mexico. The artists, who were selected

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based on their artistic style being defined as adventurous, nostalgic and playful with a nod to old-style surf culture, hail from all over the world, including Seattle, California, New York, Arkansas, Toronto and Germany.

Each artist was given a subject, such as surfing, jellyfish and scorpions, and asked to interpret it however they chose, using the bus as their canvas for their designs. New Surf Project surfboards will also be displayed on the roof racks of each vehicle.

After all surf buses are completed, the 19 vehicles will be sent to Pacifico’s core west coast markets including San Diego, Phoenix, Seattle and Los Angeles, and to new markets as the brand moves eastward such as Austin, Chicago, New York, and Charleston.

BEVERAGE SPECTRUM :: JULY – AUGUST 08

The buses will be utilized at special events and Pacifico promotions, both on- and offpremise, such as retail locations, bars and restaurants. The surf buses will also be outfitted with new stereos, in order to play music from the Pacifico playlist, a soundtrack of under-the-radar bands featured in Pacifico films on www.MexicoViaPacifico.com.

PROMO PARADE Tony Hawks Jones Soda Jones Soda Co. is excited to announce the release of a new Tony Hawk’s Boom Boom HuckJam Limited Edition bottle fourpack, featuring images that relate to legendary skateboarder Tony Hawk and the upcoming Tony Hawk’s Boom Boom HuckJam presented by T-Mobile Sidekick tour. Along with the limited edition four-pack, Jones Soda will launch their Under the Cap Text-to-Win promotion, giving away thousands of Jones Soda prizes.

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The Tony Hawk’s Boom Boom HuckJam four-pack will be available this summer at retailers across the country and at www.

JonesSoda.com. The bottles feature four different images, one of which will highlight the Tony Hawk Foundation supporting recreational programs for youth, such as the development of public skateboard parks in low-income communities. These special bottles of Jones’ new Under the Cap promotion in which consumers will have an oppor-

BEVERAGE SPECTRUM :: JULY – AUGUST 08

tunity to win prizes including myJones (cases of Jones Soda with a personalized photo on the label) and Tony Hawk HuckJam series skateboards. Prizes can be won by text-messaging or mailing the code found under the bottle caps. The promotion will run from June until the end of the year. The limited edition Tony Hawk’s Boom Boom HuckJam four-Pack will only be available through the summer.

The tour kicks off in San Antonio, Texas on Friday, July

18, 2008 and will hit 24 cities throughout the United States, finishing in Irvine, Calif. on Sunday, August 24, 2008. Hawk’s tour is an event featuring some of the most exciting athletes in the world in skateboarding, BMX and freestyle Moto-X. More information on giveaways and official rules, photos of fans from the tour, and blogs from Jones staff can be found at www.jonessoda.com.

[

Packaged beverages accounted for

$8.136 billion of in-store sales How are you going to tap into consumer beverage demand?

One Industry. One Voice. One Show.

October 4-7, 2008 | McCormick Place | Chicago, Illinois

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Registration and housing now available online. www.nacsshow.com