Page 1

OCTOBER 2006

HEAVYWEIGHT How the Izze purchase changes your cooler.

PUBLISHED BY


OCTOBER 2006

vol.

4 // no. 8

32

8

Cover Story

32 // IZZE GETS BOUGHT Does this mean curtains for the

Features

boutique CSD segment?

26 // THE EMPEROR’S NEW CLOTHES Wine makers think inside the box 42 // NUTTY! Introducing Coconut Water, the

Departments

natural sports drink

8 // BEVSCAPE Coke gets a coffee buzz // We program Bud.TV 12 // CHANNEL CHECK In-depth energy

Columns

4 // THE FIRST DROP Why Cocaine Matters

18 // NEW PRODUCTS

6 // PUBLISHER’S TOAST

Vitaminwater gets smaller, for a

Barry in Review

change 16 // BevNET.com’s VIEW Packaging: MIA?

46 // PROMOTION PARADE Make way for the Holidays!

24 // GERRY’S INSIGHTS Pepsi Hedges its Bets

OCTOBER

2006

\\ BEVERAGE SPECTRUM

3


THE FIRST DROP

UP ON THE

COKE BOX

kay, personal confession time. I’ve sampled Cocaine. It wasn’t bad. Sure woke me up pretty good, although I did feel a bit skittish after trying it. But hey, you’d expect that of an energy drink containing nearly 300 milligrams of caffeine. What you wouldn’t expect is that said energy drink would also wake up the twin sleeping giants of the press and politics, but inside, we’re all addicts. Some of us are just addicted to the sound of our own righteous indignation. Within weeks of the product’s release, we’ve seen Cocaine maker Jamey Kirby on CNN, ABC, and in various newspapers and magazines, including The New York Times. We’ve heard about it from New York City politicians and the ladies on The View, who had the good sense to treat it with humor. Kirby’s eating the publicity up and spitting it out in profit. We don’t think it can continue, because the drink is only so-so, but we do believe that Kirby came up with a great way to get

4

cheap marketing, which is exactly what he wanted. The more people who pile on, airing their disgust, the more the avalanche of attention will grow for Cocaine. From what we’ve seen of Kirby, he’s slick enough to say the right things about not promoting drugs, having a sense of humor, and warning pregnant women and kids about caffeine. The same can’t be said of the television anchors who use their interviews with him to fill the end of the broadcast hour, usually with questions based on a sense of morality felt principally by straw men. If there’s going to be moral outrage here, it should be directed toward those who further Kirby’s plans by taking his bad taste and serving it up as a juicy story. Only a tiny number of retailers even carry the stuff right now; once the din quiets, it is unlikely Cocaine will do much more than join a group of similarly-named energy drinks that have unsuccessfully used bad taste in marketing

BEVERAGE SPECTRUM // OCTOBER

2006

to compensate for bad-tasting product. Whether it succeeds or fails, it’ll likely do so based on its ability to compete with other drinks. Unless, that is, our colleagues in the media – and the politicians they cover – continue to feed their addiction to outrage. Meanwhile, we’re addicted to all kinds of drinks this month: gourmet sodas, unorthodox wine containers and sports drinks among them. Read on and enjoy.


PUBLISHER’S TOAST

ADVERTISING 1123 Broadway Suite 301 New York, NY 10010 ph. 212-647-0501 fax 212-647-0565

EDITORIAL 1 Mifflin Place Suite 300 Cambridge, MA 02138 ph. 617-715-9670 fax 617-715-9671

PUBLISHER

Barry J. Nathanson bnathanson@bevspectrum.com

“UPON FURTHER

REVIEW...”

EDITORIAL DIRECTOR

John Craven craven@bevnet.com EDITOR

Jeffrey Klineman jklineman@bevnet.com fter so many, many years chronicling the beverage retailing arena, I still find it hard to think of a theme for my column each issue. After all these years, I worry that I’ve written about every conceivable aspect of the business, praising, damning and everything in between. I’ve covered in-store displays. I’ve debated front door or back door. I’ve discussed seasons to sell and reasons to buy. Here are some phrases you’ve probably seen me write before: “Creativity, or lack thereof.” “There can never be too much innovation.” “My beloved Yankees.” “Drive business.” “The consumer seeks new, exciting and different.” I’ve written the words “functionality,” “efficacy,” and “healthful” till my hands have shaken. Why? Because I believe those three words describe the right direction for marketers and retailers to take. After all, we shouldn’t reflect society; we should take the lead in shaping it. My track record of prognosticating trends, categories and acquisitions is pretty good, although there are some things I have yet to live down. To wit: 14 years ago, I pondered why consumers would pay for bottled water when they could get it out of their taps. More recently, I wrote that the energy drink category doesn’t have legs, and would go the way of Ice and Dry beers. Oh well, can’t be perfect.

6

BEVERAGE SPECTRUM // OCTOBER

Prodding retailers to action has always been a favorite theme. I can never state enough that it is imperative to look for innovation: create a new product strategy and give the brands time to grow. The frequency with which I’ve advised retailers to re-visit their shelf sets far outnumbers the amount of times they should actually do it, of course. But you should still do it a lot. And how many times have I said the following? “True partnership between retailer and marketer is the key to success.” “Don’t be greedy.” “Don’t let the big guys bully you.” I’ve opined that attendance at industry events is a must, along with reading the magazines, Web sites and newsletters that give the insights that make your job easier. In other words, I could go on and on about the themes I’ve covered over the years. I still think most of them ring true today. So consider the theme of this column “Barry in Review.” Judging by the lack of space remaining on the page, it appears that it’s done. That was easy. Anyone got an idea for next month?

ASSOCIATE PUBLISHER

John McKenna mckenna@bevnet.com ART DIRECTOR

Matthew Kennedy mkennedy@bevnet.com PRODUCTION MANAGER

Adam Stern astern@bevnet.com BUSINESS MANAGER

John Schinn jschinn@bevnet.com SUBSCRIPTION INQUIRIES

Adam Stern astern@bevnet.com 617-715-9679 ARTICLE REPRINTS

500 copies or more FosteReprints Kelly Ganz kganz@fostereprints.com 800-382-0808 x142 BEVERAGE SPECTRUM PUBLISHING INC. CHAIRMAN

John F. (Jack) Craven jack@bevnet.com PRESIDENT

John Craven craven@bevnet.com Barry J. Nathanson, Publisher

2006

Beverage Spectrum is published 9 times a year by Beverage Spectrum Publishing, Inc. Beverage Spectrum Publishing, Inc. is a wholly owned subsidiary of BevNET.com, Inc., 1 Mifflin Place, Suite 300, Cambridge, MA 02138


BEVSCAPE

WHAT’S HAPPENING ACROSS BEVERAGES

COKE HEATS IT UP On the Coke side of life, there’s apparently some hot coffee. The soda giant has begun marketing a pair of hot beverages, both a pod-based coffee system called “Far Coast” for on-premise businesses and a coffee and tea service dubbed “Chaqwa” for convenience retailers. The program brewed in Toronto, Oslo and Singapore. The move is apparently an attempt to leverage on Coke’s already widespread dispensed vending business. While there is no consumer-based Far Coast program, the company is nevertheless opening a few concept stores to demonstrate the products. Udaiyan Jatar leads Coca-Cola’s Global Premium Brewed Beverage business. Who knew Coke even had

a premium brewed beverage business? Coke has long sold coffee drinks in Japan, where Georgia Coffee is doing very well, but this is almost a food service push. According to Jatar, “Far Coast was created to provide [customers] with a window into different cultures through our range of delicious brews and infusions.” Far Coast is expected to be offered in the U.S. in the near future. Joining it soon? A new PepsiCo/Starbucks joint venture in hot beverage vending that provides a 9 oz., heatshielded can from a machine. File under: coffee wars.

BUD.TV In this Tivo-centric era, no matter how good your advertising, it’s getting harder to get viewer attention. Anheuser Busch has decided to deal with this problem by launching its own network – online. Branded content will deal with sports, beer, chicks, beer, funny catchphrases, beer, light beer, and beer. Since things aren’t operational yet – they’re saying Bud.TV will launch in the spring, we’ve decided to try to help Bud out with its early-stage programming. Some show ideas: 1. Married, with Children (Who aren’t really children anymore, but are of legal drinking age, and really, really like beer!) – This reality show, featuring case studies from the Millennial Generation, follows the stories of millenials who enjoy beer so much that they’ve decided to never leave home. Host: Bud Bundy 2. Bush, the Early Years – When he was young and stupid, he said, he did a lot of things that were young and stupid. Guess what? A lot of them involved beer. Guest starring tennis great and co-carouser-in-chief John Newcombe.

3. Real World: St. Louis – A group of young adults from the Millennial Generation, recently kicked out of their parents’ homes, move to St. Louis to become tour guides at the Budweiser Brewery.

4. The Spuds McKenzie Cheerleader Review – In this dramatic, made-for-Bud.TV movie, an aging bull terrier, dying of silicon poisoning, remembers his past owners. 5. Pardon the Interruption – Sportswriters Tony Kornheiser and Michael Wilbon, loaded on the free beer available in the press box, belch. 6. The Teletubbies – What happens when Bud-drinking couch potatoes take a bath.

Daily’s Introduces the FIRST Ready-to-Drink Bloody Mary in a convenient, tote-anywhere 1.75L Bag-in-Box Package. Now your customers can tap into great-tasting Bloody Marys right from the fridge, cooler, picnic table - anywhere - at the push of a button. Display the new Daily’s Bloody Mary Bag-in-Box with traffic stopping “Get into the Red Zone promotional display materials and kick-off your fall sales. For more information on Daily’s RTD Bloody Mary or the “Get into the Red Zone” program, call 1 800 245-2929.

7. The Joe Namath Celebrity Telethon – “You’re all so generous! I really want to kiss you!”

®

Please Drink Responsibly © 2006 American Beverage Corporation, Verona, PA 15147

8

BEVERAGE SPECTRUM // OCTOBER

2006


BEVSCAPE PLANNING A DESERT EXPEDITION? YOU NEED THIS. Sportline, a company that produces “Personal Fitness Monitors” like Pedometers and Stopwatches, recently introduced the Hydracoach, a digital water bottle that actually tells you when you’re less than optimally hydrated. Billed as “the first product developed that actually helps people adhere to the experts’ recommendations for drinking the right amount of water on a daily basis,” it allows drinkers to track their daily water consumption on a sip-by-sip basis. Even better, a coaching feature allows the bottle to actually annoy you if it feels you haven’t been drinking enough. Trust us. If you actually think you need this product, the problem isn’t that you haven’t been drinking enough water. It’s that you’ve consumed far too much of something else, and now you’re drunk.

