June 30, 2011
Riding UFC, Category Consolidation, zero-cal Xenergy is a knockout The Session Beer Equation
Aloe Beverages in Bloom
Sports and Nutrition Beverages
BevNET Live Summer 2011 Highlights
PAGE 26
PAGE 32
PAGE 58
PAGE 64
JUNE 2011 vol.
9 :: no. 4
Columns 4 FIRST DROP Crisis Redux 6 PUBLISHERS TOAST The Retailing Angle 30 GERRY’S INSIGHTS Craft Equals Community 26
Departments 8 BEVSCAPE BUSINESS White Rock turns 140 10 BEVSCAPE INNOVATION 5-Hour goes for 65 14 CHANNEL CHECK An energy comparison 18 NEW PRODUCTS Dr. Better – and Cake Vodka!
48
26 BREWBOUND Time for a session 32 COOLER CHECK-IN Understanding aloe 66 PROMO PARADE WAT-AAH! fights bullying
Features 38 Word from the Experts Third Party Endorsements 58
44 Word from the Experts Innovation Investment 48 COVERS TORY: The Xyience of Energy Drinks Riding UFC, Category Consolidation, zero-cal energy drink cleans up. 58 Sports Drinks Vita Coco, ZICO, O.N.E. and others fight for athletic dominance 64 BevNET Live Report
64 COVER IMAGES COURTESY OF ERIC WILLIAMS AND XYIENCE Beverage Spectrum (Postal Number 024-552) is published monthly with combined issues in January/February, May/June, July/August and November/December by Beverage Spectrum Publishing, Inc., a wholly owned subsidiary of BevNET.com, Inc. 44 Pleasant Street, Suite 110, Watertown, MA 02472. Periodicals postage paid at Boston, MA and additional mailing offices. POSTMASTER: Please send address changes to Beverage Spectrum Magazine, Subscriber Services, 44 Pleasant Street, Suite 110, Watertown, MA 02472
Beverage Development Ingredient Supply Shots Energy Drinks Enhanced Waters and More Proprietary Flavors Premixes and Bases U.S. Distributor
THE FIRST DROP
By Jeffrey Klineman
By Brent Sonnek-Schmelz
AN IMPORTANT DISTINCTION FOR A POLITICAL OBSERVER, it would have been a delicious bit of irony, albeit just one of the many chocolate shavings falling on the all-you-can-eat feast offered by the Andrew Weiner sexting scandal. It was our most direct connection, however, and I think it was a doozy: while then-Congressman Weiner was on one side of the Sheraton Tower in Times Square on June 6, facing the press, his constituents, and his comeuppance as he admitted to sexual improprieties, just a few yards away in the same hotel, as part of BevNET Live, we had Robbie Vorhaus, one of the foremost communications and crisis strategists in the world, conducting a session on crisis avoidance. Throngs were on hand to greet the Weiner event, but very few of our BevNET Live attendees went to see Vorhaus, instead hitting the other sessions offered in his time slot. (Perhaps, had Weiner gone to see Vorhaus, his strategy and final result might have been altered; in speaking with Vorhaus, he told me there wasn’t much he could have done to help Weiner out by the date of the press conference because he had already lied to reporters and the public. “And when you lie,” Vorhaus says, “You create great forces against you.” Oh well!) I am not revealing this story to scold Weiner, nor am I writing it to scold the people who opted for other sessions instead of Vorhaus’s. After all, as the planner for those other sessions, I know they were all (ahem) pretty darn great. As for Vorhaus, he’s not bummed about the low turnout, either. In fact, it proved something to him – and to me, as well – about the nature of the crisis business and its relationship to brandbuilding. For Vorhaus, the lesson was one that has gradually become apparent over the years, but codified after his session: that a fundamental shift has taken place from being prepared for a crisis to instead having a strong enough reputation to prevent a crisis from ever disrupting one’s real job. Maintaining that kind of reputation, he said, is about following one’s heart, first and foremost, but also keeping a com-
4 BEVERAGESPECTRUM.JUNE.2011
pany’s or a leader’s standards and behavior consistent with its goals. “Just to say, ‘let’s be prepared for a crisis,’ it’s not viable,” he said. Particularly at a time when even small events can be detected instantly on a global level, how one is already perceived is likely to take the place of any initial response. “Instead of trying to teach about a crisis toolkit,” Vorhaus said, “I’m learning more and more that people want to learn what they can do to be a leader, so they can have a reputation that gives them an edge. It’s the exact same thing when it comes to a crisis, but one is perceived as negative and scary.” “I’ll bet you a million dollars if we’d done a session on how following your heart can give you a competitive edge, how building and maintaining a world class reputation can give you a competitive edge, we would have filled that room,” Vorhaus added. “But instead we were saying ‘are you ready for a disaster?’ And people have just about had it. They’re saying, ‘Earthquakes in Japan, fires and floods, sexual issues, enough!’ It’s negative. My intention is that I want to be able to help you protect yourself, build your brand, lead your category by building and maintaining a world-class reputation.” Of course, that doesn’t just take place at a surface level. Weiner’s career could have survived his actions, Vorhaus said, if he’d been truthful while maintaining separation between the personal and the political. By lying, Weiner betrayed that reputation. In business, by extension, you need to own your mistakes: Perrier recalling bottles that may have been tainted by benzene, or Coke giving in and bringing back the original formula are both cases in which concerns about reputation and core meaning were enough to drive businesses to act in ways that ultimately helped them preserve themselves. Having so few people attend the session wasn’t a wake-up call for Vorhaus, he told me, but it did validate a shift he’s been making in his own business, from the negative connotations of crisis management to the more positive idea of inspiration and
Robbie Vorhaus, founder and principal of Vourhaus & Company, makes the distinction between avoiding crisis and following your heart to keep a competitive edge.
reputation. One is about how you handle a disruption in operations; the other is about how you operate day-to-day. “Just talking about crisis is too vague,” he said. “People want to get back to business. It’s the difference between ’How can we have a competitive edge’ vs. ‘What can we do to prepare for the possible – the possible – event that may interrupt our business cycle.’” In other words, it’s about companies telling consumers what they stand for, what’s their essential truth, and knowing how to build on people’s perceptions. It’s an important distinction, and, like Vorhaus, in our own future programming, we’ll keep this interest in staying positive and focusing on building reputation, as a way to become crisis-proof rather than crisis averse. As for Weiner, we don’t know what the future holds for him. But we do hope that if history repeats itself, maybe next time he’ll pick a different hotel?
PUBLISHER’S TOAST
By Barry J. Nathanson www.bevspectrum.com
Barry J. Nathanson PUBLISHER bnathanson@bevnet.com
THE RETAILING CONSTANT
Jeffrey Klineman EDITOR jklineman@bevnet.com
Ray Latif ASSISTANT EDITOR rlatif@bevnet.com
SALES John McKenna ASSOCIATE PUBLISHER jmckenna@bevnet.com
Adam Stern ASSOCIATE PUBLISHER
LOOKING AT THIS INDUSTRY IN the simplest terms, one sees that it involves just a few constants. There will always be product innovation, in concept and formulation. There will always be distribution. There will always be packaging, and there will always be retailers. I want to focus on retailers this time, because lately I see how much they define the industry. They don’t just control what comes in and how it goes out, they also set the pricing, the shelf allocation and the merchandising opportunities. They determine if a new category will see the light of day, and which will be quashed before their time. I have always admired their innovation, and their power to dictate the
ers. They created excitement, took the lead in sampling and displays, on-shelf, in the aisle and outside the doors. If you wanted to know what new products to take on, you simply walked their floors. They created categories. I also need to cite the big players that thought like the little guys in creativity and innovation. Instituting new product strategies, revisiting the frequency of shelf sets, working with their communities and many other programs were the provenance of 7-Eleven, Safeway, Walgreens, Stop & Shop, Target, Ralphs, CVS and Walmart. Their scale was large, but their sense of the market was insightful and personal. They understood the consumer proposition. Those were the retailers I looked at early on, but now there is a new generation that has joined the pantheon, and leads retailing today. I can think of no retailer more important to the marketplace than Whole Foods. They come to mind in every conversation about the industry. Costco is also a leading face of the industry today, with BJ’s And Sam’s Clubs in the equation too. Their value proposition has been enhanced with their great selection. The big box guys get it and consumers are flocking to their locations. Add GNC and other non-traditional beverage retailers and you have a spectrum of retail to choose from. Walking the aisles at retail is still an important component of my job. I’m glad these aisles give me the excitement today, as they did so many years ago.
While there are issues at retail that I strongly disagree with – slotting being most obvious – I still look to them as the biggest link in the chain. terms. While there are issues at retail that I strongly disagree with – slotting being most obvious – I still look to them as the biggest link in the chain. So I would like to banner some of the players that set the tone and direction for the marketplace. There have been arbiters that define the best of beverage retailers. As the industry has evolved, so have the ones that have been the pacesetters. Early on I learned to follow Wegmans, HEB/Central Market, Schnucks, Quick Trip, WAWA, Sheetz, Store 24, Dominicks, Duane Reade, Big Y and a myriad of smaller boutique retail-
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BB
BEVSCAPE BUSINESS • The latest news on the brands you sell.
After 140 Years, White Rock Still Solid In the words of White Rock Beverages president, Larry Bodkin, “It’s one thing to say you’re a product of the 70’s, but few can clarify that they mean the 1870’s.” Once one of America’s most recognized brands, White Rock Beverages recently celebrated its 140th year in existence. The company was founded in 1871 and enjoyed widespread popularity throughout the first half of the 20th century. Just how popular? White Rock Beverages were featured at the coronation banquet of England’s King Edward VII and its sparkling water was chosen to christen Charles Lindbergh’s “Spirit of St. Louis” prior to its historic flight. While White Rock is less of a household name today, the company continues to sell over a dozen different flavors of seltzers, water, mixers, flavors and specialty beverages to over 40 states and 10 foreign countries. Bodkin, who is only the fifth president in White Rock’s long history, said that
much of the company’s continued success has been based its consistency in providing premium products to a customer base that values the reputation surrounding the White Rock brand name. “White Rock is a great brand,” said Bodkin. “And when you look at companies that have survived over the years, it’s usually the great brands.” Bodkin also noted the importance of White Rock’s ability to evolve and of-
fer a variety of products based on their relevance to their times. He specifically noted that while White Rock beverages once competed with Coca-Cola, Pepsi and Dr Pepper products, the company now shuns direct competition with the so-called “big three.” Instead, White Rock focuses on offering varied lines of specialty and “good-for-you” products to a relatively upscale consumer base. “Coca-Cola, Pepsi and Dr Pepper control 90 percent of the [beverage] market. Any hope to compete against them is virtually nil,” Bodkin said. “Also, consumption of highly sweetened, highly carbonated beverages are on the decline. Our products are either healthy, unique, or both and positioned in different niches.” Bodkin points out that in a fluctuating economy, the diversification of White Rock beverages into several niche categories was a key to the company’s overall profitability and consistent with the type of business planning and strategy that has become a hallmark of White Rock over the years. In addition to its iconic seltzer waters and mixers, White Rock introduced Sioux City Sarsaparilla in 1975, and expanded its offerings and distribution to a national audience over the following decade. In 2003, the company acquired the Olde Brooklyn brand of beverages and soon after, became one of the first beverage companies to launch a line of organic sodas. As for the next chapter in the company’s history, Bodkin said that it was White Rock’s brand name that has been and will continue to be the cornerstone to its success — and that protecting its image was crucial for the years to come. “Many beverage companies that became focused on price or value have come and gone,” Bodkin said. “We’ll never do anything to cheapen the White Rock name and see a lot of upside for the brand in the coming years.”
Natural and Organic Food & Beverages to Surpass $78 Billion in Sales by 2015 Packed Facts has projected U.S. sales of natural and organic foods and beverages to more than double by 2015 in a new report. The report pegged the current market at $39 billion with sales expected to dramatically grow by 45 percent by the end of 2011 and eventually surpass $78 billion within five years. In identifying the growth potential of the market, the report examined several key trends and issues affecting the marketplace and cited a recent consumer survey conducted by Packaged Facts. The survey found that nearly half of all U.S. adult grocery shoppers purchase foods and beverages that are either natural or organic, with a growing number actively seeking out such products. The report indicated that the growing consumer demand for these products has led several major manufacturers, including PepsiCo and Coca-Cola, to shift toward greater focus on innovation and production of organic and natural foods and beverages.
Key Transactions Last Month Shadow Beverages Purchases Whey-Up
Nestle Waters completes acquisition of Sweet Leaf Tea
J.M. Smucker buys Bustello Cool owner Rowland Coffee Roasters For more details, go to BevNET.com
8 BEVERAGESPECTRUM.JUNE.2011
BB More Sugar Co's Join "Corn Sugar" Lawsuit Several new plaintiffs from the sugar industry have joined a lawsuit that claims a marketing campaign for high-fructose corn syrup is false and misleading. The campaign, which refers to HFCS as “corn sugar”, has drawn the ire of a number of
American Sugar Cane League, all of whom have recently been added to the lawsuit. Specifically, the lawsuit charges that the use of “corn sugar” in advertising and promotional materials is intended to equate consumer perception of high-fruc-
sugar companies and trade associations including Imperial Sugar Company, the U.S. Sugar Corp., the Sugar Association and the
tose corn syrup with that of sugar particularly at a time when a number of food and beverage manufacturers have begun
replacing the ingredient with sugar. Defendants in the case, including Cargill and Archer Daniels Midland Co., say that they stand by the message as well as the science behind it. And while the Corn Refiners Association has petitioned the U.S. Food and Drug Administration to allow manufacturers to use “corn sugar” as an alternative name for HFCS, John Sheptor, the president and CEO of Imperial Sugar Co. said the wording is deceptive. “The attempted name change is an intentional effort to deceive consumers and, most disingenuously, it’s being done under the guise of consumer clarity,” said Sheptor. “We are taking a stand to challenge this marketing ploy for what it is.”
JUNE.2011.BEVERAGESPECTRUM 9
BI
BEVSCAPE INNOVATION • Product development & marketing news
POM Wonderful FTC Hearing Undersay In a case that many are looking to for direction with regard to future food and beverage health claims, a Federal Trade Commission action against POM Wonderful began in Los Angeles last month. The case is a testing ground for treating food and beverage health claims more like those of the pharmaceutical industry. But it is also an opportunity for companies to argue that their claims are supported by the first amendment and cannot be censored, even if they are found to be untrue. To make companies responsible for what they claim on their labels, the FTC is changing its requirements for health claims from “competent and reliable scientific evidence” to requiring two well-controlled clinical trials in support of product claims. If the FTC were to lose the case it might inaugurate an open season for health claims, making it possible for companies to make even the wildest claims in their advertising. Some health claims made by POM on its web site last year indicated that the product can treat prostate cancer, erectile dysfunction and heart disease, but the FTC said the studies that support these fi ndings often lack control groups, don’t show statistically significant changes and measure the wrong indicators. POM executives may also have been aware of these shortcomings, according to the FTC, but POM will most likely point to their $35 million in research backing up their product, and 65 studies on POM products. The FTC is looking for new grounds to go against advertisers in an industry where it is becoming increasingly difficult to market foods and beverages without a functional component.
