Beverage Spectrum June 2011

J u n e 3 0 , 2 0 1 1J u n e 3 0 , 2 0 1 1

BevNET Live Summer 2011

Highlights

Sports and Nutrition

Beverages

The Session Beer

Equation

AloeBeveragesin Bloom

PAGE 64PAGE 32 PAGE 58PAGE 26

Riding UFC, Category Consolidation, zero-cal Xenergy is a knockout

JUNE 2011vol. 9 :: no. 4

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

Columns

4 FIRST DROP

Crisis Redux

6 PUBLISHERS TOAST

The Retailing Angle

30 GERRY’S INSIGHTS

Craft Equals Community

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!

26 BREWBOUND

Time for a session

32 COOLER CHECK-IN

Understanding aloe

66 PROMO PARADE

WAT-AAH! fi ghts bullying

Features

38 Word from the Experts

Third Party Endorsements

44 Word from the Experts

Innovation Investment

48 COVER S TORY: The Xyience of Energy DrinksRiding UFC, Category Consolidation, zero-cal energy drink cleans up.

58 Sports Drinks

Vita Coco, ZICO, O.N.E. and others

fi ght for athletic dominance

64 BevNET Live Report64

58

48

COVER IMAGES COURTESY OF ERIC WILLIAMS AND XYIENCE

26

Beverage DevelopmentIngredient Supply

ShotsEnergy Drinks

Enhanced Waters and MoreProprietary FlavorsPremixes and Bases

U.S. Distributor U.S. Distributor

4 BEVERAGESPECTRUM.JUNE.2011

THE FIRST DROP By Brent Sonnek-SchmelzBy Jeffrey Klineman

AN IMPORTANT DISTINCTIONFOR A POLITICAL OBSERVER, it would have been a delicious bit of irony, albeit just one of the many chocolate shav-ings falling on the all-you-can-eat feast of-fered 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 communi-cations 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 at-tendees 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 brand-building. 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-

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 com-petitive 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 nega-tive. 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 recall-ing bottles that may have been tainted by benzene, or Coke giving in and bring-ing 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 nega-tive 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 be-tween ’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 program-ming, we’ll keep this interest in staying positive and focusing on building repu-tation, 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

BPA Worldwide Member, June 2007

Barry J. Nathanson [email protected]

Jeffrey Klineman [email protected]

Ray Latif ASSISTANT [email protected]

SALESJohn McKenna ASSOCIATE [email protected]

Adam Stern ASSOCIATE [email protected]

Jeff Hyde ACCOUNT [email protected]

ART & PRODUCTIONMatthew Kennedy CREATIVE DIRECTOR

Natalie Iknaian GRAPHIC DESIGNER

BEVERAGE SPECTRUM PUBLISHING, INC.John F. (Jack) Craven [email protected]

John Craven PRESIDENT & EDITORIAL [email protected]

ARTICLE REPRINTSFosteReprints (500 COPIES OR MORE)ph. 800-382-0808 x142

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DO YOUR PART:PLEASE RECYCLE THIS MAGAZINE

THE RETAILINGCONSTANT

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 dis-tribution. 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 defi ne 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 deter-mine 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

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 defi ne 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-

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 fl oors. 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 commu-nities 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 under-

stood the consumer proposition.

Those were the re-tailers 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 fl ocking to their loca-tions. Add GNC and other non-traditional beverage retailers and you have a spec-trum 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.

To find out more, contact Wes Strickland.VP of Sales, at 888-231-2684 or hitOhYeahNutrition.com

Available at these and other progressive retailers nationwide:

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


The latest news on the brands you sell.

Packed Facts has projected U.S. sales of natural and organic foods and beverages to more than double by 2015 in a new re-port. 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 sur-pass $78 billion within fi ve 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 conduct-ed 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.

In the words of White Rock Beveragespresident, 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 fi rst half of the 20th century. Just how popular? White Rock Beverages were featured at the coronation banquet of England’s King Ed-ward VII and its sparkling water was cho-sen to christen Charles Lindbergh’s “Spirit of St. Louis” prior to its historic fl ight.

While White Rock is less of a household name today, the company continues to sell over a dozen different fl avors of seltzers, water, mixers, fl avors and specialty beverag-es to over 40 states and 10 foreign countries.

Bodkin, who is only the fi fth president in White Rock’s long history, said that

much of the company’s continued success has been based its consistency in provid-ing 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 usu-ally the great brands.”

Bodkin also noted the importance of White Rock’s ability to evolve and of-

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

Natural and Organic Food & Beverages to Surpass $78 Billion in Sales by 2015

After 140 Years, White Rock Still Solid

Key Transactions Last Month

fer a variety of products based on their relevance to their times. He specifi cally 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 con-trol 90 percent of the [beverage] market. Any hope to compete against them is vir-tually nil,” Bodkin said. “Also, consump-tion of highly sweetened, highly carbon-ated beverages are on the decline. Our products are either healthy, unique, or both and positioned in different niches.”

Bodkin points out that in a fl uctuat-ing economy, the diversifi cation of White Rock beverages into several niche catego-ries was a key to the company’s overall

profi tability 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 selt-zer waters and mixers, White Rock introduced Sioux City Sarsaparilla in 1975, and expanded its offerings and distribution to a national au-dience over the following de-cade. In 2003, the company acquired the Olde Brooklyn brand of beverages and soon after, became one of the fi rst 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 corner-stone to its success — and that protecting its image was crucial for the years to come.

“Many beverage companies that be-came 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.”

The latest news on the brands you sell.

JUNE.2011.BEVERAGESPECTRUM 9

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

sugar companies and trade associations in-cluding Imperial Sugar Company, the U.S. Sugar Corp., the Sugar Association and the

More Sugar Co's Join "Corn Sugar" Lawsuit

BB

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-

tose corn syrup with that of sugar partic-ularly 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 Re-finers Association has petitioned the U.S.

Food and Drug Admin-istration to allow man-ufacturers to use “corn sugar” as an alternative name for HFCS, John Sheptor, the president and CEO of Impe-rial Sugar Co. said the wording is deceptive.

“The attempted name change is an intentional effort to deceive con-sumers and, most dis-ingenuously, 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.”

