Beverage Spectrum May-June 2010

June 23, 2010

GATORADE GETS BACK ON THE FIELD Can it get back in the game?

ENERGY DRINKS Get Nickeled and Dimed FRS Strikes a Deal BevNET Live Summer ‘10

MAY-JUNE 2010 vol.

8 :: no. 4

Columns 4 FIRST DROP One Day, Many Questions 6 PUBLISHERS TOAST Barry Needs Topic, Talks to People 26 GERRY’S INSIGHTS Tea’s Tough, But Here’s Some Potential

Departments 32

8 BEVSCAPE BUSINESS CEO’s on the Move 12 BEVSCAPE INNOVATION Gut Health Rumblings 16 CHANNEL CHECK Core Energy and its Derivatives 20 NEW PRODUCTS Shipyard Wheat 64 PROMO PARADE WAT-AAH’s ____ Idea

Features 28 BRANDS IN TRANSITION: FRS FRS Makes its Move 42

32 BEVNET LIVE An industry looking forward.

36 A SNOWMAN SHAPEDBOTTLE SIZE HOLE Distributors search for a successor to Muscle Milk.

42 COVER STORY GATORADE GETS BACK ON THE FIELD But can they get back in the game?

52 THE NEW POWER SOURCE: CHEAP ENERGY Energy drinks play the pricing game.

52

Beverage Spectrum (Postal Number 024-552) 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. 44 Pleasant Street, Suite 110, Watertown, MA 02472. Periodicals postage paid at Boston, MA and additional mailing offices.

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

By Jeffrey Klineman

THE FIRST DROP

ONE DAY, MANY QUESTIONS WE LIKE TO THINK OF OUR just-concluded BevNET Live and Beverage School events as a chance for the industry to meet and exchange knowledge and support, but I’ve found that it also serves a bonus purpose: for me, it’s also become an important reference point for industry concerns and areas of inquiry.

Certainly, from Day One we plan many of the issues that we want to explore on panels and through presentations: case studies on the search for the ultimate sales and marketing formula, the recent environment and future outlook for building an entrepreneurial beverage enterprise, the answers to questions about what retailers, investors, and distributors are looking for.

We think about ways to expose attendees to basic technical knowledge and deeper strategic decisions. We try to take into account their need for networking – and social lubrication.

But while it’s a fun event to plan and it is great when it all goes smoothly, it’s what we don’t anticipate that I find equally exciting: exchanges take place between panelists and the audience, someone “commits news” during a presentation, as we saw when Vita Coco announced its distribution deal with the Dr. Pepper/ Snapple Group, and new lines of thought and questioning begin to take on a presence of their own. Some of them can be effectively touched on as the event progresses, but others merit ongoing exploration. I find that we need to revisit them not just within the confines of the live event, but also as part of our commitment to providing the best possible information about trends in the beverage industry and how they affect the people who help make, market, and distribute them.

Here are some of the issues that seemed to bubble up, both as a result of questions directed to and among panelists, and those mentioned to me casually over the course of the event:

4.BEVERAGESPECTRUM.MAY-JUNE.2010

Michael Kirban, CEO Vita Coco, announces a distribution deal to open his BevNET Live Entrepreneur Case Study discussion.

• The tension between beverage marketers and distribution organizations – particularly DSD – needs to be addressed in clear terms that take into account both of their costs and ultimate goals. The fallout from deals like the buyouts of Glaceau and Fuze, as well as the loss of fast-growing independents like Rockstar, Muscle Milk and Monster to Coke, Pepsi and Anheuser Busch is one that has led to mutual distrust at a point in time when, as many attendees pointed out, they need each other more than ever.

• The change in the way that distributors look at innovative non-alcoholic beverages in a world where they also carry hard alcohol, craft beer, chips and candy bars.

• The difference in expectations between investors and marketers as to what comprises a successful beverage brand, both in terms of benchmarks and growth rates, as well as the ongoing role of the founder in that success.

• Whether the industry will remain a vibrant place for investment after the loss of a major tax break for venture capitalists.

• The long-term consequences that could result from, and the role of the beverage industry in, a rising tide of legislation aimed at taxing sugared beverages, regulating caffeine content, and redefining the concept of the nutritional supplement.

• Whether new “superfruits” or other high-end ingredients will be enough to drive consumers to purchase beverages after they’ve been disappointed by the promise of various products in the past – and whether the larger beverage realm is tipping back toward taste and value rather than efficacy and prestige.

• The role of traditional and new media in getting consumers to try products, to keep coming back to products, and how much brands should spend in each area when it comes to activating those consumers – as well as how much they should spend activating channels via extras like slotting fees and sales incentives.

As the year goes on, we will try to get at the answers to these questions as possible, from as many directions as we can – be it this magazine, our ever-expanding roster of online offerings, or, yes, this winter’s BevNET Live event in California. Each question that gets answered raises a host of new ones, after all, and we think we should get our best minds together to work on them. So we appreciate your feedback, your ongoing questions and answers, and we hope you’ll let us hear from you – and not just during these great gettogethers. Although we think you should keep coming to them, as well.

Thanks again for reading.

IS IT US, OR DID IT GET A LOT MORE CROWDED OVER THE LAST FEW YEARS?

The most trusted protein drink for nearly ten years.

The Category Leader with 63+% share in US Food and 93+% share in US Convenience!*

*Nielson (3/20/2010)

Š2010 CytoSport, Inc. Benicia, CA 94510 USA

musclemilk.com

PUBLISHER’S TOAST

By Barry J. Nathanson www.bevspectrum.com

Barry J. Nathanson PUBLISHER bnathanson@bevnet.com

COLUMN FATIGUE

Jeffrey Klineman EDITOR jklineman@bevnet.com

Matt Casey ASSISTANT EDITOR mcasey@bevnet.com

SALES John McKenna ASSOCIATE PUBLISHER jmckenna@bevnet.com

Adam Stern ASSOCIATE PUBLISHER astern@bevnet.com

I CAN HONESTLY SAY THAT ONE of the hardest parts of my job is coming up with an idea for my column. It’s been 18 years and counting, after all. I’ve written about innovation, distribution, shelf sets, financing, packaging and marketing. I’ve visited every retail channel to see what makes them tick. I’ve covered incredible personalities, dismal failures, my favorite “what were they thinking” concepts and formulations, the Yankees, Woodstock, and, most recently, the bane of Blackberries. I could go on and on.

As my deadline nears, the subtle, then overt emails come from Jeff Klineman, our editor, that my submission is due. So where do I go for inspiration? I decided to take it to the streets.

Yesterday afternoon, I headed up to Times Square, the crossroads of the world, to see what people were drinking and why. Mind you, this was an unscientific study, but desperate times merit desperate measures. I spent four hours stopping well over 100 beverage consumers to see what mattered to them. Here are some of the thoughts and observations that stuck out.

First and foremost, they drink for the

sheer joy of it. Beverages are an integral part of their lives, and they savor the experience. They identify with certain brands and are loyal to them. Their passion was palpable.

Price isn’t a factor in single serve.

Tourists, especially foreigners, stick to the tried and true: as a rule, Coke, then Pepsi, to a lesser extent. They don’t profess to want to try the more exotic brands offered in every retail outlet in the area.

Americans drank a broader array of products, with teas, especially the large prepriced ones (yes, AriZona), dominating the selection. I saw an interesting assortment of pretty esoteric brands in their grips. It was encouraging for the little guys.

Water was the main beverage of choice.

I asked everyone if the issue of PET, recycling and the environment was a factor, and got an overwhelming no. Most thought the issues about water were ridiculous, and that of all beverage categories, they’re picking on the wrong one. They want their portability. On the other hand, I didn’t stop anyone drinking from a thermos, so there’s obviously a built-in bias.

Energy drinks prevailed in the 25 and under set, no surprise there.

Most drinkers, in any category, don’t believe functionality claims, but that doesn’t bother them, as long as it tastes good. They figure if it’s not bad for you, that’s okay. Marketers, you have a tall task to create believability.

Most of the people I polled were acutely aware of, and read Beverage Spectrum on a frequent basis. Naah, I just wanted to slip that in.

As the officer on horseback strode up to me to ask why I was stopping so many people, I decided it was time to close my research project. Survey complete.

Column done.

Jeff Hyde ACCOUNT EXECUTIVE jhyde@bevnet.com

ART & PRODUCTION Matthew Kennedy ART DIRECTOR Amadeu Tolentino GRAPHIC DESIGNER Natalie Iknaian GRAPHIC DESIGNER BEVERAGE SPECTRUM PUBLISHING, INC. John F. (Jack) Craven CHAIRMAN jfcraven@bevnet.com

John Craven PRESIDENT & EDITORIAL DIRECTOR jcraven@bevnet.com

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DO YOUR PART: PLEASE RECYCLE THIS MAGAZINE

6.BEVERAGESPECTRUM.MAY-JUNE .2010

Most Valuable Player meets Most Valuable Product.

Three-time National League MVP Albert Pujols knows what the power of award-winning protein does for him.

Imagine what it can do for your sales. Especially since OhYeah! was judged the 2009 Best Tasting Nutritional Shake in America by the American Masters of Taste, as well as earning the 2009 CSNews Best New Product award. To find out more, contact Wes Strickland, VP of Sales, at 888.231.2684 or hit ohyeahnutrition.com.

BB

BEVSCAPE BUSINESS • The latest news on the brands you sell.

Tax Tussles

Market Outlook

Advocates and opponents of beverage taxes busied themselves in May, with three tax proposals dead, one surfacing, one returning, and one thought-dead back on its feet.

N.Y. Gov. David Paterson resurrected his proposal with a revision that would create a sales tax exemption for diet sodas and bottled water while leaving in place a tax of one penny-per-ounce on full-calorie beverages. Meanwhile, environmentalists in Massachusetts renewed a push to extend the state’s deposit law to bottled water, and Rhode Island’s House Finance Committee heard an argument in favor of a soda tax.

Each of those measures will likely meet fierce opposition from beverage industry leaders. In May, the industry stifled tax proposals in Baltimore, Washington D.C. and Philadelphia, where a nearby bottler offered Mayor Michael Nutter $10 million to take his tax proposal off the table.

He refused, but his soda tax push failed when the City Council voted to approve a budget that omitted the measure.

Philadelphia Mayor, Michael "Today the big soda Nutter, has had little success lobby won and average with beverage tax proposal.

Philadelphians lost," Nutter declared.

Even with its recent run of success, the beverage industry should expect more tax battles. First Lady Michelle Obama recently endorsed soda taxes, and Washington D.C.’s City Council is now considering an alternative measure that would eliminate a sales tax exemption for soft drinks.

Wall Street and the economy have buffeted the beverage segment recently, but according to Goldman Sachs, the storm may calming.

The brokerage firm predicted in May that sales of both alcoholic and nonalcoholic drinks will rise in the second half of the year.

It upgraded PepsiCo and Hansen Natural Corp. to “buy” status, and bumped Jack Daniels’ owner BrownForman Corp to “neutral.”

“We are now increasingly constructive on the [consumer] staples sector, as we see potential recovery in the staples demand for the second half of 2010,” a Goldman analyst wrote in a note to investors. The analyst added that Coke and Pepsi’s bottler acquisitions could help both companies pursue value over volume.

But Wal-Mart may hamper those efforts. In a play to pull more customers into its stores, CNBC reported that the retailer has cut prices on Coke, Pepsi and DPSG products. While those cuts came at the expense of its own margins instead of those of the beverage giants, ConsumerEdge analyst Bill Pecoriello said that other grocers could respond in-kind, leaving the big three struggling to raise prices.

Killebrew Gets Killebrew RJM Distributing, Inc., exclusive licensee, manufacturer and distributor of Killebrew Root Beer and Cream Soda, announced an endorsement agreement with Hall of Famer and Minnesota Twins slugger Harmon Killebrew.

As part of the agreement, the baseball veteran will endorse and market the brand’s root beer and cream soda products through personal appearances, advertising, point-of-purchase materials and packaging. Killebrew beverages also secured

8.BEVERAGESPECTRUM.MAY-JUNE.2010

serving rights for Minnesota Twins home games at Target Field.

"The Twins got involved with the rebranding of Killebrew Root Beer because Harmon's name is synonymous with the great history and tradition of our organization," said Twins Vice President Eric Curry. "Having Killebrew Root Beer available to our fans at Target Field seems only natural since it is also brewed right here in Twins Territory."

SHOTS

BB

BEVSCAPE BUSINESS • The latest news on the brands you sell.

Evolution Fresh Adds Investment Evolution Fresh announced a partnership with investment firm Fireman Capital Partners to fuel an American revival of freshsqueezed, organic juices.

Naked Juice and Odwalla both lost their way after PepsiCo and The Coca-Cola Co., Inc. purchased them, said Shawn Sugarman, CEO of Evolution Fresh and former president of Odwalla. Both brands now save costs by using purees instead of whole fruits and vegetables, and Sugarman said that switch created space for a new super-premium juice (Evolution calls itself “ultra-premium”). But, he said, the company will face the same challenges as its predecessors.