IFT11 Offers New Blends New beverage blends and newly blended supplier companies featured prominently at the recent IFT tradeshow in New Orleans. Held June 11-14 at the New Orleans Morial Convention Center, the annual meeting of the Institute of Food Technologists is the largest annual North American Exposition for companies that supply the food and beverage industry. BevNET visited upwards of 80 different companies at the show in its quest for interesting beverage prototypes. High-intensity sweetener/sugar blends were common among the concept beverages sampled at this year’s show. Rather than being presented as reduced-calorie alternatives, these hybrids were, in light of recent commodity sugar price hikes, being cast as cost-reducing alternatives to full sugar formulations. Price-driven sweetener swapping and blending is nothing new in the beverage industry. In fact, the most commonly used beverage sweetener, High Fructose Corn Syrup (HFCS), began appearing commonly in beverages in the early 1980’s when major CSD manufacturers needed an alternative to price-volatile sucrose (sugar), according to Dr. John S. White, president of White Technical Research, speaking on behalf of the Corn Refiners Association.
10 BEVERAGESPECTRUM.JUNE.2011
BI Empowering the Elderly With 5-Hour Energy Here’s an innovative bit of consumer activation: the energy shot category has started marketing to senior citizens. A recent Wall Street Journal story reported the appeal of products like 5-Hour Energy among a growing number of active baby boomers, and that energy shots are now being sold alongside other elderly-focused beverages like Ensure nutrition shakes. Manufacturers are also designing new advertising to reach out to aging consumers, the newspaper reported. In order to reach older consumers, NVE Pharmaceuticals, maker of 6 Hour Power, has begun advertising on adultfocused premium cable channels like the Discovery Channel and The Learning Channel. And in recent months, category leader 5-Hour Energy has been working with AARP, the aging persons’ advocacy group, to advertise and promote its product. 5-Hour handed out thousands of product samples at last October’s annual AARP convention, and also started running full page ads in the AARP Bulletin, a magazine delivered to 22 million households. According to the Journal, sales executives at 5-Hour have begun to hand out samples to doctors, and also have undertaken marketing drives in places like golf courses, where the shots have begun to sell at pro shops and clubs.
12 BEVERAGESPECTRUM.JUNE.2011
CORRECTION: • A New Product listing for Kona Red featured an incorrect phone number. Consumers can purchase the product by contacting KonaRed at 808.212.1553, or by visiting www.konared.com. • A listing in February’s Relaxation Drink feature incorrectly displayed the Yella can for Dewmar International’s Lean Slow Motion Potion. The updated design is a black and gold 16 oz. can which can be seen in an advertisement in this issue.
THE NEW HEINEKEN CAN… INNOVATION YOU CAN FEEL. PROFITS YOU CAN TOUCH. New tactile ink printing technology creates a 3D look and feel to the can! Creates greater opportunity for incremental sales and profit. The launch will be supported with marketing activity, such as TV and print advertising, PR events, and in-store POS. A new 3x4 suitcase package makes it easier to stack and display:
AVAILABLE IN 12 OZ, 16 OZ, AND 24 OZ. CONTACT YOUR HEINEKEN REPRESENTATIVE FOR MORE DETAILS!
©2011 Heineken USA Inc., White Plains, NY
CC
CHANNEL CHECK • What’s hot – and what’s not – in stores now.
SPOTLIGHT CATEGORY
ENERGY DRINKS
Red Bull Red Bull
Dollar Sales Total:
$2,337,445,000
52 Weeks through 5/15/2011 SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart.
The gap between Red Bull and Monster is continuing to narrow – if you read those numbers right. While IRI accounts for Red Bull with one line-item, Monster and Rockstar both have several varieties of their core products that, when added up, create a much more significant reading of the market. Looking at the brands overall, we see Red Bull is #1 and growing. Monster is #2 and growing faster. Rock Star is #3 and growing. Coke’s NOS and Full Throttle and Pepsi’s AMP are #4 and 5, but aren’t keeping up with the category’s torrid pace.
Monster Monster
Dollar Sales $1,220,415,000
Mega Energy
$179,469,600
Java Monster
$173,869,100
Brand
Dollar Sales
Change vs. year earlier
Red Bull
$2,337,445,000
14.31%
Monster
$1,220,415,000
23.42%
Rockstar
$436,116,200
12.15%
Nos
$220,540,700
13.01%
Monster Mega Energy
$179,469,600
54.88% 1.58%
XXL
$88,117,680
Java Monster
$173,869,100
Nitrous
$69,256,810
Amp
$139,591,600
-1.93%
Khaos
$68,565,500
Full Throttle
$104,086,400
-10.07%
Assault
$45,575,220
Rockstar Recovery
$88,220,340
627.33%
M80
$24,738,340
Monster Energy XXL
$88,117,680
-23.96%
Monster Nitrous
$69,256,810
64.59%
Monster Khaos
$68,565,500
3.29%
Rockstar Punched
$63,622,780
-0.21%
Amp Overdrive
$61,945,880
11.85%
Monster Assault
$45,575,220
2.09%
Rockstar Juiced
$42,873,330
-26.41%
Full Throttle Blue Demon
$39,231,140
-19.05%
Amp Energy
$32,580,220
13.83%
Xyience Xenergy
$31,279,650
61.06%
Mixxd
$18,539,590
Monster
$15,727,770
Monster Energy Light
$10,247,400
Total: Rockstar
$1,914,522,010 Dollar Sales
Rockstar
$436,116,200
Recovery
$88,220,340
Punched
$63,622,780
Juiced
$42,873,330
Roasted
$15,153,350
Roasted Light
$8,765,300
2X
$8,544,216
Total: NOS/Full
$663,295,516 Dollar Sales
Throttle NOS
$220,540,700
Full Throttle
$104,086,400
Blue Demon
$39,231,140
Total:
$363,858,240
AMP
Dollar Sales
Amp
$139,591,600
Overdrive
$61,945,880
Amp Energy
$32,580,220
Lightning
$29,525,790
Elevate
$28,959,210
Traction
$24,718,380
Relaunch
$16,424,700
Total:
14 BEVERAGESPECTRUM.JUNE.2011
Energy Drinks
$333,745,780
SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart.
TOPLINE CATEGORY
VOLUME
52 Weeks through 5/15/2011
BEER $18,493,030,000
BOTTLED JUICES $5,165,194,000
BOTTLED WATER $7,779,057,000
ENERGY DRINKS $6,915,298,000
SPORTS DRINKS $3,967,315,000
TEA/COFFEE $3,210,193,000
-0.41%
1.09%
2.90%
15.72%
14.94%
8.79%
SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart.
FRS_BevNetAdJune_FullPage.pdf
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RTD TEA Brand
HOT! AriZona Arnold Palmer Dollar Sales
Change vs. year earlier
Cappuccino Brand
HOT! Seattles best Dollar Sales
Change vs. year earlier
AriZona
$623,292,800
0.60%
Frappuccino
$544,829,600
6.64%
Lipton Brisk Tea
$283,352,800
47.83%
Doubleshot
$245,049,600
16.12%
Lipton
$280,079,300
-14.54%
Doubleshot Light
$9,618,175
-13.70%
Snapple
$186,867,500
0.87%
Private Label
$8,289,082
60.95%
Lipton Pureleaf
$158,616,700
-1.24%
Seattle’s Best
$7,819,626
569.91%
Diet Snapple
$135,520,100
16.46%
Illy Issimo
$1,444,609
227.90%
AriZona Arnold Palmer
$113,732,600
59.35%
Emmi
$1,178,551
10.05%
Nestle
$105,450,900
-10.60%
Pomx
$655,873
-25.75%
Gold Peak
$81,087,740
28.92%
Cinnabon
$650,357
-75.27%
Lipton Diet
$59,055,310
-11.07%
Community
$385,998
-22.13%
SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart. 52 Weeks through 5/15/11
ENERGY SHOTS
NOT! Lipton
HOT! Stacker 2 Change vs. year earlier
SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart. 52 Weeks through 5/15/11
SPORTS DRINK Brand
Brand
Dollar Sales
5 Hour Energy
$885,257,700
45.25%
Gatorade Perform
Stacker 2 6 Hour Power
$29,779,970
-3.72%
Red Bull
$25,355,220
-29.43%
5 Hour Energy Extra Strength
$11,717,890
97.47%
Private Label
$10,212,980
NOT! Cinnabon
HOT! Gatorade Recover Dollar Sales
Change vs. year earlier
$1,935,655,000
573.51%
Powerade ION4
$655,768,800
22.12%
Gatorade
$398,168,800
-63.68%
Gatorade G2 Perform
$383,604,600
570.86%
102.47%
Powerade Zero
$188,279,100
58.64%
$55,917,140
-82.65%
Monster Hitman
$9,638,077
-48.48%
G2
Stacker 2
$3,918,653
281.79%
Gatorade Frost
$52,173,870
-73.49%
Nitro 2 Go
$3,413,823
-15.37%
Gatorade Cool Blue
$45,198,730
-64.76%
VPX Redline Power Rush
$3,234,767
-32.16%
Powerade
$37,716,640
-16.53%
Vital 4U Screamin Energy
$3,148,175
-13.02%
Gatorade Recover
$33,205,430
1,243.21%
SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart. 52 Weeks through 5/15/11
NOT! Monster Hitman
SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart. 52 Weeks through 5/15/11
WATER
HOT! Nestle Pure Life
DOMESTIC BEER
Brand
Dollar Sales
Change vs. year earlier
Brand
NOT! Gatorade Frost
HOT! Coors Light Dollar Sales
Change vs. year earlier
Bud Light
$5,291,023,000
1.37%
-1.05%
Budweiser
$2,086,417,000
-4.31%
$687,748,600
-4.54%
Coors Light
$1,898,200,000
2.76%
$626,157,100
-1.98%
Miller Lite
$1,683,484,000
-0.11%
$392,077,400
9.73%
Natural Light
$1,105,459,000
-1.95%
$732,388,400
0.56%
Private Label
$993,905,600
4.82%
Aquafina
$705,308,200
Glaceau Vitamin Water Dasani Poland Spring Nestle Pure Life
$339,850,500
31.00%
Busch Light
Glaceau Smart Water
$308,392,100
28.12%
Busch
$676,409,000
-1.41%
Deer Park
$236,007,800
2.86%
Miller High Life
$497,994,100
-2.58%
Arrowhead
$197,723,600
-8.12%
Keystone Light
$489,566,500
2.27%
Sobe Life Water
$196,034,200
-0.89%
Natural Ice
$352,004,900
2.50%
SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart. 52 Weeks through 5/15/11
16 BEVERAGESPECTRUM.JUNE.2011
NOT! Arrowhead
SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart. 52 Weeks through 5/15/11
NOT! Budweiser
NP
NEW PRODUCTS • The newest options for cooler and shelf.
CSDs Virgil’s is taking aim at Dr Pepper with its new flavor, Dr. Better, which will be available in stores across the country. Also introduced is the all-natural, 100 percent stevia-sweetened version, ZERO Dr. Better. Made with natural spices, Dr. Better is a healthful and nostalgic, familiar-tasting soda with a suggested retail price of $4.99 per 4-pack of 12 oz. bottles. For more information, contact Virgil’s at (310) 598-8948. The Coca-Cola Co., Inc. is celebrating its 125-year anniversary by introducing a 1.25 L package. The new packaging will supplement the two-liter packaging already in stores and will feature Coca-Cola’s signature contour shape for less than $1. For more information, call Coke at (800) 438-2653
KIDS Emergen-C is introducing a kid’s version called Emergen-C Kidz, a vitamin drink mix that offers fun and fizzy goodness. Each packet contains 250 mg of vitamin C, plus zinc, quercetin, and other antioxidants that support the immune system, along with 5 B vitamins for metabolism and essential minerals and electrolytes. Available in three flavors, Fruit Punch, Orange and Grape, retail price for a 30-packet box averages $10.99. For more information, call (212) 679-6600. Frubob Fruit Floats are a children’s beverage featuring real fruit pieces bobbing in real fruit juice. Developed by a heart surgeon, Frubob provides 2 full servings of fruit in each 8.4 oz. serving. Made with no added sugars or sweeteners, all-natural Frubob is shelf stable with a one-year shelf life. Frubob is available in five flavors. Manufactured in the UK and distributed worldwide, Frubob USA is headquartered in Tampa. Frubob is at Walgreens, 7-Eleven, Piggly Wiggly, and is a hit with students in Dothan, AL schools. Look for Frubob at the 2011 NACS show. For more information, call 1-877-FRUBOB9.
ENHANCED WATER TalkingRain Company has announced recently that their Twist Essence Water is
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now zero calories. Previously nine calories, the drink is now sweetened by stevia and enhanced by antioxidants. The reformulation reinforces TalkingRain’s commitment to calorie-light, healthy drink options. With a PET bottle size of 19 oz., suggested retail price is $1.29 - $1.49. For more information, call (212) 986-7000. Cascade Ice Water is bringing two new summer-inspired flavors to market — Coconut and Huckleberry Blackberry. With a delightful fizz, the two-calorie Cascade Ice Water has 21 flavors for health-conscious indulgers. Cascade Ice Water is packaged in 17.2 oz. PET bottles with a suggested retail price of $1.09 - $1.69. For more information, call (425) 267-0959.
COFFEE Illy Issimo is introducing illy issimo caffe no sugar and illy issimo mochaccino flavors to satisfy caffeine-craving coffee lovers, in collaboration with Illycaffe and The Coca-Cola Company. illy issimo caffè no sugar offers a 15 calorie, unsweetened version of the fullbodied blend in illycaffè. At 100 calories per can, illy issimo mochaccino delivers the indulgent taste of DOMORI Chocolate, a delicacy otherwise unavailable in the United States. Both are made with natural ingredients and no added preservatives. Individual 8.4 oz. cans have a suggested retail price of $2.39 while the 4-pack’s price is $6.99. For more information call (310) 854-8196.