BI BEVSCAPE INNOVATION•


Product development & marketing news

POM Wonderful FTC Hearing Undersay

IFT11 Offers New Blends

In a case that many are looking to for direction with regard to future food andbeverage 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 bever-age health claims more like those of the pharmaceutical industry. But it is also an oppor-tunity 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 indi-cated 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 signifi -cant 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 re-search 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 diffi cult to market foods and beverages without a functional component.

New beverage blends and newly blended supplier companiesfeatured prominently at the recent IFT tradeshow in New Or-leans. Held June 11-14 at the New Orleans Morial Convention Center, the annual meeting of the Institute of Food Technolo-gists is the largest annual North American Exposition for com-panies that supply the food and beverage industry. BevNET vis-ited 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 man-ufacturers needed an alternative to price-volatile sucrose (sugar), according to Dr. John S. White, president of White Technical Re-search, speaking on behalf of the Corn Refi ners Association.

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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 Jour-nal 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 advertis-ing 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 adult-focused premium cable channels like the Discovery Chan-nel and The Learning Channel. And in recent months, category leader 5-Hour Energy has been working with AARP, the aging persons’ advocacy group, to adver-tise and promote its product. 5-Hour handed out thousands of product samples at last October’s an-nual 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 doc-tors, and also have undertaken marketing drives in places like golf courses, where the shots have begun to sell at pro shops and clubs.

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 anadvertisement in this issue.

7.25” x 10”8” x 10.75”8.25” x 11”

BeverageDynamics_CAN_TRADE_AD_075-158.indd3-24-2011 4:43 PM Grow, Leonard 4 / 03/24/11 / Leonard

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JobClientMedia TypeLiveTrimBleedPubs

51111075-158HeinekenNone7.25” x 10”8” x 10.75”8.25” x 11”Beverage Dynamics

Job info

PDF X1a to Disk and lazer to publication

Notes

Quality ControlProofreader Art DirectorCopywriterAccount Mgr.Creative Dir.Production

NoneNoneElinor ZachNoneVincent DiPalmaNoneMarlon

Approvals, Date

FontsFutura Std (Bold Condensed), DIN (Medium, Bold, Regular)

ImagesHKN_CAN_AD_BKGND_1_a.psd (CMYK; 300 ppi; 100%), NEW_CAN_PACK_3D_E3_17Pct.psd (CMYK; 300 ppi; 100%), response_logo_white.ai (23.12%)

Inks Cyan, Magenta, Yellow, Black

Fonts & Images

Date Modified

None

Computer 5011f Oper. Release#/Date/Oper.

Round Printed At

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 profi t.

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:

New tactile ink printing technology creates a 3D look and feel to the can!

Creates greater opportunity for incremental sales and profi t.

The launch will be supported with marketing activity, such as TV and print advertising, PR events, and in-store POS.

incremental sales and profi t.

A new 3x4 suitcase package makes it easier to stack and display:

PR events, and in-store POS.

AVAILABLE IN 12 OZ, 16 OZ, AND 24 OZ.CONTACT YOUR HEINEKEN REPRESENTATIVE FOR MORE DETAILS!

THE NEWHEINEKEN CAN…

makes it easier to stack and display:makes it easier to stack and display:

©2011 Heineken USA Inc., White Plains, NY

S:7.25”S:10”

T:8”T:10.75”

B:8.25”B:11”

BeverageDynamics_CAN_TRADE_AD_075-158.indd 1 3/24/11 4:43 PM

CC CHANNEL CHECK •


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

SPOTLIGHT CATEGORY

52 Weeks through 5/15/2011

TOPLINE CATEGORY

VOLUME

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

52 Weeks through 5/15/2011

14.94%

8.79%

2.90%

15.72%

1.09%

-0.41%

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 sig-nifi cant 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 Dollar Sales

Monster $1,220,415,000

Mega Energy $179,469,600

Java Monster $173,869,100

XXL $88,117,680

Nitrous $69,256,810

Khaos $68,565,500

Assault $45,575,220

M80 $24,738,340

Mixxd $18,539,590

Monster $15,727,770

Monster Energy Light $10,247,400

Total: $1,914,522,010

Red Bull Dollar Sales

Red Bull Total: $2,337,445,000

Rockstar 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: $663,295,516

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: $333,745,780

NOS/Full

Throttle

Dollar Sales

NOS $220,540,700

Full Throttle $104,086,400

Blue Demon $39,231,140

Total: $363,858,240

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

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

Brand Dollar SalesChange 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%

Java Monster $173,869,100 1.58%

Amp $139,591,600 -1.93%

Full Throttle $104,086,400 -10.07%

Rockstar Recovery $88,220,340 627.33%

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%

Energy Drinks

ENERGY DRINKS

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FRS_BevNetAdJune_FullPage.pdf 1 6/7/11 2:03 PM