“It’s not hard to make really good juice; it’s just hard to resist compromising your approach,” Sugarman said.

Fireman Capital’s investment, he said, will help the company overcome that challenge.

As the brand grows, its resemblance to the early days of Naked and Odwalla may continue: founded by Naked Juice founder Jimmy Rosenberg, Evolution Fresh, already hired a number of Odwalla veterans, Sugarman included. The company will likely expand its distribution in the footprints of the two incumbent brands, Sugarman said, and may look to old Naked and Odwalla hands to help it.

“There’s a lot of people that built the two incumbent brands over the years,” Sugarman said. “Some of them are wanting to do it again. We’re fi nding that there are a lot of people that want to join us and make this happen.”

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Big Beverage to Help Cut 1.5 Trillion Calories A coalition of food and beverage companies including Kraft, The Coca-Cola Co., Inc., PepsiCo and Nestle USA pledged cut 1.5 trillion calories from the American prepared food market by the end of 2015.

The Healthy Weight Commitment Foundation, in cooperation with First Lady Michelle Obama and the Partnership for a Healthier America, said it intends to achieve and maintain that decrease by developing lower-calorie options, changing existing recipes and reducing portion sizes of single-serve products.

Under the terms of the agreement, the HWCF will report its progress annually to the Partnership for a Healthier America. The Robert Wood Johnson Foundation will also support a rigorous, independent evaluation of the Healthy Weight Commitment Foundation's efforts and publicly report its findings.

Turnover at the Top Another fiscal quarter, another set of changes in the CEO seat at a pair of innovative beverage companies, mix1 and Steaz.

Despite being in a growth mode, Bob Pinkerton, the CEO of mix1, has been replaced by the company’s board of directors. “It’s a good brand; it’s growing fast, but it should be growing faster,” said John Burns, general partner of the Highland Consumer Fund, a minority investor in the company.

Burns himself has taken over as acting CEO, commuting weekly to mix1’s headquarters in Boulder, Colo. from his home in Boston. He said the company has been hiring and has grown nearly 50 percent in the last 12 months, but that the marketing message behind the unique protein and fitness product needed to be clearer.

Co-founders Dr. James Rouse and Greg Stroh remain key parts of the sports-oriented marketing focus, Burns said, while Pinkerton remains an investor.

Meanwhile, Steaz co-founder and CEO Eric Schnell also left his company following changes in its investment structure. While sales of the company’s tea-based products have grown recently, investors led by the firm Inventages had tightened terms for reinvestment and forced cost cutting at the business.

Jim DePietro, who joined Steaz as its COO in 2008 after a career with Unilever, replaced Schnell, and the company promoted co-founder Steven Kessler to president.

Following his departure, Schnell took a position at consumer merchant banking firm 6Pacific, where he will act as an advisor and operating partner focusing on investing in beverages and natural products.

MAY-JUNE.2010.BEVERAGESPECTRUM.11

BI

BEVSCAPE INNOVATION • Product development & marketing news

Cancer Connections Good news: a new study suggests that high daily intakes of coffee or soft drinks may not increase consumers’ risk for colon cancer. Bad news: antioxidants, a key modern functional beverage ingredient, could cause cancer in high doses.

Researchers at Cedars-Sinai Heart Institute reported that they added mega-doses of antioxidants to tissues being grown in a lab in an attempt to prevent mutations, and – unexpectedly – got more.

“Antioxidants suppressed DNA damage at low concentrations,” the researchers reported “but potentiated such damage at higher concentrations.”

As a result, the group theorized that there is an optimal dose of antioxidants like vitamins A, C and E. The FDA’s recommended daily allowance is safe, they said, but consumers might want to cancel any planned IVs of POM Wonderful.

In an unrelated report, Dr. Xuehong Zhang and his colleagues at the Harvard School of Public Health reviewed 13 studies that analyzed a total of more than 730,000 people, of whom more than 5,600 developed colon cancer.

Those that drank more than six 8 oz. cups of coffee, or more than 18 oz. of traditional soft drinks daily, shared the same colon cancer risk as the general population, said the study published in the Journal of the National Cancer Institute. Heavy tea drinkers – those that drank more than four 8 oz. cups of non-herbal tea per day – suffered a slight uptick in their risk, but the researchers said the sample included only a small number of such drinkers.

12.BEVERAGESPECTRUM.MAY-JUNE.2010

Are We More (Lactose) Tolerant Than We Think?

More than half of people that think they are lactose intolerant may be wrong, according to a study published in the journal Clinical Gastroenterology and Hepatology.

The researchers fed subjects who identified themselves as lactose intolerant a lactose solution equivalent to a quart of milk. Only half suffered stomach pain or flatulence.

The researchers speculated that those that had believed they were lactose intolerant, but weren’t, could be suffering from irritable bowel syndrome.

Or, the group said, mistaken test subjects may have concluded that they were lactose intolerant after simply over-indulging in milk products on some occasion.

Gut Health Rumbles American interest in gut-health products has spiked, according to Innova Market Insights. The new product-tracking firm reported more than 4,000 global products launched on a gut or digestive health platform in 2009, double the 2,000 it identified in 2004.

American products accounted for 28 percent of last year’s launches, the firm said, with stateside introductions more than tripling since 2005. American interest in the segment jumped notably, Innova said, after Danone repositioned Activia to more clearly call out its gut-health boosting properties.

While probiotic yogurts and dairy drinks still lead the field, Innova reported that gut health claims have extended to chocolate bars and frozen yogurts.

“Outside the US, there has been an even wider range of activity, with novel products appearing alongside development of existing brands and concepts,” the group wrote.

Innova added that the “gut health” field remains difficult to define. The segment includes high-fiber foods in addition to probiotic foods, and, many probiotic products have focused on immune defense as much, if not more than, digestive health. Estimates now tend to put the global market for gut health foods and drinks at over $10 billion per year.

BI

BEVSCAPE INNOVATION • Product development & marketing news

E-Marketing Update

Ingredient Update

Your products’ package – with the aid of a smart phone – could create a window to a new, virtual marketing channel. StickyBits allows iPhone and Android users to attach video, photos, text or audio to real-world universal product codes. The program geo-tags the content and attributes it back to the user’s social media profi le, allowing later users to fi nd the attached media and continue the conversation.

StickyBits will let brand owners track where and when people scan their products and will also let them monitor and manage attached conversations.

In more traditional social marketing, a report from eMarketer and Morpace found that referrals from Facebook friends made two thirds of American users more likely to patronize the recommended brand or store. The study also found that 41 percent of Facebook users connect to fan pages to show off their favorite products – though 37 percent joined those pages due to coupons or discounts.

Regardless of how they join, each Facebook follower is worth about $3.60, according to social media specialist Virtue. The firm determined that, while individual brand success varied, a Facebook fan base of 1 million averaged annual brand impressions equal to a $3.6 million traditional online media campaign.

Those traditional online campaigns have become more effective than television, according to The Nielsen Company. The advertising research firm, in cooperation with Microsoft, reported that video ads shown during full-episode, online TV shows achieve better results than on-air TV ads. Online ads boasted a 65 percent general recall compared to 46 percent for TV ads. The report added that the most effective way to air a commercial is both online and on the air.

Synergy Flavors, Inc. earned organic certification for its manufacturing facility near Chicago, its second in North America.

14.BEVERAGESPECTRUM.MAY-JUNE.2010

DSM Nutritional Products announced a clinical trial that showing that six months of using geniVida Bone Blend increased bone mineral density by up to 3.4 percent in post-menopausal women.

BI Nutraceuticals announced the availability of two new ingredients: quinoa, a gluten-free grain rich in protein, fiber, and micronutrients; and maqui, an antioxidantrich, dark-purple berry native to Chile.

Sensient Technologies Corporation announced a $16 million investment in its Color Group headquarters site in St. Louis, where it will construct a 25,000 square foot facility dedicated to natural colors production.

TIC Gums announced new stabilizers for dairy and alternative formulations for protein beverages.

Suntava announced a purple corn concentrate that can be used to formulate Chicha Morada and other fruit and vegetable fusion drinks.

WILD Flavors, Inc. announced new flavors developed to pair with coconut water – including mango, passionfruit, acai berry, strawberry guava, lime citrus, tropical pineapple, and pomegranate berry. WILD also designed a flavor to make coconut water taste fresh, and developed marketing concepts for the trendy ingredient.

Fullpg_Vert_NewDelicious_2F.pdf

1

5/19/10

2:39 PM

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CHANNEL CHECK • What’s hot – and what’s not – in stores now.

SPOTLIGHT CATEGORY

ENERGY DRINKS 52 Weeks through 5/16/2010

Top energy brands remain strongest at their core. While Monster’s flagship grew by 11 percent, Java Monster dropped by 8.6 percent. Other Monster spinoffs slipped as well. Sales of Rockstar’s core product edged downward amid distribution turbulence, but the brand’s Juiced and Roasted extensions plummeted. PepsiCo’s AMP (which, arguably, no longer has a core) proved an exception. It lost sales at double-digit rates on five SKUs, including its top seller. Meanwhile, Red Bull, still the top-selling energy brand, markets just two varieties: Regular and Sugar Free.

Brand

Dollar Sales

Change vs. year earlier

Red Bull

$2,041,780,000

6.1%

Monster

$988,379,400

11.2%

Rockstar

$387,993,700

-2.9%

NOS

$194,639,400

14.4%

Java Monster

$170,844,300

-8.6%

Doubleshot

$155,569,600

34.0%

AMP

$142,025,600

-12.5%

Monster XXL

$115,926,800

-51.1%

Monster Mega

$115,731,700

N/A

Full Throttle

$115,508,500

-4.6%

Monster Khaos

$66,241,300

-12.2%

Rockstar Punched

$63,427,220

9.1%

Rockstar Juiced

$57,950,540

-34.2%

AMP Overdrive

$55,204,540

-10.0%

Full Throttle Blue Demon

$48,314,360

-15.8%

SoBe No Fear

$45,178,230

-30.4%

Monster Assault

$44,540,540

-4.8%

Monster Nitrous

$41,953,310

N/A

AMP Energy

$31,060,230

10.8%

Venom

$30,376,360

26.9%

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

TOPLINE CATEGORY

VOLUME

52 Weeks through 5/16/2010

BEER $21,949,393,000

BOTTLED JUICES

-3.0%

-3.4%

$5,100,080,000

BOTTLED WATER

-4.6%

$7,547,799,000

ENERGY DRINKS $6,115,540,000

5.3%

SPORTS DRINKS

-6.9%

$3,450,722,000

TEA/COFFEE $2,804,891,000

4.9%

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

16.BEVERAGESPECTRUM.MAY-JUNE.2010

Bringing

natural flavors into focus.

Robertet is a closely-held multinational company whose vision is long-term and whose technologies are focused on the flavors and aromas that nature always intended. For all of your flavor needs, call Robertet at 732-981-8300, or send an email to Solutions@RobertetUSA.com.