DIAGEO GOES ALUMINUM

MARKETING TO MOMS The official soft drink advertising counterinsurgency has begun. After agreeing to pull full-calorie sodas from schools, the three largest soft drink makers and the American Beverage Association have taken the next step by sponsoring advertisements to encourage young consumers to eat and drink healthily. Soda makers have borne the brunt of America’s rising tide of

obesity complaints, and have begun trying to make over their images in relation to parents and their children. As such, they have begun a $10 million magazine ad campaign, featured below. The advertisements will take a humorous approach, displaying kids and teenagers in everyday situations, thinking about nutrition. There may be another phase if this one proves successful. B: 8.5 in

B: 8.5 in

T: 7.75 in

T: 7.75 in

S: 6.875 in

S: 6.875 in

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This advertisement was prepared by BBDO New York

Filename: P66535_A_ABA_GEN_V4 Proof #: 4 Path: Studio:Volumes:Studio:Mechanicals:m_American_Beverage_ Association:P66535_ABA_GEN:P66535_Mechanicals:P66535_A_ABA_ GEN_V4 Fonts Slugger (Regular), Helvetica Neue (75 Bold) Graphic Name Color Space Eff. Res. P66535_A_girlsbubbles.psd (CMYK; 400 ppi)

HI RES ART

S: 9.5 in

Ink Names Cyan Magenta Yellow Black

Created: 5/9/06 11:03 AM Saved: 9/1/06 3:23 PM Printed: 9/1/06 3:23 PM Print Scale: 100%

Ink Names Cyan Magenta Yellow Black

X1A

CLIENT: PRODUCT: JOB#: SPACE: BLEED: TRIM: SAFETY: GUTTER: PUBS: ISSUE: TRAFFIC: ART BUYER: AE:

American Beverage Association Food Pyramid P66533_A Full Page 4/C 8.5 in x 11.125 in 7.75 in x 10.5 in 6.875 in x 9.5 in None Various n/a Kellie Bock Betsy Jablow Michelle Polanski

Filename: P66533_A_GEN_V5 Proof #: 5 Path: Studio:Volumes:Studio:Mechanicals:m_American_Beverage_ Association:P66533_ABA_GEN:P66533_Mechanicals:P66533_A_GEN_V5 Operators: aimee little / Steve Catanzaro Fonts Univers (93 Extra Black Extended Oblique) Graphic Name Color Space Eff. Res. FOOTBALL_DEF_cmyk.tif (CMYK; 512 ppi), FB-BODYCOPY_cor4_cmykFIXED1.psd (CMYK; 1041 ppi), FB-BALLOON_cmyk cor.psd (CMYK; 1632 ppi)

Created: 5/9/06 11:03 AM Saved: 8/2/06 4:31 PM Printed: 8/2/06 4:31 PM Print Scale: None

Ink Names Cyan Magenta Yellow Black

T: 10.5 in

Created: 5/9/06 11:03 AM Saved: 8/2/06 4:33 PM Printed: 8/2/06 4:33 PM Print Scale: None

B: 11.125 in

Fonts Univers (93 Extra Black Extended Oblique) Graphic Name Color Space Eff. Res. ABA-KIDS_cmyk_2.tif (CMYK; 428 ppi), KD-BODYSTICKER COR_cmykFIXED.psd (CMYK; 951 ppi), KI-BALLOON_cor cmyk.psd (CMYK; 2080 ppi)

S: 9.5 in

Path: Studio:Volumes:Studio:Mechanicals:m_American_Beverage_ Association:P66534_ABA_GEN:P66534_Mechanicals:P66534_A_GEN_V5 Operators: aimee little / Steve Catanzaro

T: 10.5 in

This advertisement was prepared by BBDO New York

Filename: P66534_A_GEN_V5 Proof #: 5

BEVERAGE SPECTRUM // OCTOBER

B: 11.125 in

S: 9.5 in

T: 10.5 in

American Beverage Association Vitamin C P66534_A Full Page 4/C 8.5 in x 11.125 in 7.75 in x 10.5 in 6.875 in x 9.5 in None Various n/a Kellie Bock Betsy Jablow Michelle Polanski n/a

B: 11.125 in

CLIENT: PRODUCT: JOB#: SPACE: BLEED: TRIM: SAFETY: GUTTER: PUBS: ISSUE: TRAFFIC: ART BUYER: AE: RETOUCH:

show that Diageo, which has experienced massive growth as the spirits category has shot into the stratosphere, is thinking about moving into drinking occasions that used to be centered around beer. The cocktail brands involved Captain Morgan and Cola, Smirnoff Vodka and Lemon Lime Soda, George Dickel Whisky and Cola, and Seagram’s 7 Whiskey and Lemon-Lime Soda. Branded on the label with the liquor brand, they may move national next year.

B: 8.5 in

T: 7.75 in S: 6.875 in

This advertisement was prepared by BBDO New York

10

Remember those great canned Beam-and-Colas you used to drink outside the tailgates? They’re coming back. Diageo is testing 12 oz. ready-todrink spirit-based cocktails in aluminum cans, according to Advertising Age. In Tampa, ground zero for the test, the 5 percent alcohol-byvolume cans are doing great, and that’s before the Georgia-Florida game. According to Beer Business Daily’s Harry Schumacher, the cans


Channel Check

E<NE<NE<NE<N E<NE<NE<NE<N E<NE<NE<NE<N E<NE<NE<NE<N E<NE<NE<NE<N E<NE<NE<NE<N E<NE<NE<NE<N E<NE<NE<NE<N

october 2006

SPOTLIGHT CATEGORY

ENERGY DRINKS 52 Weeks ending 9/10/2006 leading brands Maybe they really were onto something there at Coke, with their crazy lady-friendly energy drinks. Look at TaB Energy, strutting her stuff into the top 10 when it comes to energy drink sales. Not that the top few products are in much danger of toppling, but the advance of TaB does show that there are still some growth areas for energy drinks yet. Combine TaB Energy with the other two Coke-affiliated offerings â&#x20AC;&#x201C; Full Throttle and Rockstar â&#x20AC;&#x201C; and the company is showing some real â&#x20AC;&#x153;Vigah.â&#x20AC;? Actually, that sounds like a pretty good name for an energy drink, huh? SOURCE: Information Resources, Inc.Total food/drug/mass excluding Wal-Mart

Brand

Dollar Sales

Change vs. year earlier

RED BULL

$258,623,500

23.0%

MONSTER

$77,774,460

124.2%

ROCKSTAR

$64,217,000

78.5%

FULL THROTTLE

$38,976,490

152.5%

SOBE NO FEAR

$31,088,620

87.2%

AMP

$22,620,910

21.9%

SOBE ADRENALINE RUSH

$19,274,870

-3.8%

solely on beverage innovation. That editorial will incorporate insightful

TAB

$10,222,820

N/A

reporting with the cutting-edge knowledge base of BevNET.com into

SOBE LEAN

$4,587,427

115.4%

a smartly designed, market-savvy package that will resonate with its

RIP IT

$4,386,116

62.6%

MONSTER XXL

$4,322,571

1,479.3%

PRIVATE LABEL

$4,316,540

N/A

POWERADE

$3,368,082

-36.3%

VON DUTCH

$3,270,130

N/A

BOO KOO

$2,573,827

107.5%

SOBE SUPERMAN

$2,209,769

N/A

LOST

$1,945,092

-19.0%

NOS

$1,940,578

604.5%

BAWLS

$1,895,458

19.1%

RUSH

$1,560,980

-6.3%

RUSH LITE

$1,469,781

5.2%

RED JAK

$1,455,578

13,042.9%

ADVANCE BY POWERADE

$1,415,856

36,930,487.9%

ARIZONA EXTREME ENERGY SHOT

$1,396,890

103.8%

GO GIRL

$1,339,779

N/A

INNOVATIVE BEVERAGES QUARTERLY â&#x20AC;şâ&#x20AC;şâ&#x20AC;ş BevNet IBQ is a new publication that will be unlike any other industry publication on the market today, with its editorial content focused

demanding core readership of beverage industry professionals. *Subscription is free to qualified individuals in the USA only. Non-qualified individuals may purchase a subscription of $75 per year for USA based subscriptions or $125 for International subscriptions.

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TOPLINE CATEGORY

VOLUME

52 Weeks ending 9/10/2006

CSDâ&#x20AC;&#x2122;s $14,266,596,574 +1.8%

ENERGY DRINKS $583,001,000 +48.9%

BOTTLED WATER $4,431,204,000 +15.9%

SPORTS DRINKS $1,556,934,000 +14.3%

BEER $8,810,589,184 +1.6%

TEA/COFFEE $1,104,209,000 +23.2%

BOTTLED JUICES $3,486,504,000 +0.4% 12

BEVERAGE SPECTRUM // OCTOBER

2006

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

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IBQ1006


Channel Check

october 2006

RTD TEA

Dollar Sales

Change vs. year earlier

AriZona

$255,036,600

30.1%

Lipton

$127,263,100

217.1%

Snapple

$105,651,200

8.4%

Diet Snapple

$85,239,060

-1.5%

Lipton Brisk

$81,720,680

3.3%

Lipton Iced Tea

$49,146,910

18.7%

Nestea Cool

$31,793,100

Nestea Private Label SoBe

CSDs

Dollar Sales

Change vs. year earlier

Coca-Cola Classic

$1,936,531,987

-0.9%

Pepsi

$1,580,084,572

-0.7%

Diet Coke

$1,196,907,699

1.3%

Diet Pepsi

$804,832,639

0.0%

Mountain Dew

$738,906,857

3.5%

Dr. Pepper

$596,783,666

3.3%

-47.4%

Sprite

$599,317,223

1.1%

$29,548,050

119.0%

Caffeine Free Diet Coke

$356,755,289

-7.9%

$29,468,190

11.5%

Diet Dr. Pepper

$276,010,527

2.0%

$14,653,840

2.1%

Diet Mountain Dew

$241,541,636

9.3%

Heading Up: Lipton

52 Weeks through 9/10/06 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Heading Up: Diet Mountain Dew

SPORTS DRINKS

IMPORTED BEER

Dollar Sales

Change vs. year earlier

52 Weeks through 9/9/06 SOURCE: AC Nielsen/Citigroup Total U.S. food/drug/mass

Dollar Sales

Change vs. year earlier

Gatorade

$693,320,300

10.2%

Corona Extra

$476,482,656

7.9%

Powerade

$190,205,800

7.0%

Heineken

$294,866,048

10.1%

Gatorade Frost

$141,997,600

8.7%

Corona Light

$119,600,040

10.4%

Gatorade All Stars

$101,252,900

21.3%

Tecate

$81.790,536

6.5%

Gatorade X-Factor

$96,448,430

7.8%

Modelo Especial

$50,080,388

33.4%

Gatorade Fierce

$92,159,100

-9.8%

Labatt Blue

$49,013,388

-6.1%

Gatorade Rain

$92,145,070

N/A

Becks

$47,403,336

6.4%

Gatorade Xtremo

$18,468,210

-19.5%

Amstel Light

$47,188,440

-0.9%

Gatorade Ice

$15,695,780

-43.7%

Guinness Draught

$45,469,952

6.5%

Powerade Option

$14,525,240

531.2%

Newcastle Brown Ale

$44,906,908

21.0%

Heading Up: Powerade Option

52 Weeks through 9/10/06 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Heading Up: Modelo Especial

CONVENIENCE/PET STILL WATER

DOMESTIC BEER

Dollar Sales

Change vs. year earlier

52 Weeks through 9/10/06 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Dollar Sales

Change vs. year earlier

Aquafina

$480,368,000

18.5%

Bud Light

$1,349,308,672

0.7%

Private Label

$473,456,200

22.3%

Budweiser

$764,094,208

-8.5%

Dasani

$407,152,300

23.7%

Miller Lite

$708,054,080

-1.6%

Poland Spring

$236,955,800

24.1%

Coors Light

$609,059,072

2.4%

Propel

$193,739,200

13.4%

Natural Light

$289,029,760

1.6%

Arrowhead

$161,837,300

18.1%

Busch Light

$206,402,880

3.7%

Dannon

$148,821,000

-5.2%

Michelob Ultra Light

$204,023,824

-11.9%

Glaceau vitaminwater

$134,200,000

155.4%

Miller High Life

$175,026,064

-3.9%

Deer Park

$126,014,400

22.2%

Miller Genuine Draft

$174,341,824

-10.0%

Ozarka

$89,304,930

17.5%

Bush

$169,650,112

-2.6%

Heading Up: Glaceau vitaminwater

52 Weeks through 9/10/06 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Heading Up: Busch Light

52 Weeks through 9/10/06 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart paulrene@gelosobev.com

14

BEVERAGE SPECTRUM // OCTOBER

2006

OCTOBER

2006

\\ BEVERAGE SPECTRUM

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BevNET.com’s VIEW

BEVERAGE SALES NOT WHERE THEY SHOULD BE?