Brand Dollar Sales Change vs. year earlier

AriZona $623,292,800 0.60%

Lipton Brisk Tea $283,352,800 47.83%

Lipton $280,079,300 -14.54%

Snapple $186,867,500 0.87%

Lipton Pureleaf $158,616,700 -1.24%

Diet Snapple $135,520,100 16.46%

AriZona Arnold Palmer $113,732,600 59.35%

Nestle $105,450,900 -10.60%

Gold Peak $81,087,740 28.92%

Lipton Diet $59,055,310 -11.07%


5 Hour Energy $885,257,700 45.25%

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 $10,212,980 102.47%

Monster Hitman $9,638,077 -48.48%

Stacker 2 $3,918,653 281.79%

Nitro 2 Go $3,413,823 -15.37%

VPX Redline Power Rush $3,234,767 -32.16%

Vital 4U Screamin Energy $3,148,175 -13.02%


Bud Light $5,291,023,000 1.37%

Budweiser $2,086,417,000 -4.31%

Coors Light $1,898,200,000 2.76%

Miller Lite $1,683,484,000 -0.11%

Natural Light $1,105,459,000 -1.95%

Busch Light $732,388,400 0.56%

Busch $676,409,000 -1.41%

Miller High Life $497,994,100 -2.58%

Keystone Light $489,566,500 2.27%

Natural Ice $352,004,900 2.50%


Private Label $993,905,600 4.82%

Aquafina $705,308,200 -1.05%

Glaceau Vitamin Water $687,748,600 -4.54%

Dasani $626,157,100 -1.98%

Poland Spring $392,077,400 9.73%

Nestle Pure Life $339,850,500 31.00%

Glaceau Smart Water $308,392,100 28.12%

Deer Park $236,007,800 2.86%

Arrowhead $197,723,600 -8.12%

Sobe Life Water $196,034,200 -0.89%


Gatorade Perform $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%

Powerade Zero $188,279,100 58.64%

G2 $55,917,140 -82.65%

Gatorade Frost $52,173,870 -73.49%

Gatorade Cool Blue $45,198,730 -64.76%

Powerade $37,716,640 -16.53%

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






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RTD TEA

ENERGY SHOTS SPORTS DRINK

Cappuccino

WATER DOMESTIC BEER

HOT! AriZona Arnold Palmer

HOT! Stacker 2 HOT! Gatorade Recover

HOT! Seattles best

HOT! Nestle Pure Life

NOT! Arrowhead

NOT! Gatorade Frost

NOT! Budweiser

NOT! Monster Hitman

NOT! Lipton NOT! Cinnabon

HOT! Coors Light


Frappuccino $544,829,600 6.64%

Doubleshot $245,049,600 16.12%

Doubleshot Light $9,618,175 -13.70%

Private Label $8,289,082 60.95%

Seattle’s Best $7,819,626 569.91%

Illy Issimo $1,444,609 227.90%

Emmi $1,178,551 10.05%

Pomx $655,873 -25.75%

Cinnabon $650,357 -75.27%

Community $385,998 -22.13%


NP NEW PRODUCTS • The newest options for cooler and shelf.

CSDs

Virgil’s is taking aim at Dr Pepper with its new fl avor, 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 informa-tion, 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 supple-ment 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 fi zzy 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 fl avors, 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 fi ve fl avors. Manufac-tured 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

now zero calories. Previously nine calories, the drink is now sweetened by stevia and enhanced by antioxidants. The reformula-tion 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 informa-tion, call (212) 986-7000.

Cascade Ice Water is bringing two new summer-inspired fl avors to market — Co-conut and Huckleberry Blackberry. With a delightful fi zz, the two-calorie Cascade Ice Water has 21 fl avors 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 informa-tion, call (425) 267-0959.

COFFEE

Illy Issimo is introducing illy issimo caffe no sugar and illy issimo mochaccino fl avors to satisfy caffeine-craving coffee lovers, in col-laboration with Illycaffe and The Coca-Cola Company. illy issimo caffè no sugar offers a 15 calorie, unsweetened version of the full-bodied 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 ingredi-ents 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 fl avor that will be an Iced Chai Naturally Sweetened Black Tea. Fol-lowing a year after the launch of the zero calorie teas, Tazo’s new fl avor 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 fl avors with unsweetened, low calorie and classic fl avors. Following a trend toward lower sugar levels and lighter taste profi les, the low-calorie fl a-vors are Blueberry Green, Lemon Black and


Mango Oolong. The unsweetened tea fl avors are Pure Green, Green Jasmine, Green White, Lemongrass Green and Rose Green. New fl avors 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 artifi cial 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 nonprofi t military support organization. For more information, call 1-888-569-6993.

ENERGY

Golazo is a new hydrating energy drink developed in the Pacifi c Northwest that will be available in convenience stores around Seattle, select Whole Foods stores, Ama-zon 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 devel-oped with the rigors of extreme athletes in mind. Formulated with a proprietary Pow-erBlend, 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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Alumi-Tek bottles for a suggested $2.49. For more information, call (954) 428-1800.

Bonavitas is introducing a new non-alco-holic 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” sensa-tion. These ingredients combine to help burn fat, improve mood and fi ght free radicals while increasing mental acuity, metabo-lism 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 per-cent 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 beverag-es, 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 fl avor with Blue-berry 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 fi rst light fl avored malt beverage of its kind. Available in two fl avors, lemonade and cranberry lem-onade, Mike’s Lite is a less fi lling 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 re-launching its CJ Crunk Juice Premium Malt Beverage. With a new package design, fresh fl avors and clearer labeling, Crunk Juice is targeted for legal adult consumers between

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. alumi-num 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 fl avored malt bever-ages called Spiked Tea and Spiked Lemon-ade. Available along the East Coast in bars, liquor, grocery and convenience stores, the tea is made with a blend of fi ne select teas and natural lemon fl avor, while the lemon-ade is fi nely carbonated, also with natural lemon fl avor. 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, Were-wolf, Winter IPA and fi nally, Founder’s Ale. With the motto, “limited in time, not in fl avor,” the new beers are the product of a collaboration between Newcastle Brewer-ies in England and Caledonian Brewery in Scotland, and will feature a wide array of fl avors. 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 fi n-ish 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-cal-orie 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.

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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 Rasp-berry, 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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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

Amoretti is announcing new Premium Martini Mixes for cool summer cocktails,

available in 23 flavors like blueberry, pas-sion 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 mix-ers 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 By Christopher FurnariA BETTER WAY TO EXPERIENCE BEER

THE SESSION BEER EQUATION:

SESSION BEER, A LOWER-alcohol 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-fl avored 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 higher-alcohol 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 selec-tion and where the ABV’s (Alcohol By Vol-ume) were gravitating towards,” he said.

Lohring, who started brewing commer-cially when he founded Tremont Brew-ing 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 fl avor 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 fl oor space and cash fl ow. 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 ses-sion” so much that she trademarked the name for two of her beers. She said she

Less (Alcohol) Equals More (Sales)

believes that while special one-off beers and high-gravity offerings are nice, it’s ses-sion beer that is driving the most revenue growth for distributors and retailers.

“That is one of the things that as brew-ers 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 lower-alcohol 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 fi rst 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 exclu-sively 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 res-taurants 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 sell-ers because a guy who wants to drink a Notch Pilsner is going to have three, not just one double IPA. Sipping on a 9 per-cent whopper for an hour is not a session and the bar is losing a seat.”

Despite all this, a vast majority of brew-ers have yet to adopt the session mentality. Ken Weaver, the former managing editor of Ratebeer.com’s, The Hop Press, ana-lyzed the sites database and found that the average ABV of new U.S. beers eclipsed 7 percent for the fi rst time ever in 2009.