TECHNOLOGY • CREATIVITY • INNOVATION

CC

SPORTS DRINKS Brand

Gatorade

HOT! Gatorade Rain No Excuses Dollar Sales

Change vs. year earlier

BOTTLED WATER Brand

HOT! SoBe Life Water Dollar Sales

Change vs. year earlier

$1,102,447,000

-16.8%

Private Label

$938,516,200

8.4%

Powerade ION4

$531,066,900

798.2%

Vitaminwater

$719,968,600

-22.3%

G2

$325,098,700

-2.4%

Aquafina

$713,022,100

-10.1%

Gatorade Perform

$282,898,700

N/A

Dasani

$638,685,700

-16.0%

Gatorade Frost

$197,091,400

-15.6%

Poland Spring

$355,944,200

-8.0%

Gatorade Fierce Bring It

$149,782,300

520.7%

Nestle Pure Life

$259,432,000

36.3%

Gatorade Cool Blue

$128,422,000

N/A

Smartwater

$240,800,800

32.1%

Powerade Zero

$118,741,600

34.8%

SoBe Life Water

$239,329,400

85.1%

Gatorade Rain No Excuses

$115,444,700

1,076.0%

Deer Park

$230,923,200

-6.6%

Gatorade Tiger Focus

$91,898,140

N/A

Arrowhead

$215,156,300

-17.6%

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

52 Weeks through 5/16/10

RTD TEA Brand

NOT! Gatorade

HOT! AriZona Arnold Palmer Dollar Sales

Change vs. year earlier

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

52 Weeks through 5/16/10

ENERGY SHOTS Brand

NOT! Vitaminwater

HOT! Red Bull Dollar Sales

Change vs. year earlier

AriZona

$619,562,400

7.6%

5-Hour

$613,274,800

48.3%

Lipton

$327,612,100

-7.9%

Red Bull

$35,978,940

50,466.4%

Lipton Brisk

$191,613,700

34.4%

Stacker2 6 Hour Power

$28,932,270

-1.2%

Snapple

$185,422,100

2.2%

Monster Hitman

$18,711,810

63.5%

Lipton Pureleaf

$160,505,600

8.3%

NOS

$9,121,323

-51.9%

Nestea

$118,020,100

5.3%

Rockstar

$6,012,033

-22.6%

Diet Snapple

$116,582,500

12.7%

Redline Power Rush

$4,703,991

13.8%

Gold Peak

$76,357,960

33.1%

Nitro 2 Go

$4,033,767

-24.7%

AriZona Arnold Palmer

$71,298,130

132.7%

Private Label

$3,757,425

360.7%

Diet Lipton

$66,387,440

2.5%

Extreme Energy

$3,702,738

-67.9%

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

52 Weeks through 5/16/10

IMPORT BEER Brand

Corona

NOT! Lipton

HOT! Dos Equis XX Dollar Sales

$928,825,100

Change vs. year earlier

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

52 Weeks through 5/16/10

DOMESTIC BEER Brand

NOT! Extreme Energy

HOT! Keystone Light Dollar Sales

Change vs. year earlier

-9.1%

Bud Light

$5,225,654,000

-3.7%

$2,180,712,000

-8.6%

Heineken

$582,087,200

-8.7%

Budweiser

Modelo Especial

$252,031,000

4.9%

Coors Light

$1,847,187,000

1.2%

Tecate

$178,106,100

-7.6%

Miller Lite

$1,685,467,000

-6.1%

Corona Light

$169,846,400

-2.0%

Natural Light

$1,128,335,000

7.1%

Labatt Blue

$118,202,300

-3.4%

Busch Light

$728,907,700

9.2%

Labatt Blue Light

$98,159,700

5.8%

Busch

$688,241,200

2.8%

Heineken Light

$92,246,880

-14.6%

Miller High Life

$511,199,200

3.5%

Dos Equis XX Lager

$87,169,130

22.7%

Keystone Light

$478,671,400

17.4%

Stella Artois

$78,214,400

9.5%

Natural Ice

$343,533,400

3.8%

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

52 Weeks through 5/16/10

18.BEVERAGESPECTRUM.MAY-JUNE.2010

NOT! Heineken Light

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

52 Weeks through 5/16/10

NOT! Budweiser

NP

NEW PRODUCTS •

CSD R.W. Knudsen Family’s Spritzers reappeared on shelves this spring. The new Spritzers contain 70 percent to 80 percent juice, a reduction from the original 100 percent juice formula. This adjustment, in combination with the brand’s transition from 12 oz. cans to 10.5 oz cans, decreased the calories per can from about 200 to 120 or 110. The new can design showcases real fruit and lively colors. The new Spritzers come in 4-packs with a recyclable paper wrap, replacing the former 6-pack unit. Spritzers are sold at natural and traditional grocers nationwide for $3.99 per 4-pack. Flavors include Mango Fandango, Tangerine, Red Raspberry, Jamaican Lemonade, Black Cherry, Boysenberry, Grape, Ginger Ale, Lemon Lime, Cranberry, Mandarin Lime, Strawberry, Orange Passionfruit and Peach. For more information, call (303) 449-2108.

Fizzy Lizzy announced a re-branding of its sparkling juice line, with a new logo and graphics for its packaging as well as its website. The revised packaging emphasizes a clean, simple and fun look. The new labels and 4-packs hit stores starting in May. Fizzy Lizzy consists of fruit juice and sparkling water with an average of 60 percent juice per bottle. The line includes eight flavors and is sold in select grocers, health-food stores, restaurants and cafes across the country. For more information call (800) 203-9336.

IZZE Beverage Company introduced limited edition SKU, IZZE Sparkling Guava.

Made with 70 percent juice and a splash of sparkling water, Sparkling Guava contains no refined sugars, caffeine, preservatives or artificial flavors. Sparkling Guava’s 4-pack packaging promotes awareness for IZZE’s non-profit partner, Global Education Fund.

Sparkling Guava is available exclusively in Whole Foods Market nationwide for a suggested retail price of $1.00 to $1.69 per bottle or $3.99 to $5.99 per 4-pack. Guava will only be around for the summer. For more information, call (310) 248-6119.

BEER Shipyard Brewing Company announced the release of Shipyard Wheat Ale. This new beer is available year-round in 6-packs, 12-packs and on draft. Shipyard Wheat Ale is a crisp American style wheat ale with a 20.BEVERAGESPECTRUM.MAY-JUNE.2010

The newest options for cooler and shelf. soft golden color and nice copper hue. This filtered wheat beer is 4.5 percent alcohol by volume and is made with 60 percent Malted Wheat and 30 percent Pale Ale Malt. There are touches of Light Munich and Caramunich Malts and a hint of Crystal Malt.

This beer is subtly hopped with Glacier and Hallertau Hops and a new aroma hop called 04-188. Shipyard Wheat Ale is available across the Northeast and Florida at a typical retail price of $9.99 per 6-pack, and distribution is expected to expand to other markets throughout the year. For more information, contact Shipyard at (207) 761-0807.

SPIRITS Southern Comfort announced new labeling that reasserts its New Orleans provenance. Individual design cues have been created for each product within the Southern Comfort portfolio - 70 Proof, 100 Proof, Special Reserve, newly introduced Southern Comfort Lime and each Ready to Serve Cocktail. The neck wrap features an award-winning illustration designed by Christian Northeast. The iconic shield on the front of the bottle is the new shorthand for the brand serving as a simplified, contemporary badge. It features the fleur de lis and filigree reminiscent of the wrought iron balconies often found in New Orleans. The new package was designed by Cue, a brand design company based out of Minneapolis, Minn., and is now hitting shelves globally with a suggested retail price of $16.99 for Southern Comfort 70 Proof 750ml. For more information, call (502) 774-7643.

Phillips Distilling Company introduced UV Coconut Vodka. UV Coconut Vodka is an all natural coconut flavored vodka that’s distilled four times, carbon filtered and sweetened with cordial-grade cane sugar from Florida. UV Coconut Vodka is available in all normal bottle sizes. The suggested retail price for the 750ml is $12.99. This product is currently available across the U.S. and Canada.

For more information, call (612) 677-1717.

BACARDI launched two new cocktail additions to its ready-to-drink portfolio: Bacardi Classic Cocktail Piña Colada and the Bacardi Classic Cocktail Strawberry Daiquiri. Both pre-mixed cocktails are made with Bacardi Superior Rum. The translucent 750 ml and 1.75 L bottles contain 15 percent ABV and have a suggested retail price of $12.99 and

Innovation opens eyes (and pocketbooks.)

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Dirty Blonde Champagne Cocktails launched in Los Angeles with Raspberry Flirtini and Peach Passion Bellini flavors. Dirty Blonde Champagne Cocktails are served in clear, sleek, 187 ml bottles, sold in 4-pack totes, and contain 12 percent alcohol by volume.

Each 4-pack retails for $13.99 and is currently available for purchase at BevMo. For more information, call (310) 858-2222.

Haamonii Shochu (soju) mixes like vodka but with fewer calories and half the alcohol.

A two-ounce serving of Haamonii is approximately 70 calories and 22 percent alcohol, compared to as much as 120 calories and 30-50 percent alcohol for vodka. Haamonii is available in two varieties: Haamonii Original and Haamonii Lemon. Haamonii is currently available on premise in San Francisco, Los Angeles and Atlanta. Consumers can now order Haamonii online, and the brand has secured retail distribution in California and Atlanta with New York soon to follow. For more information, call (323) 337-9042.

JUICE New Odwalla Strawberry Protein Monster packs 25 grams of protein in every bottle.

Organic Soymilk and milk protein provide the protein while strawberries deliver a fresh berry flavor and aroma. Strawberry Protein Monster also delivers Vitamins B6, B12, calcium and zinc. Odwalla Strawberry Protein Monster is available in 450 mL (15.2 oz.) recyclable plastic bottles and can be found in natural food stores, select supermarkets and specialty outlets throughout the country. For more information, call (718) 746-0087.

Joint Juice introduced the reformulated Joint Juice Supplement Drink. This 20-calorie, juice-based beverage combines a full day’s supply of Glucosamine with Chondroitin, vitamin D3, vitamin C and antioxidants. Joint Juice Supplement Drink now features Cran Pomegranate and Blueberry Acai flavors in resealable bottles.

Joint Juice Supplement Drink is nationally available in the vitamin aisle at warehouse clubs, mass merchandisers, grocery stores, and drug stores. The suggested retail price

22.BEVERAGESPECTRUM.MAY-JUNE.2010

is $5.99 per 6-pack of 8 oz. bottles and $16.99 per 30-pack (club stores only). For more information, call (415) 392-2232.

WINE Woodbridge by Robert Mondavi introduced California Brut Sparkling Wine.

Woodbridge by Robert Mondavi Brut Sparkling Wine displays green apple, ripe pear, and bright citrus notes with a toasty finish.

The Woodbridge by Robert Mondavi Brut Sparkling Wine will be available nationally beginning June 1, 2010. The suggested retail price for 750 ml is $9.99. For more information, call (415) 978-9909.

Lualle, LLC introduced BonBlaze Wine Sorbet. Available in Natural Cranberry and Natural Blueberry varieties, BonBlaze uses real fruit and is sold non-frozen in 1 L TetraPrisma. Each package, containing 12.5 percent alcohol by volume, will be available at $10.99 retail. For more information, call (347) 668-7460.

ENERGY SHOTS Stacker2 announced new Stacker2 Vitamin Shots. Stacker2 Vitamin Shots deliver essential vitamins in a 2 oz. shot that contains zero sugar and zero calories. Vitamin Shot Hangover Helper is a blend of B vitamins, milk thistle, green tea, dandelion and ginger root in a Detox Lemonade flavor. Vitamin Shot Self Defense contains B vitamins, vitamin C, Echinacea, zinc and other herbs in an Intense Orange flavor. Vitamin Shot Joint Fit combines glucosamine, chondroitin and vitamin D with a Sweet Cherry flavor. Vitamin Shot Rest & Relaxation is a fusion of valerian root extract, passion flower extract, L-tryptophan and chamomile extract in a Blissful Blueberry flavor. Vitamin Shot Prolong Pleasure is a mixture of horny goat weed, ginkgo and maca root in a Tropical Passion flavor. For more information, call (973) 786-7868.

Solvi Brands LLC introduced CRUNK!!!

Energy Stix. CRUNK!!! Energy Stix contains only 10 calories and 3 grams of carbohydrates in an orange-flavored powdered format that requires no water and no mixing. CRUNK!!! Energy Stix come two per blister package. For more information, call (678) 578-5320.

A true dipeptide that goes the distance.

Meet pure, patented and beverage-ready Sustamine™. The only GRAS L-Alanyl-L-Glutamine available on the market, Sustamine is the result of a patented process that creates a true dipeptide of L-Alanyl-L-Glutamine without chemical synthesis. A natural ingredient that has been clinically tested, Sustamine supports rehydration, energy replenishment and muscle recovery.* Stable in liquids and ready-to-drink formulations, Sustamine is designed to fit the needs of athletes as well as weekend warriors.

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These fine brands contain Sustamine™ in their formulations

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*These statements have not been evaluated by the Food and Drug Administration.

This product is not intended to diagnose, treat, cure, or prevent any disease.

NP ENHANCED WATER

new 18.5 fl. oz. plastic bottles. Gold Peak Chilled Tea in 59 oz. carafes is offered in sweetened, unsweetened, diet and lemon varieties. Gold Peak single serve in plastic bottles is available nationally in supermarkets, convenience stores and other retailers in sweetened, unsweetened, diet, lemon and green tea varieties. For more information, call (404) 676-1070.

AriZona Beverage Company announced the launch of RESCUE Water, a line of enhanced waters with a proprietary blend of Twinlab vitamins and antioxidants. Berry Blend combines L-Theanine, green tea extract and lemon balm extract. Lemon Lime is designed to provide a boost in energy, with a blend of guarana extract, green tea extract and natural caffeine. Orange Citrus blends Alpha Lipoic Acid, green tea extract, milk thistle extract, and L-Glutathione. Pomegranate Punch blends Arabinogalactin, green tea extract and elderberry extract to support immunity. The RESCUE Water line contains no preservatives, no artificial colors and no artificial flavors. RESCUE Water is sweetened with Reb A and contains only 25 calories per 8 oz. serving. AriZona’s RESCUE Water is currently available in 20.5 oz. PET bottles. Suggested retail price is $1.39 - $1.89 per bottle.

For more information, call (516) 812-0260.

ISOTONICS O.N.E.: One Natural Experience debuted O.N.E. Active, a new line of coconut water sports drinks. O.N.E. Active provides the same health benefits and electrolytes as O.N.E. Coconut Water, but with the addition of ginkgo biloba, ginseng and catuaba.