TEAS Tazo is adding to its zero calorie iced tea line with a new flavor that will be an Iced Chai Naturally Sweetened Black Tea. Following a year after the launch of the zero calorie teas, Tazo’s new flavor is a rich and spicy blend of freshly brewed black tea, sweet cinnamon, ginger, star anise and fragrant cardamom. Sweetened with stevia, the exotic blend will retail in their standard 13.8 oz. glass bottles for $1.39-$1.79. For more information, call 1-800-299-9445. Teas’ Tea is introducing new flavors with unsweetened, low calorie and classic flavors. Following a trend toward lower sugar levels and lighter taste profiles, the low-calorie flavors are Blueberry Green, Lemon Black and
NP Mango Oolong. The unsweetened tea flavors are Pure Green, Green Jasmine, Green White, Lemongrass Green and Rose Green. New flavors will retail for $1.79 in 16.9 oz. PET bottles. For more information, call (718) 250-4000.
SPORTS DRINKS R.W. Knudsen has introduced Recharge Natural Sports Drink Mix, which is the latest addition to their Recharge sports beverage brand. The product will come in powder sticks that deliver essential electrolytes and vitamins without sugar or artificial ingredients. Sweetened with Truvia, the sticks contain only 10 calories and will be sold in packs of eight for a suggested price of $3.99. To kick off of the new mix, the R.W. Knudsen Family will donate 200,000 sticks to Operation Gratitude, a nonprofit military support organization. For more information, call 1-888-569-6993.
ENERGY Golazo is a new hydrating energy drink developed in the Pacific Northwest that will be available in convenience stores around Seattle, select Whole Foods stores, Amazon Fresh, QFC stores and other outlets. Named after the popular word from soccer commentary that means, “super goal,� the product has 40 percent less sugar than leading brands and is all natural. Golazo is available in 8.4 oz. cans with an MSRP of $1.99 per can. For more information, call 1-206-682-GOAL. FMF Racing is introducing the FMF Power Beverage, an all-natural energy drink developed with the rigors of extreme athletes in mind. Formulated with a proprietary PowerBlend, the FMF Power Beverage contains natural caffeine, Panax Ginseng, Green Tea and Yerba Mate extracts. The product will come in Citrus Lemonade and Fruit Punch and will be packaged in re-sealable 13 oz.
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NP Alumi-Tek bottles for a suggested $2.49. For more information, call (954) 428-1800. Bonavitas is introducing a new non-alcoholic drink named Sweet16, and imbuing it with powerful energy nutrients including honey and capsaicin, which is a chemical in spicy food responsible for the “hot” sensation. These ingredients combine to help burn fat, improve mood and fight free radicals while increasing mental acuity, metabolism and energy production for a sustained energy boost. Sweet16 will be packaged in 2 oz. bottles with the suggested retail price of $2.95 per bottle. For more information, call 888-895-2220.
MALTERNATIVES Phusion Products has introduced Four Loko in a new, 11.2 oz. glass bottle, which will be available in approximately 1,000 grocery, mass merchandise and drug stores to customers of legal drinking age. Bottled versions of Four Loko contain 6 or 8 percent alcohol by volume, lower than canned varieties of the product. Phusion will work closely with retailers to make sure Four Loko is stocked only with alcoholic beverages, and the glass bottles will retail for $7.49 per 6-pack, and for $12.99 for a 12-pack. The brand is also replacing its canned Green Apple limited edition XXX flavor with Blueberry Lemonade. For more information, call (312) 596-3616. Mike’s Hard Lemonade recently introduced Mike’s Lite Hard Lemonade, made with 100 percent natural sweeteners it’s the first light flavored malt beverage of its kind. Available in two flavors, lemonade and cranberry lemonade, Mike’s Lite is a less filling alternative for light beer drinkers and is refreshing for summer entertainment. Available in 6-packs, which will retail for a suggested $8.99 $9.99, Mike’s Lite Hard contains fewer calories than the leading light beer and uses fresh lemon juice. For more information, call (206) 267-4444. Gila Brew Co. has announced that it is relaunching its CJ Crunk Juice Premium Malt Beverage. With a new package design, fresh flavors and clearer labeling, Crunk Juice is targeted for legal adult consumers between
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21 and 29, and will be good for pre-gaming, tailgating, and enjoying on ice. The product will be available in watermelon, grape and fruit punch and packaged in 24 oz. aluminum cans with a suggested retail price of $2.99. Cj Crunk Juice comes in 6 percent or 12 percent alcohol by volume options. For more information, call (860) 676-7900. Margaritaville is celebrating their “no shirt, no shoes, no problem” attitude by launching a new line of premium flavored malt beverages called Spiked Tea and Spiked Lemonade. Available along the East Coast in bars, liquor, grocery and convenience stores, the tea is made with a blend of fine select teas and natural lemon flavor, while the lemonade is finely carbonated, also with natural lemon flavor. 5.5 percent alcohol by volume, the products will be sold in 6-packs of 12 oz. bottles and in 24 oz. cans. For more information, call 1-877-689-2737.
BEER Newcastle Brown Ale is lining up four new Limited Edition Ales: Summer Ale, Werewolf, Winter IPA and finally, Founder’s Ale. With the motto, “limited in time, not in flavor,” the new beers are the product of a collaboration between Newcastle Breweries in England and Caledonian Brewery in Scotland, and will feature a wide array of flavors. The Summer Ale is refreshing and light with notes of citrus while the Werewolf is naturally blood red in color. The Winter IPA is zesty in character with a creamy finish while the Founder’s Ale is a rich ode to Newcastle’s heritage. The Limited Edition Ales are available in 6 and 12-packs. For more information, call (310) 578-7050. MillerCoors’ MGD 64 is adding MGD 64 Lemonade, a limited edition product, to their roster. MGD 64 Lemonade is a 64-calorie light beer with the taste of lemonade that launched May 1 and will stay on the market until Labor Day. The launch will be supported with television, radio and digital advertising and will be available in 6-packs, 12-packs and cans. Line-priced with other MGD 64 offerings, MGD 64 Lemonade contains 2.4 grams of carbohydrates. For more information, call (312) 496-2969.
NP WINE The d’Alessandro Winery has expanded production into U.S. markets, where it is introducing its three main varietals. D’Avola/Syrah is a deep red wine consisting of 65 percent Nero d’Avola and 35 percent Syrah, while the Nero d’Avola is ruby-red and best paired with grilled meats and hearty fish. The d’Alessandro white wine is 100 percent Inzolia, and is best with fish and white meats. The d’Avola/Syrah has a suggested retail of $30, while the other two wines retail for $14.99, and are packaged in 750 ml bottles. For more information, call (646) 624-2885.
SPIRITS Orient Apple is a new flavor by Absolut Vodka that has been in stores since May. The new flavor features the fruity taste of apples combined with tangy ginger that will mix well with many juices and sodas, and has no sugar or artificial flavors. ABSO-
LUT ORIENT APPLE (40 percent ABV/ 80 proof) will be available in 750 ml, 1 L, and 50ml sizes. The suggested retail price, $20/750 ml, falls in line with many of the ABSOLUT flavored offerings. For more information, call (203) 254-8225. Phillips Distilling Company has introduced its 14th flavor of UV Vodka: UV Cake. Best consumed with ginger ale, cola or as a shot, UV Cake is distilled four times and will be sold with a suggested $12.99 per 750 ml bottle. Other flavors include Espresso, Sweet Green Tea, Coconut, Cherry, Blue Raspberry, Vanilla, Grape, Apple, Citruv, Orange and Lemonade. For more information, call (612) 677-1717. Beam Global is introducing their new Pucker Flavored Vodka with four flavors, Sour Apple Sass, Grape Gone Wild, Cherry Tease and Citrus Squeeze. Featuring bold flavors and unique packaging that centers on a pair of lips, Pucker uses its experience in cordials to create a unique tasting drink. Pucker Fla-
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NP
vored Vodka will be bottled in 750 ml bottles with the suggested retail price of $16.99. For more information, call (312) 297-7418. Malibu is launching a new 70 proof spirit called Malibu Black, which will be its first foray into the full-proof spirit segment. With a hint of Malibu’s coconut flavor, Malibu Black offers consumer new ways of enjoying Malibu, and is the perfect choice for young men who like to socialize, have fun and have a higher energy style than tradition Malibu customers. Malibu Black will be supported by a range of advertising, including TV, digital, and on-premise consumer sampling events. The product will be available in 50 ml, 750ml, 1 L and 1.75 L sizes and the 750ml will retail for a suggested $15.99. For more information, call (914) 848-4782.
MIXERS
available in 23 flavors like blueberry, passion fruit, pomegranate, cosmopolitan, sour apple and lemon drop. Requiring no refrigeration, Amoretti’s mixes are so fresh that they should be mixed with two parts Amoretti’s, one part vodka. Amoretti’s mixers are in TK TK that retail for TK TK. For more information, call (402) 829-8016. Master of Mixes has announced the launch of a new line of cocktail mixers called Master of Mixes Lite Cocktail Mixes. With just 20 calories or fewer per serving and no added sugar, the mixers are loaded with fruit juices and come in 3 flavors, Margarita, Sweet ‘n Sour and Strawberry Daiquiri/ Margarita. The mixers are sweetened by Sucralose and will be targeted for the 194 million Americans who currently consume low calorie products. The mixes will be packaged in 1 L and 1.75 L bottles and will retail for $3.99 and $6.99, respectively. For more information, call (812) 944-3585.
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Brewbound
A BETTER WAY TO EXPERIENCE BEER
By Christopher Furnari
THE SESSION BEER EQUATION: Less (Alcohol) Equals More (Sales) SESSION BEER, A LOWERalcohol craft beer style emerging in the U.S market – and gaining momentum just in time for summer – may be a way for both on- and off-premise accounts to boost sales. The idea behind session beers, say their advocates, is that they offer consumers the ability to drink multiple full-flavored beers with less fear of intoxication. It’s an issue because many styles of craft beer have become more alcohol- and calorie-heavy as the category has grown. Veteran beer maker Chris Lohring became so unhappy with the higheralcohol movement that he started Notch Session as a response. “I got out of the beer industry for a few years, and it was during that time that I realized I was unhappy with the beer selection and where the ABV’s (Alcohol By Volume) were gravitating towards,” he said. Lohring, who started brewing commercially when he founded Tremont Brewing in 1993 (a business that he sold to Shipyard in 2004), has built an entirely new business model around creating beers that he describes as “less than standard.” All of his beers are under 4.5 percent ABV, with the newest offering, a Saison-style beer, checking in at just 3.8 percent ABV– well below the 5 percent ABV “standard drink” described by the U.S. Center for Disease Control. But it’s not just passion for new flavor that is driving the session movement. The real sell from brewers is that it can help pump up the bottom line. “This whole business model is done on inventory turns,” said Irene Firmat, the founder of Full Sail Brewing. “What retailers and distributors have at risk are floor space and cash flow. If you have a product that turns 12 times a year or more, you are generating that much more revenue for them off of their investment.” Firmat liked the idea of “the beer session” so much that she trademarked the name for two of her beers. She said she
26 BEVERAGESPECTRUM.JUNE.2011
believes that while special one-off beers and high-gravity offerings are nice, it’s session beer that is driving the most revenue growth for distributors and retailers. “That is one of the things that as brewers we have to realize,” she said.” We are not in this business model by ourselves. We are in this business model to sustain our business partners all the way through.” Nevertheless, there’s a fast-growing debate within the industry about the true alcohol content of a session beer. Style purists, for example, will argue that Full Sail’s Session Lager, which checks in at 5.1 percent ABV isn’t truly a session offering. Historically, session beer (at least in Britain, where loweralcohol beers are popular) checked in at 4 percent and lower. And the Brewers Association puts the number in a range between 4 and 5.1 percent. For Firmat, however, it’s the intent behind the term “session” that’s most important, as it refers to the act of drinking multiple beers during a longer period of time. “What we have always found engaging is the German saying ‘the first beer calls for the third,’” she said. “That is why we drink beer. It’s the sense of enjoying the beverage and you can have a few and still have a day ahead of you.” Lohring, who distributes his beer exclusively in the state of Massachusetts, said the category is growing, and more on-premise accounts are looking for session offerings. “The feedback I get from pubs and restaurants that have started to serve Notch is very positive,” said Lohring. “They (the customers) stay longer, they spend more money, they remember to leave a tip and they walk a straight line out of the door.” Lew Bryson, a veteran beer writer, said he believes that the session trend is just now beginning to gain momentum. “It’s really just the edge of the wedge,” he said. “It’s just now starting to pop.” Bryson also echoed Lohring’s comments on sell-through.
“Session beers have a shorter shelf life, so they have to be sold faster,” he said. “They are also fairly high velocity sellers because a guy who wants to drink a Notch Pilsner is going to have three, not just one double IPA. Sipping on a 9 percent whopper for an hour is not a session and the bar is losing a seat.” Despite all this, a vast majority of brewers have yet to adopt the session mentality. Ken Weaver, the former managing editor of Ratebeer.com’s, The Hop Press, analyzed the sites database and found that the average ABV of new U.S. beers eclipsed 7 percent for the first time ever in 2009. Lohring believes the consumers just need to be educated. “I always talk about the myth of more flavor being wrapped around higher ABV -that has been emphasized for the last ten years,” said Lohring. “The consumer has gone along with that. Now that the consumer is seeing flavorful beer under 5 percent, they are beginning to pay attention to the category.” Firmat believes that although somewhat new to the U.S. scene, the trend has staying power and distributors should be paying attention. “I think the trend has way deeper legs now,” she said. “It’s going back to the roots of brewing. If you look at when we first started, these are the types of beers people were making.”
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Brewbound
A BETTER WAY TO EXPERIENCE BEER
By Christopher Furnari
Key Craft Offerings: Victory Brewing Company pushes the boundaries of style with this Belgian-style Dubbel ale, made with smoked malts that are typically found in Rachbier’s. An extension of their “V” series line of beers, Otto, is a brand new beer for the Pensylvania brewing company. It will be available in limited quantities across all 29 states Victory products are sold. Suggested retail price will be $8.00 per 750mL cork-top bottle. Bell’s Brewery will release their late summer seasonal, The Oracle, in August. Their take on the West Coast-style Double IPA, this offering (which checks in at 10 percent ABV) places hop intensity first and foremost, making only the slightest concession to malt and balance. It will be available in very limited quantities in 12 oz. bottles and on draught across 8 states. Suggested retail price starts at $16.99 for a 6-pack, however many retailers will sell this as single bottle offerings. Deschutes Conflux #2 is the second beer in their conflux collaboration series but the first to be released. Conflux #2 is the handy work of both Deschutes and Boulevard Brewing. A white IPA that checks in at 7.2 percent ABV and 60 IBU’s, this beer will be available in 22 oz. bottles and on draft in limited quantities across the 17 states Deschutes products are sold. Suggested retail price is $7.99 for the 22 oz. bottles. Peak Organic’s Pomegranate Wheat is a refreshing wheat ale brewed with organic Pomegranate and acai juice from Sambazon. The wheat is organic and sourced from a local supplier. This brew checks in at 5.9 percent ABV and 19 IBU’s. Pomegranate wheat will come in 12 oz. bottles and on draught. Suggested retail price is $9.99 per 6-pack and it can be found in all 14 states Peak Brewing has distribution. Gritty McDuff’s Halloween Ale is one of the most anticipated seasonal release offerings of the year for the Maine based brewery. An ESB, the Halloween Ale was one of the first Autumn beers distributed in the New England region back in the 1990’s. It checks in at 6.0 percent ABV and pours a deep amber color. This beer can be found in all 10 states Gritty’s is distributed beginning in August.