Lohring believes the consumers just need to be educated.

“I always talk about the myth of more fl avor being wrapped around higher ABV -that has been emphasized for the last ten years,” said Lohring. “The con-sumer has gone along with that. Now that the consumer is seeing fl avorful beer under 5 percent, they are beginning to pay attention to the category.”

Firmat believes that although some-what 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 fi rst started, these are the types of beers people were making.”

POWER.FORWARD.

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Brewbound By Christopher FurnariA BETTER WAY TO EXPERIENCE BEERBrewbound A BETTER WAY TO EXPERIENCE BEER

Victory Brewing Company pushes the bound-

aries 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 sea-

sonal, The Oracle, in August. Their take on the

West Coast-style Double IPA, this offering (which

checks in at 10 percent ABV) places hop inten-

sity fi rst 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 Confl ux #2 is the second beer in

their confl ux collaboration series but the fi rst to

be released. Confl ux #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. bot-

tles 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 fi rst 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.

Key Craft Offerings: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, fi reweed 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.

Dogfi sh Head Craft Brewery. For the fi rst time

in 20 months, Dogfi sh 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 hit-

ting 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 Bonfi re 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 fi nish. The specialty malt is dried over

a beech wood fi re, giving the beer a distinct smo-

kiness. 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 Pacifi c 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 CRAFTWITH HUNDREDS OF NEW CRAFTbrewers 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 sec-tor 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 brew-ers’ event in New York I met a Dominican guy who’s planning to open the fi rst production brewery in Harlem in many decades.) Beer drinking venues and occa-sions 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 busi-nesses. We’ve seen that movie before.

But for those who stay local, or at least regional, there are some great dividends be-yond 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 com-munities, 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 particu-larly excited about the nanos (nanobrewer-ies) 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 count-less retailers and developers seeking sup-port 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

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 add-ing 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 en-terprise, but real nevertheless. At a time that local retail is an endangered species because of the Internet and big-box ri-vals, breweries and brewpubs should be a tempting option for developers and urban planners looking to re-establish down-towns and Main Streets as vibrant com-munity 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 state-houses fi nally 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 commu-nity building. There still is work to do to truncate onerous licensing requirements, and to allow the smallest brewers to self-distribute in their home markets.

The advent of nanos reinforces that trend, despite it sometimes being hard to take them seriously as real operating busi-nesses. No question, despite the rhetoric of staying small and regional, some really har-bor ambitions of becoming the next Boston Beer or Dogfi sh 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 infl uential brewers like Firestone and 21st Amendment, brewers also are extending social fi laments to a broader range of com-munity institutions, such as local farmers, artisanal food producers, coffee roasters and retailers in a way that enriches the lo-cal culture. Not trapped by the burdens of heritage, American craft brewers are will-ing to go pretty far afi eld 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 bever-ages served at a temporary beer garden it has set up in a vacant lot at the north-ern terminus of the park. That’s place-making 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.

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IT SOOTHES SCORCHED AND SUN-burned 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 benefi ts, aloe nevertheless may fall short of a miracle cure, but produc-ers 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 ingre-dient, and beverages made with it are fi nding increasing acceptance.

While the American market is still second fi ddle to interest from Asian countries, aloe’s U.S. numbers are look-ing stronger, and its taste becoming more mainstream. Introduced approxi-mately seven years ago to U.S. markets by SPI West Port Inc., the fi rst 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, presi-dent of SPI West Port. “Late 2008 is when we launched our ALO Drink.”

According to Chen, early aloe distri-bution in the U.S. centered mostly on concentrates that were sold in health food stores, and people mostly bought them for their health benefi ts. 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

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. Uti-lized 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 fi nal product.

“We grind the whole things,” said Brett Aaron, managing director of Viva-loe. “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 con-crete information.

And here’s one more side issue. While latex has historically been used as a lax-ative, 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 benefi ts. 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 misinforma-tion 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 fl ying 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,

city dwellers in their 20’s, 30’s and 40’s may be the ideal target. What the mar-ket 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 mil-lion 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 main-stream 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 fl exible appeal.

“There’s really not a channel of distri-bution that aloe doesn’t fi t,” he said. “The target market could be skewed as female, but it’s not. Young adults love and com-ment on the texture, and older adults love the health benefi ts.”

Stores, Kergl said, are eager to pick up new aloe vera products and that any new fl avor or line extension was an easy sell. He said their ALO products are now top sell-ing, even with highly competitive products.

“We’re also exclusive importers of Calyp-so 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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ENDORSEMENTSTESTIMONIALSAND THE FTC

Beverage Companies Need to Be CarefulBy: Justin ProchnowEndorsements 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.


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 advertis-ing strategies.

Endorsements are not a new phenom-enon. 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 mes-sages. 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 regu-latory focus regarding the use of endorse-ments 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.

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 top-ics, highlighting the need to disclose mate-rial 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 testimo-nials 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 advertis-ing. 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 advertis-ing 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 regula-tory cases involving actions brought by the FTC have underscored that companies sponsoring products now have the burden of responsibility to monitor those endorse-ments and ensure that they are compliant with applicable laws and regulations

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 guitar-lesson DVDs. The crux of the FTC’s case against Legacy was that Legacy dis-seminated 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 connec-tion is a connection that might substan-tially affect the weight or credibility of an endorsement or testimonial and can be a financial, personal or another similar con-nection that consumers would not reason-ably expect to be present without disclo-sure. The FTC asserts that endorsements coming from people that have a financial connection to the product, such as the af-filiates 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 docu-ments, 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 adver-tisers 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

MARKETING & DISTRIBUTION NETWORKS

UPDATING THE GUIDES


sites that purported to belong to legitimate news-gathering organizations when, in re-ality, 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 investi-gative 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 report-ers, the consumer testimonials, and the attempt to portray an objective, journalis-tic endeavor.” Rest assured, resolution of these cases is likely to result in substantial penalties for the defendants.