O.N.E. Active contains no high-fructose corn syrup, preservatives, artificial flavors or day-glo colors. The line’s three flavors, Grape/ Berry, Lemon/Lime and Cranberry/ Grapefruit, are sweetened with stevia and contain 40 calories and nearly 400 milligrams of potassium per 16.9 oz screw-top Tetra Pak carton. Each carton and retails for $1.99. It is now available nationwide.

For more information, call (212) 410-9039.

TEA Gold Peak has launched its new multi-serve chilled Gold Peak Tea nationally and has replaced its single-serve glass bottles with

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GERRY’S INSIGHTS

By Gerry Khermouch

ICED TEA DREAMS: PERPETUALLY BREWING READY-TO-DRINK ICED TEA HAS become ubiquitous, but the segment remains a paradox. It was one of the last segments to see its growth subside under pressure from the ongoing recession, but it’s also one that experts are quick to pronounce played out. No less perceptive an observer than John Bello, the creator of SoBe and in recent years a beverage scout for private equity shop Sherbrooke Capital, has declared that tea is off his radar – he just doesn’t see any future winners.

A scan of all the marvelous tea brands that so far haven’t ignited might suggest there’s something to what he says: they include white tea pioneer Inko’s, multiplatform player Steaz, not to mention a flock of RTD entries from loose-tea stalwarts ranging from big Republic of Tea to smaller Harney & Son, Numi and Adagio. These are all quality products, but it’s hard to see any of them breaking out in a truly big way. With so many brands mired in that transitional trough between niche status and ubiquity, why would anyone else want to venture into the breach? Maybe big companies looking to fill a portfolio gap (see: Anheuser-Busch’s Paradise Key line) but certainly not entrepreneurs. And yet, they march in. As I said, it can seem paradoxical. Still, there are brands, positions, and unexplored segments that could make for future hits.

It’s also easy to see why iced tea has been such a fertile platform in the past: it’s an obvious way station for consumers leaving CSDs, it carries many health connotations (especially for its green and white varieties) and it’s relatively cheap to produce, even in its more premium and subtle variants.

And yet – as Bello points out – there’s the problem of a profitable exit: who’s the buyer going to be? Some of more intriguing RTD entries already have been subsumed into Coke (Honest Tea, Fuze), Pepsi (Tazo) or Nestle (Sweet Leaf, Trade

26.BEVERAGESPECTRUM.MAY-JUNE.2010

Winds), which may clear the way for new entrants to move into the independent distribution channel, but that also seems to constrain prospects of a profitable exit.

Still, here are some approaches that maybe shouldn’t be ruled out:

Kombucha. Hey – remember, this is tea, albeit a fermented variety that seems to comprise its own unique category. It’s becoming more accessible, although how mainstream the beverage can become remains very much an open question.

Reasonable premiumization. That’s a phrase that Beverage Marketing Corp.’s Brian Sudano tossed out at a recent conference as a trend likely to capture consumers who’re ready to dig out from the ruins of the recession but aren’t going back to their wild-and-crazy spending days. It’s the bet New Leaf Tea is making as it aggressively builds a DSD network behind its good quality but affordably priced line.

Just plain quirky. It’s always risky to underestimate the power of a quirky combination of elements. Long after the novelty had worn off, and it had been fumbled by big companies, Snapple showed how far quirkiness can take you. Rob’s Really Good, from the creator of Pirates Booty snacks, is another example: look at the brand’s attributes, and there would be nothing that stands out as particularly fresh, aside, perhaps, from intriguing flavor combos like chocolate tea (already familiar from the loose-tea realm). But it’s been remarkable to witness the degree of interest that’s been stoked in the trade by this new brand. So who knows?

Maybe players in one or more of these categories will break out. Oddly, I find myself least enthused by the sub-segment that seems to be drawing the greatest activity lately: value tea, particularly prepriced canned teas. Taking a leaf from the evergrowing AriZona brand, companies like Monster (with its Peace Tea devised for the Coke bottling system), Dr Pepper Snapple (with Snapple) and others have offered low-priced teas that can lure consumers who want large quantities at low prices.

It’s hard to see how anyone makes much money off these but Peace seems off to a brisk start and, once more, history has shown that beverage winners can emerge from odd places. As the slogan for the lottery used to put it, hey, you never know.

Varietals. Tea can be produced in a wide array of styles and, as with craft beer, it’s possible for new entrants to ride on differentiation. That was the tack Numi took when it based its RTD line on complex, smoky puerh teas. They’re great teas but their price is high and, as the example of Inko’s shows with white teas, it’s not a very defensible position once bigger companies spot the promise and rush in.

Unsweetened Asian varieties. Ito En, with its Teas’ Tea and then Oi Ocha lines, has built a sizable business that’s transcended the Asian niche, suggesting there is a general market for unsugared varieties. But it’s still a small and modestly growing market.

Fresh-brewed tea. Because of the difficulties of scaling up production and the distribution dilemmas that a refrigerated product poses, it’s hard to see this on its face as a promising avenue for mass acceptance. But if you taste a brand like Seattle’s Cha Dao, there is an unmistakable quality difference in it. No less mainstream a company than CocaConsolidated (via its BYB Brands incubator unit) made an investment in Cha Dao. So who knows?

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

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BRANDS IN TRANSITION

FRS

FROM MAIL ORDER TO MAINSTREAM

by Matt Casey

IN AN AGE WHEN MANY BRANDS supplement their on-shelf sales with online availability, FRS is doing the opposite.

The FRS Company spent most of the last decade building an online presence for its quercetin-based nutritional supplements. Its now-ubiquitous online banners feature brand-evangelist and board member Lance Armstrong, offer free samples and lead curious consumers to a smartly-finished website and online store. Through that portal, the company mainly sells chews, powders and drink concentrates. While FRS has long offered an RTD option, the realities of its mail order business focused sales on products that required less postage.

Now, FRS has gotten serious about getting its drinks into coolers. First, the company hired Carl Sweat, a veteran of Coke pickup FUZE, to head up DSD operations, while buttressing the move with Armstrong-centric television ads. But even more importantly, it has announced a major distribution deal with Pepsi Beverages Americas (the new combined PepsiCo/ Pepsi Bottling entity) in which the product will be distributed in most of the country outside the Western U.S., where it has struggled to grow in retail locations.

28.BEVERAGESPECTRUM.MAY-JUNE.2010

In the West, particularly California, the brand’s focus seems to have created some positive response: one long-time distributor reported that the brand’s sales nearly doubled its previous year volumes. But the success of FRS as an internet-based marketing phenomenon has complicated its DSD ambitions for a long time and may be part of the reason for the alliance with PBA. Up until now, new consumers whom the brand might have picked up in-store would then have the opportunity to bypass it via a drop-off from Federal Express. But with the distribution breadth of its new partner, FRS should be able to create a national imprint with gapless coverage. That, combined with the brand’s long history and persistent online advertising can create what founder Simon Good calls a “tailwind” in new markets and with new retailers.

Armed with that tailwind, the company has stepped up its efforts to address mainstream retailers and consumers. In addition to splashing Armstrong across TV screens, it expanded its roster of athlete spokespeople to 20. The full cast includes Los Angeles Laker Derek Fisher, 2009 Major League Baseball Rookie of the Year Andrew McCutchen and pro volleyball

players Brooke Hanson and Nike Lucena.

Meanwhile, Sweat has increased on-theground support through sales staff like glaceau veteran Tim Redmond and FUZE veteran Todd Gibson as the brand moves into mainstream grocers like Safeway in California and Publix in Florida.

Cary Seyl, director of marketing for Pacific Beverage in Santa Barbara, said FRS recently sent a crew drive through his territory. Correspondingly, in March, he enjoyed his best month of sales with the product to date, with recent months seeing 70-90 percent year-over-year sales growth. Not only has the brand added additional retail placement in mainstream retailers, but its volume has grown in enduring strongholds near gyms and universities. Seyl said he expects to see the upward trend continue.

“I think there’s great potential that it may be just on the edge of really taking off,” Seyl said. “I’m kind of interested to see what Mr. Sweat has in mind over the long term.”

On a store level, Mike Gibson, Nutrition Lead at Sports Basement in Sunnyvale, Cali. said he’s seen interest in FRS increase over the last year.

“I’m sure it doesn’t hurt when you have Lance Armstrong as the face of your company. Most consumers will try things based on what their favorite athletes use,” he said. “You will generally see FRS at more races now than you have before, which, in my opinion, means they are doing a good job trying to get their product noticed.”

The brand also boasts a handful of enduring advantages. Its central ingredient, quercetin – included mainly for its endurance-enhancing properties – has been investigated for a wide range of health benefits including boosting the body’s immune system. The flavonoid even earned attention from the American Cancer Society for its potential effects on caner. Armstrong, whom Forbes once called the most influential athlete in Amer-

A Sweet and Refreshing Value.

Great Profit Opportunity!

For more information, contact BYB Brands, Inc. at sales@bybbrands.com or 1-877-292-2387. Š2010 BYB Brands, Inc. Country Breeze and the Country Breeze logo are registered trademarks of BYB Brands, Inc.

BRANDS IN TRANSITION

FRS

ica, lends credibility to the brand, and FRS has also collected a spectrum of unpaid athlete evangelists. Women’s soccer star Christie Rampone, for example, recently told Shape magazine that she couldn’t live without the product. Additionally, due to its history of online sales, FRS maintains a database of existing “core” customers that can be activated when the company secures distribution at a new chain.

“As soon as those stores are set, we can knock an email out,” Goode said.

Despite the appeal of instant customer activation, Seyl at Pacific Beverage said FRS’ enduring online presence both helps and hurts.

“As a wholesaler, we need to see the transition of that customer base,” Seyl said. “If we can capture a percentage of that internet business, we’d be pleased.”

But Goode said FRS’ direct sales shouldn’t concern retailers and distributors.

He cited an adage in the direct response business that one remote sale will translate to eight at retail. While heavy users may find financial merit to purchasing bulk

powder or concentrate online, Goode said, as long as consumers can find the same product in their local stores, they tend to favor convenience over marginal savings.

The brand’s biggest challenge may be its sophistication. Seyl, whose company also distributes Red Bull, noted that FRS sells poorly in his stores that move the largest volumes of the banner energy drink. Based on that, he opined that it may not perform well in Middle America.

Sweat said he’s comfortable with the product’s sophistication. Every area, no matter how much of a Red Bull stronghold it may be, has enclaves where more sophisticated products flourish, he said.

Up until now, the solution has been to try to avoid a scattershot approach by targeting markets for maximum efficiency, but the days of FRS working with specific retailers’ customer profiles to determine exactly where and how the product should be positioned within chains will likely take a back seat to the number-crunchers from PBA – not necessarily a bad thing, however, given the

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21/05/10 11:52 AM

brand’s low in-store profile to date.

In the mean time, FRS is using the legacy of its online business to fuel consumer education. Goode described many of the brand’s returning customers as “hard core” athletes that FRS can use as a bridge into the mainstream market. FRS has built rapport with repeat customers, Sweat said, and aims to turn them into brand evangelists.

The company has nudged that strategy with pre-mainstream forays into local sporting events, cycling clubs, and gyms within the targeted market. On broader scale, they advertise FRS as Lance Armstrong’s “secret weapon,” and drive consumers to educate themselves at FRS.com.

Those efforts will benefit from a recent $23.1 million cash infusion from its existing investors. Sweat said he planned to put that cash toward marketing, personnel – both on the street and national level – and on ensuring production so that the brand’s supply is “ready as the wave comes.”

With the PepsiCo alliance, it appears that the wave has appeared on the horizon. And just in time. Even before the PBA deal, FRS had tried to extend its reach into a growing number of mainstream outlets, but those had mostly centered on the GNC and Vitamin Shoppe end of the retail spectrum. It will be up to the PBA sales crew, however, to energize its presence in Safeway, Publix, Duane Reade, Quick Trip and Target, the large national accounts that will ultimately determine its ability to fulfill its potential.

But what the deal indicates is that FRS does indeed believe that its greatest potential lies at the retail level, and its RTD product is the key to realizing retail success. The brand’s site currently features videos with Fisher, Hanson and others drinking the RTD product and explaining why they use it. Given the company’s history in mail order, the powders have long been cheaper to ship and RTD has lagged behind. Obviously, its now going to be front-and-center.

Sweat said FRS’s future innovations will likely stay close to its quercetin core, but he wants to be ahead of the game. Other companies have already started selling quercetin-based products, and while he expects to have a formulation advantage (quercetin lends a particularly tricky flavor to work with, he said), he wants to make sure his company maintains that edge. •

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AREVIEW SUMMER2010 INPHOTOS WE CAN’T POSSIBLY TELL YOU everything that happened at BevNET Live and Beverage School in just a twopage spread, but we thought we’d show you a little bit of the scene to convey the excitement that 330 people in a ballroom can generate when they’re there to help each other succeed.