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It will be available in both 6- and 12-packs, 22 oz. bottles, mini-kegs and on draught. Suggested retail price is $8.99 per 6-pack and $14.99 per 12-pack. Alaskan Perseverance Ale, a Russian Imperial Stout made with smoked malts, fireweed honey and birch syrup, is the latest ‘Pilot Series’ Beer from Alaskan Brewing. Brewed in celebration of their 25th anniversary, Perseverance checks in at 9 percent ABV and 50 IBU’s. Set to release September 1st to all 11 states Alaskan is distributed in. Suggested Retail Price is $7.99-$8.99 per 22 oz. bottle. This beer will also be available on draught and in 12 packs. Dogfish Head Craft Brewery. For the first time in 20 months, Dogfish Head’s 120 Minute IPA will hit the shelves in 19 states. The 18 percent IPA is being bottled in batches of 100 and currently hitting the market. This limited edition brew will sell at the brewery for $30 per 4-pack and will often times be sold as single 12 oz. bottles at various retailers. Boston Beer Co. Samuel Adams Bonfire Rauchbier is a new beer for Boston Beer Co. This Rachbier is a dark, malty, smoked brew with notes of caramel and toffee to balance out the smokiness for a smooth finish. The specialty malt is dried over a beech wood fire, giving the beer a distinct smokiness. It checks in at 5.7 percent ABV. This beer can only be found in the Harvest Variety 12-pack, which will also include Octoberfest, Black Lager, Irish Red, Harvest Pumpkin Ale and Boston lager. The suggested retail price for the mixed variety pack is $13.99. Baird/ Ishii/ Stone Japanese Green Tea IPA, a collaboration beer made for Japanese tsunami relief will be bottled in 12 oz. containers and sold as singles. This beer is aggressively hopped with Warrior, Crystal and New Zealand Pacific hops. It is also dry-hopped with a new hop variety from the Alsace region of France and Sorachi Ace hops. This beer is scheduled to release July 11th, and will be available in all states that receive Stone Brewing’s collaboration beers. Suggested retail price will range from $2.49-$3.49 per 12 oz. bottle.
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GERRY’S INSIGHTS
By Gerry Khermouch
THE COMMUNITY TENDRILS OF CRAFT WITH HUNDREDS OF NEW CRAFT brewers coming into the category this year, it’s sometimes hard to imagine where craft beer can go from here. I’m not worried much about a dumbing down of the sector to the lowest common denominator as happened during an earlier boom in the 1990s: the beers emerging these days are at a high level of quality and sophistication. And there’s no question the demographic is expanding, with women deeply involved these days and ethnic minorities starting to clamber aboard. (At a recent home brewers’ event in New York I met a Dominican guy who’s planning to open the first production brewery in Harlem in many decades.) Beer drinking venues and occasions are expanding. So the demand side seems in good shape. Inevitably, though, the expansion of the biggest will leave them less tethered to their local roots, and high capital costs will force them to move a lot of liquid, potentially forcing down pricing and undermining the viability of the businesses. We’ve seen that movie before. But for those who stay local, or at least regional, there are some great dividends beyond the fresh, inventive beers that are sure to result. Dividends not just to the brewers themselves but to all of us. Without getting too sentimental about the matter, I believe these dividends stem from the role small brewers play in lending texture to their communities, in a country where mass media and mass consumption have made most towns or city neighborhoods pretty much like every other one. That’s why I’m particularly excited about the nanos (nanobreweries) that have been springing up, and some of the collaborations we’re seeing, too. True, community building is an often abused, self-serving phrase used by countless retailers and developers seeking support in the form of tax breaks, grants and zoning variances. In beer, though, I think it rings truer, because of beer’s role as a
30 BEVERAGESPECTRUM.JUNE.2011
social lubricant, and the ability of pubs and restaurants to serve as third places, neighborhood hangs that offer a break from home or work, in the process adding life around the clock to retail districts and malls. It’s not coincidental that John Hickenlooper of Wynkoop Brewery could parlay his role as a pioneering publican in bringing Denver’s downtown back life into getting elected the city’s mayor and then governor of Colorado. But Hickenlooper always was about community building, siting his brewpubs on struggling main streets in landmark redbrick buildings that would make for good gathering places. For most other brewers, that aim is less central to the enterprise, but real nevertheless. At a time that local retail is an endangered species because of the Internet and big-box rivals, breweries and brewpubs should be a tempting option for developers and urban planners looking to re-establish downtowns and Main Streets as vibrant community centers. Unlike other restaurants, brewpubs that package their beer can serve other retailers, further contributing to the sense of authentic place. Fortunately local authorities and statehouses finally seem to be coming around from a neo-Puritanical view that regards breweries as a form of blight to one that recognizes their contribution to community building. There still is work to do to truncate onerous licensing requirements, and to allow the smallest brewers to selfdistribute in their home markets. The advent of nanos reinforces that trend, despite it sometimes being hard to take them seriously as real operating businesses. No question, despite the rhetoric of staying small and regional, some really harbor ambitions of becoming the next Boston Beer or Dogfish Head. No doubt some will break out. But those who don’t are tapped into a phenomenon that’s rich with
potential for themselves as well as their retail partners and communities. Beyond one exciting trend, the collaborative brews produced by, say, Stone Brewing and other influential brewers like Firestone and 21st Amendment, brewers also are extending social filaments to a broader range of community institutions, such as local farmers, artisanal food producers, coffee roasters and retailers in a way that enriches the local culture. Not trapped by the burdens of heritage, American craft brewers are willing to go pretty far afield in their search for new associations, giving them a pretty rich palette from which to paint. As I write this Brooklyn Brewery is unveiling Brooklyn High Line Elevated Wheat, drawing upon grains from New York State to produce a special beer for the newest stretch of New York City’s High Line elevated park, which is insisting on local sourcing for foods and beverages served at a temporary beer garden it has set up in a vacant lot at the northern terminus of the park. That’s placemaking with a vengeance. A Brooklyn upstart, Sixpoint Craft Ales, has teamed with Stumptown Coffee Roasters for its Berserker Bock, Gorilla Coffee for Gorilla Warfare porter and Mast Brothers Chocolate for Sixpoint Dubbel Trouble. These cross-sector collaborations can go in both directions: Austin’s (512) Brewing uses regionally sourced organic pecans for its Pecan Porter, even as local chain Amy’s Ice Cream works the porter into its ice creams and the South Congress Café uses it to braise its ribs. It all adds a pretty intriguing layer to the craft beer mania that’s gotten all our attention. Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.
WhOOping Ass tAking nAmes Open A CAn of WhoopAss and attack your day. Whether it’s a massive workout, all-nighter, or just whooping ass, this drink has the functional ingredients to get you there and back again. Amino Acids such as Taurine, L-Arginine, L-Carnitine, L-Lysine are the building blocks of protein and are critical to metabolism. Contains yerba mate, grape extract, and polyphenols from green tea, which have been linked to supporting your workout recovery. Robust Vitamin Blend: B2, B3, B6, B12. Total 2250 ORAC Units: Equal to antioxidant power of 2.5 servings of vegetables.
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ALOE
Introduces Itself BY AARON DENTEL-POST
IT SOOTHES SCORCHED AND SUNburned skin and takes the rage out of a rash, but now aloe vera is taking an even juicier role on the summer stage as an increasingly popular drink. Awash with speculation on a plethora of rumored health benefits, aloe nevertheless may fall short of a miracle cure, but producers say it does help with digestion and vitamin absorption. While there may not be enough clinical data to say for sure on many of the wilder claims, the fact remains that it’s a fast-growing ingredient, and beverages made with it are finding increasing acceptance. While the American market is still second fiddle to interest from Asian countries, aloe’s U.S. numbers are looking stronger, and its taste becoming more mainstream. Introduced approximately seven years ago to U.S. markets by SPI West Port Inc., the first aloe drink was initially targeted at Asian-American and Latin-American consumers because many were already familiar with the ingredient from a cultural standpoint. “We felt that the product really had legs and that’s when we decided to introduce our own drink,” says Henry Chen, president of SPI West Port. “Late 2008 is when we launched our ALO Drink.” According to Chen, early aloe distribution in the U.S. centered mostly on concentrates that were sold in health food stores, and people mostly bought them for their health benefits. But consumers who are just interested in the taste and mouth feel are joining the health conscious ones. Now, aloe drinks are just now moving into mainstream markets, where they’re catching on. “We’re seeing some exponential growth,” Chen said. “We’ll at least double our sales from last year.” Other companies joined the aloe
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market and began making juices of their own. Vivaloe is another aloe vera drink company that, according to Brett Aaron, its managing director, has experienced phenomenal success, but like ALO, is not looking to promote aloe as a miracle cure. Aaron views aloe vera more as a satisfying ingredient with great mouth feel than a cure-all, he said. Both companies agree on this point, but they’re not the first to use aloe. Utilized for thousands of years and grown in South America, the Caribbean and Africa, aloe was a commonly prescribed treatment during the 17th and 18th centuries. A perennial plant with long, spiky leaves, it is used to topically treat skin conditions. The most commonly used part of the plant is the gel, which is a watery substance contained within the leaf and surrounded by a layer of meaty aloe latex. Aloe is added to beverages one of two ways: producers either extract the gel from the leaf and leave the latex, or they grind the entire leaf, including the latex. ALO uses just the pulp, while Vivaloe grinds the whole leaf, which includes the latex in the final product. “We grind the whole things,” said Brett Aaron, managing director of Vivaloe. “We’ve been making this beverage for two and a half years and have had no complaints.” While there is plenty of disagreement on how aloe affects the body, Chen says it is known to aid digestion and help in the absorption of vitamins. But beyond that, he said, there wasn’t much concrete information. And here’s one more side issue. While latex has historically been used as a laxative, this is now discouraged because of painful cramping side effects, according to the University of Maryland Medical
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Center’s page on aloe vera. Moreover, for a product that carries a healthy aura, little is known about its exact benefits. But Aaron says aloe vera contains 16 amino acids and 20 minerals. “We don’t try to say too much,” he said. “In our eyes, we’re trying to be a soft drink, not a functional drink.” “I think there is a lot of misinformation concerning aloe vera,” Chen says. “There’s certainly a lot of great things that aloe vera does, but there haven’t been a lot of clinical studies.” Traveling back and forth from Taiwan, Aaron does say he thinks the aloe he drinks helps stabilize his stomach. But he also says it’s just a plant that’s good for you, not one that works miracles. “All the miracle cures,” he said. “I’m a pretty healthy guy — but I’m not flying through the air.” Aaron is earth-bound, but says the aloe market may soon skyrocket. And while aloe is probably not a drink for teenagers,
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city dwellers in their 20’s, 30’s and 40’s may be the ideal target. What the market size may depend on, though, is how people view aloe vera, and whether they begin to think of it as an ingredient, and not just a cure-all. “I think, conservatively, it’s a $50 million market in the next 2 years,” he said. “When people get really interested and people start talking about it, that’s when you get the tipping point.” Chen said that ALO’s next distribution goal is to get the product into more mainstream venues. While the only national chain they are sold in currently is Vitamin Shoppe, they are set to begin national distribution with Safeway in June. Stefan Kergl, vice president for Beverage World Inc., which distributes ALO Drink in Canada, said that he was interested in aloe drinks from the start. They were already popular in British Columbia, and Kergl says part of the reason he was interested is because it seems to have flexible appeal.
“There’s really not a channel of distribution that aloe doesn’t fit,” he said. “The target market could be skewed as female, but it’s not. Young adults love and comment on the texture, and older adults love the health benefits.” Stores, Kergl said, are eager to pick up new aloe vera products and that any new flavor or line extension was an easy sell. He said their ALO products are now top selling, even with highly competitive products. “We’re also exclusive importers of Calypso Lemonade, Tradewinds Ice Tea and Rip It Energy, and ALO is our number one product in terms of sales and of growth,” he said. Kergl cautiously said that he would put the approximate Canadian market size at one million cases for the aloe vera category and said the U.S. market could be ten times as large. Moreover, Kergl says there seems to be an abundance of new customers. “Every day I get an email from ALO with people who are looking for it. Every day.”
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ENDORSEMENTS TESTIMONIALS AND THE FTC Beverage Companies Need to Be Careful By: Justin Prochnow Endorsements and testimonials are very powerful and influential forms of advertising. Consumer testimonials and celebrity endorsements often provide the final assurance to consumers that their purchase is warranted. Due to their success, these popular forms of advertising are utilized by all types and sizes of companies.
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hether it is a well-established company trying to keep its share of the marketplace or a young company trying to entice new consumers, endorsements can be and are a vital part of many marketing and advertising strategies. Endorsements are not a new phenomenon. For centuries, “snake-oil” salesmen have touted their products from carts in the Greek marketplaces, covered wagons in the Old West, or the backs of trucks in the early 20th century. What has changed significantly is the reach of those messages. With the ever-increasing number of companies conducting online marketing and advertising, the expansive range and sheer volume of potential customers has exponentially increased. In an effort to rein in companies trying to “one-up” each other with bolder and more outlandish claims, the Federal Trade Commission (FTC) has significantly intensified its regulatory focus regarding the use of endorsements and testimonials. Recent actions taken by the FTC are a clear message that the agency is not making idle threats and is going to closely scrutinize endorsements and testimonials moving forward.
UPDATING THE GUIDES In 1980, the FTC created the Guides Concerning the Use of Endorsements and Testimonials in Advertising to provide guidance to companies on the proper use of endorsements and testimonials in advertising. In an attempt to keep up with changing times and new technology, the FTC published a revised version of the Endorsement Guides in December 2009. The revisions to the Endorsement Guides clarify some of the previous guidance topics, highlighting the need to disclose material connections between an endorser and the company marketing the products. The revisions also cover some new issues that were not previously addressed, such as the conveyance of endorsements and testimonials through different social media outlets like blogs, Twitter and Facebook.