While testimonials from consumers can be helpful to sell products, celebrity endorse-ments are often even more influential in promoting products. Celebrities are frequently perceived as trusted and reli-able 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 testimo-nials and endorsements, must also be truthful and not misleading and must be

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 con-trol 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

regarding endorsements. Whether state-ments are made on Facebook or tweeted through Twitter, endorsements made through social media outlets are sub-ject to the same requirements regarding material disclosures as the requirements for traditional advertising. In a March 2011 speech to the Connecticut Bar As-sociation, FTC Commissioner Julie Brill discussed a “tweeting” situation involv-ing 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 actu-ally 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.

A third method used with increasing fre-quency by companies to endorse products is the enlistment of bloggers to promote products. While the Endorsement Guides did not previously address issues sur-rounding blogging, the current Endorse-ment 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.

In determining whether connections must be disclosed, the fundamental question is whether, when viewed objec-tively, the relationship between the ad-vertiser and the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and there-fore an “advertising message.” Thus, a consumer who purchases a product on his or her own, without special com-pensation from the manufacturer, and praises it on a personal blog is not pro-viding an endorsement that is subject to the guidance contained in the Endorse-ment 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.

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.

CELEBRITY ENDORSEMENTS

BLOGGERS

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.


The FTC action against Reverb Com-munications provides further insight into the FTC’s direction in this area. In August 2010, the FTC fi led a complaint against Reverb, a California public rela-tions 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 blog-gers and the companies sponsoring the products endorsed by the bloggers may be

held responsible for misleading endorse-ment that fail to disclose material connec-tions. The responsibility of companies for statements made by bloggers is similar to that which exists for companies using oth-er 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 determin-ing 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 effective-ly supervise bloggers promoting products on behalf of the company.

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 com-panies, 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 testi-monials are the consumers. This emphasis on transparency should give consumers greater confi dence that they are getting the complete story when making that next important purchase.

Justin J. Prochnow is an attorney and Share-holder in the Denver offi ce of the international law fi rm 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 [email protected].

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As an investment banker advising consumer-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, mar-keting, 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 av-erage 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 RISKInevitably, 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 lim-ited 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-

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HOW TO MONETIZE INNOVATIONINSIGHTS FROM THE STRATEGICS


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.

THERE IS ROOM FOR THE SIMPLE AND THE COMPLEXStrategics are looking for and will pay for both. Not every inno-vation needs to be, say, a relaxation beverage with 12 ingredi-ents 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 PROOFStrategics are clearly open to investing or buying earlier-stage (under $25MM sales – sometimes even as low as $5MM) bever-age 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 trac-tion in the marketplace. Many strategics are willing to partner and test those ideas before buying.

FITMake sure your innovation aligns with your strategic buyer. Of-ten 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 LINEInnovation 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 FOCUSOne strategic advised that entrepreneurs take time to grow their brand. “Consumers don’t want innovation forced on them;

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INGREDIENTSAcai (Sambazon; Zola); Chia (Mamma Chia)

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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 fi nal proposition. You need to invest time and energy to learn, tweak and change… other-wise, 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 spec-trum can raise questions (and hence, risk) such as: Is the in-novation 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 ap-proach. “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 MARKETPLACEThere 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 com-panies 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-de-livery innovations and technology innovations. Some estab-lished 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 prod-ucts that don’t come with a required premium price and speak to the masses, and products with the taste and mes-saging to help move people away from sugar-laden prod-ucts –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, mes-saging, 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 stra-tegic 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 ap-peal becomes broad enough for a larger audience. To get there, it’s all about execution.

Xenergy gets off the mat, onto the shelfBy: 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 fi ghting 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 advan-tage – complete and total identifi cation 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 fi ghters 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-fi nanced brand that speaks to a desirable audi-ence. Four-channel sales (Drug, Gas and Convenience, Supermar-kets 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 fi ghters, according to a recent story in Sports Business Journal. That’s a number and a demographic that an “offi cial beverage” would kill for. To give the number perspec-tive, 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 hetero-geneous 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 ac-counts, 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.”


But some folks do: other drink companies are aware of the potential for marketing via top UFC fi ghters. While Xyience has 205 lb. Champion Jon Jones in its camp, no less a bever-age 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 fl avor profi le that has improved by leaps and bounds since a switch to Allen Flavors last year, along with a packaging overhaul that has unifi ed the line inside an au courant

With Americans continu-ing their shift toward the consumption of healthier food and beverages, many new and established energy drink manufacturers are infus-ing 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, remov-ing added caffeine from product lines altogether.

Whether caffeine-free energy drinks will trend toward greater adop-tion and use or simply remain a small niche subcategory remains to be seen. Regard-less, 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 antioxi-dant found in fruits and vegetables which, according to FRS, increases the production of the energy-producing parts of body cells, mir-roring an effect of exercise.

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 signifi cant share. They see other potential competitors like DPSG’s Venom failing to catch fi re and know they have better mainstream appeal than other, less mainstream products like Redline or Cocaine.

Through its own scientifi c research, FRS concluded that caffeine, once thought to enhance the bioavailability of quercetin, was actually not

necessary for overall effi cacy of the beverage. Additionally, FRS makes an interesting claim that its key ingredient provides actual energy to the muscles and brain – as opposed to caf-feine, 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 en-ergy products are widely available, it’s our posi-tion that the subcategory of healthy energy drinks is growing much faster.”

Mike Weinstein, the chairman of HYDRIVE Energy, agrees. His com-pany 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 consum-ers 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 mar-keted as “The Only Energy Shot for People Sensitive to Caffeine,” the product actually does contain caffeine – but the six milli-grams comprise only the amount one would fi nd 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 micro-grams 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 pro-duction of neurotransmitters in the brain that affect memory, intelligence and mood.

However, in the ultimate demonstration of a company’s commitment to a caffeine-free 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 caffeine-free 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 con-sumption 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.

›› SANS CAFFEINE, IS IT ENERGY?

With Americans continu-ing their shift toward the consumption of healthier food and beverages, many new and established energy drink manufacturers are infus-ing 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, remov-ing added caffeine from product lines altogether.