Kicking off a full day of Beverage School, keynote speaker Rob Ehrlich, the founder of Rob’s Really Good and Pirate Brands, explained his philosophy of starting an entrepreneurial business – avoid outside investors, show up everywhere, and have fun – and he was followed by a series of technical speakers attempting to offer newcomers the kind of operational guidance they would need to fulfill the same kind of entrepreneurial destiny that has brought Ehrlich fame and fortune.

The spirit of support and discussion carried over into the next day at the start of BevNET Live, as the more strategic event’s first speaker, Inko’s founder Andy Schamisso offered an honest look at his brand’s difficulties in some markets – while also offering a positive look at its fast-growing business in New York City schools.

From the case studies of succeeding entrepreneurs to the lament – and anger – of failed business plans, BevNET Live panelists offered attendees a look at their strategies for understanding what to do when facing some of the issues of investment, sales and distribution that inevitably crop up during the process of growing a beverage brand.

For those brands that have fallen on harder times, a discussion of the potential for turning things around conducted by what Sunny Delight Beverage Co. Billy Cyr termed “The Beverage Company Repair Shop” offered hope for a clean exit with something to build on.

Speakers then dissected headwinds for entrepreneurs, brands, and the industry itself. First, a panel of attorneys from across the regulatory and lobbying spec-

32.BEVERAGESPECTRUM.MAY-JUNE.2010

CLOCKWISE FROM TOP RIGHT: The Live Review panel at work; HINT COO Theo Goldin makes a point; Hot stuff from Prometheus Springs’ Alexis Mincolla; Bob Giroux makes a point on the Distribution panel; Andy Whitman at a Breakout Session podium; the scene at cocktail time.

trum took a hard look at forces threatening the industry from a public relations and legislative standpoint. That discussion was followed by a warning on brand design – why they fail – and segued into a discussion of the travails of three beverage entrepreneurs who had endured less-thanpositive outcomes in the industry.

Late afternoon discussions focused on the push-and-pull between entrepreneurs and two of their most important partners, investors and distributors. Eric Melloul, an investor with the private equity firm Verlinvest, explained his company’s willingness to help out company founders as valued partners rather than obstacles to fat returns, while a panel of investment professionals explored the hard choices often faced when boards and company founders are dealing with the realities of lower-thanexpected returns and valuations.

Activate President – and distribution vet – Dan Holland took a turn in the “hot seat” to discuss his company’s strategy for building within a network of beer distributors who are rapidly

opening their cargo bays to non-alcoholic products. Following his one-on-one discussion, a panel of five direct store delivery distributors made their case for the importance of their system in the building and marketing of brands.

Finally, the two-day session was turned back over to the dreamers, as innovators from hot-and-spicy Prometheus Springs, NERD energy drink and the sports drink Greater Than attempted to impress a panel of tough-minded beverage experts – including representatives from Coca-Cola and PepsiCo – on the relative merits of their products.

At that point in the day, more than a few observers had tuned in via a one-day special live feed – one diehard even stayed up late in Japan, but the proof of the energy was in the room. Packed to bursting with entrepreneurs, suppliers, investors, distributors, retailers, consultants, media, and powerpoint presentations, one thing was clear: you had to be there. (Although if you weren’t, you might be able to check out a sample or two on BevNET.com.) •

Networking over raw materials.

Ian McLean offers some informal design advice.

MAY-JUNE.2010.BEVERAGESPECTRUM.33

Like the 250 lb body builder

A SNOWMAN BOTTLE-SHAPED

HOLE

BY MATT CASEY

36.BEVERAGESPECTRUM.MAY-JUNE.2010

who used the weight machine before you, Muscle Milk is a hard act to follow.

The Cytosport-owned brand exploded across the nutrition store/convenience store barrier in 2008 and created a space for protein drinks at venues that more commonly host sugar waters, candy bars and hot dogs. Flying high on a decade of history in nutrition stores and surprising resonance with mainstream consumers, the brand snapped up distributors across the country, including such noted king-makers as L.A.’s Haralambos and New York City’s Big Geyser. It ascended so quickly that Pepsi Bottling Group announced a deal to snatch it away from the independent distribution network in November 2008, less than a year after it caught attention on mainstream shelves. That landmark deal created a snowman-bottle-shaped hole in some indies’ portfolios, leaving them and their retailers wondering: can another protein brand replicate Muscle Milk’s success?

Ed Jones, owner of Nutrition World in Chattanooga, Tenn. said he doesn’t think so. Muscle Milk built such a lead that he can’t imagine another product catching up to it.

“In 31 years of watching nutrition products come and go, sometimes there some magic that can happen,” he said. “Lordy, it’s a rare thing for that to happen.”

Despite Jones’ view, the roster of ready protein competitors runs deep. At least a dozen brands like BSN, Optimum Nutrition and ISS Research boast long track records in the same gyms and nutrition stores that launched Muscle Milk. They understand protein; they understand nutrition, and they understand that they want to enter the same lucrative market that Muscle Milk has tapped.

But the brand has left challenges in its wake – it didn’t just build a tremendous head start; it burned bridges. Spurned

by Muscle Milk’s abrupt arc, Wright Wisner Distributing Corp. in Rochester, N.Y. fled the segment.

“There are other things coming along, and we just decided to put our efforts someplace else,” said Don Miller, Wright Wisner’s vice president of sales.

Many distributors, though, have been willing to give other protein brands a chance to prove their might. G. Housen in Vermont filled its Muscle Milk-void

Several other brands with long track records in the gym and nutrition stores are trying to follow Muscle Milk’s lead and head to the mainstream. Even Gatorade is trying to get in on the act with their new protein packed recovery drinks.

• EAS Myoplex Strength Formula • Labrada Lean Body On the Go

• American Body Building Pure Pro

• G Series Pro 03 Recover

38.BEVERAGESPECTRUM.MAY-JUNE.2010

with Myoplex. Haralambos picked up both Myoplex and VPX Sports’ Protein Rush, while Great State Beverage in New Hampshire replaced Muscle Milk with four separate protein brands: Protein Rush, Lean Body, Myoplex and Sytha-6.

Rob Tuck, a sales rep at Great State, said it took his company less than a month to find its first Muscle Milk replacement and, as a group, the distributor’s spectrum of protein products seems to be matching Muscle Milk’s sales.

“Each one is targeted to a different audience,” Tuck said.

Lean Body boasts zero sugar, he noted, while EAS backed Myoplex with a television ad campaign and both Sytha-6 and Protein Rush – with their 40 grams of protein and Tetra packaging – attract serious fitness store consumers.

More Space Not all distributors are adding protein products to their portfolio to replace Muscle Milk. Jeff Howe, general market manager for Syntha-6 at BSN, said many of his distributors never carried Cytosport’s protein brand. Instead, they developed an interest in protein after Pepsi’s distributors urged retailers to open dairy cooler space for Muscle Milk.

The nascent market has led distributors to experiment with a smorgasbord of combinations. Howe estimated that half of his distributors handle at least one other protein brand, and half of those are trying to figure out which brands they should cut. Ultimately, they may maintain multiple protein lines, according to Lee Labrada, founder and CEO of Lean Body-maker Labrada Nutrition. The protein category has only begun to develop, he said, as a collision of demographics and cultural trends have set the foundation for a groundswell of fitness-focused beverages. With healthcare reform and obesity on the national radar, more young adults view protein drinks as good meal replacements, he said. At the same time, Baby Boomers entering their sunset years pay careful attention to their health and nutrition. Additionally, the television marketing campaigns waged by Muscle Milk and Myoplex are garnering attention from consumers who may have formerly viewed protein drinks as strictly for gym

rats. Amid the accumulation of all those forces, Labrada said distributors may be wise to maintain multiple protein brands.

“In any market, there’s always room for a Coke and a Pepsi. There’s always room for a third- and even fourth- and fifth-tier brand,” Labrada said.

Those lower tier brands will likely bear names familiar to GNC shoppers, as the category presents unusual barriers to entry. According to Labrada, not only is protein expensive, but not all proteins are created equal. The human body will readily absorb and use milk proteins like those found in Muscle Milk and Labrada, he said, but has a harder time using cheaper collagen proteins. Additionally, as the flavor profiles of several fledgling protein drinks have demonstrated, protein is a difficult ingredient to work with. Body builders and their ilk have inoculated themselves to the taste, Labrada said – some even consume protein shots that pack as much as 42 grams in as little as two ounces – but the metallic taste can turn off the general public. Additionally, Labrada said, hardcore protein drink consumers tend to be highly brand loyal, making a Myoplex drinker unlikely to pick up a new entry.

Still, Labrada and Howe said they could see room for a newcomer to succeed.

They’d fight long odds, considering that their better-established competitors can lean on already-successful powder businesses, but a brand like PRO FOODS’ PRO ADE could snap up consumers that haven’t already pledged their allegiance to an existing brand. The only long term risk, Labrada said, is that competition could lead to price wars, siphoning profits out of every point on the supply line.

Labrada said he thinks that’s why the Coca-Cola Co., Inc. and PepsiCo never got into the market before: protein is expensive and doesn’t provide enough profit for them. But that has changed. In addition to adding national distribution for Muscle Milk, PepsiCo debuted a handful of Gatorade recovery products with added protein.

Coke added another flavor to its Odwalla Protein Monster line in May, and is planning a protein-enhanced Powerade product. In the mean time, a roster of nutrition shop brands and posing for entry into the independent distribution system. Only time will tell whether any of those brands can flex as well as Muscle Milk. •

©2010 Abbott Laboratories LITHO IN USA

®

GATORADE GETS BACK ON THE FIELD

BY MATT CASEY 42.BEVERAGESPECTRUM.MAY-JUNE.2010

Just like the athletes it has long claimed to support, Gatorade needs to get back in shape.

So it’s trying to say goodbye to that particular breed of thick-waisted suburbanite lazing on his back porch, and instead to join the young parent out for his morning run. It’s trying to say aloha to the jersey-wearing I-banker chomping his soft pretzel in the stands,

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and hello to his lacrosse-playing nephew.

The fact is, those sedentary characters never should have been included in the Gatorade fold, says PepsiCo North America chief Massimo D’Amore. It was a fluke, he said, their interest in the brand the result of a handful of sweltering summers and a paucity of other healthy-seeming products. The run of double digit growth?

The company knew it had to end.

They just didn’t expect it to be so fast.

But as marketers and retailers increased their beverage options, the economy reduced consumers’ disposable incomes. Gatorade lost sales to direct competitors, indirect competitors and tap water. PepsiCo watched sales for its third-largest beverage brand plummet by 14 percent in 2009. A confusing re-branding cost the company momentum, while performance-oriented consumers looked to brands ranging from nutrition shop elixirs to more mainstream products like vitaminwater, as well as longtime rival Powerade, which now has a 20 percent share of the category.

But, even as Powerade has increased its share, the size of the category has shifted.

Other functional beverages – particularly vitaminwater, which Coke acquired in 2007 for more than $4 billion – have created a new paradigm.

A November study from Deutsche Bank illustrated how the game has changed: when the investment bank polled consumers about brand preferences within a combined sports drink and enhanced water market, they chose vitaminwater nearly as often as they chose Gatorade, and more than 70 percent named rehydration as the reason they chose either one. The takeaway?

The casual users who had fueled Gatorade’s growth were leaving the brand.

But so were the core users who had built the brand in the first place: Gatorade Chief Marketing Officer Sarah Robb O’Hagan (hired from Nike two years ago) recently told PepsiCo investors that Gatorade – the brand that laid the groundwork for commercial sports beverages – currently penetrates just 27 percent of the 68 million-strong “performance athlete” market. Among the 55 million consumers who stay active to keep in shape, the brand’s market penetration was an anemic 12 percent.

44.BEVERAGESPECTRUM.MAY-JUNE.2010

CHANGES AND CHALLENGES It’s those active consumers that the brand will turn to as it seeks to become relevant again. Recently, O’Hagan said, Gatorade surveyed thousands of athletes about their needs, and responded to its findings by stripping the entire line of high-fructose corn syrup and adding pre- and postworkout products to flank its core thirst quencher. The pre-workout product, Gatorade Prime, packs B vitamins and 25 grams of sugar into a 4 oz. pouch. Gatorade Recover follows the athletic-trainer

The new G Series Pro is targeted at trainers, marathon runners, and other serious, lifetime athletes.

recommended mix of carbohydrates, electrolytes, and that ever-popular (and once verboten around Gatorade HQ) building block, protein, into a 16.9 oz bottle to help restore muscles after a hard workout.

In addition, Gatorade is shooting for the intense amateur, a performance-minded field of consumers who have turned into targets for a growing number of sports and nutrition products. In seeking those hardcore types, the company opened the door for its “elite” formulations to hit the mainstream market for the first time.

