Starbucks, something of a sleeper force in the RTD beverage arena, is adding Hint Water to its coolers and debuting a new line of its own RTD drinks.
The coffee chain giant announced it will roll out a line of Seattle’s Best-branded lattes with distribution through its partnership with PepsiCo. The new line, with Iced Latte, Iced Vanilla Latte and Iced Mocha flavors, will retail at a suggested price $1.49 per can and $4.99 per 4-pack, a discount proposition when compared to Starbucks’ bottled Frappucinos.
The chain also recently nudged the fates of a handful of brands through its in-store coolers. Hint, Inc. announced that the retailer will stock Hint Blackberry essence water in the U.S. and Canada starting in March. Starbucks also dropped Dry soda in December after a test in Seattle.
The decisions come at a time when Starbucks appears to be reevaluating its in-store RTD plans. According to Beverage Business Insights, Starbucks’ board decided late last year to end a plan that would have placed several coolers of innovative beverages in each of 1,000 stores, because it would undermine the chain’s all-about-coffee image.
In the past, the company has proved to be a powerful force for the brands it touches. Jones Soda Co.’s rapid rise was fueled, partially at least, by a distribution agreement with the coffee chain, and rapidly fell from grace when Starbucks discontinued the brand. Starbucks also serves as a major outlet for niche PepsiCo Inc. properties including IZZE.
Forgive him for being a little blown away by the response, but Michael Kirban probably should have realized this was going to happen. Soon after announcing that an extraordinarily high-profile group of investors – including Madonna and a small cohort of celebrities – were going to be putting their money into Vita Coco, the fast-growing coconut water brand he owns, things went a little crazy around the office.
The announcement that the veteran pop star and her business manager, as well as other celebrities, including actors Matthew McConaughey and Demi Moore and rock star Anthony Kiedis would be purchasing what Kirban called roughly 10 percent of the company was more than just a boost to the brand’s financial profile – it was a huge push in terms of publicity, he said.
“The announcement went out on Madonna’s Facebook page, and all of a sudden, it went to about 1.9 million people,” Kirban said. “We had about ten times our usual web traffic.”
The deal was brokered through one of Madonna’s agent, Guy Oseary, who also matched her reported $1.5 million investment. According to Kirban, Oseary’s wife is a model from Brazil, a country where coconut water has become an incredibly popular beverage category. The move rings true with the brand’s image of healthy nutrition and good times – to the point where McConaughey had been included in sales presentations as the company’s ideal consumer.
“That is hot,” said one beverage consultant regarding the deal. “It’s just plain hot.”
But the news that the “Material Girl” would move from dedicated Vita Coco consumer to investor in the company means a great deal to the brand’s public profile in the U.S. And it’s an unexpected windfall: according to Kirban, the company is still too small to try to get paid spokespeople on board, so the fact that it is getting a financial endorsement from the celebrities is even more valuable.
“We could never pay enough to use their names – and instead, the real story becomes that they want to be investors,” Kirban said. “Aside from the money, this is a real marketing opportunity.”
Of course, with the extra exposure, Vita Coco is now likely going to face a situation where more consumers are aware of the brand – and will want to try it. That means quickly rolling out into new channels. Last year, Vita Coco did not do much in terms of expanding its geographic footprint or adding new distribution – although sales did double, to about $20 million, in what Kirban called a “foundational year” – and awareness also grew with the category. This year, a new program with GNC should help fill the gaps, increasing doors by about 25 percent, he said.
While a federal tax on sugar-sweetened beverages may have died in Congress, politicians in two states have put new soda tax proposals into play.
In New York, Gov. David Paterson reintroduced a plan to add a one-cent per oz. tax on sugar-sweetened soft drinks in an effort to balance his state’s budget and improve the health of New York residents. The plan would raise the price of a can of soda by 12 cents, and the price of a case of Coke by $1.44, making a 6-pack of Coke more expensive than inexpensive beer at some Manhattan stores, according to the New York Times.
In Mississippi, state Rep. John Mayo (D-Clarksdale) proposed a bill that would levy a distribution-level excise tax on all “sugared-up soft drinks,” both RTD and fountain syrups. Juices and diet drinks will be exempted from his bill, he said, though he’s not sure how it would affect beverages with varying sugar levels. At the time of publication, the bill is still pending for final wording and submission, he said, but its ultimate structure likely doesn’t matter.
“I don’t expect it to pass,” Mayo said.
Amid continuing questions about the fate of its first non-energy product, Red Bull issued a statement saying it would not discontinue Red Bull Cola.
“Red Bull has a commitment to being a leader in the premium CSD category with Red Bull Cola,” the company said.
Red Bull’s cola line has had a spotty entry into the market. Despite early acclaim (including a Best of BevNET award) the brand failed to excite consumers and retailers – in part due to price point. A 12 oz. can of Red Bull Cola sells for a similar price to a 20 oz. bottle or Coke or Pepsi.
In defense of the cola’s relevance, Red Bull said the line achieved $21 million in its first year of retail distribution. For reference, Information Resources, Inc. reports the annuals sales for mainline Red Bull products at $1.9 billion in food, drug, convenience and mass merchandizing stores, excluding Wal-Mart.
In the days following the 7.0 scale that stuck Haiti and devastated the country, a collection of beverage firms sent relief in a variety of forms. Below follows a partial list of beverage firms’ charitable efforts in Haiti.
• Cheerwine- maker Carolina Beverage Corp. donated 6,000 cases of drinking water to Haiti through the Feed the Children aid organization.
• WAT-AAH! announced it would airlift a truckload of its product to Haiti.
• Icelandic Water Holdings ehf announced that the company donated three tons of bottled water to victims of the earthquake in Haiti, ultimately sending roughly one bottle of water for every citizen of Iceland.
• Peaceful Remedies, LLC, makers of RelaxZen, said it would donate $10 per 12-pack to The Red Cross Haiti Relief Fund.
• Project7 is worked to get food and beverage supplies, including 20 truckloads of gallon jugs of water, to survivors of the earthquake.
• Sweet Leaf Tea donated 449,000 ounces of tea, enough to fill an 18-wheeler, to Feed the Children for disaster relief. The company also gave out 16 oz. cans of Sweet Leaf in exchange for donations of any size at an Austin coffee shop.
• Anheuser-Busch’s AmBev business in Latin America shipped nearly 350,000 cans of fresh drinking water from a brewery it operates in Santo Domingo in the Dominican Republic.
• FIJI Water donated over 136,000 liters of bottled water to victims of the earthquake. FIJI Water worked directly with the United States military to deliver the bottled water to Fort Bragg, North Carolina where the water was loaded onto a relief flight and air dropped into Haiti.
• The PepsiCo Foundation announced a donation of $1 million to the earthquake victims in Haiti. The company also provided Quaker products, bottled water and Gatorade for the disaster victims through its bottlers in Florida and the Dominican Republic.
• The Coca-Cola Co., Inc.’s charitable arm donated $1 million to the American Red Cross for victims of the earthquake.