Packaging: MIA? any beverage marketers are forgetting about packaging. I don’t mean the label design or sleeve, but rather the actual physical container itself -- its shape, material, and personality. How do I know? Recently, I was looking through a list of all of the products we’ve covered this year, and I realized that I couldn’t remember holding many of them at all. Now, there are plenty of reasons why products are forgettable, but for those that might actually bring innovation in flavor or design, having a great shape is sometimes a forgotten opportunity. Packaging has taken quite a downturn over the past ten years. Back when we first started BevNET, companies were always talking about their proprietary packaging. Whether it was something simple, like a raised company logo on a 16 oz. glass bottle, or something complicated and new that had never been tried before, there was generally a proprietary piece that added zip to a packaging plan. Now, our experience is that companies look to use a package that is accepted and successful – for someone else. And that copycat methodology hurts innovation and encourages poorlyplanned products. Over the course of time, packaging innovations have made worlds of difference. The CSD category, the former sweetheart of the industry, has seen many: 12 oz. cans, two- and three-liter bottles, the 6-pack and the fridge pack. Coke’s modern growth has even been attributed to its

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BEVERAGE SPECTRUM // OCTOBER

development of the now one-size-fits-all-brands 20 oz. PET bottle. Why aren’t we seeing more attempts to create sizing variation, as well as that of taste? In today’s market, look at “the Red Bull can” or “the Vitaminwater bottle.” Hundreds of competitors have gone into the same package without ever giving more than a minute of thought to changing anything more than the design on the label. And for those companies that have gone the extra mile and succeeded in using something different, such as Rockstar – or Monster, depending on who you ask – with the 16 oz. energy drink can, their reward is their own sea of imitators. What happens as a result of this is, in the long run, actually detrimental rather than helpful to a new brand. Let’s use the example of the now iconic Red Bull 250 mL can. Sure, it might seem easier to launch with this package than without it. Won’t everyone who sees that can immediately understand that it’s an energy drink? Sure they will – but it will also serve to remind the prospective buyer of the Red Bull they went looking for in the first place. Rather than create a point of difference, the products shyly say “me too.” Unfortunately for energy drinks and functional waters, it’s going to be an uphill battle to get past this. Every product that has gone into a 250 mL can or 20 oz. ribbed bottle has essentially helped to validate Red Bull and Vitaminwater as market leaders. Furthermore, it has trained customers that these types of products only

2006

come in certain types of containers – meaning that creative marketers must be willing to accept even more risk when they vary their packaging, pushing any new idea further to the fringes. We see a lot of “me too” products, and you all know how we feel about them. We get calls from marketers who stress points of difference, who say consumers have a predisposal to certain flavors, and certain packages, as well. But nothing says ‘intellectual laziness’ like a knocked-off can or bottle. And nothing reinforces the strength of a category leader by echoing its iconography, either.

LET

FIXYOURMIX Are you having trouble deciding to stock your cooler with Red Bull or Rolling Rock, Honest Tea or Tequiza, Snapple or Sprite? Just drop us a line and you could have the next store featured in Fix My Mix! Just call 617.715.9678 or email fixmymix@bevnet.com and explain what part of your mix could use some fixin’! We’ll come take photos of your store, look at the demographics, and talk about your goals. Then, Beverage Spectrum’s hand-picked industry

John Craven is the founder of beverage-industry watchdog The BevNET.com, based in Cambridge, Mass. The BevNET.com’s goal is to test nonalcoholic beverages — primarily soft drinks — and to provide a written critique of each one on its Web site. With more than 1,100 reviews posted since 1996, The BevNET.com has become an internationally recognized resource for beverage industry professionals.

experts will go to work, offering you and your store the best kind of makeover there is: a free one!

OUR EXPERTS ARE STANDING BY


NEW PRODUCTS Iced Tea From the Cott Corporation comes Orient Emporium Tea, a line of premium readyto-drink teas being sold in over 1500 WalMart Supercenters. The Orient Emporium Tea brand includes 10 distinct flavors; nine of the 10 contain the powerful antioxidants and health benefits long associated with tea drinking in Asian cultures. The products are manufactured in-house and packaged in 20 oz. PET bottles, in both six- and 12-packs. They are available in: Green Tea with Citrus; Diet Green Tea with Citrus; Green Tea Berry Medley; White Tea with Berry Medley; White Tea with Clementine Orange; Raspberry Iced Tea; Jasmine Sumana Tea; Oolong Jahini Tea; Rooibos Terema Tea; and Yudomo Black Tea from Darjeeling Region of India. For more information, call Cott at (416) 203-5613. Spirits Pernod Ricard USA has launched SOHO Lychee Liqueur, a refreshing and luxurious liqueur with powerful aromas of sweet ripened lychee and a bright, tropical taste. SOHO, the first lychee liqueur available in the U.S., is being introduced nationally following a successful West Coast launch earlier this year. The bottle is embossed with a lychee medallion, and the SOHO label is written vertically, evoking the neon signs of Asia’s vibrant nightlife districts. Imported exclusively by Pernod Ricard USA, SOHO is available in 750 mL and 50 mL bottles in California; the 750 mL bottle carries a suggested retail price of $18.99. For more information, call Pernod Ricard at (860) 523-5437. Pernot Ricard’s Kahlúa brand has also launched an exotic new flavor, Chocolate Latte. Available in “party size” ready-todrink and “drinks-to-go” single-serve formats, Kahlúa Chocolate Latte is a sweet and creamy coffee cocktail with hints of chocolate. Kahlúa is supporting the launch with point-of sales materials including a case card, shelf talker and shelf schematic that will

be shipped directly to the retailer with the product in the case. Kahlúa Chocolate Latte joins the other Kahlúa ready-to-drink flavors that including Original Mudslide, White Russian, Banana Mudslide, Kappuccino, Coconut Mudslide and the other Kahlúa drinksto-go flavors. All Kahlúa Prepared Cocktails come in two sizes – ready-to-drink 1.75 L (12.5 percent alc./vol.) and single-serve 200 mL (5 percent alc./vol.) – in a variety of delicious cocktails. The suggested retail price for ready-to-drink is $13.99 and for singleserve is $5.49. For more information, log on to www.kahlua.com or call (860)523-5437. Luctor International, importer of Van Gogh Vodka, is rolling out new Van Gogh Pomegranate Vodka this month in stores, bars and restaurants nationwide. The ruby-hued, low-carb vodka is 70-proof and is labeled with a Vincent Van Gogh-inspired depiction of the pomegranate. For more information, call (888) 539-3361. Wine Voga, the wine that fused flavor with fashion, is introducing Quattro, a fusion of the top four red grape varietals: Shiraz, Merlot, Cabernet and Pinot Noir, into one intriguing and seductive red wine. Leading the way and demonstrating the evolution of wine packaging, Voga Italia wines are presented in sleek cylindrical bottles, corked and then further topped with a resealable cap (black for Pinot Grigio and silver for Quattro). The Voga Italia wines further differentiate from the norm as they are shipped in fashionable triangular 15-bottle cases which offer built-in case cards to create a dynamic display of their own. Available nationwide, the Quattro and Pinot Grigio both retail for $11.99. For more information, call A.V. Imports at (800) 638-7720. Water This fall, vitaminwater will be available in a new 12 oz. size in an attempt to make it an

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BEVERAGE SPECTRUM // OCTOBER

2006

OCTOBER

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attractive choice for kids of all ages. According to vitaminwater, the 12 oz. launch comes at a time when most beverage companies, in response to the obesity epidemic, are swapping out sugar for artificial sweeteners, which, among other things, increase cravings for sweets. The smaller bottle will be available in four of the top vitaminwater varieties; power-c, revive, essential and focus, and will be sold in single-serve bottles (srp $.99) and four-packs (srp $3.99). The 12 oz. will be available immediately in CVS, Safeway, and schools nationwide. WaddaJuice, the healthy juice alternative for kids, has launched WaddaBlast, a new healthy hydrating drink specially formulated for active kids. WaddaBlast is low in sodium and does not include high fructose corn syrup or artificial sweeteners. WaddaBlast comes in three flavors, Watermelon, Lemonade and Lotta Fruit (fruit punch) and contains a special blend of vitamins and minerals that provides kids with healthier hydration. The hydrating beverage retails for $1.34 per bottle in independent stores, $1 in schools, and $10.99 per 12-pack in grocery stores. For more information please call (212) 999-5585. Icelandic Glacial is introducing a new, larger-sized, 750 mL sport cap bottle that offers a revolutionary twist top cover. Unlike other bottles on the market with a pull-up valve that many active consumers use their teeth to open, Icelandic Glacial’s cap is an easy-toturn cover with a ribbed grip that offers further ease of use. The 750 mL Icelandic Glacial sport cap bottle, which features the same award-winning, Icelandic Glacial landscape and bottle design as the brand’s .5 and 1 L

bottles, will be available in September 2006 in SuperTarget, Wild Oats, Trader Joe’s, and select Whole Foods and Target stores nationwide for a suggested retail price of $1.79. TalkingRain is offering up a new take on water called TalkingRain TWIST. The product premieres en masse this month, touting a flavorful but naturally flawless answer to pure water. TWIST is an all-natural, delicately-flavored, ultra-premium water with no sweeteners, preservatives or artificial ingredients. It comes in four flavors: Lemon, Mandarin, Peach, and Marionberry. TalkingRain TWIST comes in a unique 30 oz., square bottle, complete with gold rimmed font. It was recently launched at leading supermarkets and specialty grocers throughout the country, and can be found at select Whole Foods, Kroger, QFC, Zupan’s, Central Market, Sunflower Markets, Rosauer’s, New Seasons, and Yoke’s Fresh Markets, among others. Coming this fall are two additional flavors in a smaller version. Suggested retail prices are $1.99 for the 30 oz. bottle and $.79 for the forthcoming smaller size. Coffee Tully’s Coffee Corporation, the Pacific Northwest’s largest fully handcrafted coffee roaster, has begun selling Bellaccino, its signature drink, in 9.5 oz. glass bottles. Created from Tully’s gourmet Madison blend coffee and lowfat milk, Bellaccino comes in three flavors – coffee latte, mocha latte, and vanilla latte; all are 100 percent natural and shelfstable. Bellaccino ready-to-drink bottles will be featured in QFC, Fred Meyer, Haggen, and Bartell Drugs, and a number of other independent retailers. Distribution is expected

BevNet.com

NEW DRINK REVIEWS Freedom Energy NOS Energy Caballo Negro Zero Inko’s White Tea Energy Tully’s Bellaccino Nesbitt’s

20

From September 1 to press time; to see reviews, log on to www.BevNET.com

Bubble Yum Soda GUS Dry Pomegranate Daredevil Energy Blue Sky Energy O Beverage Infused Starbucks Iced Coffee