Whether caffeine-free

an energy beverage that

be the primary functional

currently in the process

dant found in fruits and vegetables which, according

Through its own scientifi c research, FRS concluded that caffeine, once thought to enhance the bioavailability of quercetin, was actually not

necessary for overall effi cacy of the beverage. Additionally, FRS makes an interesting claim that its key ingredient provides actual energy to the muscles and brain – as opposed to caf-feine, 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 en-ergy products are widely available, it’s our posi-tion that the subcategory of healthy energy drinks is growing much faster.”

chairman of HYDRIVE Energy, agrees. His com-pany recently launched HYDRIVE Energy Decaf, a 100 percent caffeine-free beverage loaded with a number of B-Vitamins as well as D-Ribose.

ers don’t drink caffeine and whenever we sampled our products, we always said, ‘We wish we had something to give these people,’” Weinstein said.

launched a variety with extra caffeine, so it’s obvious

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“In the last few years, the energy drink category is consolidat-ing 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 fi nding that oppor-tunity, 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 – it-self a fast-growing, exciting sport aimed at the UFC demographic.

“Xyience is a good brand, but it’s kind of stuck in that cage-fi ghting niche,” said Frank Kerker, the “Chief Power Offi cer” at FMF, which launched last month. “Ask people if they’d rather watch cage-fi ghting 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 inves-tors – many in Las Vegas – who understood the potential of a brand that was focused on UFC.

At the time, that league was cleaning up its own image, con-solidating a myriad of organizations, each focused on hyping the no-holds-barred gore of their products – once derided by Sen. John McCain as “human cockfi ghting” – 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 fi nance 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 fi led for bankruptcy, listing liabilities of more than $42 million.

As the bankruptcy case progressed, so too did the govern-ment’s case against Pike. Later that year, Manchester Consoli-dated 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 – offi cial or unoffi cial -- isn’t necessarily a bad thing, when you look at what the Fertitta broth-ers, 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 ex-pand 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 distri-bution completed in time. I feel fortu-nate 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


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 Origi-nal fl avors.

Gladiator Championship Wrestling, LLC.

X-Treme Gladiator energy drink has been in-troduced to the U.S. market. The ginger-fl a-vored beverage is made in Austria, contains as taurine, B-vitamins, and glucose and is pack-aged in an 8.4 oz. aluminum can.

Boston America has announced new distri-bution for Duff Energy. The Mandarin orange fl avored energy drink is sold in 12 oz. cans and takes its name from the television show “The Simpsons.” Duff Energy is offi cially 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 a-vors to its line of Go Girl Energy drinks. The non-carbonated beverage is fortifi ed 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 bever-ages now contain 325mg of the natural en-ergy 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 formu-lated with organic sugar and stevia and con-tain 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.

XL Energy Marketing has introduced a new lemon and lime fl avor. XL Lime & Lemon En-ergy 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 En-ergy. The beverage is available in three fl avors: 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 fea-tures L-Theanine to help provide enhanced men-tal 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, Vita-min C, Vitamin B12, Vitamin B6, and more, according to the manufacturer.

Golazo Inc. has launched Golazo All-Natu-ral 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 com-pany 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, caf-feine, glucuronolactone, taurine, and inositol.

BRAND NEWS: ENERGY DRINKS

BRAND NEWS


GURU Beverage Company launched GURU 2.0 and GURU 2.0 Lite. GURU 2.0 is certifi ed organic and 100 percent natural. The bever-age contains a powerful botanical complex and contains no preservatives, no taurine and no artifi cial ingredients. GURU 2.0 Lite is also 100 percent natural, sweetened with Stevia, and contains 10 calories.

Vuka, LLC is slated to launch several fl avors 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 sing-er Rick Monroe and Martyr Clothing.

Cintron Beverage Corporation has refor-mulated 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 re-tail 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 Nutri-

tion, Inc. BSN has launched ENDORUSH, a 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 fl avors.

Speedelicious Beverages, LLC has intro-duced Speedy Energy Drink. The beverage contains Guarana and is sweetened with Stevia and fl avored with Maqui berry, blue-berry, Acai berry and pomegranate. Speedy

contains 100 calories per 12 oz. aluminum bottle. Speedy is accepting inquires for na-tional and international distribution outside of New York City.

Bite Me Energy Drink, Inc. Bite Me Energy Drink is now available for sale on Amazon.com and includes free shipping on all orders.

Go Fast Sports & Beverage Company has 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 fl avors 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 grass-roots 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 outfi tting a profes-sional cycling team.

PBEV, LLC, maker of Killer Buzz Energy, has announced several new distribution partners: Southern Eagle in New Orleans, LA, Cham-pagne Beverage in Covington, LA, Budweiser Busch of Mobile, AL, Full Circle Distributing in the Pittsburgh, PA area, and Trenton Coca-Cola in Trenton, MO. Killer Buzz has also launched two new sustained coffee energy drinks, Luscious Latte and Mocha Madness.

Jones Soda Company has re-launched Whoo-pAss, 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 ex-tracts, 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.

HYDRIVE Energy LLC has launched two new products. HYDRIVE Decaf is a 100 per-cent caffeine free energy drink available in a Wild Peach fl avor. Loaded with B-Vitamins,


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 fl avor.

Kronik Energy has announced agreement with over 1,100 Kangaroo Express stores in 8 states Initially 3 fl avors 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 veg-etable 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 fl avors: Pome-granate/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 fl avors. Virgin Sacrifi ce Cherry is sweetened with pure cane sugar, while Lucifer’s Lemonade is sugar-free.

Bio-Engineered Supplements and Nutri-

tion, 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 Raspber-ry and Green Apple fl avors.

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 bul-let points boasting Bazi as a healthier choice

than alternative energy shots. Bazi has also improved its bottle design to include a self-sealing 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 Co-caine Energy Shot contains 280 milligrams of caffeine, with supporting supplements L-Carnitine, 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 natu-rally powered shot of 100 percent vegetable and fruit juices combined with green tea ex-tract. They are available at participating con-venience stores, supermarkets and drugstores in Colorado, Florida and Minnesota.

NVE Pharmaceuticals has introduced a new Extra Strength Berry fl avor to its “2 for $3.99” 6 Hour Power product line. The prod-uct features a brand new, highly visible value pack shrink band and will be distributed na-tionally in convenience stores.

Cellutions, LLC announced placement of its Modjo Life Energy Shots in Circle K South-east 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 fl avored Rip It Red Zone, and blueberry, blackberry and straw-berry fl avored Rip It 3-WAY. Each beverage contains Vitamin C, Vitamin B6, Folic Acid, Vitamin B12, Sodium, Taurine, Caffeine, Ino-sitol, Guarana Seed Extract.