Most people are likely familiar with the basic principles governing the use of testimonials and endorsements in advertising. Companies that use endorsements in their advertising are essentially adopting the statements and claims made in the endorsements as their own. Therefore, companies using endorsements in advertising cannot use endorsements that make claims that the company could not legally express on its own. However, in a situation that is becoming increasingly important in the age of the “functional beverage,” the endorsements of products that are made outside of the immediate control of the company are the issue. Multi-level or affiliate marketers and distributors, celebrity endorsers, and bloggers, to name a few, are often utilized to promote products. Those third-party endorsers must comply with applicable laws and regulations but perhaps less clear is the duty of a company to ensure that endorsements made by these third parties that promote the company’s products are legally permissible. In fact, recent regulatory cases involving actions brought by the FTC have underscored that companies sponsoring products now have the burden of responsibility to monitor those endorsements and ensure that they are compliant with applicable laws and regulations
MARKETING & DISTRIBUTION NETWORKS Two recent actions by the FTC involving affiliate marketers show, better than any guidance document, how the FTC is likely to enforce the obligations of companies to monitor third parties. In March 2011, the FTC announced the settlement of an action filed against Legacy Learning Systems, the makers of a series of guitarlesson DVDs. The crux of the FTC’s case against Legacy was that Legacy disseminated deceptive advertisements by representing that online endorsements reflected the views of ordinary consumers or independent reviewers when, in fact, they were written by affiliates of Legacy.
This reflected a clear violation of the duty to disclose any material connections relevant to endorsements. Pursuant to the Endorsement Guides, a material connection is a connection that might substantially affect the weight or credibility of an endorsement or testimonial and can be a financial, personal or another similar connection that consumers would not reasonably expect to be present without disclosure. The FTC asserts that endorsements coming from people that have a financial connection to the product, such as the affiliates in the Legacy case, might influence the credibility of the endorsements and, therefore, must be disclosed. Another newsworthy consequence of the Legacy case was the requirement imposed upon Legacy that it set up and maintain an affiliate monitoring program. The FTC has indicated, through the Legacy case and other guidance documents, that companies must monitor and review affiliate and distribution networks. Effective programs usually consist of three steps to properly monitor endorsements and other statements made by network members. First, a company must educate distributors, marketers and other advertisers as to what can and can’t be said about the company’s products. Next, the company must periodically review endorsements and other statements made by the third parties. Legacy, in the consent order, agreed to monitor and review the websites of its top fifty revenue-generating affiliates on a monthly basis, as well as another fifty affiliates on a random basis. Finally, a company must be prepared to take action against a third-party endorser if the company discovers that deceptive statements have been made or disclosures have not been properly made. While companies sponsoring products certainly have a duty to monitor affiliates marketing products, it doesn’t mean that affiliates are absolved from responsibility themselves. The FTC made a big splash in April 2011 by simultaneously filing suits against ten different affiliate marketing operations that allegedly committed fraud in the marketing of acai berry supplements for weight loss. In those suits, the FTC alleged that the defendants operated web
JUNE.2011.BEVERAGESPECTRUM 39
sites that purported to belong to legitimate news-gathering organizations when, in reality, the sites were simply advertisements aimed at deceptively enticing consumers to buy the weight-loss products. The sites included the names and logos of major media outlets and falsely represented that the reports on the web sites had been seen on the major networks. The sites purported to document a reporter’s first-hand experience with acai berry supplements, reporting that the investigative reporter had lost 25 pounds in 4 weeks. The reports detailing the success of the weight-loss products were designed to drive traffic to the sites where certain merchants sold the products. In addition to alleging that the defendants committed egregious fraud by creating the fictitious websites and reports, the FTC also alleged that the advertisements were misleading and deceptive in that the defendants failed to disclose their financial relationships to the merchants selling the products. David Vladeck, Director of the FTC’s Bureau of Consumer Protection, made the FTC’s position very clear when the lawsuits were announced. “Almost everything about these sites is fake. The weight loss results, the so-called investigations, the reporters, the consumer testimonials, and the attempt to portray an objective, journalistic endeavor.” Rest assured, resolution of these cases is likely to result in substantial penalties for the defendants.
CELEBRITY ENDORSEMENTS While testimonials from consumers can be helpful to sell products, celebrity endorsements are often even more influential in promoting products. Celebrities are frequently perceived as trusted and reliable sources of information. Many fans want to emulate their idols and drink the same beverages that their favorite stars drink or drive the same type of car they drive. According to the FTC, celebrity endorsements, just like other testimonials and endorsements, must also be truthful and not misleading and must be
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accompanied by disclosures if material connections exist which would require such disclosures. While companies have a duty to take steps to ensure that celebrity endorsements made about their products are legal, companies often have less control over statements made by celebrities due to the varying forums in which such endorsements can be made and the lack of final authority over the finished product conveying the endorsements. The convergence of celebrities and social media has proven to be another challenge when it comes to companies’ compliance with the laws and regulations
BLOGGERS A third method used with increasing frequency by companies to endorse products is the enlistment of bloggers to promote products. While the Endorsement Guides did not previously address issues surrounding blogging, the current Endorsement Guides now address topics like blogging and other social media outlets. Companies must be cognizant of the fact that endorsements made through bloggers are also subject to the same constraints as other endorsements.
Whether they are being used in direct advertising by a company, tweeted by a celebrity, or posted by a blogger, one thing is certain: the chances of an endorsement being reviewed by the FTC are greater than ever been before. regarding endorsements. Whether statements are made on Facebook or tweeted through Twitter, endorsements made through social media outlets are subject to the same requirements regarding material disclosures as the requirements for traditional advertising. In a March 2011 speech to the Connecticut Bar Association, FTC Commissioner Julie Brill discussed a “tweeting” situation involving rapper 50 Cent. 50 Cent mentioned a penny stock in a series of tweets and the stock price skyrocketed 240 percent. It turns out that the company mentioned by 50 Cent has an interest in a line of high-end headphones called “Sleek by 50 Cent.” While 50 Cent later tweeted in two follow-up messages that he actually owned stock in the company, no one knew that 50 Cent stood to benefit when it was first mentioned. The FTC has indicated that an endorser must identify connections, even when there are only 130 characters to work with. The FTC has recommended that endorsers mark tweets with something like #endorser, #paid, #ad, or #promo to indicate such connections.
In determining whether connections must be disclosed, the fundamental question is whether, when viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and therefore an “advertising message.” Thus, a consumer who purchases a product on his or her own, without special compensation from the manufacturer, and praises it on a personal blog is not providing an endorsement that is subject to the guidance contained in the Endorsement Guides. However, a blogger who is compensated by a company to promote its products is required to comply with the requirements for properly disclosing material connections. Considerations for determining whether a blogger has been compensated such that a disclosure is necessary include monetary payments, the provision of products or services to the blogger by the sponsoring company for free, the value of items received, and the existence of a written agreement between the parties.
The FTC action against Reverb Communications provides further insight into the FTC’s direction in this area. In August 2010, the FTC filed a complaint against Reverb, a California public relations company. In the complaint, the FTC alleged that Reverb employees posted reviews about the gaming applications of clients of Reverb on iTunes. The reviews were posted using account names that would give readers the impression that they were submitted by disinterested consumers. At no time did Reverb or the companies sponsoring the gaming systems disclose that the reviews were written by employees of Reverb. Shortly thereafter, the FTC announced a settlement with Reverb in which Reverb agreed that it will not misrepresent reviews as coming from independent users and will make proper material disclosures. While the FTC only brought the action against Reverb and its owner, both bloggers and the companies sponsoring the products endorsed by the bloggers may be
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held responsible for misleading endorsement that fail to disclose material connections. The responsibility of companies for statements made by bloggers is similar to that which exists for companies using other types of third party endorsers. The FTC will look at efforts by a company to advise the bloggers of their responsibilities and to monitor their statements in determining whether action is warranted against the blogger and the sponsoring company. Accordingly, it is prudent for companies to employ monitoring programs similar to those recommended for marketing and distribution networks in order to effectively supervise bloggers promoting products on behalf of the company.
FUTURE PROMOTIONS Whether they are being used in direct advertising by a company, tweeted by a
celebrity, or posted by a blogger, one thing is certain: the chances of an endorsement being reviewed by the FTC are greater than ever been before. This doesn’t have to mean the end of a highly persuasive and successful form of advertising for companies, but it does mean that companies must carefully monitor those who help them sell their products and make proper disclosures to avoid unwanted action from the FTC. The big winners from this increased focus on endorsements and testimonials are the consumers. This emphasis on transparency should give consumers greater confidence that they are getting the complete story when making that next important purchase. Justin J. Prochnow is an attorney and Shareholder in the Denver office of the international law firm of Greenberg Traurig LLP. His practice concentrates on legal issues affecting the beverage, supplement and conventional food industries. He can be reached at (303) 572-6562 or prochnowjj@gtlaw.com.
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HOW TO MONETIZE INNOVATION As an investment banker advising consumer-
INSIGHTS FROM THE STRATEGICS BY: MICHAEL BURGMAIER, MANAGING DIRECTOR, SILVERWOOD PARTNERS 44 BEVERAGESPECTRUM.JUNE.2011
focused companies, I see many business plans from innovative food and beverage companies looking to sell their company. To successfully sell a company, in fact, I’ve found that innovation is often an essential component to make it attractive to a large strategic buyer. Innovation is a broad term, of course, and when it comes to food and beverage companies, it can take many forms: novel ingredients; supply-chain advantages; science-based functionality; breakthrough packaging; or unique branding, marketing, social media and/or messaging. It can include products with new usage occasions, that utilize new distribution channels or have unique merchandising. Knowing the scope, it’s important to think about what matters to the strategic investor and what delivers the return for the entrepreneur. To see what those large strategic investors are thinking, I spoke with some friends at eight of them. (To understand the size, the average 2010 revenues among them were near $40 billion). All asked that I not attribute thoughts to any specific company, but taken together, they provide some very interesting insights, particularly when it comes to trying to gauge how entrepreneurial beverage companies should align themselves as they try to grow and attract attention from potential acquirers. So here’s what I learned:
MITIGATE RISK Inevitably, large beverage companies have to innovate. To do so, they will either invest or acquire, or else build internally. Because big companies tend to be risk-averse, they tend to be slow. On the other hand, smaller companies, with smaller staffs and limited decision-makers, can act quickly and use that nimbleness to their advantage. So the larger the risk to be taken, the more likely it will originate externally. But here’s the rub: to eventually get acquired, over time, companies must minimize those risks. For example, if a product uses less-common ingredients or complex molecules, this can raise questions: Are they safe? Have they been tested? How do they interplay with other ingredients? Smaller companies can often get away with things (ingredients, packag-
ing, claims, marketing) that will make a larger strategic uneasy. Simply put, because they are large, the scrutiny microscope (and the legal department) gets bigger. Take the risk early, but, even if you can’t put it into practice right away due to budgetary or size constraints, you should know how to mitigate those risks by the time you want to sell.
›› SOME EXAMPLES OF INNOVATION TYPES PACKAGING Plant-based bottles; Eco-Shaped bottles; Fridge Packs; Sportastic; refrigerated almond milk
THERE IS ROOM FOR THE SIMPLE AND THE COMPLEX Strategics are looking for and will pay for both. Not every innovation needs to be, say, a relaxation beverage with 12 ingredients you can’t pronounce. Simple innovations can be big: think coconut water (one ingredient), Honest Tea (low-calorie tea in a bottle), Coca-Cola’s fridge pack for cans (consumer s use more, so buy more). Every strategic I spoke with believes there is room left for these simple innovations, but interestingly, many strategics say that the simple can often be the most difficult for them to spot. For example, several pointed out that just three years ago, coconut water was not identified through internal strategic planning sessions.
EARLY IN DEVELOPMENT CAN WORK, BUT HAVE PROOF Strategics are clearly open to investing or buying earlier-stage (under $25MM sales – sometimes even as low as $5MM) beverage companies these days. Part of the reason is that they want to ride the innovation wave, instead of coming in after (“let’s avoid the $4.1 billion for Glaceau…”). But early needs to come with proof points: same-store sales, deep consumer insight – clear traction in the marketplace. Many strategics are willing to partner and test those ideas before buying.
FIT Make sure your innovation aligns with your strategic buyer. Often the biggest questions asked by a strategic center on whether the company is an appropriate fit: is it the right size (both current size and eventual potential brand sale potential) and is the timing right (for the strategic and the growth company). Innovation alone is not sufficient, but it is a required element together with other aspects like business model and management team – it must all comes together – and must fit with the large company’s view of the world, capabilities and strategic direction.
DON’T FORGET THE BOTTOM LINE Innovation is just as important for the top line as well as the bottom line. One strategic said, “many younger companies forget that all areas of the P&L are on the table.” In other words, if you have an innovation that might save money or increase efficiency, it might be just as valuable than one that increases revenue. Strategics want to drive overall company success, not just one brand’s top line.
TAKE TIME AND FOCUS One strategic advised that entrepreneurs take time to grow their brand. “Consumers don’t want innovation forced on them;
DEMOGRAPHIC Tampico and Rowland Coffee (Latino Market) HEALTH/WELLNESS Good Belly (probiotics) SIMPLICITY/AUTHENTICITY Honest Tea; Coconut Water (Zico; O.N.E); VitaminWater PROCESS DELIVERY 5-Hour Energy; Activate (caps) INGREDIENTS Acai (Sambazon; Zola); Chia (Mamma Chia) SUPPLY CHAIN ADVANTAGES Coconut water; Acai SCIENCE-BASED FUNCTIONALITY Function Drinks; FRS; Nawgan USAGE OCCASION Muscle Milk (protein) MARKETING – CHANNEL 5-Hour Energy; Mona Vie COMPLEX Relaxation drinks
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instead, they want to be part of ‘discovering’ the innovation.” In doing so, the so-called “early adopters” become brand ambassadors and entrepreneurs have the time to perfect their idea over time. One investor told me that “nothing on Day One will ever end up being the final proposition. You need to invest time and energy to learn, tweak and change… otherwise, the chances of failure grow quickly.”
STAY AWAY FROM THE EDGE Both breakthrough innovations and a slight tweak may be tough for strategics. The breakthrough edge of the spectrum can raise questions (and hence, risk) such as: Is the innovation just “too much”? Is it safe? Is it sustainable over the long-term? And something small may not be enough to move the needle. A happy medium may be the best approach. “Consumers move gradually, but it’s tough to be on either side of the spectrum…being too far out there on the pioneering -edge innovation can sometime pose too much risk for a larger buyer.”
HAVE A CLEAR POINT OF DIFFERENTIATION IN THE MARKETPLACE There is no innovation in “me too.” You need to set yourself apart, know and own your target consumer and show that you can scale with your differentiation. A name like Honest Tea has elegant simplicity and broad permission to move in new directions. Such “must-have” names alone can be enough, they told me.