BEVERAGE SPECTRUM // OCTOBER

2006

Cinnabon Premium Lattes Starbucks Doubleshot Light FUZE Vitalize DRY Soda Aroma Water Maple Lane Black Currant


to include other leading retailers in coming months. Bellaccino ready-to-drink retails for $1.89 for a single bottle, or $6.99 for a 4pack. Tully’s Bellaccino is delivered directly to stores through partner Columbia Distributing, the leading beverage distributor in the Pacific Northwest. For more information, call (800) 96-Tully or visit www.tullys.com. Energy Drinks Cohee/Smith has introduced SPINNERZ Energy Drink, a product that attempts to capitalize on the popularity of automotive reality television shows. In a 16 oz. can, Spinnerz will be distributed through Cohee/Smith Beverage Distribution, Inc. It does not yet have a suggested retail price. For more information, call (310) 673-9002. Juice From Naked Juice comes Gold Machine – the first all-natural, 100 percent fruit smoothie featuring sweet, golden kiwi. This variety will join Naked’s five other new juices introduced this year, including two new flavors in the popular Naked Energy drink line: Black & Blueberry Rush, Cherry Pomegranate Power, Purple Machine, Black Currant and Chocolate Banana Protein. Like all Naked Juice products, Gold Machine is packaged in a 15.2 oz. PET bottle. Suggested pricing is $2.99 per bottle. Malternatives From Seagram’s Cooler Escapes, the brand managed and marketed by United States Beverage, L.L.C. of Stamford, Conn., comes the newest flavor to the Seagram’s Escapes family, Tea Breeze. Tea Breeze will be the first green tea-flavored malt beverage on the market when it sails onto shelves this fall. It’s a blend of peach, mango, and green tea

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2006

and offers a light, refreshing flavor with a crisp, airy aftertaste. The introduction of Tea Breeze comes on the heels of the 20th Anniversary of Seagram’s Escapes. Losing the classic wide neck bottle of coolers past, the new modern bottle design combined with beach themed graphics has given the brand a more contemporary look. The suggested retail price for a 12 oz.4-pack of this product is $3.49 to $3.99. This product will be distributed nationwide. For more information, call Seagram’s at (212) 999-5585. Beer Anheuser-Busch will kick off the second year of its seasonal beer series by bringing back Jack’s Pumpkin Spice Ale – a subtle, wellbalanced copper ale with rich, full flavors and aromas of pumpkin, nutmeg, ginger, cinnamon and clove. Previously only available on draught, this seasonal offering will now also be sold in bottles. Jack’s Pumpkin Spice Ale is brewed with two-row, caramel and carapils barley malts and a blend of imported Hallertau and domestic Saaz hops.  It is also brewed with seasonal spices and Golden Delicious pumpkins from the Stahlbush Farm in Oregon. This ale pairs exceptionally well with turkey dinners, teriyaki chicken, mild Italian sausages and pumpkin bisque. Available through early December, Jack’s Pumpkin Spice Ale is brewed at the Anheuser-Busch Fort Collins, Colo., brewery and has 5.5 percent alcohol by volume.  Jack’s Pumpkin Spice Ale can be found in 12 oz. bottles in 6- or 18-packs at grocery and convenience stores. It will be line-priced with other Bud offerings.


GERRY’S INSIGHTS

Quietly Hedging for the Future n the world of Wall Street deals, it was so slight an acquisition it didn’t even merit a mention in any of the daily news sections I read: PepsiCo paid what insiders said was $75 million – pocket change – for privately-held-Izze Beverage. What Pepsi got for its outlay is a healthieralternative soda that couldn’t have been doing much more than a million cases in annual volume – some in Starbucks, some in gourmet stores and supermarkets, some in schools. So obscure is Izze in the bigger realm of soft drinks that a Pepsi acquaintance of mine confided that, aside from the odd mention in trade journals he reads, it wasn’t a brand that was even on his radar. So imagine his surprise when, mentioning at breakfast that Pepsi was about to announce the acquisition, his teenage daughter excitedly revealed that she was a closet fan of Izze. Apparently, now that it was entering the Pepsi orbit she could afford to admit it! But that’s how these brands are. For those of us who tend to focus on big-volume brands launching in-your-face media assaults and grand merchandising displays at retail, brands like Izze and Switch and GuS and Fizzy Lizzy really are beneath notice. Still, they have loyal followings – even, it seems, within Pepsi households – and since many of these loyalists are young, these brands can’t be entirely written off without a hard look at the future. In Izze’s case, the brand commands a premium price, has won a soft spot in moms’ hearts

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BEVERAGE SPECTRUM // OCTOBER

and is packed in classy glass bottles that provide a distinctive shelf presence next to the ocean of CSD line extensions packed in metal and plastic. It’s also a nifty on-premise play for delis, pizza parlors and corporate cafeterias looking to strike an upscale note or two. Like Frappuccino and Ethos Water, also in the Pepsi portfolio, it has a very visible presence in the aura-conferring Starbucks cold box. Not least, if Coca-Cola were to decide to counter Pepsi’s move, it’s hard to see what other brand in this segment has quite the presence of Izze, small as awareness is even for Izze. Let’s not kid ourselves, though. Historically, this segment – what I think of as fizzy juices – has been quite problematic. I got worked up when Crystal Geyser’s Juice Squeeze turned up in my local Starbucks in the 1990, earning the honor of becoming the first beverage sold in Starbucks that my kids actually enjoyed. With 72 percent juice and 28 percent sparkling spring water, it seemed a parent’s dream. (We hadn’t learned to be scared of juice yet.) It didn’t go anywhere, though: it wasn’t “refreshing” enough for mainstream tastes, my more seasoned friends in the business explained to me, and there were punishing economics that made it hard to make a buck. Now, driven in part by the backlash against conventional CSDs, these drinks may finally be about to break out (though the economics haven’t gotten any friendlier). So count Pepsi as showing a subtle intelligence in picking out

2006

the choicest alt-soda brand in the batch, recognizing that – despite the absence of any significant entry barrier – neither its soft-drink nor its Tropicana units are likely to be able to KO it convincingly – and being willing to pay a “strategic” price (read: one day’s sales in Minnesota) to get it. Also smartly, I think, Pepsi is resisting the urge to fold it into its headquarters development operation and its bottler network. Instead, taking a cue from its experience with SoBe – an acquisition that went inert fairly quickly once sku-pinching marketers and bottlers went to work – it’s said it will let the brand breathe. We’ll see, if the brand gathers momentum, whether Pepsi maintains that approach. So far, though, it’s looking like a good way to proceed with what may prove to be a very smart buy.

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


The New Clothes By Jeffrey Klineman

the guy who showed up at the party with the box o’ wine was quickly ordered to drop it next to the cases of Natural Light and all the other drinks reserved for consumption when all the good booze had been emptied. imes have changed, though. A new group of slimmer, classier boxes have appeared on the market, directed toward the wine consumer who is confident enough to recognize that what’s in the package is much more important than the perception of the package itself. Joining this new generation of high-end boxed wines is a complementary group of innovative containers that, taken together, are fast changing the way retailers and consumers think of acceptable wine packaging. Many of these new packages, including TetraPak boxes in traditional 750 mL and single-serve

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BEVERAGE SPECTRUM // OCTOBER

2006

sizes called “187s,” half bottles and jugs, pouches and upscaled champagne cans, even aluminum bottles, are fast gaining traction among consumers and are showing profits that are making retailers very happy indeed. Products like Black Box, French Rabbit, Three Thieves, Sofia Blanc de Blancs and dtour are showing that wine in alternative packages sell, and sell productively. Sales of premium bag-in-box wines, the fastest-growing nontraditional packaging segment, were up more than 50 percent in sales last year, according to ACNielsen; overall, they made up just over 2 percent of the wine market, but that’s changing.


With wines growing quickly as a category – they’ve gone back and forth with beer as the most popular alcoholic beverage option for Americans in recent years – the pressure is on for retailers across all channels to come up with interesting presentations and value pricing, and these new packages seem to have shaken off their low-end stigma. “Consumers are starting to realize that the three liter box isn’t necessarily the sugar water you used to get in the five liter,” says Scott Kamp, the wine buyer for Meijer, a 176-store

aging methods, including jugs. “But I’m also talking about real differentiation, not just a different kind of label or twist- off cap.” According to Bieler, while the “Critter Wines” might have introduced the much sought-after millennial group of 21-to-35 year-olds to a whole new way to consume alcohol, they’ve also helped them learn enough about wine to not have to stand on ceremony when it comes to the packaging of the productlf. In fact, if they’re aware of the past stigma associated with the packaging, it adds to the attraction. It hits a

didn’t begin as an offering to everyday wine drinkers, but as a challenge to smaller wine dealers to have fun and not take the product too seriously. “We were bored by the idea that screwtops were the revolutionary idea,” Bieler says of himself and his two partners. “We got sick of the idea that the only way to present a different face is on the label. We wanted to change all notions of packaging in the business.” Manufacturers are jumping into the alternative packaging trend en masse, albeit not as

The three theives: Joel Gott, Roger Scommegna and Charles Bieler

grocery chain in the Upper Midwest. “We’re making good money on a good margin, and the consumers have responded to it very positively.” They’re responding well because they know more, according to Ryan Sproule, the original inventor of Black Box wines, which grew from oddity to national phenomenon when they were purchased by Constellation in 2003. “It’s appealing to people who are daily drinkers of wine, and who have outgrown the pomp and ceremony,” Sproule says. “For them, having a practical, price-effective package is a good thing.” Wines have taken off in the past decade in America as a result of a increased mass culture attention and the introduction of accessible “New World” tastes like Yellowtail Australian Shiraz and Sauvignon Blanc, as well as many California products that share the Aussies’ style of fun labeling and unintimidating twist-off caps, such as Twin Fin and Big House Red. “There’s more willingness to go to fun packaging as a result of Yellowtail,” says Charles Bieler, one of the founders of Three Thieves, a fast-growing brand of wines that has broken ground in Tetra-Pak and other alternative pack-

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BEVERAGE SPECTRUM // OCTOBER

sweet spot in the hipster sensibility, combining environmental sensitivity, a feel for modern design and an ironic love for low-end imagery. “Everyone wants to be considered ‘in the know,’ on the verge of the latest thing,” says Alberto Pecora, the regional manager of A.V. Imports in Columbia, MD. “The appeal of these packages is to get into the ‘in crowd.’” A.V. has gone into the far reaches of alternative packaging, marketing a wine that’s as deeply anchored in fashion trends as it is in the worship of Bacchus. With a double-capped, cylindrical bottle, one marketed in upscale magazines and retailers, A.V.’s Voga was a success in its first year, shipping more than 150,000 cases. A new offering, Quattro, will offer retailers a triangular 15-pack with a case card built right into the case. “Packaging is changing in all other categories,” Bieler says. “Tradition in winemaking might be one of its strengths, but with more accessible wines, the increase in approachability is bringing in way more new sales. The new people buying wine are buying the fun wines.” Nevertheless, for Bieler, the scion of a multigenerational wine making family, Three Thieves

2006

quickly as they embraced the development of critter wines. But the shipping, storage and display advantages of boxed wines and single-serves can create major supply chain efficiencies – and savings all around. And that could mean they’ll be even more popular in the long term. “I think it’s where the future of wine is going in this country,” says Vincent Monaco, the corporate wine director for Kappy’s, a chain of package stores in the Boston area. “It won’t all be packaged that way, but you’ll see more and more available.” According to Bieler, a case of his Tetra-Pak “Bandits” consisting of 15 4-packs of 250 mL single-serve boxes weighs 28 lbs. “That’s nine pounds less shipping weight for three more liters than your regular case of 12,” he says. But the real advantage for retailers still lies in the novel aspects of the packaging, he adds. “There’s a lot of trepidation, but it’s a fantastic way to differentiate yourself among mass customers,” he says of retailers. “Just being like your neighbor is a pathway to mediocrity. This adds a lot of life to the store.” And with consumer wine education on the rise, they’ll see the advantage of the packages,

