High-End Optimism

Gourmet CSD’s show staying power.

WITH CONSUMERS HOLDING TIGHT TO THEIR wallets, cafes closing, big soda brands losing volume and the perennial challenges of running a small business, it might seem like a terrible time to sell high-end glass-bottled soda. But the environment for boutique soda brands is better than it looks.

Danny Ginsburg, the self-proclaimed “Soda Sommelier” at Real Soda In Real Bottles, Ltd., a distributor in Gardena, Calif., said the category’s current ills are minor and will be short-lived. His business is down, he said, but not significantly. Home deliveries have suffered the most, and deliveries to cafes have also slipped, he said, but they’ve done so at a rate similar to the drop in café foot traffic. In his view, that means that once customers have entered such dens of indulgence, they’re not going to try to save pennies or calories by avoiding products like his glass-bottled sugar bombs.

“The ‘decline’ isn’t really indicative of a decline in interest in boutique sodas in those places,” Ginsburg said.

And while the market may currently be sluggish, individual companies insist they have been doing well. Tami Kennedy Director of Communications for Maine-based Capt’n Eli’s Soda said her company has grown, adding new territory in California and Florida where many part-time New Englanders spend the winter months. Additionally, a god number of new products have been appearing: SOL Elixirs rolled out a three-SKU line, Zevia relaunched its entire line of stevia-sweetened sodas and Steaz reintroduced its diet sparkling green tea sodas.

Kennedy said the biggest problem facing her company is finding the manpower to get the product where it needs to be. Most of the company’s distributors specialize in something other than boutique sodas, she said. So, the brand needs personnel in the market to help out

Greg Warwick, president of the U.S. division of Fentiman’s North America, said getting money has presented his company’s largest challenge. Developing sales channels and back office support, he said, can tax small companies more than they might expect.

“I would strongly counsel startups to make sure they’ve got their funding buttoned up and have contingency plans in place if sales fall short of forecast or unforeseen expenses materialize,” Warwick said.

Once a small soda company has established those channels, he said, they have to struggle with the prices their distributors are willing to pay. Brands need to resist the temptation to “degrade” their brand “through excessive, deep price promotions,” he said. Unfortunately, a lot of distributors expect prices lower than smaller companies can sustain, said Maine Root president Mark Seiler.

“Some beverage companies have sort of trained buyers to expect a large introductory discount and promotional offering,” Seiler said. “Buyers will take sub-par brands if the offer is right. If you have a great brand and believe in what you are making and doing, then hold your price and don’t give it away. “

One notable boutique soda marketer has almost wholly walked away from DSD altogether. Chris Reed has shifted his focus to stocking his products in grocery stores and big-box outlets through chains’ warehouse systems. He has succeeded by placing Reed’s Ginger Brew and Virgil’s Root Beer in natural products sections appearing in grocery, and now wants to get those products into the same aisle as Coke and Pepsi.

Like Reed, Seiler said he and his brother believe strongly in their brand, and their distribution partners have been willing to take a risk on them. Still, he said, the business is “tougher than it looks.”

“I didn’t think I’d ever say that,” he added.

Thanks to its new partnership with Pepsi Bottling Ventures, Cheerwine, the 92-year-old soft drink from Salisbury, N.C., has expanded its distribution into Maryland. Cheerwine is available in all retail outlets in Pepsi Bottling Ventures LLC (PBV)’s Delmarva franchise,

Snow Beverages. Snow entered the New York market in June and the product is currently available in approximately 500 accounts in Manhattan. In 2010, the company expects to introduce 4-packs and additional flavors.

Mosse Beverage Industries (MBI). Mosse Beverage Industries introduced two new flavors – Citrus and Peach – that are both sweetened with agave. The company also reformulated its Black Cherry flavor, and is currently reformulating its Black Grape variety.

Zevia LLC. Zevia reports that it has seen a 300 percent increase in same-store sales over the last year. Zevia has added production facilities to meet demand on both the East and West Coasts. Copacker Adirondack Beverage started producing Zevia in December.

Global Beverage Enterprises Inc. Global Beverage Enterprises recently released a new version of its Mr. Q Cumber soda, with a redesigned label, all natural formulation, and 7 oz. serving size – though the company still sells a 12 oz. version.

Fentimans North America, Inc. Fentimans Botanically Brewed Beverages celebrated its first anniversary of U.S. production in November, and has added placement at Andronico’s (Cali.), Central Market (Tex.), Cost Plus World Market, Fresh Direct (N.Y.), Whole Foods (Canada, Northern Cali. and New England), Haddon House, Sun Opta (Canada) and Wine Warehouse (Cali.).

GuS – Grown-up Soda. GuS – Grown-up Soda expanded further into Canada with new bi-lingual labels that rolled out in November. The brand also added placement at BevMo! and Coffee Bean & Tea Leaf stores, as well as HEB Plus stores in Texas through new distributor Kehe Foods. The company also added DSD distribution with Esotec, LTD in New York and Vino Wholesale LLC for the state of Louisiana.