Genesis Today has launched Pure Energy Or-ganic Shots in Acai and Goji fl avors. Pure En-ergy 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.

BRAND NEWS: ENERGY DRINKS

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THE ULTIMATE ATHLETICCOMPETITION:

Putting Coconut Water in Your Sports DrinkBy: Jeffrey Klineman

PHO

TO B

Y KE

ITH

ALL

ISO

N


It’s the summer sweat season, and all eyes are on the sports drink cat-egory, where hydration and performance are being remixed in countless new ways. This year, however, that mix seems to have to include coconut water.

The importance of the sports nutrition market to that emerging category became obvious in early June when coconut water brands ZICO and Vita Coco squared off over none other than Alex Rodriguez. The New York Yankee third baseman had apparently invested in ZICO a few years ago, and then invested in Vita Coco and signed on as an endorser in June.

The addition of Rodriguez – and Red Sox second baseman Dustin Pedroia – was supposed to signal a move by Vita Coco into a more sports- and performance-oriented marketing scheme, an area whose marketing ZICO had long treated as its core. ZICO fought back, reveal-ing its own athlete investors and endorsers. Meanwhile, O.N.E., the third of the “big three” coconut water brands, remained in the mix because of its O.N.E. Active line of enhanced coconut water products. Between these three companies, one would imagine that there’s enough co-conut water permeating athletic ranks to cause every league to start fl ying the Brazilian fl ag, but that’s just looking at the coconut trees and not seeing the forest of uses for coconut water in the athletic realm.

Following ZICO, O.N.E. and Vita Coco into the ath-letic market are coconut water hybrids like Greater>Than and Body Armor, a “Super Drink” recently launched by FUZE founder Lance Collins. Both brands employ a mix of coconut water and other elements to help supplement athletic performance and fi ght dehydration. Body Armor takes something of a “kitchen sink” approach as well, throwing in other electrolytes, fi ber, vita-mins, EGCG and amino acids.

That would leave it enough to sound like a drugstore, but the

power in the category, Gatorade, has also used the retailer as a staging ground to sync the product back up with its former core users. While the powerhouse brand stumbled with the introduction and restaging of the brand as “G” in 2009, the launch of its G Series FIT line of before-during-after workout products has helped it regain its footing as a serious performance-oriented brand.

Last quarter, Gatorade sales volume leapt 20 percent – a large part of that no doubt assisted by the emergence of G2 as a lower-calorie alternative to the core G line. With a broader product line that is more carefully lined up with athletic need states, the bolt should continue to fl ash in the years to come.

Still, the category continues to broaden beyond the bolt and beyond hydration it-self. With more consumers understanding

the value of protein products, PepsiCo made the move of aligning itself with lead-ing protein drink producer Muscle Milk two years ago.

Protein’s twin use as a body building and satiety supple-ment means that Muscle Milk isn’t just competing for share with hydration products, however. It’s being fl anked on one side by performance beverages and on the other by appetite suppressant products like Neuro Trim and Func-tion: Lightweight and meal replacement products like Orgain and CalNaturale.

And here’s where we come all the way around to coco-nut again. As a way of touch-ing all the bases, it should be noted that some of the larger meal replacement smoothies out there, like those made by Naked and Odwalla, have begun to incorporate coconut water into the mix. Which means that for all types of performance beverage, there’s a coconut water ver-sion – although not neces-sarily one that has been, is currently, or will be endorsed by A-Rod in the future.

supplemented coconut water side is going to be getting even more crowded as nutri-tion retailing specialist GNC gets into the mix with its own line of enhanced coconut water products founded under the Phenom moniker. Co-developed with PepsiCo, GNC is launching Phenom in four SKUs – three of which seem directly aimed at the sports market. They mix the retailer’s strong background in supple-ments with the fast-growing interest in coconut water as a hydration medium to offer a strong in-store alternative.

GNC, which went public earlier this year, also is planning several other sports-oriented brands via a partnership with Shadow Beverages, an incubation and brand innovation company based in Arizona that picked up workout/energy product Whey Up in June.

Speaking of GNC, the traditional

By: Jeffrey Klineman

Coconut water hybrids like Greater>Than and Body Armor employ a mix of coconut water and other elements to help supplement athletic performance and fi ght dehydration.


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.

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, HY-DRATE 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 carbo-hydrates 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.

Greater > Than has announced that its all-natural sports drink is available throughout Chicago in-cluding Whole Foods and online at Amazon.com. Greater > Than is fortifi ed with coconut water.

Innovative Health Solutions, LLC has launched BÖDE Sport. The beverage is sci-entifi cally designed to improve performance during prolonged exercise and help repair damaged muscles and promote training adap-tations. BÖDE Sport contains CoQ10 and Ri-bose, which help support fast muscle recovery and promotes optimal performance.

ProDrive has launched ProDrive Sports Fuel. The beverage contains 20 grams of whey pro-tein and 10 grams of natural agave sugar per 16 oz. serving. ProDrive comes in four fl avors: Pomberry Acai, Orange Mango, Lemoncello, and Wild Berry.

Neuro Drinks has reformulated its weight management beverage, NeuroTrim. The bev-erage now contains no caffeine. The packag-ing of NeuroTrim has also been updated to a royal purple color in order to better fi t with the packaging of the company’s other drinks.

California Natural Products has launched CalNaturale Svelte. The beverage is a multi-functional, all-natural protein shake made with organic and all-natural ingredients. Cal-Naturale Svelte shakes are also non-dairy, cholesterol-free, certifi ed gluten-free and cer-tifi ed kosher. Svelte beverages are available in four naturally delicious fl avors 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 Func-tion: Alternative Energy to several new re-tailers in New England and along the east-ern seaboard. The beverage will be carried in Gristedes, Foodtown, Nouria Energy, MPG Rapid Refi ll, and Heinen’s Fine Foods. Wegman’s, which already carried Alterna-tive Energy in Açai Grape and Strawberry Guava fl avors, will now carry its Tropical Citrus fl avor as well.

All Sport Inc. has introduced a new clear label for its All Sport beverage. All Sport is available in fi ve fl avors: Blue Raz Ice, Fruit Punch, Lemon Lime, Orange and Grape.