As the product of a “sports science institute,” Gatorade has long offered scientifically optimized formulations to top athletes – O’Hagan noted that 88 percent of athletes in America’s top five professional sports leagues use Gatorade.

Now, it’s selling some of those innovations at places like GNC and Dick’s Sporting Goods under the name G Series Pro. Meanwhile, Gatorade has even launched Gatorade Natural, which will only be offered through the natural channel. O’Hagan called that part of the brand’s “surgical” market strategy. (Not a bad idea, especially considering that Whole Foods has soured on vitaminwater since its acquisition by Coke.)

“You are where you sell,” she said.

And, apparently to whom you sell, as well. O’Hagan said the company specifically targeted G Series Pro at trainers, marathon runners and other serious, lifetime athletes to garner support from those who influence the purchasing patterns of young competitors across all sports. The sporting world has moved beyond those sports represented by the top five professional sports leagues, and Gatorade wants elite athletes from lacrosse, skateboarding, distance running and other physical competitions to reach for G Series Pro when they need nutritional fortification.

But the brand may face a hurdle when trying to reach those influencer consumers. Currently, serious athletes tend to view the brand with disdain, according to Mike Gibson, the lead nutrition product salesman at Sports Basement in Sunnyvale Cali.

“I have rarely, if ever, had a customer come in specifically looking for Gatorade,” he said. “On occasion it does happen, but the majority of people

come in looking for just about anything but Gatorade.”

Gibson said his customers now prefer other isotonics, like Cytomax or dissolvable nuun tablets. He also doesn’t see much opportunity for the brand to reclaim those consumers. Gatorade will continue to attract the uninitiated, he said, but those searching for individualized performance will continue to look elsewhere.

But the brand’s recent efforts may change some minds. Jim Launer, owner and head trainer at the Ignite training center in Camp Hill, Pa. said he has long advised athletes to avoid Gatorade, instead encouraging them to drink water, and only allowing sports drinks – usually protein-bearing Accelerade – for some workouts. But upon hearing that Gatorade had started offering pre- and postworkout formulations (and natural sugar), he softened his outlook for the brand.

“That’s falling along the lines of what the Accelerade product is,” Launer said.

“I do really like the fact that they’re eliminating the high-fructose corn syrup.”

ers, but it offered no hard data on that idea’s effectiveness.

Meanwhile, respondents to Deutsche Bank’s 15-30 year-old “What’s Facebook Drinking” survey gave the campaign middling ratings.

But Gatorade is standing behind “G.” The company recently took a 53-foot-long “mobile locker room” to visit high schools in nine cities, promoting what it called “The G Series Experience.” On television,

MARKETING While the brand’s repositioning may earn it a second glance from some consumers, the upheaval invited risk.

Shifting the brand’s focus to the capital letter “G” and away from its lightning bolt logo drew derision from long-time consumers and skepticism from industry insiders. The brand similarly sowed confusion by relabeling its sub-lines like “Rain” and “Fierce” as “No Excuses” and “Bring It.” Its more recent overhaul triggered further confusion. Business Pundit blogger Rob May said the new array of products baffled him.

“Is this just a move to make choosing a sports drink as complicated as choosing a cell phone plan?” he wrote.

O’Hagan acknowledges that the shift stirred ire and confusion, but said it was necessary to build rapport with the next generation of consumers and pave the way for the G Series. PepsiCo asserts that the new branding resonates better with teens and pointed to the comparative ease with which one can spot the G on sideline coolGatorade Natural will only be offered through the natural channel as part of Gatorade’s “sugical” market strategy.

46.BEVERAGESPECTRUM.MAY-JUNE.2010

the National Basketball Association’s biggest stars prominently consumed the G Series before, during and after playoff games. A PepsiCo spokesman, speaking to the Wall Street Journal, called it “biggest spend for a launch in our history.”

PEPSICO’S PORTFOLIO While Gatorade focuses on practice fields, dugouts and sidelines, D’Amore says he hopes other PepsiCo products can pick up the slack that Gatorade carried for the company for nearly a decade. First and foremost, he said, he wants Aquafina to retain consumers trading down to bottled water. For those looking for enhanced water, he wants to see a move to SoBe Lifewater and Propel, both of which have gone through significant restages.

SoBe Lifewater began as a vitaminwater copycat and shipped in bottles that closely resembled those of the category leader. PepsiCo has since invested in proprietary packaging and innovation for the line. SoBe Lifewater’s swirled, fullywrapped bottles served as an early proving ground for stevia-derived sweeteners, and the line now boasts seven naturallysweetened, zero-calorie flavors.

Propel, meanwhile, has struggled with its identity. It appeared originally as a low-calorie Gatorade sub-brand with the tag-line “How Gatorade Does Water,” but it drifted away from its parent brand. Now, D’Amore said, fueled by the company’s recently found ability to coldfill the product, PepsiCo will promote Propel as a value-positioned, zero-calorie enhanced water. Gatorade – and the category it founded – has matured since its early days under the hot Florida sun. Riding high on more than three decades of unchallenged category leadership, it got fat, and drifted away from its own core training purpose. Now it contends for consumers’ attention against Powerade and vitaminwater, while it has to get up and play against a wide array of nutrition shop brands. PepsiCo is gambling that returning Gatorade to its core will pay off.

If it doesn’t work out, however, Gatorade might have to recast itself once again – as the official beverage of the Senior Tour. •

BRAND NEWS: SPORTS DRINKS

BRAND NEWS GT Beverage Company, LLC. Sportastic Sports

Drink is now being sold nationally through Big Lots and Wal-Mart Stores. The company will introduce two new flavors, Grape and Orange, which will be available in Sportastic’s Soccer Ball, Baseball and Basketball packages.

Hydro One. Hydro One announced the intro-

duction of BÖDE Sport. BÖDE Sport comes in Lemon Lime and Black Cherry Grape, as well as protein-enhanced Pomegranate Raspberry and Orange Mango flavors. All four varieties contain 35 calories or less per serving.

Vita Coco. In February, Vita Coco roped in ce-

lebrity investors like Madonna, Demi Moore and Matthew McConaughey. Vita Coco debuted its fi rst-ever advertising campaign this spring in New York City with taglines like “No Chemists Ever Touch Our Nuts,” and “So Good For You, It’s Nuts.”

The Coca-Cola Co., Inc. The Coca-Cola Co.,

Inc. introduced POWERADE PLAY, a sports drink targeted at young athletes. POWERADE PLAY has less sugar and more vitamins than the leading sports drink, with 100 percent of the recommended daily amount of vitamin C, 20 percent RDA of Zinc and 20 percent RDA of vitamins B3, B5, B6 and B12.

Amy & Brian. Amy & Brian added distribu-

tion with Santa Monica Distribution in Southern California, Humboldt Beer in Northern California , Morris Distribution in Sonoma, Napa, and San Francisco, and Asia Tran & Co. Inc. in Hawaii. The brand also sponsored the Bishop High Sierra Ultra marathon in Bishop, Cali.

C2O Pure Coconut Water. C2O Pure Coco-

nut Water is now available in all Whole Foods Markets’ Western Region.

Purity Organic. Purity Organic, maker of

Purity Organic Restore, recently added distribution with Haralambos Beverage, Horizon Beverage (Oakland, Cali.) and DBI Beverage Truckee. The company added placement with Albertsons in Arizona, Colorado, New Mexico and Texas; Kroger in Atlanta; Ingles 48.BEVERAGESPECTRUM.MAY-JUNE.2010

Markets in N.C. and Haggen/Top Foods in the Pacific Northwest. The company also converted to a lighter weight PET bottle.

PRO FOODS. PRO FOODS introduced PRO

H2O protein-fortified water in April with Black Cherry and Kiwi Strawberry flavors in 16.9 oz. PET. The company also introduced PRO ADE protein fortified-sports drink in Fruit Punch and Orange flavors. PRO ADE and PRO H2O are available through Amazon.com and in select stores in the Dallas area.

Talking Rain. Talking Rain debuted actiVwater FUEL, a Strawberry Kiwi-flavored water with 25 calories per serving. activWater FUEL is the official enhanced water for the OMBRA P55 Racing Team, part of the Formula 3 Italia Auto GP Series.

Big Red, Inc. Big Red announced that All Sport Body Quencher will debut new packaging with clear labels. The company also released All Sport Naturally, a zero-calorie sports drink naturally sweetened with Truvia.

It is currently available in schools in California, Chicago and Texas. Additionally, All Sport has reduced the plastic in its 20 oz. bottles by 10 percent.

Gatorade. Gatorade’s G Series Pro officially launched at GNC on May, 1 with appearances

by Eli Manning of the New York Giants, Matt Forte of the Chicago Bears and Reggie Wayne of the Indianapolis Colts. Until now, G Series Pro has only been available in pro and collegiate locker rooms and specialized training facilities.

ABB. ABB has partnered with Denver’s New Age Beverage and Bill’s Distributing in Anchorage, Alaska. The brand also recently released new packaging and new formulations.

The FRS Company. The FRS Company introduced two new flavors sweetened with stevia: Apricot Nectarine and Orange. Both rolled out nationally in May and June.

ISS Research. ISS Research, LLC, announced its continued endorsement agreement with three-time National League MVP, Albert

BRAND NEWS: SPORTS DRINKS Pujols. ISS has expanded OhYeah! distribution nationwide at 7 Eleven and in numerous chains throughout the mid-west, Arizona, California and Nevada.

Attitude Drinks. Attitude Drinks, Inc. an-

nounced that 12-packs of 14.5 oz. containers of Phase III Recovery are now available for purchase online. Attitude also announced distribution with High Five Distributors in the New York Metro Area.

Cytosport. Cytosport updated Muscle Milk’s

labels and added text to the side of its bottles highlighting the benefit of protein in a healthy, active lifestyle. Cytosport also introduced a ready-to-drink Café Latte flavor in select markets, and released a protein enhanced water, Muscle Milk Protein H20- into its specialty distribution network.

California Natural Products. California Natural Products announced the introduction of CalNaturale Svelte. CalNaturale Svelte is a non-dairy, gluten-free natural protein shake.

ZICO Beverages LLC. ZICO Pure Premium

Coconut Water released a new bottle designed for active lifestyles. The new ZICO bottle features a blend of natural coconut waters that naturally deliver 20 percent fewer calories.

The new ZICO bottles are made of #2 recyclable HDPE, and are currently available for Natural, Lima Citron and Pomberry flavors.

O.N.E., One Natural Experience. O.N.E., One Natural Experience debuted O.N.E. Active, a line of coconut waters fortified with ginkgo biloba, ginseng and catuaba. The new line comes in stevia-sweetened Grape/Berry, Lemon/Lime and Cranberry/Grapefruit flavors.

EAS. EAS debuted a new advertising campaign for Myoplex built around the call-toaction “If you use muscles, use Myoplex.”

The ads close with the new EAS tagline: “Power to the People.” The campaign is being featured in major sports, fitness and mainstream print, online and broadcast outlets, including: CBS Sports, ESPN, MTV, TNT, Spike, Versus, FX, Facebook, ESPN. com, MSN, active.com, Rodale, Rise, Hulu, Self, Shape, ESPN The Magazine, Bicycling, and Men’s Health among other outlets. •

Adobe Springs Water Company Adobe Springs is the largest supplier of bulk mineral water to the bottling industry in the United States, with a TDS of 435 mg per liter. Adobe Springs’ healthful magnesium content of 110 mg per liter is more than the combined magnesium content of the top-20-sales bottled waters in the US. Adobe Springs tastes great, and has been marketed as “Noah’s Spring Water” since 1992.

The Adobe Springs are conveniently located 19 miles off I-5 in Central California.

New clients welcomed, as we have plenty of water.

Call Paul Mason, Owner Tel: (408) 897-3023 Email: paulmason@MgWater.com Adobe Springs Water Co. LLC 19000 Del Puerto Canyon Road Patterson, CA 95363

50.BEVERAGESPECTRUM.MAY-JUNE.2010 adobesprings_spectrum_half.indd 1

3/8/10 8:37 AM

THE NEW POWER SOURCE:

CHEAP ENERGY

BY MATT CASEY

ike every growing boy, energy drinks got bigger as they reached maturity, moving from a puny 8 oz. can to a spiffed-up tallboy, and then even into the land of the 32-ouncer. But if they’ve gotten bigger, something else has started to fall – prices and margins.

Yes, the value brands have fi nally arrived.

After a decade of consumers shelling out $2-4 for cans that delivered as little as eight ounces of sugar, water and caffeine, top brands have let their prices slip. They’ve held “every day” prices as high as ever – even raised them, in some cases – but Red Bull, Monster and Rockstar have indulged in promotions that move product for as little as $1.50 per can. Meanwhile, value energy brands may be gaining ground – a strange development for a space that once routinely killed entrepreneurs who boasted that their product was “like Red Bull, but cheaper.”