Beyond a good name, however, these big beverage companies are looking for innovations in many areas. They’re looking for healthy beverages in growing markets, like products that can play to fast-growing demographics like the Latino community, packaging innovations, process-delivery innovations and technology innovations. Some established categories mentioned where strategics thought there was still room to grow include tea, lemonade, functional beverages and natural sweeteners. Also, more innovation for the mainstream is needed, both with innovative products that don’t come with a required premium price and speak to the masses, and products with the taste and messaging to help move people away from sugar-laden products –innovations that can help with larger cultural issues. In the end, my friends spoke about how the magic of innovation comes from the interplay of taste, feel, messaging, functionality, brand and ingredients – but they also said that there’s little magic without cash generation, same-store sales growth and execution. There are just no economics and no exit for companies lacking the last three characteristics. And innovation can take time: As one strategic noted, most entrepreneurs create a product for their community (friends, social networks, family, peers) and as they start to expand the brand beyond that universe, they need to keep it true its original mission (what it started out to be) but continually innovate and evolve so the appeal becomes broad enough for a larger audience. To get there, it’s all about execution.
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Xenergy gets off the mat, onto the shelf By: Jeffrey Klineman
At this point, with sales surging and brand awareness through the roof, it’s hard to believe that Xenergy, the Ultimate Fighting Championship-focused energy drink made by Xyience, was ever fighting for its survival. But that was the case just four years ago, when the company’s creditors forced it into bankruptcy and its founder and former CEO, Russell Pike, headed off to prison, facing charges of tax evasion. Xenergy was a brand in limbo, but one with one small advantage – complete and total identification with the fastest-growing sport in American, Ultimate Fighting. Even as its former owners had sloppily poured dollar after marketing dollar into various promotions, promoting the product alongside UFC (albeit while using a sexy dancer instead of the fighters themselves) meant it overlapped a key demographic – those precious 14-34 year-olds who are at the very core of the energy drink movement. And as of now that small advantage is prying open doors around the country. In recent months, the brand has become the go-to independent player for distributors who have lost access to Rockstar, Monster, or Red Bull, and it has begun to consolidate share as a well-financed brand that speaks to a desirable audience. Four-channel sales (Drug, Gas and Convenience, Supermarkets and Mass) hit $31 million in June, according to Symphony/ IRI Group, and those numbers don’t include the 4,000-plus GNC stores, gyms, even the live event sales that put the brand into the hands of a growing group of brand ambassadors. “UFC is blowing things up. Gyms are huge opportunities for us,” said Reuben Rios, the brand’s dogged VP of sales, who has survived the bankruptcy to watch it come back stronger. “Our online recognition is stronger, you go to these events and everyone has the gear.” Here’s what gives it a chance to break into new accounts: there are 30 million Americans age 12 and older who are rabid supporters of UFC and its fighters, according to a recent story in Sports Business Journal. That’s a number and a demographic that an “official beverage” would kill for. To give the number perspective, the UFC’s percentage of avid fans in the general population trails only pro and college football, basketball, and pro baseball. Still, Rios makes it clear that he knows the brand has not arrived on the scene fully formed (“I’m not a fan,” said one key New England distributor). Helping keep things under the radar is still-inconsistent national distribution and a heterogeneous fan base for both the product and its key marketing asset. Just as with the sport to which it has linked its fortune, most people just don’t know how big it is becoming. “Look, in some of our bigger distributors, our biggest accounts, we’re probably at about an 8 to 11 share,” Rios said. “But that drops way down if you gather in the whole U.S.” That inconsistency means that Xyience seems to remain part of the chase pack of brands that have long tried to go after Monster, Red Bull, Rockstar, and the shifting lineup of Pepsi and Coke products. But as it gathers shelf after shelf, Rios said, “these guys, they don’t see us coming.”
JUNE.2011.BEVERAGESPECTRUM 49
But some folks do: other drink companies are aware of the potential for marketing via top UFC fighters. While Xyience has 205 lb. Champion Jon Jones in its camp, no less a beverage power than Gatorade has signed up popular welterweight champ Georges St. Pierre. Here’s what Xyience has going for it: it’s a brand with zero calories and a flavor profile that has improved by leaps and bounds since a switch to Allen Flavors last year, along with a packaging overhaul that has unified the line inside an au courant
black 16 oz. can. As an advantage, Xyience has a brand that straddles the line between athlete and spectator effectively— many MMA fans are workout freaks. The strategy for Xyience is to ride one of the most enthusiastic fan bases in the country into sales momentum that lets Xyience consolidate space occupied by any number of the category’s also-rans into significant share. They see other potential competitors like DPSG’s Venom failing to catch fire and know they have better mainstream appeal than other, less mainstream products like Redline or Cocaine.
›› SANS CAFFEINE, IS IT ENERGY? With Americans continuing their shift toward the consumption of healthier food and beverages, many new and established energy drink manufacturers are infusing beverages with natural sources of caffeine, via yerba maté, guarana or green tea extract. And in recent months, a handful of companies took a step further producing energy beverages with zero caffeine and, in some cases, removing added caffeine from product lines altogether. Whether caffeine-free energy drinks will trend toward greater adoption and use or simply remain a small niche subcategory remains to be seen. Regardless, even the small number of beverages taking this tack leaves a couple big questions left to be answered: What do manufacturers use for energy in place of caffeine? And how do companies market an energy beverage that is missing what many consumers consider to be the primary functional ingredient? For FRS, which is currently in the process of phasing caffeine out of its Healthy Energy line, the answer lies in its primary functional ingredient, quercetin. Quercetin is an antioxidant found in fruits and vegetables which, according to FRS, increases the production of the energy-producing parts of body cells, mirroring an effect of exercise. 50 BEVERAGESPECTRUM.JUNE.2011
Through its own scientific research, FRS concluded that caffeine, once thought to enhance the bioavailability of quercetin, was actually not necessary for overall efficacy of the beverage. Additionally, FRS makes an interesting claim that its key ingredient provides actual energy to the muscles and brain – as opposed to caffeine, which, it says provides only short-term alertness. “We’ve never called out the presence of caffeine in our products, because we were never using caffeine as a stimulant,” said the Vice President of Marketing for FRS, Deepak Masand. “And while caffeine-driven energy products are widely available, it’s our position that the subcategory of healthy energy drinks is growing much faster.” Mike Weinstein, the chairman of HYDRIVE Energy, agrees. His company recently launched HYDRIVE Energy Decaf, a 100 percent caffeine-free beverage loaded with a number of B-Vitamins as well as D-Ribose. “25 percent of consumers don’t drink caffeine and whenever we sampled our products, we always said, ‘We wish we had something to give these people,’” Weinstein said. HYDRIVE also launched a variety with extra caffeine, so it’s obvious Weinstein isn’t pushing all his chips into a zero-caffeine game. However, he did note that while HYDRIVE’s Extra Strength
product may initially perform better on the shelves, “it could be HYDRIVE Decaf that is bigger in the long run.” In the case of 5-Hour Decaf, a shot marketed as “The Only Energy Shot for People Sensitive to Caffeine,” the product actually does contain caffeine – but the six milligrams comprise only the amount one would find in a half cup of decaffeinated coffee. Like HYDRIVE Decaf, the majority of energy in the product is derived from vitamins B6 and B12 though in much larger quantities. The product contains 40 milligrams of vitamin B6, amounting to a whopping 2000 percent of the FDA’s daily recommended intake of the supplement, and 500 micrograms of vitamin B12 – a mind-boggling 8333 percent of normal consumption. 5-Hour Decaf also contains choline, which the company claims to be vital to the production of neurotransmitters in the brain that affect memory, intelligence and mood. However, in the ultimate demonstration of a company’s commitment to a caffeinefree energy drink, multi-level marketing company Reliv introduced 24K, a shot formulated with a synergistic blend of 24 active ingredients including omega 3 fatty acids, taurine, turmeric root and Ginkgo biloba extract. Reliv makes few, if any, claims as to the overall effectiveness of the product, though the company markets the beverage based on external research about each individual ingredient. And while Reliv conducted no market research on the sales potential of caffeinefree energy product, Barry Murov, the Vice President of Corporate Communications for Reliv, said the company, having known the health conscious focus of its distributors and general consumer trends toward consumption of healthy and natural beverages, developed the shot fully expecting a very receptive and positive response. “Our feeling is that most people who have tried energy shots would be interested a more natural product that could [potentially] offer a steady increase in energy as opposed to one with caffeine which has a ‘spike/drop’ effect on consumers,” Murov said.
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“In the last few years, the energy drink category is consolidating down,” Rios said. “Sets are clean – they’ve only got Red Bulls, Monsters, Pepsi products, Coke products. But there’s that 20 percent, the miscellaneous area, and we’re finding that opportunity, and we’re exploiting that opportunity.” But there are downsides to having the strength of a brand rely almost solely on its affiliation with UFC. For starters, leagues have their ascents, and their declines. Red Bull, for example, has long been rumored to want to pull out of its deal with NASCAR sponsorship – particularly as that sport’s popularity has begun to wane with the same group that is currently enamored of UFC. And there are other sports on the rise, as well. Look at FMF, a new energy drink modeled to exploit the world of motocross – itself a fast-growing, exciting sport aimed at the UFC demographic. “Xyience is a good brand, but it’s kind of stuck in that cagefighting niche,” said Frank Kerker, the “Chief Power Officer” at FMF, which launched last month. “Ask people if they’d rather watch cage-fighting or motocross.” While that might be a question to ponder, it’s not one that seems to be a concern for either UFC or for Xyience. Maybe that’s because of the troubles the brand has already overcome. In fact, for a long time, it wasn’t clear that Xyience would have the opportunity it has now. Started by Pike in 2004, the brand quickly attracted investors – many in Las Vegas – who understood the potential of a brand that was focused on UFC.
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52 BEVERAGESPECTRUM.JUNE.2011
At the time, that league was cleaning up its own image, consolidating a myriad of organizations, each focused on hyping the no-holds-barred gore of their products – once derided by Sen. John McCain as “human cockfighting” – into a more technical (albeit still gory) streamlined set of pay-per-view spectaculars and a reality tv series, The Ultimate Fighter. Pike spent heavily on The Ultimate Fighter – $50 million in marketing in one year, according to one former executive – and the brand grew from $109,000 in sales to $20 million by 2006. The next year, the company took in more loans to continue to finance its growth – including $12 million from Zyen, a marketing company owned by the Fertittas, the owners of UFC and the Station Casino franchises. But with spending so far out of whack and hot competition in the energy drink category, Xyience couldn’t maintain its momentum. In January, 2008, it filed for bankruptcy, listing liabilities of more than $42 million. As the bankruptcy case progressed, so too did the government’s case against Pike. Later that year, Manchester Consolidated bought the company out of bankruptcy for what was essentially a promise to repay $15 million in debt, and Manzen was established as the corporate entity to oversee it. With much of that $15 million in debt belonging to the Fertittas via Zyen, the company appears to have largely fallen under their control. And that control by the Fertittas – official or unofficial -- isn’t necessarily a bad thing, when you look at what the Fertitta brothers, along with their friend Dana White, managed to do in turning around UFC. After buying it for a reported $2 million in 2001, the company is now valued at more than $1 billion, with its TV rights coming up for bid later this year. Fastest-growing sport in America, meet one of your fastest-growing energy brands: as of June, Xyience sales revenues were up more than 61 percent over the previous 12 months, according to Symphony/IRI; overall, in 2010, it grew 58 percent. That barely takes into account the new, national accounts that the brand has added since February, including a much-anticipated agreement with Circle-K that will put it into nearly 5,000 new stores nationwide. As the brand continues to add stores – new president John Lennon, the former CEO of Pabst, among other beer companies – has a mandate to expand it to more national chains and “complete the picture” for the brand, particularly on the East Coast. “I feel fortunate for joining the brand at the right time,” Lennon said. “Hopefully there’s something I can add in terms of getting the distribution completed in time. I feel fortunate in that, here’s this brand, it kind of feels like a startup, but it’s out of the garage, it’s in the fast lane.”
MORE THAN JUST ENERGY JUNE.2011.BEVERAGESPECTRUM 53
BRAND NEWS: ENERGY DRINKS
BRAND NEWS BAWLS Acquisition has launched BAWLS Cherry in the company’s signature 10 oz. clear glass bottle. Fluid Motion Beverage Inc. Talon Energy has launched new silver colored cans for their Sugar-Free Blood Punch and Sugar-Free Original flavors. Gladiator Championship Wrestling, LLC.
X-Treme Gladiator energy drink has been introduced to the U.S. market. The ginger-fl avored beverage is made in Austria, contains as taurine, B-vitamins, and glucose and is packaged in an 8.4 oz. aluminum can. Boston America has announced new distri-
bution for Duff Energy. The Mandarin orange flavored energy drink is sold in 12 oz. cans and takes its name from the television show “The Simpsons.” Duff Energy is officially licensed by 20th Century Fox and sold nationally in specialty stores and in convenience stores in the Northeast. Nor-Cal Beverage Co. has introduced Lem-
on Drop and Pomegranate Blueberry Tea fl avors to its line of Go Girl Energy drinks. The non-carbonated beverage is fortified with B vitamins, caffeine and Super Citrimax (a mild herbal appetite suppressant) and contains less than 5 calories and 1 gram of carbohydrates. The FRS Company has launched new formu-
las of their Healthy Energy line. The beverages now contain 325mg of the natural energy boosting antioxidant Quercetin, 85mg of Green Tea Catechins and 7 essential vitamins. FRS Healthy Energy comes in three fl avors. Cherry Limeade and Wild Berry are formulated with organic sugar and stevia and contain 90 calories. Peach Mango is made with sucralose and contains 20 calories. The drinks are sold in 12 oz. PET bottles. Ex Drinks, LLC has reformulated Ex Slim Energy. The beverage now contains Reb A stevia, a natural sweetener, which replaces Sucralose. Ex Slim Energy also contains Kombucha Tea Extract, Ginseng, Guarana, vitamin C and B vitamins. 54 BEVERAGESPECTRUM.JUNE.2011
XL Energy Marketing has introduced a new lemon and lime flavor. XL Lime & Lemon Energy will be available in 8.4 oz. cans and sold in select accounts by July 2011. The Masters of Beverages, LLC has intro-
duced $0.99 pre-priced cans of its Spider Energy. The beverage is available in three flavors: Original Spider Energy, Sugar-Free Lighter Spider and recently added Widow Maker. The Coca-Cola Company. NOS Energy Drink
has just introduced Charged Citrus, which features L-Theanine to help provide enhanced mental focus in addition to high performance energy. Enertia Beverage LLC has begun distribution of Vital Energy into Wegmans Grocery Stores in New York State. To celebrate they have launched a $10,000 Social Media Scavenger Hunt at www.theVitalenergy.com/buried. Liquid Lightning Energy announced that its formula now has more vitamins and minerals than any other energy drink on the market. While the exact formula is a secret, Liquid Lightning is full of Ginseng, Potassium, Vitamin C, Vitamin B12, Vitamin B6, and more, according to the manufacturer. Golazo Inc. has launched Golazo All-Natural Sugar Free Sports Energy. The beverage is sweetened with stevia and contains 10 calories and 2 carbohydrates per 12 oz. can. Roaring Lion Energy Drink, LLC has been
chosen as the exclusive energy drink at all SBE nightlife properties in Hollywood. The company will also introduce a new design for its 12 oz. cans in summer 2011. AriZona Beverage Company has introduced
AZ Energy in a 23.5 oz. “Big Boy” can. The new “Big Boy” cans have a suggested retail price of $1.50. Liquid Management Partners, LLC formally introduced THE BOSS Energy Drink at the 2011 Nightclub & Bar Show in Las Vegas. The beverage uses a blend of B vitamins, caffeine, glucuronolactone, taurine, and inositol.