OCTOBER

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manufacturers say. Singles consumers, who have buoyed the market for “187s” (so named because they are 1/4 the size of the traditional 750 mL bottle, or 187 mL) know they can open one of the small “juice boxes” when they don’t want to uncork an entire bottle and see it go to waste. Meanwhile, steady consumers recognize the value of a four-bottle capacity box that can keep wine fresh for weeks, due to the fact that the bladder inside the box decreases the wine’s exposure to oxygen. “It makes for nice portion control,” says Monaco. “Someone wants to have a glass a night, it’s easy, and it’s quick.” Additionally, because the products cost retailers less, they appeal to cost conscious consumers, as well. A Black Box, for example, contains the equivalent of four bottles of an award-winning wine – at the low price of about $6 per liter. “Consumers are more aware of what they’re drinking, and the energy market has really come into play from a supplier standpoint,” says Josh Schulze, director of packaging technology for Constellation Wines. “The price of oil is affecting glass manufacturing, and recyclability is much more of an issue. PET is also petroleumbased, so that takes energy, as well. And as consumers get more knowledgeable about our products, they become more aware of its costs, and so we are more aware of those costs as well.” It’s not as if America is in the lead when it comes to marketing these packages to consumers. In Australia, the same place that launched the critter labels, bag-in-box wines account for more than 50 percent of wine sales overall; in Italy and other European countries, Tetra Pak bricks are common to many drinks and other liquids, including milk and broth. Recently, Tetra Pak products also became the darling of Ontario, Canada wine sellers, because a shortage

of dump space meant that there was nowhere to put traditional bottles. Dump space aside, it’s in-store spacing that’s the real key to selling boxed wines, according to Kamp, the wine director at Meijer. “What I’ve actually done is separate the threeliter boxes from the fives, because those products, the Franzias of the world, are more in line with the traditional box,” he says. “In most stores, we’ve now got a four foot, five-shelf section. It’s really big, and we carry all the Black Box SKUs, a Blue Nun Riesling, some South African boxes, a Sangria from Spain, even Toad Hollow Pinot Noir.” He’s devoting the extra space because, he says, “when the ‘cork dorks’ got ahold of Black Box, they realized it’s a beautiful box at a nice price.” Those “cork dorks” are the group Monaco, of Kappy’s, describes when he says “there’s a different demographic that’s drinking this.” Retailers indicate that the products in stayfresh boxes and single serve have the potential to fit many channels, from gas stations to superTable Wine Brand

markets, as well as traditional package stores. “I actually don’t know that boxes have a huge place in a bottle shop,” says Kamp. “You can hand-sell a bottle easier than a box. But in a big box store, a chain or drug, look out.” Recently, Constellation began testing the sale of mid-priced wines through its beer distributors, selling it only by the case; other wine makers are trying to sell half bottles through convenience stores. It’s not that wine has gone downscale, it’s that knowledge has gone up, everywhere. “We’re doing really well in all channels right now,” Sproule says of Black Box. “The only reason people weren’t doing it before was the stigma. Food and drug account for about 20 percent of our sales, and we’re also doing really well in Wal-Mart. There’s not a major chain we’re not in right now.” Guess that means that, unlike his predecessors, the box wine guy now does pretty well at parties.

Dollar Sales

Yellow Tail

$183,669,200

15.0%

Franzia

$160,079,000

0.8%

Sutter Home

$154,556,800

5.8%

Woodbridge

$141,017,500

1.8%

K-J Vintners Reserve

$136,560,600

6.5%

Beringer

$107,765,200

4.6%

Carlo Rossi

$106,671,200

-1.9%

Livingston Cellars

$103,757,700

0.3%

EJ Gallo Twin Valley

$84,114,670

-9.2%

Almaden

$80,988,570

-7.3%

Clos Du Bois

$75,032,700

16.3%

Vendange

$73,825,330

-1.7%

Robert Mondavi Private Selection

$72,241,250

15.7%

Fetzer

$71,194,540

6.8%

Turning Leaf

$70,633,100

2.0%

Lindemans

$63,531,760

9.0%

Cavit

$54,668,940

24.1%

Columbia Crest

$54,099,310

3.2%

Inglnk Vineyards & Winery

$51,752,690

-7.6%

Blackstone

$49,093,320

15.3%

Bella Sera

$47,915,170

-0.6%

Chateau Ste Michelle

$46,387,640

15.5%

Peter Vella

$46,310,060

18.1%

Barefoot

$46,184,670

243.0%

Blk Swan

$43,837,920

-7.2%

Source: IRI, 52 weeks through 9/10/06

30

BEVERAGE SPECTRUM // OCTOBER

Change vs. year earlier

2006

Total US Food & Drug only


Boutique Sodas:

The

Shrinking By Jeffrey Klineman

he deal is done. PepsiCo went and swallowed Izze, the biggest jewel in the alternative soda shop earlier this month.

At two million cases last year, the sale of the sparkling juice company marks a major change in the high-end CSD segment. Whether it’s a validation of a growing category or the beginning of the end remains to be seen, however. For retailers, the $75 million purchase, on face, shouldn’t make it any harder to get hold of their stock of Izze – or any harder than it’s been to get hold of to date, that is. Word from Pepsi and Izze at the time of the sale indicated that the Boulder-based company would be left to maintain its own distribution network – despite recent changes the company had been forced to implement to increase its ability to fulfill orders. Still, if you’re in the business of making highend sodas – and it has been a growing business, estimated at $495 million by Jones Soda CEO

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BEVERAGE SPECTRUM // OCTOBER

Peter van Stolk during a recent shareholders’ meeting, you’ve either got to look at it as a positive development, or else throw in the towel. And soda makers are a pretty resilient bunch. The positive spin comes from spunky fighters like Cricket Cola’s Mary Heron, who insists that the purchase showed larger companies “have opened their eyes to upscale products, ones that, like Izze, are better for you, come in a glass bottle and have great packaging.” But at the same time, there are fears that that discovery is going to result in squeezed routes to market for the products that don’t get picked up. With the purchase of Izze, there’s bound to be a counterstrike or two, she agrees. The question of whether big companies like Coke or Cadbury Schweppes will pick up more sparkling juice companies (like Fizzy Lizzy or The Switch) or go prospecting for more gourmet versions of their own products (Pop Soda or Boylan’s) is just part of what will determine the direction of the business. The fact that there are now a couple of clearly positioned leaders in the production of alternative CSDs is another: in scooping up Izze, (as well as smaller functional soda maker Airforce Nutrisoda), Pepsi has grabbed one of the best-known properties available, one that has a considerable amount of marketing momentum. The question of whether other pure carbonated juice companies will be able to stake a national claim has to hang heavy in the air for

2006

those companies, as well as the retailers and distributors who carry them. But there is nevertheless some optimism that carbonated juice makers will be able to take advantage of the purchase in much the same way Monster Energy slid onto vacant trucks after competing brand Rockstar signed a near-exclusive distribution deal with Coca-Cola Enterprises. “Some of their distributors have already been calling,” says Richard Beswick, the national sales manager for The Switch. “They’re worried about losing the money they’ve spent building the brand and they want to have something else to cover it. The same thing happened with Snapple.”

Beswick makes it clear that he’s not concerned that shelf space will dry up. “If you’re in the right market, the audience is still there,” he says. “Grocery stores are all putting in natural sections that deal with our product.” “But if you’re in gourmet sodas,” he adds, “It’s just poorly defined.”

In saying that, Beswick taps into the issues facing the larger contingent of non-juice alternative soda makers: some are anchored in tradition and nostalgia, while others appeal to a new breed of aspirational gourmets. Depending on consumer response, the effect of the Izze purchase on them is likely to be more tangential, but a much larger question is the direction of the soda category overall. While CSDs are still the most widely purchased beverage product in the country, they are quickly losing share overall, leaving craft CSDs facing the prospect of becoming a very good anachronism. “We’re considering taking the word ‘soda’ off the (White Rock Organics) bottle,” says Larry Bodkin, White Rock’s president. “When we sample, people say to us, ‘I just don’t drink soda anymore.’” At forward-looking Jones, things have taken a slightly less gourmet direction, as it has hooked up with bargain soda maker National Beverage and plans to start selling through K-Mart. Still, K-Mart isn’t exactly Whole Foods, and Jones seems satisfied to be a well-distributed alternative to mainstream sodas rather than one that stakes its claim in the high ground of gourmet authenticity. Jones’ pipeline approach should appeal to retailers who find their customers overlapping with Jones’ current direction. Hansen’s, with its re-tooled Blue Sky soda, is taking a similar middlebrow approach, only in the natural foods galaxy. As for smaller producers, expect them to keep plugging away, hoping to catch lightning in their bottles, and then hoping to get those bottles into your cooler. Companies like Maine Root, GuS, Virgil’s and Cadbury’s own Stewart’s have their own regional fan bases, and some have built strong on-premise followings, as well. The stronger the following, of course, the more likely they’ll attract some attention. For a homegrown soda maker like Cricket’s Heron, the option of slowly, organically building market share at a select set of retailers has its romance; she, like many other soda makers, are always hunting for someone new to give them a try on their shelves. But she recognizes that Izze’s route has its own advantages, as well. “Hey, that model is a good one,” Heron says. “Acquisition is a pretty nice thing to have happen.”

Guarana Sodas: Tiny Market Share, Growing Opportunity? Amidst all the discussion of “energy sodas” Vault and Mountain Dew MDX, there is another attempt to cross the streams of energy drinks and sodas, only this time, it’s the energy drinks who are trying to leap into the CSD pool. Products like Bawls Guarana, Sol Maté and Golly Guarana are taking a micro-soda approach to traditional energy drink ingredients like the guarana berry and yerba mate extract, brewing these natural caffeine sources up into CSD’s that range from 50 to 100 percent more caffeine than your average Coke or Pepsi. The idea is one that Pepsi actually attempted itself prior to the energy drink craze with a short-lived guarana soda called Josta, which launched in the mid-1990s. The beverage lasted just a few years. It might be time for a revival, though. With the nation becoming more caffeine-aware, the guarana and yerba mate sodas might have the potential to take double advantage of that increased knowledge. For some consumers, the idea that they’re drinking a naturally-occurring caffeine product would top an artificial source. For caffeine junkies, however, the idea that these products actually have twice the boost of a regular soda could be a major attraction.

OCTOBER

Bawls is still marketed largely as an energy drink – and has achieved a small level of success in that form, making the top 20 in that category. Sol Maté, which has high-power yerba maté as its caffeine analog, hasn’t quite figured out where it stands with regard to the energy drink/CSD divide. But both come in upscale, design-heavy glass bottles that could easily translate into a spot on a gourmet soda shelf set. Golly Guarana, with a 12 oz. can and 20 oz. bottle, has more of a mainstream look. The key element of success for all three, however, is the ever-present consumer education component. Given the massive growth of energy drink consumption, it’s likely that many more consumers have consumed guarana than could actually discuss what it is. “I don’t know if the benefit of guarana is mainstreamed yet,” says Mary Heron, CEO of Cricket Cola, a green tea soda that spent years waiting for that now red-hot additive to break into the mainstream. “I have trouble even pronouncing it.” That might be true, but with both guarana and yerba maté consumption on the rise, and caffeine awareness growing, retailers might find it to be something worth learning.