52.BEVERAGESPECTRUM.MAY-JUNE.2010

Budget brand Rip It, for example, sells at 16 oz. for a buck and has seen rapidly rising sales in Michigan, according to Randy Shanker, owner of Canada Dry Bottling in Lansing. Shanker said he’s carried the National Beverages brand since 2006, and it has recently enjoyed a run of double-digit growth fueled by strong execution of its value positioning. Jolt, in its latest iteration, has decided to splash into the value end of the energy category with 99-cent pre-priced 12 oz. cans and 16 oz. cans crafted to hit a similar price point in other channels. So far, said Val Stalowir, Jolt’s acting chief market-

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THE NEW POWER SOURCE: CHEAP ENERGY ing officer, the brand has seen rapid adoption in targeted markets.

The success of these brands cuts against a premium-only perception that has defined the energy category since its inception. Red Bull built a mystique around expensive energy elixirs that encouraged suspicion of products that promised the same bang for fewer bucks. Monster and Rockstar maintained this perception but those three brands have recently faltered on pricing.

Red Bull crafted an every-day deal that offers consumers two 8 oz. cans for $4 – a discount from its single-can price of $2.19; Monster and Rockstar authorized deals selling two 16 oz. cans for as little as $3.

It’s gotten to the point where at least one Budweiser distributor who had wanted to keep the Hansen’s brand in his house has become so angry about his declining margins that he’s decided to kick Monster out,

Bargain brands make up, on average, eight to ten percent of most consumer packaged goods markets. By contrast, they currently account for just one percent of the energy drink category. complaining it’s just not worth the trouble to keep if from cutting over to Coke.

The problem? Too much success. As the category has matured into a big three – Red Bull, Monster, and Rockstar – these products have gradually moved into vast,

BIGGER BANG – LOWER COST

Why a price conscious consumer might go for a cheaper energy drink.

Brand: Red Bull Size: 8 oz.

Cost: $2.19

Brand: Jolt Size: 12 oz.

Cost: $0.99

Brand: Rip It Size: 16 oz.

Cost: $1.00

COST PER OZ. $0.27

COST PER OZ. $0.08

COST PER OZ. $0.06

54.BEVERAGESPECTRUM.MAY-JUNE.2010

highly competitive distribution networks that tend to regard them as commodities more than status symbols. In other words, if you’re going to hook up with Coke and Pepsi, sooner or later you’re going to have to go the way of Gatorade or glaceau and pay the pricing game.

“As soon as Coke and Pepsi got the Rockstar [and] Monster agreements, they got very aggressive on pricing,” Stalowir said. “The big guys... trained the consumer to believe that great, high-quality, effective energy brands can retail for less.”

In Stalowir’s view, the category was overdue for value players. Bargain brands make up, on average, eight to ten percent of most consumer packaged goods markets, he said. By contrast, they currently account for just one percent of the energy drink category. He said that disparity, combined with consumers discovering that they don’t need to pay 30 cents per ounce for a quality energy drink, opened a window for Jolt to restage itself as the AriZona Iced Tea of the energy category – a strong, recognizable brand with an easy-to-handle price.

Of course, the fact that Stalowir is running Jolt at fire sale prices following the ouster of founder C. J. Rapp isn’t lost on observers who have voiced concerns about inconsistent quality and declining brand equity. Still, tough times mean little disposable income, and the discount nook of the category, which includes private label brands at grocery stores and big-box retailers, owes some of its recent rise to the economy.

Shanker said it’s no coincidence that Rip It has surged in Michigan, a state suffering 15 percent unemployment, but value’s rise likely also springs from energy’s matu-

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Ruben Rios, vice president of sales for Xyience, has noticed a generational shift as teenagers and young adult consumers now purchase water, teas and energy drinks rather than soft drinks.

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rity. Energy drinks hit $5.6 billion in U.S. sales in 2009 at food, drug, convenience and mass market stores (excluding WalMart), according to Symphony IRI, with an overall growth rate of 4.6 percent. But maturity means competitive pricing and a group of consumers who, just like with CSDs, understand there are cheaper ways to get the energy buzz.

That consumer differs from those that buy Red Bull and Monster, Shanker said.

In his territory, he said, Rip It captures consumers who would have normally bought traditional carbonated soft drinks, and have been reluctant to join the energy category due to high prices and the “energy drink taste.” Rip It, he said, overcame both of those hurdles with its $1 price tag and wide array of flavors. His distributorship alone carries nine.

The brand’s growth – particularly at the expense of sodas – may also indicate a generational shift. Ruben Rios, vice president of sales for XYIENCE, said he’s noticed that teenage and young adult consumers don’t drink soda like they used to. Where once they ordered soda in restaurants and kept 2 liter bottles at home, now they order water and buy teas and energy drinks.

Even though those same consumers tend to lack pocket change, Rios said he’s not sure that discount energy drinks can

thrive nationwide. While XYIENCE has adjusted its prices to match promotions from the category’s leaders, Rios said he recently visited a convenience franchise in Louisiana that eschewed discounts completely. Their coolers, he said, included exactly zero energy products on special, and he expects that trend to grow among smart store managers. Individual locations are judged by their overall store margin, he said, and discount energy drinks squeeze the category’s profitability.

But Shanker and Stalowir said discount energy drinks could actually improve penny profits. Stalowir said that Jolt increased margins for both itself and its retailers by jettisoning its expensive cap can. The brand also hasn’t focused exclusively on convenience and grocery stores, he said, extending its reach to dollar stores and other large direct accounts. And, even with their $1 price tags, Shanker said Rip It offers traditional convenience stores higher margins than traditional carbonated soft drinks, if not the outstanding margins prized by Red Bull’s best wholesalers.

Shanker noted that the shift hasn’t been kind to his margins, though.

“I miss the Monster days without question,” he said. “They were a special, oncein-a-great-while run for an independent beverage distributor,” he said. •

BRAND NEWS: ENERGY DRINKS

BRAND NEWS Liquid Lightning. Liquid Lightning Energy

Drink introduced new packaging for its core products. The brand also added distribution in Hong Kong and debuted a marketing campaign centered on photographs that aim to be elegant, edgy and thoughtfully provocative.

Sex Drive Energy Drink. Sex Drive Energy

Drink announced placement at Walgreens.

The brand now boasts distribution in the Bahamas, Bangladesh, Barbados, British Virgin Islands, Grenada, Europe, Jamaica, Mongolia, St. Vincent and the Grenadines, Trinidad and Tobago, Turks and Cacaos and other Caribbean countries.

AriZona Beverages. AriZona Beverage Company introduced AZ Energy, a new street art-inspired energy drink that emphasizes function and fl avor. AZ Energy is made with orange blossom honey and natural juices from pears, apples, peaches and mangos.

Hip Hop Beverage Corporation. Hip Hop Beverages announced three new fl avors of Pit Bull Energy Drink: Blueberry Pomegranate, Cranberry Pink Grapefruit, and Cherry Lime.

DD Beverage Co. DD Beverage Co. recently

signed UFC Heavyweight Champion Shane Carwin as a Beaver Buzz athlete. The company also executed a rebranding effort, making its banner beaver a little meaner.

Red Bull GMBH. Red Bull debuted its 19.2 oz. Red Bull Racing special edition can. The regular and Sugarfree varieties feature Red Bull Racing’s Brian Vickers and Scott Speed, respectively, and will be available through most of the NASCAR season.

Plasma Energy. Plasma Energy recently signed a national online marketing contract with Nutritional Products International, Inc. Sun Country Airlines also reached an agreement to sell Plasma Energy on its planes.

RLED, LLC. Roaring Lion was named the

exclusive energy drink of Los Angeles based

58.BEVERAGESPECTRUM.MAY-JUNE.2010

luxury hospitality and development company, SBE. Roaring Lion will be the exclusive energy drink for SBE’s luxury collection, including the SLS Hotel and SBE’s dining and nightlife properties in Los Angeles, Las Vegas and Miami.

JOLT Energy. AMC and JOLT Energy Drink announced a nationwide campaign that promotes season three of the Emmy Awardwinning series, Breaking Bad. More than one million JOLT cans will feature tune-in information for the program.

Jump Innovations, LLC. Jump Innovations, LLC of Arvada, Colorado is now under new management. Brothers Michael and David Newlon have focused the company’s efforts along the Front Range of Colorado. The company also created new can designs for Recon Coffee Energy Cola and Sentinel Vigilant Energy.

Futuristic Brands USA, Inc. Futuristic Brands USA introduced NX (Nitrous Express) “Crashproof Energy” fortified with the plant-based flavanoid, quercetin. The company boasts that, taken daily for 2 to 4 weeks, NX Energy can increase mental alertness, strengthen your immune system, provide sustained energy and reduce oxidative stress, muscle soreness and inflammation after exercise.

Hype Energy. Hype Energy introduced Hype

Energy Organic in May. Hype Energy Organic contains no taurine, no coloring and no preservatives. The lightly-carbonated natural product combines the taste of apple juice, aloe vera, tea and guarana.

Go Fast Sports & Beverage Co. Go Fast

Sports and Beverage Company introduced Go Fast Coconut Energy and Go Fast Energy Tea. Go Fast Coconut Energy, sweetened with stevia, includes coconut water to aid in hydration. Go Fast Energy Tea, also sweetened with stevia, combines Go Fast Original’s energy and herbal blend with white, black and green teas. Each of these new flavors contains 50 calories per 8 oz. serving.

A game-changing hand for the Energy & Cocktail Industry.

Introducing World Series of Poker Energy Mix, the Energy-Infused cocktail mix with choices like Margarita, Piña Colada and Bloody Mary. Your patrons can now get their favorite drinks energized — this is not like those bull drinks — there’s nothing else like it on the market!

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Bloody Mary • CranBerry • Citrus • Mai tai • Mango • Margarita • Mojito Pina Colada • PoMegranate • sour aPPle • strawBerry • sweet n sour ©2010 produced, manufactured and distributed by Earth Beverages, Inc. 1270 Champion Circle Carrollton, TX 75006. World Series of Poker marks are owned by Harrah’s Interactive Entertainment, Inc. Used with permission.

BRAND NEWS: ENERGY DRINKS

XO Energy Beverage Corp. XO Energy Bev-

erage Corp. announced that XO Energy 6 oz. shots are now available in Ohio, Kentucky and Indiana distributed by Queensgate.

ment with G&G Distributing of Bossier City, La. LOTUS also has distribution in California and Tennessee.

Goddess Energy, Inc. Goddess Energy an-

Fluid Motion Beverage Inc. Talon Energy

Drink launched Talon Energy Cola in January in both the US and Canada. The brand is continuing its campaign that places fan-submitted mottos on Talon cans. Talon Energy Cola features the motto “Never Compromise,” from fan Shanelle in California.

Ex Drinks LLC. Ex Drinks introduced Ex

Pure Energy and Ex Slim Energy. Ex Pure Energy contains kombucha tea extract, 80 mg of natural caffeine, Asiatic ginseng, guarana, vitamin C, and B vitamins. Ex Slim Energy provides the same benefits of Ex Pure Energy with two grams of carbohydrates and 15 calories.

Twinlab. Twinlab promoted its Pure Fuel En-

ergy at athletic events The Arnold, Interbike, The NYC Triathlon, The Boston Marathon, The NYC Marathon, Sea Otter Classic and Association of Volleyball Professionals title matches. Pure Fuel can be found at Rite Aid, GNC, Vitamin Shoppe, and other health, natural food and online retailers.

Bite Me Energy Drink, Inc. Bite Me Energy Drink announced the introduction of its sugar free drink at stores throughout Southern California. Bite Me is accepting inquires for distribution outside of California.

ZUN. ZUN is now a national brand showing syndicated data in Total US Food, Total US FDMx and Total US Convenience. The company reported that it shipped 200 24pack cases per week to Kum & Go during an initial national trial.

Vuka, LLC. Vuka is now in Whole Foods stores in Colorado, and has additional retailers, including the Hyatt Denver Convention Center.

The brand also sampled around 60,000 cups to date and plans to sample the brand at additional events, including BolderBoulder.

Lotus Group, LLC. Lotus Group, LLC an-

nounced an exclusive distribution agree-

60.BEVERAGESPECTRUM.MAY-JUNE.2010

nounced that it secured placement for Flirt Energy at more than 200 Harris Teeter locations beginning this summer.

CL-ONE Corp. CL-ONE Corp announced that it added distribution with Monarch Beverage Co. and Baumgarten Distributor Company of Peoria, Ill., previously a Red Bull distributor. As a promotion, CL-ONE also announced a reward for the capture of any human with wings.

Celsius announced availability through A&P and Pathmark Stores in the New York, New Jersey and Philadelphia areas. The brand also added placement at Casey’s General Stores in the Midwest.

Celsius.