GURU Beverage Company launched GURU
contains 100 calories per 12 oz. aluminum bottle. Speedy is accepting inquires for national and international distribution outside of New York City.
2.0 and GURU 2.0 Lite. GURU 2.0 is certified organic and 100 percent natural. The beverage contains a powerful botanical complex and contains no preservatives, no taurine and no artificial ingredients. GURU 2.0 Lite is also 100 percent natural, sweetened with Stevia, and contains 10 calories.
Bite Me Energy Drink, Inc. Bite Me Energy Drink is now available for sale on Amazon. com and includes free shipping on all orders.
Vuka, LLC is slated to launch several fl avors
Go Fast Sports & Beverage Company has
of Vuka Zo-Cal, a zero calorie, naturally sweetened energy drink this summer. Vuka has recently expanded into the New York and Southwest U.S. markets and recently announced its support of Cookies For Kids’ Cancer by donating a portion of its sales to the organization. JarMax, LLC, makers of VegasFuel, announced
partnerships with Naylor Racing, country singer Rick Monroe and Martyr Clothing. Cintron Beverage Corporation has reformulated Cintron Liquid Energy. The beverage now contains pure cane sugar as a sweetener. The company has also announced brand new distribution in the Milwaukee area through Star Distribution. XYIENCE, maker of Xenergy, announced new
distribution deals with Florida Distributing Company and Buckeye Distributing and retail relationships with Sheetz Inc. and Sunoco, Inc. XYIENCE also launched Xenergy Xtreme Fruit Punch packaged in a limited edition can featuring UFC fi ghter Dan Hardy. The brand also added Jon “Bones” Jones, UFC light heavyweight champion, to its team of athlete ambassadors. Bio-Engineered Supplements and Nutrition, Inc. BSN has launched ENDORUSH, a
re-launched its Energy Hybrids line with a new look and feel. Go Fast Energy Hybrids are low in calories; contain no aspartame, no preservatives, and no high-fructose corn syrup. The line comes in four varieties: Berry, Lemonade-Lime, Coconut, and Tea. Celsius Inc. has launched three new flavors of Celsius Fitness Drinks: Strawberry Kiwi, Apple Orchard Blend, and Lemon Iced Tea. Celsius has also introduced Calypso Punch Calorie Burning Shots. Krank’d Body Fuel is continuing its grassroots promotional sampling blitz this summer across the Northeast at big and small venues. Krank’d is also introducing new and exciting promotions at a growing number of retailers and also sponsoring and outfitting a professional cycling team. PBEV, LLC, maker of Killer Buzz Energy, has
announced several new distribution partners: Southern Eagle in New Orleans, LA, Champagne Beverage in Covington, LA, Budweiser Busch of Mobile, AL, Full Circle Distributing in the Pittsburgh, PA area, and Trenton CocaCola in Trenton, MO. Killer Buzz has also launched two new sustained coffee energy drinks, Luscious Latte and Mocha Madness.
non-carbonated, sugar-free performance and energy beverage specifi cally engineered with a proprietary energy matrix that combines energy and hydration to provide endurance, performance and mental focus. The beverage is available in Grape, Fruit Punch, Tropical Fusion and Blue Raspberry flavors.
Jones Soda Company has re-launched WhoopAss, as uniquely formulated energy drink that contains 2.5 servings of vegetables in one can. WhoopAss also contains Taurine, L-Arginine, L-Carnitine, L-Lysine, Yerba Mate, grape extracts, green tea and a blend of B2, B3, B6 and B12 vitamins. Jones Soda has also launched a low-calorie version, WhoopAss Zero, that only contains 10 calories per can.
Speedelicious Beverages, LLC has introduced Speedy Energy Drink. The beverage contains Guarana and is sweetened with Stevia and flavored with Maqui berry, blueberry, Acai berry and pomegranate. Speedy
HYDRIVE Energy LLC has launched two new products. HYDRIVE Decaf is a 100 percent caffeine free energy drink available in a Wild Peach flavor. Loaded with B-Vitamins, JUNE.2011.BEVERAGESPECTRUM 55
BRAND NEWS: ENERGY DRINKS
D-Ribose and Choline, HYDRIVE Decaf contains 30 calories per bottle. HYDRIVE Extra Strength contains B-Vitamins, and Yerbe Mate and 20 percent more caffeine than leading energy drinks. It is available in a Black Cherry flavor. Kronik Energy has announced agreement
with over 1,100 Kangaroo Express stores in 8 states Initially 3 flavors will be available (Blue Citrus, Blue Citrus Low-Carb and Vengence) The Campbell Soup Company has launched V8 V-Fusion + Energy drinks. V8 V-Fusion + Energy drinks are made with a blend of vegetable and fruit juices plus natural green tea. V8 V-Fusion + Energy drinks are available in 2,400 Wal-Mart stores beginning this month. The drinks are available in two flavors: Pomegranate/Blueberry and Peach/Mango. Convenience Marketing, LLC announced the offi cial launch of X Games Energy Drink at convenience stores throughout Colorado, Texas and LA County.
ENERGY SHOTS 666 Energy. 666 Energy Drink is a 4 oz. en-
ergy shot and available in two flavors. Virgin Sacrifi ce Cherry is sweetened with pure cane sugar, while Lucifer’s Lemonade is sugar-free. Bio-Engineered Supplements and Nutrition, Inc. BSN has launched NO-XPLODE
IGNITER SHOT is the ready to drink version of the pre-workout product, NO-XPLODE. The beverage’s proprietary energy matrix boasts an increase of mental focus, power and performance and is available in Blue Raspberry and Green Apple flavors. Bazi International Inc. has launched a new
12-pack display box of Bazi Energy Shots. The red on white design features large pictures of the 8-superfruits that power Bazi, a new tag line, “More than Just Energy” and bullet points boasting Bazi as a healthier choice
56 BEVERAGESPECTRUM.JUNE.2011
than alternative energy shots. Bazi has also improved its bottle design to include a selfsealing lid thus eliminating the need for the additional pull off seal. Redux Beverages, LLC has launched Co-
caine Energy Shot. The Cocaine Energy Shot is based on the same formulation as Cocaine Energy Drink, but without the sugar. The Cocaine Energy Shot contains 280 milligrams of caffeine, with supporting supplements LCarnitine, Taurine, Vitamin C, Vitamin B6 & B12, Guarana seed extract and D-RIBOSE. The Campbell Soup Company has launched V8 Energy Shots. V8 Energy Shots are a naturally powered shot of 100 percent vegetable and fruit juices combined with green tea extract. They are available at participating convenience stores, supermarkets and drugstores in Colorado, Florida and Minnesota. NVE Pharmaceuticals has introduced a
new Extra Strength Berry flavor to its “2 for $3.99” 6 Hour Power product line. The product features a brand new, highly visible value pack shrink band and will be distributed nationally in convenience stores. Cellutions, LLC announced placement of its
Modjo Life Energy Shots in Circle K Southeast Division locations and MGM Properties in Las Vegas. The beverage has a suggested retail price of $2.99. National Beverage Company has launched
Extra Strength Sugar-Free Rip It G-FORCE Energy Shot, strawberry flavored Rip It Red Zone, and blueberry, blackberry and strawberry flavored Rip It 3-WAY. Each beverage contains Vitamin C, Vitamin B6, Folic Acid, Vitamin B12, Sodium, Taurine, Caffeine, Inositol, Guarana Seed Extract. Genesis Today has launched Pure Energy Or-
ganic Shots in Acai and Goji flavors. Pure Energy is sweetened only with agave cactus and stevia leaf and contains Vitamin B12, tea leaf extract and guarana. Pure Energy is packaged in a 2 oz. bottle and is available at Whole Foods and other health foods retailers nationwide.
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USE BEFORE WORKOUTS OR WHENEVER YOU WANT INTENSE ENERGY WITHOUT LIQUID VOLUME USE POST-WORKOUT TO KICK-START MUSCLE RECOVERY & ANYTIME YOU NEED A BOOST OF MUSCLE SUPPORTING AMINO ACIDS USE BEFORE WORKOUTS OR WHENEVER YOU WANT INTENSE ENERGY AND HYDRATION USE AS A REFRESHING BOOST OF ENERGY, ALERTNESS & HYDRATING ELECTROLYTES ANYTIME
By: Jeffrey Klineman
PHOTO BY KEITH ALLISON
THE ULTIMATE ATHLETIC COMPETITION:
Putting Coconut Water in Your Sports Drink
58 BEVERAGESPECTRUM.JUNE.2011
It’s the summer sweat season,
supplemented coconut water side is going power in the category, Gatorade, has also to be getting even more crowded as nutri- used the retailer as a staging ground to and all eyes are on the sports drink cattion retailing specialist GNC gets into sync the product back up with its former egory, where hydration and performance the mix with its own line of enhanced core users. While the powerhouse brand are being remixed in countless new ways. stumbled with the introduction and This year, however, that mix seems to have coconut water products founded under the Phenom moniker. Co-developed with restaging of the brand as “G” in 2009, to include coconut water. PepsiCo, GNC is launching Phenom in the launch of its G Series FIT line of The importance of the sports nutrition four SKUs – three of which seem directly before-during-after workout products has market to that emerging category became helped it regain its footing as a serious obvious in early June when coconut water aimed at the sports market. They mix the retailer’s strong background in suppleperformance-oriented brand. brands ZICO and Vita Coco squared off ments with the fast-growing interest in Last quarter, Gatorade sales volume over none other than Alex Rodriguez. coconut water as a hydration medium to leapt 20 percent – a large part of that no The New York Yankee third baseman had offer a strong in-store alternative. doubt assisted by the emergence of G2 apparently invested in ZICO a few years GNC, which went public earlier this as a lower-calorie alternative to the core ago, and then invested in Vita Coco and year, also is planning several other G line. With a broader product line that signed on as an endorser in June. sports-oriented brands via a partnership is more carefully lined up with athletic The addition of Rodriguez – and Red need states, the bolt should continue to Sox second baseman Dustin Pedroia – was with Shadow Beverages, an incubation and brand innovation company based in flash in the years to come. supposed to signal a move by Vita Coco Arizona that picked up workout/energy Still, the category continues to broaden into a more sports- and performancebeyond the bolt and beyond hydration itoriented marketing scheme, an area whose product Whey Up in June. Speaking of GNC, the traditional self. With more consumers understanding marketing ZICO had long treated as its the value of protein products, core. ZICO fought back, revealPepsiCo made the move of ing its own athlete investors and aligning itself with leadendorsers. Meanwhile, O.N.E., ing protein drink producer the third of the “big three” Muscle Milk two years ago. coconut water brands, remained Protein’s twin use as a body in the mix because of its O.N.E. building and satiety suppleActive line of enhanced coconut ment means that Muscle Milk water products. Between these isn’t just competing for share three companies, one would with hydration products, imagine that there’s enough cohowever. It’s being flanked conut water permeating athletic on one side by performance ranks to cause every league to beverages and on the other by start flying the Brazilian flag, but appetite suppressant products that’s just looking at the coconut like Neuro Trim and Functrees and not seeing the forest tion: Lightweight and meal of uses for coconut water in replacement products like the athletic realm. Orgain and CalNaturale. Following ZICO, O.N.E. And here’s where we come and Vita Coco into the athall the way around to cocoletic market are coconut water nut again. As a way of touchhybrids like Greater>Than ing all the bases, it should be and Body Armor, a “Super noted that some of the larger Drink” recently launched by meal replacement smoothies FUZE founder Lance Collins. out there, like those made by Both brands employ a mix Naked and Odwalla, have of coconut water and other begun to incorporate coconut elements to help supplement water into the mix. Which athletic performance and fight means that for all types dehydration. Body Armor takes of performance beverage, something of a “kitchen sink” there’s a coconut water verapproach as well, throwing in sion – although not necesother electrolytes, fiber, vitasarily one that has been, is mins, EGCG and amino acids. Coconut water hybrids like Greater > Than and Body Armor employ a currently, or will be endorsed That would leave it enough to mix of coconut water and other elements to help supplement athletic performance and fight dehydration. by A-Rod in the future. sound like a drugstore, but the
JUNE.2011.BEVERAGESPECTRUM 59
BRAND NEWS: SPORTS/NUTRITION DRINKS
BRAND NEWS Vita Coco announced that Rihanna will be featured in the company’s national advertising campaign launching this summer. The company also added Alex Rodriguez and Dustin Pedroia, a pair of baseball stars, to its list of endorsers.
Neuro Drinks has reformulated its weight
management beverage, NeuroTrim. The beverage now contains no caffeine. The packaging of NeuroTrim has also been updated to a royal purple color in order to better fit with the packaging of the company’s other drinks.
Bonavitas has launched R12, a recovery
drink that includes 12 citrus fruits to promote natural muscle recovery and an improved sense of overall health. Innovative Health Solutions, LLC has
launched H2O Overdrive HYDRATE. Like the original H2O Overdrive formula, HYDRATE promotes intracellular hydration, provides the same high quality ingredients and is virtually sugar free. H2O Overdrive HYDRATE delivers a balanced electrolyte matrix and 3 grams of 100 percent whey protein isolate, 9 grams of complex carbohydrates and over 30 vitamins, minerals and amino acids essential to hydration, energy, stamina, performance and recovery. Gehl Foods has introduced Main St. Café
Protein Smoothies. The beverages are blended from freshly made yogurt and real fruit purees and available in Mixed Berry, Strawberry and Peach fl avors. The smoothies are packaged in shelf-stable 11 oz. HDPE bottles.