2006

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Boutique Soda GuS â&#x20AC;&#x201D; Grown-up Soda recently launched its newest ďŹ&#x201A;avor, Dry Pomegranate, in August. Dry Pomegranate is the seventh in the line of 98-calorie sodas, which are known for their not-too-sweet, mature taste profiles. GuS continued its expansion nationally last summer with new distributors and national and regional accounts: GuS added distributors Bohanâ&#x20AC;&#x2122;s Distributing, Inc. in Southern California and North Country Natural, Inc. in New England. GuS sells nationally in Cost Plus World Market and Whole Foods Market, and regionally in The Fresh Market, Wegmanâ&#x20AC;&#x2122;s, Balducciâ&#x20AC;&#x2122;s, Stop & Shop, Central Market and hundreds of other specialty food stores and eateries. GuS expanded its California presence this summer in Gelsonâ&#x20AC;&#x2122;s, Whole Foods Market, Andronicos and Mollie Stones. GuS can also be found at fine restaurants including The French Laundry in the Napa Valley, Per Se Restaurant in New York City and Charlie Trotterâ&#x20AC;&#x2122;s in Chicago. Maine Root â&#x20AC;&#x201D; Maine Root, an award-winning organic soda from Maine, is now being distributed by Budweiser houses, Federal Distributors and National Distributors, throughout the state of Maine. Maine Root is now distributed in Florida, Wisconsin, Illinois, Minnesota, Colorado, New Mexico, Kansas and Louisiana, making for a total of 29 states. Airforce NutriSoda â&#x20AC;&#x201D; Recently purchased by Pepsi Americas, Airforce NutriSoda has a style-conscious promotion for the stylish with a conscience. The company is in partnership to make menâ&#x20AC;&#x2122;s and womenâ&#x20AC;&#x2122;s t-shirts with Edun in Lesotho, Southern Africa. Edun is a sociallyconscious apparel company helping create much-needed employment and trade opportunities. 100 percent of the profits will go to Dress for Success, which works in the U.S. and overseas to help disadvantaged women achieve economic independence. Customers buying shirts will get 50 percent off their next online order of Airforce NutriSoda. Snow â&#x20AC;&#x201D; Snow Sparkling Beverages, Inc. has added $1.4 million in financing, led by the investment group Menemsha Capital. Since Snowâ&#x20AC;&#x2122;s July 2005 launch, this New

York City-based beverage company has increased its distribution in markets across the country. Snow is currently available in New York City, throughout New England, Texas, Minnesota. In addition, Snow Beverages is proud to announce their first international distribution deal â&#x20AC;&#x201C; the product will launch in Jamaica through a partnership with their largest retailer, MegaMart. Snow is expected to hit shelves at MegaMart at the beginning of October. Fizzy Lizzy â&#x20AC;&#x201D; The folks at Fizzy Lizzy sparkling juice inaugurated autumn with their ninth ďŹ&#x201A;avor, Black Currant. High in antioxidants, Vitamin C and Potassium, the product is available in select gourmet food stores and restaurants. The company also switched all of its products from short, â&#x20AC;&#x153;Ginseng-Upâ&#x20AC;? style bottles to twist-off longnecks.

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Captâ&#x20AC;&#x2122;n Eli â&#x20AC;&#x201D; Captâ&#x20AC;&#x2122;n Eliâ&#x20AC;&#x2122;s Blueberry Pop is the fourth ďŹ&#x201A;avor in Captâ&#x20AC;&#x2122;n Eliâ&#x20AC;&#x2122;s premium soda line. Available in single 12 oz. glass bottles, Captâ&#x20AC;&#x2122;n Eliâ&#x20AC;&#x2122;s Blueberry Pop joins Captâ&#x20AC;&#x2122;n Eliâ&#x20AC;&#x2122;s Root Beer, Ginger Beer, and Parrot Punch. Captâ&#x20AC;&#x2122;n Eliâ&#x20AC;&#x2122;s Soda is available across New England, Florida and in select markets on the West Coast. Expansion is planned as new distribution inquiries come in from around the United States, including Utah and Texas. Captâ&#x20AC;&#x2122;n Eliâ&#x20AC;&#x2122;s Soda is hand-crafted with real cane sugar and is caffeine-free. This soda is produced by Shipyard Brewing Company in Portland, Maine and is the only soda in the world with its own on-line adventure comic, The Undersea Adventures of Captâ&#x20AC;&#x2122;n Eli, which will be printed as a graphic novel this fall. Reedâ&#x20AC;&#x2122;s â&#x20AC;&#x201D; Capitalizing on the growing popularity of cherry and vanilla ďŹ&#x201A;avor combinations, Reedâ&#x20AC;&#x2122;s has launched Virgilâ&#x20AC;&#x2122;s Black Cherry Cream Soda as part of its Virgilâ&#x20AC;&#x2122;s lineup. Like Virgilâ&#x20AC;&#x2122;s award-winning Root Beer and original Cream Soda, the new Black Cherry Cream Soda contains no artificial ingredients, caffeine or preservatives. Virgilâ&#x20AC;&#x2122;s brews and ďŹ&#x201A;ash pasteurizes authentic ingredients from around the world to ensure the purest quality.

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BEVERAGE SPECTRUM // OCTOBER

2006

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Wet Planet Beverages — From Wet Planet comes the 8.4 oz. Jolt Quick Fix package, designed to put a quick spark into the consumer’s day. The quick fix is also designed to mix well with spiced rums and brown spirits like whiskey and bourbon. Jolt’s Quick Fix will be sold in case packs of 24 and will be nationally distributed in three flavors, Cola, Blue and Ultra. Aloe’ha — Aloe’ha Drink Products has added several new distributors in the past year, including Aloe V Beverages in New York. Additionally, Aloe’ha products are now available in Bag In Box and Frozen Carbonated Beverage. Aloe’ha products are also available in the current 16.9 oz bottle. Kutztown Soda Works — Century-and-a-half old Kutztown Soda Works has recently launched a 12 oz. variety 4-pack, as well as a line of 24 oz. PET bottles. The company has also launched a black cherry flavor. All Kutztown sodas use real sugar and the diet products have Splenda as the sweetener. Pop Soda — Vermont’s Pop Soda is all natural and handcrafted, with extracted and infused whole ingredients that lead to authentic and bold flavors. Pop Soda batch conditions and bottles at a brewery in central Vermont. Their first three flavors—Lemon Lavender with Ginger, Mint Lime and Citrus Hibiscus—were brewed with fresh squeezed fruits, root and herbs, and sweetened with cane sugar and Vermont honey. For a new flavor, Coffee Fiend, they extract freshly roasted, organic coffee from Vermont Coffee Company. Very lightly sweetened with cane sugar and infused with aniseed, Coffee Fiend is strong, well-caffeinated and dark roasted. SodaLixir Herbal Beverages — SodaLixir’s Green Dragon, the world’s first herbal stress relieving soda, is now being sold in Whole Foods Markets throughout the Northern California region. Green Dragon is an all-natural, non-alcoholic brewed ginger soda containing a Chinese herbal extract that produces a sense of relaxation and stress-relief—without being sedating. Green Dragon attempts to stand apart from the recent glut of ‘energy’ drinks on the market by bringing about a calm and centered demeanor, rather than ‘amping-up’ and stimulating the drinker.

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BEVERAGE SPECTRUM // OCTOBER

2006

Jones Soda Co. — For 10 years, Jones Soda Co. has been making colorful flavors and unique labels for fans across North America. To commemorate the occasion, the company has created a limited edition 10th Anniversary Collector Pack featuring Hot Wheels cars. Included in the pack are four sodas, each decorated with a specially designed metallic label and photos from early Jones Soda label runs. The flavors include Blue Bubblegum and Green Apple, along with long retired flavors Raspberry and Pineapple Upside Down Soda, which hard-core Jones fans have been asking the company to reintroduce for years. To round out the package, Jones has partnered with Mattel’s Hot Wheels to design a 1:64 scale model replica of the original black and silver-flamed Jones vans that cruised the streets back in 1996 when the brand launched. Hank’s Gourmet Beverage Co. — The Hank’s Gourmet Beverage Company has introduced new, even more upscale packaging in 2006. The new package features a distinctively shaped proprietary 12 oz. glass bottle, embossed with the Hank’s logo. Also featured on the bottle are raised oval panels displaying a new metallic, embossed body and neck label. The gold medallion label was designed to showcase the quality of the Hank’s line of gourmet sodas.Six gourmet flavors will be available in the new package: Root Beer, Diet Root Beer, Black Cherry, Vanilla Cream, Orange Cream, and Birch Beer. Hank’s Diet Root Beer uses the same premium flavors without the sugar. White Rock — White Rock is making changes in all three of its high-end soda lines. White Rock Organics will have a new flavor, Green Apple, as part of its line. Sioux City is getting rid of high-fructose corn syrup as an ingredient and will begin using pure sugar; a recently-introduced Diet Saraparilla is made with Splenda. Olde Brooklyn is being reformulated as a natural soda as well, with no preservatives, artificial ingredients, or high-fructose corn syrup. It will be available next year, as well. Hansen Natural’s — Hansen Naturals Blue Sky Organic Soda received a makeover in July as a reward for its outstanding growth over the past year. Blue Sky Organic sodas are available in six flavors, including Black Cherry


Cherish, Root Beer Encore, New Century Cola, Orange Divine, Ginger Ale and a reformulated Lemon Lime (previously Prime Lime Cream). The line is certified USDA Organic. Blue Sky Organic sodas can be found in most natural food stores as well as the natural food section of many conventional grocery stores. Kristall Beverage — Kristall Beverage introduced a new 4-pack carrier earlier this year creating a carrier for every flavor in the line. Kristall has also launched a new Cranberry flavor this year. The new carrier is available in every Whole Foods Market in the Mid-Atlantic region as of May, 2006. Steaz — Steaz has announced the development of the world’s first organic- and Fair Trade-Certified energy drink. Formulated with globally-sourced ingredients including Yerba Maté, Açai and Guarana, Steaz Energy also contains the same premium Sri Lankan green tea used in the Steaz Green Tea Soda line. Steaz Energy will launch in early 2007. Steaz Green Tea Soda is also now available in 12-count multi-packs featuring Raspberry, Orange and Key Lime flavors. The multi-packs are currently available in club stores, including Costco, throughout the US and Canada. Steaz Green Tea Soda has been certified Fair Trade a key step in keeping with the company’s mission of creating not only healthier beverages for consumers, but also creating a better world for the people that supply the ingredients for Steaz beverages.

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Cadbury-Schweppes — Cadbury-Schweppes’ Stewart’s Fountain Classics gourmet soda line will conduct a Halloween-themed promotion in the New York Metro area this month, designed to get a dramatic boost in sales and gain new distribution in the convenience and grocery channels. Halloween-themed Stewart’s displays will also be set in grocery chains to improve product movement. Izze — Representatives of IZZE Beverage Company and Project REACH recently drove a trailer packed with English and ESL books and educational materials to the farm working community in Yakima Valley, Washington, one of three current farm working communities supported by Project REACH. Founded in 2004, Project REACH (a non-profit program fully managed and funded by the IZZE Beverage Company) supports and creates education- based development for farm workers and their families in the communities where IZZE buys its fruit. Izze was also purchased by PepsiCo last month.