XYIENCE. XYIENCE debuted Orange Fuel

Xenergy Xtreme at the UFC Fan Expo May 28-29 in Las Vegas. The company recently signed reality television star Amanda Corey as its Xenergy Xtreme spokesmodel and added UFC fighter Dan Hardy to its roster of professional athletes. The brand is now available in Texas through Silver Eagle Distributors, in Georgia through United Distributors, and in Louisiana through Schilling Distributing and Champagne Beverage, as well as in Ohio at Circle K convenience stores.

Enertia Beverage LLC

Enertia Beverage LLC introduced Vital Energy, a vitamin-enhanced caffeinated water in three flavors: Acai Blueberry, Raspberry Apple, and Tangerine. The drinks contain an average of 50 calories per 8 oz. serving, and 150mg of caffeine per bottle. The brand secured a distribution contract with Wright Wisner Distribution in Western New York.

Johnny Fountain Beverage Innovators, LLC.

Powerball launched new packaging this spring, and will be available in two new flavors: Coconut Water and Cranberry Juice.

BRAND NEWS: ENERGY DRINKS

NRS-Nutrition Resources Services, Inc.

NRS will promote Krank’d Body Fuel this summer at local hometown 5K races and at larger events such as The Multiple Sclerosis City to Shore Bike Tour. Krank’d will also continue to run coupons and 2 for $3 offers at all Giant/Martin Foods Stores, and at a growing number of independent retailers. The brand also signed on as a lead sponsor for National Premier Soccer League team FC Sonic.

Beverage Innovations, Inc. Venga introduced Cranberry Lime Calorie Burn. The brand also won “best new non-alcoholic beverage 2010” at the Gulfood Awards in Dubai.

CRUNK!!! launched a Mango-Peach flavor in 2010 and added over 4,000 new doors within the last six months. New retailers include Cumberland Farms, Xtra Mart, Circle K, Bashas, Sunflower Grocery Markets, Catalina Mart, Giant, Mustang, Thriftway Gas & Convenience Stores, Quick Mart, Reay’s Ranch Market, Dunlop Oil, Honey Farms, Western Oil, Quicktrip, Kum & Go, and independent retailers. Plans for 2010 include radio and press efforts around Lil Jon’s CRUNK Rock Album release and sampling events at concerts and college campuses.

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Big Brands, LLC. Fuel Energy is now available in four fl avors: Berry Tangerine, Sugar Free Berry Tangerine, Apple and Orange Cream. Big Brands also expanded its distribution to include Dallas, Kansas City, St Louis, Atlanta, Phoenix, Des Moines, and Tulsa.

Zenedge, Inc. Zenedge Premium Energy

Drink announced a redesigned label and a new formulation. The product has launched through parts of New Jersey, New York, Pennsylvania and Jamaica, and is currently seeking additional distribution.

The Coca-Cola Co., Inc. NOS Energy Drink

announced new Loaded Cherry fortified with L-Theanine. The new fl avor touts enhanced mental focus, and the national launch will focus on convenience stores.

Wave Energy Drink. Wave Energy Drink

completed the sale of a franchise operation in

62.BEVERAGESPECTRUM.MAY-JUNE.2010

Hampton Roads, Va., bringing the total number of franchises sold in 2010 to four, including Buffalo, New York City and Columbia, S.C. Additionally, Bay Distributors, LLC, in Seaford, Va. is now fully-licensed to exclusively distribute Wave Energy Drink in the Southeastern Virginia-area.

XL Energy Drink Corp. XL Energy Drink recently created XL Energy Drink Cranberry.

The brand now works with 60 distributors across the East Coast, Midwest, Caribbean, South America and Canada.

420 Energy Drinks. 420 Energy Drinks an-

nounced it will donate $1 for every case sold to a fund that helps people arrested for nonviolent marijuana offenses by bailing them out of jail. The company will also donate $1 for every case sold to the family of Jack Herer, the recently-deceased hemp advocate known as the “Hemperor.”

NOR–CAL Beverage Co. Inc. NOR – CAL

Beverage Co., Inc. introduced Molotov Energy Drinks in Mango, Pineapple and Tamarindo flavors. The Mango and Pineapple also available with Tapatío hot sauce. NOR-CAL will donate a portion of the proceeds to benefit the Hispanic Scholarship Fund.

HYDRIVE Energy LLC. Hydrive Energy debuted new packaging and HyDrive R, a “grape fusion” flavored recovery formulation fortified with vitamin E, aloe vera, folic acid and acai extract.

National Beverage Corp. National Beverage Corp. rolled out a limited edition, resealable 20 oz. extension for Rip It. Rip It City 32 features a strawberry flavor and NBA Star Rip Hamilton on the label.

Kronik Energy. Kronik Energy announced

DRAGON BERRY. Available this summer in Regular and Low-Carb as part of the brand’s “Top-Tier” Energy Arsenal, DRAGON BERRY offers a twisted blend of exotic fruit flavors.

Bionic Products, Inc. Bionic-Tonic and La-

dyPink will be featured on the new TV web series, “Miss Behave.” Miss Behave is a teen series whose characters share industry trends.

Bionic-Tonic and LadyPink have been integrated into the series, and the actors can be seen drinking them in several episodes.

Mountain Crest Brewing Co. Mountain Crest Brewing Co will launch iEnergy in Canada through beer and liquor distributors this summer. It has been selling in the Midwest for two years.

Shadow Beverages. Ironclad Performance

Wear Corporation introduced Ironclad Energy & Hydration in three flavors: Triple Citrus, Goji Berry and Sugar Free Black and Blue with Black Currant. Ironclad Energy & Hydration is supported by an on-pack promotion that encourages consumers to collect the Ironclad tabs and redeem for free Ironclad gloves and gear.

Liquid Management Partners. Liquid Ice

and Minnesota Vikings. Liquid Management Partners also announced a new energy brand called The Boss. The Boss, in 8.3 oz. cans, will be made available through Liquid Ice’s distribution network in 36 states.

Rockstar, Inc. Following its new distribution agreement with Pepsi Beverages Company, Rockstar debuted two new beverages: Rockstar Energy Cola and Rockstar Recovery.

Rockstar Recovery is a 10 calorie per serving, electrolyte-enhanced energy lemonade.

Hansen Beverage Company. Hansen Beverage Company partnered with DUB Publishing and co-founder Myles Kovacs to develop Monster Energy DUB Edition, launched in the first 32 oz., resealable Jumbo Cap Can from Ball Corporation. The company also secured placement at Carl’s Jr. and Hardee’s restaurants. •

Energy is now the offi cial energy drink for the Minnesota Wild, Nashville Predators,

MAY-JUNE.2010.BEVERAGESPECTRUM.63

PROMO PARADE

PROMOTIONS, EVENTS, AND SPECIALS FOR THE INDUSTRY

Jim Beam (Kid) Rocks

Corona Beaches Times Square

Jim Beam Bourbon, in partnership with Atlantic Records, is making exclusive downloads of Kid Rock tracks available to fans who purchase its Jim Beam or Red Stag brands. Codes for downloading the otherwise unavailable music will be available on special edition gift cartons of the two brands. In some states, the codes are supplied via tear pad coupons, per legal requirements.

Corona Extra and Corona Light hosted a 24-hour beach party in New York City’s Times Square on May 20th. This event kicked off Corona’s “Win a Beach Getaway” summer promotion, which runs through July 31.

The Corona “pop-up” beach boasted 30 tons of sand spanning 2,500 square feet, as well as ocean sounds, palm trees, beach chairs, bean-bag toss games, the world’s largest Corona bottle (measuring 30 feet tall), and Corona giveaway items including sunscreen, bead necklaces and key chains.

As part of the promotion, Corona inserted 2,000 Corona Extra and Corona Light 12 oz. bottles with special graphic wraps and an entry codes in specially marked 12-packs, 18-packs and 24-packs.

Consumers can redeem the codes at www.coronabeachgetaway. com for a chance to win one of 1,000 prizes including 100 Grand Prize trips for two to Cancun, Mexico.

Makers Marks Summer Holidays Makers Mark Bourbon is celebrating Independence Day and honoring United States service men and women with a limited edition Red White and Blue Triple pack. The Triple Pack combines a bottle of Makers Mark sealed with the brand’s trademark red wax with two more bottles – one each sealed with white and blue wax.

The package is now available in retail outlets.

Elated to Help Elations announced the launch of its Boomers Building a Better America initiative. The program is designed to reward baby boomers who actively volunteer and want help completing specific projects. Former Olympic gymnasts and community activist Nadia Comaneci and her husband Bart Conner will help choose the winning projects, which will

64.BEVERAGESPECTRUM.MAY-JUNE .2010

receive cash grants and expert advice along with additional tools and resources.

Boomers can learn more about this program and apply for the grants at www.Facebook.com/Elations or www.

Elations.com. Projects will be chosen by an independent panel of judges. Three winners will be announced Fri. July 30.

Beverage Spectrum covers new beverage products, as well as the marketing, packaging, and ingredient innovation trends behind those products. From the largest beverage marketers to regional distributors to the smallest corner stores, the beverage business is at its core about selling drinks. Beverage Spectrum is the guide for those who both sell them and create them.

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3. What is your primary business type? (check only one) A Convenience Store B Supermarket/Grocery C Club/Warehouse D Mass Merchandiser/Dollar E Drug Store F Liquor Store G Wine Store H Wholesaler/Distributor/Broker I Beverage Only/Beverage Specialty Store J Beverage Company K Supplier Company L Services Company X Other (please describe) 4. What is your title? (check only one) A Owner/President/CEO/COO/VP/Director B Buyer C Bottled Water D Regional/District Manager E Store Manager/Supervisor X Other (please describe) 5. Do the locations that you are responsible for sell: (check all that apply) A Carbonated soft drinks B Non-carbonated soft drinks C Bottled water D Beer E Wine F Liquor

PROMO PARADE

PROMOTIONS, EVENTS, AND SPECIALS FOR THE INDUSTRY

Capt. Morgan’s Birthday Maxim

WAT-AAH’s _____ Idea

Captain Morgan celebrated his 375-ish birthday on May 15. In honor of the event, Captain Morgan teamed up with Maxim Magazine to host birthday bashes in Philadelphia, Las Vegas, Chicago, Tampa Bay, and Minneapolis. Buddy Valastro and his team at Carlo’s Bakery (the setting of the TV show “Cake Boss”) created a special birthday cake featuring Captain Morgan for the event in Philadelphia. Break Media supported the event with a web video celebrating “Captain Morgan Day.”

WAT-AAH! took on soda manufacturers with its “Don’t Drink _____, Drink WAT-AAH!” campaign. The campaign filled the blank spot with With “Soda,” “Sugar,” “Junk,” and “&#%+!,” For the month of May, the “Don’t Drink ___” ads ran outdoors in New York City with wild-postings and street stencils. The campaign was accompanied by a viral execution showing the WATAAH! boy covering traditional soda icons and images that he encounters on the streets. These videos and posters will also appear on the company’s website, YouTube, Facebook, and other social media sites. Additionally, print ads have been purchased to run in local family and parenting magazines in key markets across the country, such as Philadelphia, Boston, Los Angeles and San Diego.

Nestle Partners for Parks Nestle Waters North America Inc. announced its 2010 partnership with the National Parks Conservation Association.

To support NPCA’s work, Nestle Waters North America will donate $600,000 to the organization. Additionally, Nestle Waters’ Regional Spring Water brands will support the NPCA with specific restoration needs, including trail maintenance and construction, removal of non-native, invasive plants, wetland restoration and general park maintenance.

The partnership will be communicated at retail on select packages of Nestle Waters’ Regional Spring Water brands from May 2010 to July 2010, and through advertising, public relations, and online marketing.

Nestle’s Arrowhead Brand Mountain Spring Water is also sponsoring a Facebook Cause promotion, through which the brand will donate up to an additional $40,000.

Fruit2O Fights Diabetes Fruit2O water is partnering with the American Diabetes Association to promote the fight to stop diabetes. As part of its small changes>Lifelong Results campaign, the Fruit2O brand is asking

66.BEVERAGESPECTRUM.MAY-JUNE .2010

consumers to pledge to make a small change in their life that will have a big impact on their health. For every pledge collected at local events and through Fruit2O’s Facebook page, the brand will donate $1 (up to $5000) to a local, participating American Diabetes Association. The participating market that obtains the most pledges by Aug. 15 will win an additional $15,000.

From May 14 to Aug. 8, the Fruit2O brand will visit 10 markets with free samples of Fruit2O and a traveling pledge wall where visitors can post their own “small change.” Consumers can also submit their “small change” on the online pledge wall at www.facebook.com/fruit2o, and select a participating American Diabetes Association to receive the pledge. The pledge donation supports the following American Diabetes Associations: Chicago, Boston, Hartford/New Haven, Washington DC, New York, Cincinnati, Grand Rapids, Philadelphia, Baltimore, and Detroit.

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