Purity Organic, Inc. has introduced an Orange Mango Tangerine fl avor 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, Gel-son’s and other leading retailers.

CytoSport, Inc. has released a series of lim-ited 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

BRAND NEWS: SPORTS/NUTRITION DRINKS

BRAND NEWS


of Texas. Each bottle will be available in the food, drug, mass and c-store channels and only in geographic areas specifi c to each school featured. Muscle Milk will support these bottles in each market with advertis-ing, POS and other grassroots program-ming. CytoSport has also launched a new Café Latte fl avor for Muscle Milk Light. The beverage is caffeine-enhanced, lactose and sugar-free and contains 20 grams of protein and other additional essential vita-mins and minerals.

Amy & Brian Naturals Inc. has expanded distribution of their 17.5 oz. cans of Amy & Brian Coconut Juice into all Fresh Mar-kets in the Southern US. The company has also increased item placement of their Co-conut 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 fi ve essential electrolytes, is enhanced with antioxidants to aid recovery and boasts more potassium than traditional sports drinks. O.N.E. Ac-tive is packaged at source, not made from concentrate and is made without artifi cial colors, high fructose corn syrup, or preser-vatives. O.N.E Active is available in three fl avors: Grape Berry, Lemon Lime and Cran-berry Grapefruit and is packaged in a 16.9 oz. Tetra Pak container.

Cera Products, Inc. introduced a new package option for CeraSport EX-1 concen-trate, 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 hy-drates the body and replenishes carbohy-drates and electrolytes lost during endur-ance activities. It is available in two fl avors, 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 featur-ing organic ingredients.

PRO FOODS has reformulated PRO ADE. The protein-enhanced water beverage is now fortifi ed with extra protein, electrolytes and essential nutrients. PRO ADE’s new formula has 90 calories, 20 grams of protein and sev-eral nutrients including potassium, sodium, and calcium. The beverage contains no fat or sugar and is available in Black Cherry and Kiwi Strawberry fl avors.

The Gatorade Company. Gatorade has in-troduced G Series FIT, a new line of products developed specifi cally for fi tness-minded in-dividuals to provide fuel, fl uid and nutrients before, during and after a workout, training session or activity. Each product in the series was inspired by fi tness athletes and designed by Gatorade. The G Series FIT products are available at retailers including Target and Walgreens among other mass, drug and gro-cery stores nationwide.

Vitalyte has announced new fundraising ini-tiatives aimed at encouraging youth participa-tion in athletics and team sports and also pro-viding 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 specifi cally 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 new hockey helmet-shaped package for its line of Sportastic sports themed beverages. The company has also added two new fl avors: Grape and Orange.

Orgain, Inc. has introduced a new Iced Café Mocha fl avor to its line of certifi ed organic nutritional shakes.

Naked Juice Company. Naked Juice will add three new fl avors to its line of coconut water: Lychee, Mango Peach and Pineapple. The new fl avors will be available nationwide in August 2011. Naked Juice has also added two new fl avors to its Protein Zone line, Mango and Double-Berry.


BRAND NEWS: SPORTS/NUTRITION DRINKS

BodyArmor Nutrition LLC has introduced a line of all-natural BodyArmor SuperDrinks. The beverages contain coconut water, antioxi-dants, 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 fl avored bev-erage contains 90 mg of caffeine derived

from green tea extracts, ginseng and guara-na. 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 me-dia platforms. ZICO’s list of current ath-lete 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.

DECEMBER 5 & 6, 2011

WINTER 2011SANTA MONICA

Loews Santa Monica Beach HotelSanta Monica, CA

SPONSORED BY:

For more information and early registration pricing, visit www.bevnetlive.com

™


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 at-tendees with up-to-the-minute advice on the way innovative beverage companies can find growth in the current economy.

But the instruction was also accom-panied 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 cred-its 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-

ther up the chain, and the distributors, retail-ers, suppliers, investors and other industry members who work with them, however, if there was no cash prize, there was neverthe-less 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 Anony-mous Consulting’s Andy Steele to discuss the organizational, mechanical and branding adjustments that become neces-sary as innovation evolves into revenue.

Those individual presentations were matched by a second-day slate of entre-preneurs 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 discuss-ing 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 encour-aged 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 bever-ages 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 speak-ers, Karin Rotem of PepsiCo. As that company’s Senior Director of Global R & D Strategy, Rotem’s presentation gave en-trepreneurs the knowledge that beverage companies need their ideas in a variety of ways – but that the road to partner-ship 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

BevNET Live Summer 2011 Highlights: Attendees Learn to Grow, Not Just Innovate


companies like to work with entrepre-neurs 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 bev-erage trend spotter Ken Sadowsky, who shared stories from a career spent work-ing 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 Bev-NET Live, but most prominently into dis-cussions of investment, a topic that was featured on both Monday and Tuesday. On Monday, Silverwood Partners Man-aging Director Mike Burgmaier unveiled key attributes of the innovative compa-nies that strategic investors are seeking out, and a broad panel of investors re-viewed 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 – in-cluding 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, de-scribing the Indian conglomerate Tata), there was plenty of variety to be ab-sorbed 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 ad-vice 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 consolida-tion 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 termina-tion fees hanging over the heads of both distributors and suppliers, the life of the beverage entrepreneur is pressure-packed – 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 consid-ering 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 ap-parent that there’s just as much competi-tive 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.

PROMO PARADEPROMOTIONS, EVENTS, AND SPECIALS FOR THE INDUSTRY


WAT-AAH! Tells Kids to Stop Bullying

Perrier Brings the Heat

evian Brings the Babies Back Out

WAT-AHH! will be the offi cial beverage of the “Stop Bullying, Speak Up!” Anti-Bul-lying Tour 2011, which will travel to dif-ferent 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 epidem-ics 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 is giving consumers the chance to heat up the Perrier par-ty 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.

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 fl ip-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.

Miller Lite Saves Summer

Miller Lite is introducing Taste Points, which are found in specially marked packages of Miller Lite and can be submit-ted 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 around-the-world journey. Consumers can collect Taste Points by sub-mitting offi cial 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. ©

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Beverage Spectrum June 2011

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Transcript of Beverage Spectrum June 2011