38

BEVERAGE SPECTRUM // OCTOBER

2006

Dry Soda — New minimalist Dry Soda was recently picked up by Whole Foods in California, Arizona and Nevada. The company has also just signed with DeLuca Distributors in Las Vegas, and will be kicking off sales there in the next few weeks. Wild Fruitz — Developments of late for Wild Fruitz include distribution in New York City via a self-distribution system, and a new distributor on the New Jersey shore. Wild Fruitz now contains new labels enabling the product to be immersed in ice water for extended periods of time. Wild Fruitz expects to re-launch yet again with a revolutionary organic sweetener sometime in the near future. Monarch Beverages — Monarch’s Dad’s Root Beer launched its “Big Daddy” 1 L PET bottle in additional flavors this year, including Dad’s Blue Cream. Dad’s Orange Cream and Dad’s Red Cream to accompany Dad’s Root Beer, Diet Dad’s and Cream Soda. This year Monarch has also enjoyed bringing Dad’s back to many retailers, including Cub Foods in Chicago. BibiCaffe — TSR Imports, LLC., the North American Importer of BibiCaffè, has announced that BibiCaffè has gained retail distribution in Arizona, Arkansas, California, Colorado, Iowa, Kansas, Nebraska, Nevada, New Mexico, Oklahoma, Oregon, S. Dakota, Texas, Utah, Washington and Wyoming through United Natural Foods, Inc., West and its affiliate Rainbow. Global Specialty Foods, located in Atlanta, also recently began offering BibiCaffè to its customers in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Virginia. Additionally, BibiCaffè will be represented at the upcoming Phoenix Costco Business Expo in October and is available for purchase at the Lynnwood, WA, Fife, WA and Phoenix, AZ Costco Business Centers. The Switch — Since Beverage Acquisition, LLC, purchased The Switch Beverage Company in February 2006, the brand has refocused in the Specialty Foods / Natural Foods channel and select profitable DSD markets. The Switch was introduced into Target Stores nationwide in April 2005, and has expanded to store shelves in all states. The Switch has developed a new Slimline can for school and vending markets and is priced for distribution to traditional grocery.


Cricket Cola, Inc. — Cricket Cola has been gaining momentum by adding distribution both domestically and internationally. Cricket is now available in the US in 35 states and in British Columbia, the UK and the South of France. In response to current demand in the marketplace, early 2007 will see an all-natural Cricket through the removal of two preservatives. These changes come as consumers, retailers and distributors are looking to expand their “clean” offerings without sacrificing taste, packaging or alienating consumers. Cricket offers the big consumer audience of cola the opportunity to meet the “premium, natural world” of 2007 by providing a “natural boost” of energy while giving consumers the taste they love. Pop Shoppe — Resurrected in 2004, the iconic 70’s soda brand Pop Shoppe has positioned itself on retro-coolness. Originally launched with four Pop Shoppe classics such as Lime Rickey and Black Cherry, they have now grown to eight flavors. The newest launch was Cola in the spring of 2006. Also launched were 4-packs, with grocery and mass merchandise channels in mind. Pop Shoppe’s future plans include two new diet flavors, launching in the spring of 2007, and continued expansion through the U.S.

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BEVERAGE SPECTRUM // OCTOBER

2006

Bawls — Guarana soda Bawls recently released BAWLS Guaranexx, a sugar-free version of the original BAWLS Guarana that packs the same citrus flavor derived from the Amazonian guarana berry, with none of the carbs or calories, yet with 80 mg of caffeine. BAWLS Guaranexx has commissioned award-winning designer Julian Chang in a year-long partnership to create one-of-a-kind couture bottle accessory totes for Fashion Week VIP’s. BAWLS Guaranexx’s involvement with Olympus Fashion Week also opened the doors for a new partnership with television Web site TVgasm.com – Yahoo’s most popular TV web site. BAWLS Guaranexx hosted an online fashion competition that offered one lucky winner a chance to attend the live finale of Project Runway during Olympus Fashion Week.


B N:

Not just a Nutty idea? I

t’s getting hard to figure out how much more of a good thing the good folks at Gatorade are going to be able to come up with. They’ve co-opted the weather: it’s Ice, Frost, and Rain. They’ve labeled it by intensity: it’s X-tremo, it’s Fierce, it’s got Endurance, it’s got that X-Factor (does that mean that in France, it’s Gatorade Je Ne Sais Quoi?). It’s not just Original, either. Now, it’s added enhanced water, and that’s the kind of thing that has served to Propel it even farther into the stratosphere of category dominance. So rather than tinker with their formula, they’ve decided to ascribe it to a particular time of day, with plans to launch Gatorade A.M. – the same product, but with ‘morning friendly’ flavors – in the New Year. And when you’re on a roll, why not keep on going? Besides the numbers, which are so dominant it’s hard to imagine why anyone else would even bother – a glance at just about any convenience cooler or supermarket shelf will tell you that when it comes to sports drinks, Gatorade has created a divine monarchy. That doesn’t mean that its ability to address hydration needs is necessarily God-given, though, and plenty of secular studies are addressing whether the electrolyte mix Gatorade has used as its meal ticket for so long are really the best possible way to maintain or restore fluids during athletic exertion. The most bizarre of these studies was a recent exercise trial at Indiana University in Bloomington, where researchers found that when cyclists drank low-fat chocolate milk after exhausting themselves, they biked longer and harder four hours later than those who drank sports drinks. Other studies have linked adding caffeine or protein to the electrolyte mix as keys to achieving optimum re-hydration. And many athletes swear by water, soda, Red Bull, or, if we believe the Babe Ruth mythology, beer and hot dogs. The point is, the more science digs into hydration, and the more consumers delve into it themselves, the more varied the need state appears, even with regard to exertion. But it’s tough to argue with success. Gatorade scientists obviously have their own counter-studies at the ready, and the Gatorade formula is tried and true, according to company representative Heather Mitchell, who makes it clear that we won’t be seeing caffeine and chocolatefortified Gatorade Buffet anytime in the near future.

42

BEVERAGE SPECTRUM // OCTOBER

2006

Sports Drinks

By Jeffrey Klineman

Nevertheless, there are challengers out there, and given the increasing levels of interest in what effects particular additives or formulations might have on the functionality of beverage products, it’s important to survey the field. A glance at the product roundup on the facing page shows that there are plenty of products that haven’t yet given up their pursuit of the category leader. It also reveals a subset of natural products that are fast growing in popularity: coconut water. And if that seems out of place, consider the science: according to their manufacturers, coconut waters, made by harvesting the watery fluid inside an immature coconut, are naturally high in electrolytes like potassium, sodium, calcium, magnesium and phosphorous while avoiding much of acidity that can accompany other drinks. “It’s just the next step in sports drinks,” says Tiffany Wattanaporn, vice president of family-owned Taste Nirvana, which is launching four coconut water SKUs at retail next year. “It’s nature’s way of doing it.” Wattanaporn isn’t alone in making those assertions. Producers like Zico (one distributor called it “the most exciting product I’ve seen in a long time,”), Amy & Brian and Vita Coco – which expects to sell more than 2.5 million of its Tetra-Pak cubes this year, according to owner Michael Kirban – are all banking heavily on the growth of the coconut water market. “It’s really getting some good press, and people are just talking about it as a natural alternative to all the products out there,” says Kirban. “And it’s one, single ingredient, and people like that simplicity.” So that’s it, right? Game over? Start stocking up? Well, again, look at your cooler. Feel the power of marketing. Sure, in looking up at the mountain of market share they’ll have to climb to approach the category leader, these guys might all be (coco)nuts. But on the other hand, having them around does mean you won’t have to drink Gatorade MOO….

LIV Natural — Launched this summer, LIV is a sports drink designed for athletes, active adults and kids. Its most important differentiating factor is LIV’s use of agave nectar instead of high fructose corn syrup. Its first two flavors are Berry and Lemon. Bottles come in a 20 oz. size. LIV’s agave nectar is a natural, unprocessed source of sugar that the body breaks down more slowly. In addition to agave nectar for sweetening, LIV contains rice syrup, which provides a healthy source of carbohydrates. LIV contains no artificial ingredients – no artificial flavors, dyes or sugars. LIV also offers athletes an ideal mix of potassium and sodium to replace these minerals that are lost during exertion. Vita Coco — This summer, coconut water Vita Coco increased its distribution, extending the brand in Southern California (through Ralph’s), Texas (through HEB) and the Northeast (through Shaw’s). Vita Coco, created by All Market LLC, is pure, 100% natural coconut water. Once

available primarily through health food stores, Vita Coco’s distribution through these three major food retailers marks the brand’s arrival into the mainstream. Pepto Pro — Banking on studies that indicate rehydration occurs more quickly with protein, NutriBev Science, in conjunction with Nationwide Beverage Bottling, Inc. in Corona, CA, has recently released a protein sports drink called RAD. It contains primarily glucose, with less than 2 percent fructose, for energy, sufficient levels of the five major electrolytes, plus two different levels of PeptoPro protein. RAD is available in a lemonade flavored drink with 5 grams of protein, with and without caffeine (100 mg/bottle), and an orange flavored 10 gram protein drink without caffeine. Powerade — Coke-owned Powerade launched Powerade Grape and Powerade Option Grape in April. Both are extensions to the traditional Powerade line and are avail-

OCTOBER

2006

\\ BEVERAGE SPECTRUM

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able in easy-to-grip, proprietary 32 oz. and 20 oz. single bottles and 6-packs and are competitively priced with other sports drinks on the market. FRS â&#x20AC;&#x201D; Designed as a high-antioxidant product, â&#x20AC;&#x153;Free Radical Scavengerâ&#x20AC;? â&#x20AC;&#x201C; FRS comes in 10.5 oz. single-serve bottles in three ďŹ&#x201A;avors: Orange, Wild Berry and CherryLime. The product is currently available in Seattle, San Diego, and Santa Barbara, and will be launching in more cities over the next two years. Amino Vital â&#x20AC;&#x201D; Created by Ajinomoto U.S.A., Inc., one of the worldâ&#x20AC;&#x2122;s leaders in amino acid research and development, Amino Vital Pro is available at Vitamin Shoppe, GNC, and other retailers nationwide. It is designed to provide maximum energy and muscle repair through the use of amino acids. DZL â&#x20AC;&#x201D; A protein beverage combining 18 vitamins and minerals along with joint-friendly glucosamine, DZL, a sports drink in a 16 oz. can, came to market earlier this year. DZL sponsors professional boxers and Monday Night Football on ESPN in New York State. Gleukos â&#x20AC;&#x201D; Gleukos is distributed by the following com,ABRADA24$AD?/CTOBERPDF!panies: C&S Distributing, UNFI-West/Mountain Peo-

pleâ&#x20AC;&#x2122;s Warehouse, NFI-West/Rainbow Natural, Natureâ&#x20AC;&#x2122;s Best, Associated Grocers â&#x20AC;&#x201C; Seattle, Associated Foods, UNFI â&#x20AC;&#x201C; East, Market Centre (United Grocers),Dale Cox Distributing, Associated Foods. The product is positioned in the sports drink aisle, the ready-to-drink grab-and-go area, and nutrition centers within a retail store. Taste Nirvana â&#x20AC;&#x201D; Taste Nirvana is launching the first domestic coconut juice available in a glass bottle in early 2007. Made with all-natural ingredients including cane sugar, coconut slices and pulp, and no preservatives, the product will be available in three ďŹ&#x201A;avors: Taste Nirvana Young Coconut Juice with Real Slices, All-Natural with Pulp, and All-Natural. All products come in 9.5 oz. bottles and 24-bottle cases. Gatorade â&#x20AC;&#x201D; From PepsiCo-owned Gatorade comes Gatorade A.M., available in the first quarter of 2007. Gatorade A.M. is designed with morning-friendly ďŹ&#x201A;avors like Orange-Strawberry and Tropical Mango. Made with the original Gatorade formula, A.M. restores ďŹ&#x201A;uid lost overnight before a regularly scheduled morning workout. Gatorade A.M. will be available in 32 oz. and 20 oz. bottles and will be supported by a full marketing plan.