California Natural Products has launched
CalNaturale Svelte. The beverage is a multifunctional, all-natural protein shake made with organic and all-natural ingredients. CalNaturale Svelte shakes are also non-dairy, cholesterol-free, certified gluten-free and certified kosher. Svelte beverages are available in four naturally delicious flavors including Chocolate, French Vanilla, Cappuccino and Spiced Chai, and are packaged in recyclable 15.9 oz. Tetra Prisma containers. MD Drinks, Inc., the maker of Function Drinks, is expanding distribution of Function: Alternative Energy to several new retailers in New England and along the eastern seaboard. The beverage will be carried in Gristedes, Foodtown, Nouria Energy, MPG Rapid Refill, and Heinen’s Fine Foods. Wegman’s, which already carried Alternative Energy in Açai Grape and Strawberry Guava flavors, will now carry its Tropical Citrus flavor as well.
Greater > Than has announced that its all-natural sports drink is available throughout Chicago including Whole Foods and online at Amazon.com. Greater > Than is fortified with coconut water.
All Sport Inc. has introduced a new clear
Health Solutions, LLC has launched BÖDE Sport. The beverage is scientifi cally designed to improve performance during prolonged exercise and help repair damaged muscles and promote training adaptations. BÖDE Sport contains CoQ10 and Ribose, which help support fast muscle recovery and promotes optimal performance.
Purity Organic, Inc. has introduced an
ProDrive has launched ProDrive Sports Fuel.
CytoSport, Inc. has released a series of limited edition collegiate themed 14 oz. bottles of Muscle Milk to celebrate the start of the 2011 college football season. The bottles will feature the University of Oregon, the University of Maryland and the University
Innovative
The beverage contains 20 grams of whey protein and 10 grams of natural agave sugar per 16 oz. serving. ProDrive comes in four flavors: Pomberry Acai, Orange Mango, Lemoncello, and Wild Berry. 60 BEVERAGESPECTRUM.JUNE.2011
label for its All Sport beverage. All Sport is available in five flavors: Blue Raz Ice, Fruit Punch, Lemon Lime, Orange and Grape.
Orange Mango Tangerine flavor to its line of Purity Organic Functional Drinks. The beverage contains 25 percent organic juice, electrolytes from sea salt and 60 calories per serving. The beverage will be featured in promotions this summer at Safeway, Gelson’s and other leading retailers.
of Texas. Each bottle will be available in the food, drug, mass and c-store channels and only in geographic areas specific to each school featured. Muscle Milk will support these bottles in each market with advertising, POS and other grassroots programming. CytoSport has also launched a new Café Latte flavor for Muscle Milk Light. The beverage is caffeine-enhanced, lactose and sugar-free and contains 20 grams of protein and other additional essential vitamins and minerals. Amy & Brian Naturals Inc. has expanded distribution of their 17.5 oz. cans of Amy & Brian Coconut Juice into all Fresh Markets in the Southern US. The company has also increased item placement of their Coconut Juice with Pulp and 10 oz. 6-packs of Coconut Juice at Fresh & Easy locations in Southern California. O.N.E. Coconut Water has introduced O.N.E. Active, a coconut water based sports drink. O.N.E. Active contains five essential electrolytes, is enhanced with antioxidants to aid recovery and boasts more potassium than traditional sports drinks. O.N.E. Active is packaged at source, not made from concentrate and is made without artificial colors, high fructose corn syrup, or preservatives. O.N.E Active is available in three flavors: Grape Berry, Lemon Lime and Cranberry Grapefruit and is packaged in a 16.9 oz. Tetra Pak container.
PRO FOODS has reformulated PRO ADE.
The protein-enhanced water beverage is now fortified with extra protein, electrolytes and essential nutrients. PRO ADE’s new formula has 90 calories, 20 grams of protein and several nutrients including potassium, sodium, and calcium. The beverage contains no fat or sugar and is available in Black Cherry and Kiwi Strawberry flavors. The Gatorade Company. Gatorade has introduced G Series FIT, a new line of products developed specifically for fitness-minded individuals to provide fuel, fluid and nutrients before, during and after a workout, training session or activity. Each product in the series was inspired by fitness athletes and designed by Gatorade. The G Series FIT products are available at retailers including Target and Walgreens among other mass, drug and grocery stores nationwide. Vitalyte has announced new fundraising initiatives aimed at encouraging youth participation in athletics and team sports and also providing its low-calorie all-natural sports drink to young athletes. StoneGate Distributors Inc. is set to launch Fit Physique, a ready-to-drink RTD protein drink designed specifically for women. The beverage contains 22 grams of soy & whey based protein, 12 grams of carbohydrates, 7 grams of sugar and zero grams of fat. GT Beverage Company has introduced a
Cera Products, Inc. introduced a new
package option for CeraSport EX-1 concentrate, now available in 238 gram pouches, each able to produce 2.5 gallons or 40 8 oz. servings. CeraSport EX-1 is also available in 8.45 oz. ready-to-drink packs. All Cera products can be purchased online at www. ceraproductsinc.com. CLIF BAR & Company has introduced CLIF SHOT Electrolyte Drink. The beverage hydrates the body and replenishes carbohydrates and electrolytes lost during endurance activities. It is available in two flavors, Cranberry-Razz and Lemonade. CLIF SHOT Electrolyte Drink meets all of the thresholds for current sports science and, according to the company, is the only sports drink featuring organic ingredients.
new hockey helmet-shaped package for its line of Sportastic sports themed beverages. The company has also added two new flavors: Grape and Orange. Orgain, Inc. has introduced a new Iced Café Mocha flavor to its line of certified organic nutritional shakes. Naked Juice Company. Naked Juice will
add three new flavors to its line of coconut water: Lychee, Mango Peach and Pineapple. The new flavors will be available nationwide in August 2011. Naked Juice has also added two new flavors to its Protein Zone line, Mango and Double-Berry.
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BRAND NEWS: SPORTS/NUTRITION DRINKS BodyArmor Nutrition LLC has introduced
a line of all-natural BodyArmor SuperDrinks. The beverages contain coconut water, antioxidants, vitamins, amino acids and electrolytes. The line is available in Raspberry Blueberry Goji, Cranberry Citrus, Tropical Mandarin, Strawberry Banana Guava, Orange Mango Black & Green Tea and Pomegranate Acai Green Tea fl avors. BodyArmor SuperDrinks are packaged in shelf-stable 16 oz. bottles. ProGo is set to launch a new java and vanilla fl avored protein shot in summer 2011. The beverage contains 88 calories, 20 grams of protein, 125 milligrams of caffeine and zero grams of fat or sugar. Each shot is packaged in a 2.5 oz. bottle. ABB Performance, LLC. has launched Diet
Turbo Punch. The fruit punch flavored beverage contains 90 mg of caffeine derived
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from green tea extracts, ginseng and guarana. Diet Turbo Punch contains no calories, carbohydrates or sugar and is packaged in an 18 oz. bottle ZICO Pure Premium Coconut Water and NFL PLAYERS Inc. recently announced an exclusive partnership to make ZICO the official coconut water of professional football players. ZICO is offering every NFL player complimentary ZICO to help them stay hydrated and perform at their best during the intense pre-season training period. ZICO will also have a presence at NFL PLAYERS events and in its social media platforms. ZICO’s list of current athlete investors includes the Kevin Garnett of the Boston Celtics; Amar’e Stoudemire of the New York Knicks; Rip Hamilton of the Detroit Pistons; and others.
S A N TA M O N I C A
WINTER 2011
DECEMBER 5 & 6, 2011 Loews Santa Monica Beach Hotel Santa Monica, CA
For more information and early registration pricing, visit www.bevnetlive.com SPONSORED BY: ™
BevNET Live Summer 2011 Highlights: Attendees Learn to Grow, Not Just Innovate From luring investors to locking down trademarks, BevNET Live Summer 2011 offered a full look at the state of the entrepreneurial beverage business. Held on June 6 and 7 at the Sheraton Tower Hotel in Times Square, New York, the event was the culmination of a six-month planning process designed to provide attendees with up-to-the-minute advice on the way innovative beverage companies can find growth in the current economy. But the instruction was also accompanied by high drama, as a slate of six entrepreneurs competed in the first-ever New Beverage Challenge, with one, Ojo fortified eye care nectar, taking home cash, merchandise, and advertising credits that will help launch it on its journey through the search for distribution, investment, and marketing plans. For companies in Ojo’s position, those fur-
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ther up the chain, and the distributors, retailers, suppliers, investors and other industry members who work with them, however, if there was no cash prize, there was nevertheless plenty of knowledge to take home. Beginning with an opening series of presentations that focused on how companies have moved from startup into fast growth, entrepreneurs Mike Kirban of Vita Coco and Tom First of Nantucket Nectars joined with distributor Gerry Martin of Polar Beverage and Anonymous Consulting’s Andy Steele to discuss the organizational, mechanical and branding adjustments that become necessary as innovation evolves into revenue. Those individual presentations were matched by a second-day slate of entrepreneurs who offered advice on nurturing the spark of innovation. Mark Rampolla of ZICO, Bryan Reese of Bolthouse Farms and Julie Smolyansky of Lifeway Foods all gave presentations on how an original idea is just part of the playbook when it comes to growing a new beverage brand – and that deploying that idea into original marketing and merchandising strategies is just as important. In discussing their search for “white space” the trio touched on patience, planning, and
the sense of purpose that can help drive a new beverage enterprise. On the retailing side, high-ranking representatives from both mass retailer Target and nutrition house GNC encouraged entrepreneurs to seek them out as important stops in the growth of a national brand. GNC is happy to partner with brands in the nutritional space at an early stage, according to the company’s (now-outgoing) president, Beth Kaplan. Meanwhile, Target will try new beverages out in smaller “test programs” but is as interested in building new categories within the store as it is in debuting new products, according to former Senior Beverage Buyer Ross Widmoyer. Brand-building was also on the mind of one of Monday’s featured speakers, Karin Rotem of PepsiCo. As that company’s Senior Director of Global R & D Strategy, Rotem’s presentation gave entrepreneurs the knowledge that beverage companies need their ideas in a variety of ways – but that the road to partnership from the outside can be as rocky as the internal struggle to foster a good idea inside a large company. Focusing on the “Innovation Bullseye” as her target, Rotem explained that large beverage
companies like to work with entrepreneurs because they are often risk-averse institutions – but that small organizations need strong leadership and firm footing to win investment precisely because of that risk averse attitude. Her views were balanced on the next day by veteran beverage trend spotter Ken Sadowsky, who shared stories from a career spent working with innovative brands in a variety of roles, both as a distributor and investor. The risks of innovating in the beverage category – be they financial, regulatory, or operational — featured prominently into all manner of discussion during BevNET Live, but most prominently into discussions of investment, a topic that was featured on both Monday and Tuesday. On Monday, Silverwood Partners Managing Director Mike Burgmaier unveiled key attributes of the innovative companies that strategic investors are seeking out, and a broad panel of investors reviewed the current market for attracting investment in entrepreneurial beverage companies. Tuesday featured a discussion of the changing role of the entrepreneur after ownership changes hands, with a presentation helmed by Zola Brazilian Superfruits CEO Chris Cuvelier and a
panel discussion that bounced issues of control between three former beverage company board members. With nine breakout sessions – including the now-traditional “Beverage School” curriculum – held on Monday and the views of a pair of potential strategic partners airing on Tuesday (in Mike Ohmstede of Coca-Cola’s VEB group and consultant Henry Hidell, describing the Indian conglomerate Tata), there was plenty of variety to be absorbed by entrepreneurs over the course of both days. There were also a pair of views representing the entrepreneurial class in a broader sense, one coming from Bevology CEO Brad Barnhorn, who had hosted a unique round-table discussion on entrepreneurial problem solving the day before, and another from longtime beverage company lawyer and advisor Nick Giannuzzi, who offered advice on key decision points in a beverage company’s life cycle in an entertaining presentation that ranged from boxing to Madonna to binding contracts. Contracts also came up repeatedly during discussions of distribution as a key to brand-building. With consolidation continuing in the beverage dis-
tribution community, a panel of DSD experts debated the potential influence of “super-regional” distribution houses and what the overall growth toward regional distribution networks can mean for emerging brands. With carve-out clauses and termination fees hanging over the heads of both distributors and suppliers, the life of the beverage entrepreneur is pressurepacked – a finding that was reflected in Barnhorn’s findings from the roundtable group. Still, the sold-out audience of 400 didn’t seem deterred – especially considering the fact that there were dozens of new products on display in a sample bar. Considering the traffic during a two-hour “mini-expo” presenting new supplier wares and other arrangements designed to help out beverage makers, it was apparent that there’s just as much competitive pressure inside the pipeline as there are external pressures that are localized for each company. Which means that it should come as a relief for innovators to know that the opportunity to learn even more – at the December 5 and 6 BevNET Live winter event in Santa Monica, Calif. — is just around the corner.
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PROMO PARADE
PROMOTIONS, EVENTS, AND SPECIALS FOR THE INDUSTRY
evian Brings the Babies Back Out Out of evian’s marketing past comes roller baby marketing once more. This time, evian has edited portraits of people wearing their popular ‘baby inside’ t-shirts together into a commercial montage that features flip-book style baby dancing. Also in the process of being introduced is a user-generated version of the commercial available on letsbabydance.evian.com, as well as through the “Lets Baby Dance” iPhone application.
WAT-AHH! will be the official beverage of the “Stop Bullying, Speak Up!” Anti-Bullying Tour 2011, which will travel to different schools and encourage kids to speak up against bullying and stay healthy with WAT-AAH! Featuring the multi-talented T.E.V. (The Educated Voice) and rapper/ singer/dancer, Joie, the tour will raise awareness about the damaging epidemics of bullying and obesity, and how they are linked. WAT-AAH! aims to improve the mental and physical health of kids in school while also informing them about the importance of staying hydrated.
Perrier Brings the Heat Perrier is giving consumers the chance to heat up the Perrier party on their YouTube channel by encouraging their friends to view a series of videos where the parties get “hotter” with more page views. Expanding their “Le Club Perrier” campaign, the videos were directed by Hollywood standout Nez Khammal with music by Babe Youth, and feature a woman on her way to perform on a club stage. Visitors to the channel will also have the opportunity to win a sweepstakes for a stay in New York’s Standard Hotel and VIP access to the “Le Club Perrier” party on Sept. 20 at one of the city’s hottest nightclubs.
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Miller Lite Saves Summer Miller Lite is introducing Taste Points, which are found in specially marked packages of Miller Lite and can be submitted for the chance to win epic prizes. Encouraging consumers to “save their summer,” prices include thousands of daily and weekly prizes or three epic prizes, which includes an aroundthe-world journey. Consumers can collect Taste Points by submitting official codes online, via SMS or on the Taste Points mobile site, or by checking in on foursquare to see what bars and restaurants are participating in the promotion.
© 2011 MILLER BREWING CO., MILWAUKEE, WI
WAT-AAH! Tells Kids to Stop Bullying