Capt’n Eli’s Soda. Capt’n Eli Soda recently added retail placement at Big Y in Massachusetts and Connecticut and Market Baskets in Massachusetts and New Hampshire. It also shipped its first international order to Germany.

Evolution Brands, LLC. Cool Mountain Fountain Classic changed its label to better reflect the brand’s name. The brand also rolled out a bag-in-box program for all seven cane sugar-sweetened flavors. Evolution Brands also launched Chicago Rootbeer in October in ½ barrel and ¼ barrel kegs. Evolution plans to begin production of Chicago Rootbeer in bottles and bag-n-boxes in the spring.

Reed’s Inc. In the past year, Reed’s launched Reed’s Natural Energy Elixir and Virgil’s Orange Cream Soda. Energy Elixir uses green tea for a natural caffeine lift; ginger for increased metabolism and nutrition absorption; jiaogulan for resistance to stress and camu camu for mood balancing. Virgil’s Orange Cream Soda takes a twist on classic cream soda.

The Coca-Cola Co., Inc. The Coca-Cola Co., Inc. introduced CASCAL, a handcrafted, all-natural soda designed in France, exclusively at Whole Foods Market stores across the US. CASCAL is also available in fine restaurants and taverns in New York City.

Jones Soda Co. Jones Soda Co. launched Jones Zilch. Zilch, sweetened with Splenda, contains zero calories and 30 percent of the recommended daily allowance of vitamin C. It comes in three flavors: Pomegranate, Vanilla Bean and Black Cherry.

R.W. Knudsen. R.W. Knudsen, maker of Sparkling Essence and Natural Brew sodas, recently received a “Greenie” award from California State University at Chico for recognition of the company’s commitment to sustainability.

Boylan Bottling Co. Boylan Bottling Co. now has over 300 distributors nationwide as well as in Canada, Australia, New Zealand, UK, Sweden and Spain. The company’s vintage pops are also now available in 16 oz. re-sealable glass bottles designed specifically for c-store chains and food service.

National Beverage Corp. Recently named one of the top root beers in America by Bon Appétit magazine, Faygo root beer has maintained the same flavor profile for more than a century.

Ale-8-One Bottling Company, Inc. Fourth generation owner Fielding A. Rogers became president of Ale-8-One Bottling Company, Inc. in October. The new president began working full-time at Ale-8-One in August of 2003 after graduating with a BS in Business Management from Washington and Lee University. Rogers plans to focus his efforts toward sales and marketing to further the expansion of the drink.

Egg Cream America, Inc. Egg Cream America, Inc. introduced Jeff’s Sodas, a line of shelf stable, low fat, dairy-based carbonated beverages in new 12 oz. packaging that reflects the product’s nostalgic theme. Jeff’s currently offers Chocolate, Diet Chocolate, Vanilla, and Orange Dream sodas throughout the Northeast and has recently entered the greater Chicago market.

PRESS COCKTAIL LLC. PRESS is now naturally sweetened with evaporated cane juice and available in a 6.3 oz. glass bottles. PRESS is preparing distribution partnerships for their West Coast launch which includes California, Arizona, Nevada and Colorado.

SOL Elixirs LLC. SOL Elixirs LLC launched solixir, a line of all-natural sparkling botanical beverages, in three flavors: Orange Maté (Awaken), Pomegranate Ginger (Restore), and Blackberry Chamomile (Relax). Each can be found nationally in Whole Foods Market. solixir has also gained distribution with Vitamin Cottage, Earth Fare, and Pharmaca. The company plans to release new flavors in 2010.

Fizzy Lizzy. Fizzy Lizzy has obtained kosher certification from the Orthodox Union (OU).

DRY Soda Co. DRY Soda achieved new placement at Coffee Bean and Tea Leaf, Dean and Deluca, Fred Meyer, Fry’s, Kroger Southwest, H-E-B and Jewel-Osco in 2009. In May, the company launched its 45-calorie Cucumber DRY Soda with the support of premier chefs and an awareness campaign on Facebook and Twitter.

Q Tonic. Q Tonic recently released a new 750 ml, resealable glass bottle designed for home entertaining.

The Healthy Beverage Company. Steaz introduced its organic and fair-trade zero calorie soft drink, Steaz Zero Calorie Sparkling Green Tea. Steaz Zero Calorie is made with all-natural and organic ingredients and is sweetened with organic compliant stevia. The line is boosted with B vitamins and contains 120 mg of natural tea antioxidants per bottle. Steaz Zero Calorie comes in four flavors: Raspberry, Blueberry Pomegranate, Orange and Black Cherry. Steaz Zero Calorie is available at Whole Foods Markets, gourmet and natural food stores and supermarkets nationwide.

Oogave’ LLC. Oogave achieved placement in over 100 Whole Foods Markets in 2009, including all of the stores West of the Rockies and Texas. The company also created a fountain program with Whole Foods in the Rocky Mountain Region.