(866) 528-2977.

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BEVERAGE SPECTRUM // OCTOBER

2006

BS1006


PROMO PARADE Diageo Castle Brands Castle Brands, Inc. has released spirited holiday 2007 gift plans for its growing portfolio of spirits. Boru Vodka was inspired by Brian Boru, legendary high king of Ireland. In the year 1014, Boru led Ireland to victory against foreign invaders. In the spirit of this tenacious defense, Boru Vodka upholds unsurpassed standards of quality and craftsmanship that have no rival, and in the chilly winter, the Boru Iceless Chiller will keep Boru perfectly chilled without diluting the clean, bold taste you've come to expect. Just store Boru in the freezer until ready to serve. Then, place the bottle into the chiller where the smooth, crisp character and delicate appeal of Boru will remain chilled for up to four hours. Holiday gift sets from Gosling's Black Seal Rum feature a 12 oz. jar of New Hot Buttered Rum Toddy Mix or a ready-toenjoy Gosling's Gourmet Rum Cake. CocoRumba Double Chocolate Cake, Bermuda Rum Swizzle Cake or Dark ‘n Stormy Island Spice Cake. As for Castle Brands’ Liqueurs, Pallini Limoncello will come with a gift pack containing two elegant and contemporary hand-blown Pallini "classico" glasses, compliments of Virgilio and Micaela Pallini. Celtic Crossing, the rich, honey-flavored liqueur from Ireland, offers an exquisite gift pack featuring a collection of Irish Christmas ornaments. The Celtic gift box is a warm, burgundy color trimmed in gold and is imprinted with a bow and a gift card. Inside each box is a beautiful Christmas ornament with a shamrock design trimmed in gold. There are four different ornament designs in each six-pack case. ‘Tis also the season for Irish cream, and Brady’s Irish Cream Liqueur wears its holiday green and gold coffee mug right on the bottle. This festive on-pack is the perfect stocking stuffer.

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Diageo’s spirits portfolio fulfils gift lists with offerings for the holiday host, diligent executive or even stocking stuffers for a loved one. There’s no better way to celebrate the season of giving than with a fine spirit. For this year’s holiday season, Diageo is promoting the following spirits: Crown Royal XR — The newest and rarest addition to the Crown Royal Canadian whisky family, is crafted from the last batch of whiskies from the Waterloo Distillery. It retails for $149.99. Jose Cuervo Reserva de la Familia — This ultra-premium tequila is made from 100 percent blue agave, and is aged and stored a minimum of two years in the family distillery. Every year a different Mexican artist is commissioned to design the handcrafted commemorative gift box. It retails for $100. Johnnie Walker Blue Label Magnum — Now available in a 1.75 L bottling (previously only available in 750 mL), accompanied by a collectors’ edition navy blue leather case, Johnnie Walker Blue Label is blended from the rarest whiskies in the world. It retails for $500 Bushmills 21-Year-Old Single Malt — Bushmills is the world’s oldest licensed whiskey distillery. The town of Bushmills was awarded the first license to distill in 1608. Only the finest single malt casks are selected and aged for a minimum of 21 years in sherry and Bourbon casks to make this single malt, which retailers for $115. Also, for the holiday party, Diageo is promoting the following gifts under $25: Jose Cuervo Flavored Tequilas are the newest edition to the Jose Cuervo family. Each flavor is a blend of premium silver-styled tequilas with natural hints of orange, lime and tropical fruit flavors (Citrico, Oranjo and Tropina). They retail for $18.99. Holiday packaging makes the Smirnoff Red Gift Box a great “grab and go” gift with no wrapping required. Smirnoff is the best-selling premium distilled spirit in the world, and was the “hands down favorite” in a blind tasting of 21 worldclass vodkas by The New York Times. It retails for $14.99. For New Year’s Eve, Diageo is promoting Johnnie Walker Gold Label, a gentlemen’s whiskey that is “perfect for that midnight toast.” Each whisky in the Gold Label is matured for at least 18 years. It’s best-served ice cold to release the fruit flavors and honey sweetness. It retails for $75-$80.


PROMO PARADE Tullamore Dew Tullamore Dew, the distinctively smooth Irish whiskey, is dressed for gift-giving in a decorative new tin introduced in the U.S. just in time for the holiday season. The design, created by Dublin design company Dynamo, features an image from County Wicklow captured last February by photojournalist Tony Gavin. Dressed in its new tin, Tullamore Dew is the ideal gift for the holidays for every whiskey lover from novice to true aficionado.

PINK Vodka p.i.n.k. vodka is doing a Holiday value-added package (pictured at right). This great pre-boxed holiday package will retail for $40 – the same price the bottle itself sells for.

Heaven Hill Holiday Offerings Highlighting Heaven Hill's Holiday offerings for the 2006 holidays are: HPNOTIQ — In-home cocktails are made more sophisticated with two unique Martini glasses from HPNOTIQ. The aqua blue sensation has become an industry phenomenon on the heels of the cocktail explosion. For this season, the two come together in a stylish gift set featuring the pair of victor martini glasses along with a 750 mL bottle. Outfitted in a silver box with a clear front, the gift set makes an eyecatching centerpiece for displays or a compelling gift purchase off the shelf. PAMA Pomegranate Liqueur — PAMA, the world's first true pomegranate liqueur, is leading the way in the next major category in the spirits world--pomegranates. For holiday, this product is packaged in a clear gift carton for great giftgiving. To enhance PAMA's shelf presence for the holidays, the upscale gift carton includes the identifiable PAMA logo across the top and bottom of the sturdy clear construction. Evan Williams Single Barrel Vintage Bourbon — The 5time "Whiskey of the Year" award winner enters the holiday season with a holiday gift set that pairs a 750 mL bottle of the world's only vintage-dated single barrel bourbon with an engraved silver "tipping jigger" and logoed rocks glass. The tipping jigger is a traditional way to chill whiskey by

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suspending it over ice on the rim of the glass. The Evan Williams Single Barrel Vintage can then be "tipped" into the ice or drunk straight up and chilled. This unique two piece gift set comes in a striking black and gold outer carton that reprints glowing reviews of the bourbon by the world's top whiskey writers. Two Fingers Tequila — The Two Fingers 750 mL bottle is showcased for the holiday season through a "Master the Margarita" gift set that includes a logoed margarita glass and recipes for four different types of margaritas. December is always the top month for tequila sales, better even than May or the summer months, and the attractive Two Fingers "Master the Margarita" gift set is perfect for gift-giving or holiday entertaining. Isle of Jura — New for 2006, the Isle of Jura Single Malt Gift Set delivers the unique flavor of Jura in a pinstriped gift set. The Isle of Jura 10-year-old Single Malt Scotch features the brand's new packaging with a pair of lowball glasses in a carton featuring accolades from three of the world's renowned Scotch experts - befitting a Scotch of Jura's character. The square lowball glasses feature an etched Isle of Jura logo and are a unique look for a "wee dram" of the whisky. The pinstriped outside also includes images from around the Isle of Jura, one of the most unique distilleries in the world.

Irish Whiskeys

Foster’s

The Knappogue Castle Whiskey Gift Pack reflects the heritage of this sophisticated brand. The gift box, in rich wood tones, is meant to reflect opening the door to the Castle. Once inside (the back of the box) you are in the Drawing Room of Knappogue Castle itself, which contains a portrait of Mark Edwin Andrews, the brand's founder. Whiskey connoisseurs know that adding a wee bit of water to whiskey will open up its nose and flavor, so with the gift pack comes a ceramic water pitcher emblazoned with the Knappogue Castle Whiskey logo, bearing a sketch of Knappogue Castle. With the Clontarf Gift Pack (left), customers receive an elegant and upscale glass water carafe bearing a frosted Clontarf logo on the front.

Foster’s is encouraging retailers to take the Australian approach to Summer Downunderland the Winter Season this year and watch sales go north for the winter – not south! According to Foster’s, the winter season is the ideal time for customers to enjoy more social gatherings and intimate holiday occasions with their family and mates. And to capitalize on the increase of these beer-drinking events, they suggest joining Foster’s for the “Summer Downunderland” promotion. Program materials include display enhancers and POS pieces that play on the many different occasions that are celebrated during the winter months. Foster’s will also be displayed along side Miller Trademark brands for even greater impact. This promotion will run through Dec. 31.

Daily's Mixers Daily's, America's premium brand of fruit mixers and ready-to-drink cocktails, announces a holiday program aimed at capturing the spirit and profits of America's fascination with the cocktail during the years most festive season. Daily's "The Perfect Taste to Toast" promotion is fully loaded with all of the materials retailers will need to stop traffic and increase sales during the critical October - December selling period. At retail, Daily's is providing colorful and appetite-appealing POS materials that support Daily's full line of products and allow for cross merchandising displays with popular spirit brands and It’s A Wonderful other holiday-reWhiskey Sour lated items. Case cards and shelf talkers target impulse shoppers Mistletojito looking to purHolly Jolly chase big for their Cosmopolly holiday entertaining needs. Daily's "The Perfect Taste to Toast" holiday promotion materials are available as of last month.

Off-Premise Promotion Details Retail Dates: November 1 – December 31, 2006 Brands: Foster’s

“Take the Australian approach to the Winter Season this year and watch your sales go north for the winter – not south!”

The winter season is the ideal time for your customers to enjoy more social gatherings and intimate holiday occasions with their family and mates. To capitalize on the increase of these beer-drinking events, join Foster’s for the “Summer Downunderland” promotion. Program materials include display enhancers and POS pieces that play on the many different occasions that are celebrated during the winter months. Foster’s will also be displayed along side Miller Trademark brands for even greater impact. The Aussie's openness and effortless social attitude will keep things fun this winter and keep your sales hot all season long!

Static Sticker

3D Display Card

Case Card

See your local distributor for details and to request merchandising materials. Graphics not final. Elements subject to change. Distributors and retailers are responsible for ensuring that promotional programs conducted in their markets are in accordance with state law.

http://www.MillerAdvantage.com

Captain Morgan The makers of Captain Morgan Original Spiced Rum have launched a new Web site, captainyourhalloween.com, to help consumers “dress up and get down” this Halloween. The site will provide consumers with everything they need in order to pull off a legendary costume on one of the biggest party nights of the year. Beginning early this month, adult consumers can log onto captainyourhalloween.com and order whimsical costumes, get creative cocktail suggestions and review party-planning tips. The site also features a variety of videos highlighting the most common costume blunders, including costumes that are incomplete, too cumbersome, awkward or sight-prohibitive. Hoping to reduce the number of costume blunders, captainyourhalloween.com offers five tongue-in-cheek pre-packaged costumes including the Deviled Egg (a foam egg with horns and a tail), First Class Male, Venetian Blind, Little White Lies and Hold the Mustard, beginning at $35.99 each. The site also features a collection of humorous last-minute costume suggestions, as well as three Halloween-inspired cocktail recipes that are sure to spark some lively conversation at parties.

OCTOBER

2006

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Beverage Spectrum October 2006  

The October 2006 issue of Beverage Spectrum Magazine.

Beverage Spectrum October 2006  

The October 2006 issue of Beverage Spectrum Magazine.

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