What's Happening Across Beverages

Add another problem to the growing list of soft drink manufacturers’ headaches: Benzene.

Recently a pair of growing beverage companies, In Zone Brands, Inc. (which makes Belly Washers), and Talking Rain settled lawsuits filed by consumer groups over the presence of benzene in their products. Benzene has been linked to cancer.

Another lawsuit, filed by Boston lawyer Andrew Rainer, names Coca-Cola as a defendant. According to Rainer, the company’s new Vault Zero contains ingredients that can, under the right conditions, result in the generation of benzene.

The chemical, which can form when soft drinks that contain ascorbic acid and either sodium benzoate or potassium benzoate are either heated or exposed to excessive light, has been found in levels in excess of those set by the FDA for drinking water.

Soft drink makers contend that the benzene in their products is insignificant even if it exceeds those levels because of the comparatively small number of soft drinks that are consumed compared to drinking water. Nevertheless, at a time when soft drinks are already taking it on the chin – and in the belly – due to allegations that their products are helping create an obese America, the last thing many need is a link to cancer. Such a link nearly crippled Perrier two decades ago, when a benzene scare forced it to pull more than $100 million in product off of store shelves.

Meanwhile, both Coke and Pepsi continue to fight claims in the Southern Indian state of Kerala, that their drinks include high levels of pesticides. While the companies have the backing of the Indian government, many consumer and environmental groups remain dubious.

PIMPS FOR PETA

Hip-hop energy drink Pimp Juice is now starring as the number- one attraction on PETAWorld. com, the urban-focused Web site of People for the Ethical Treatment of Animals. The drink company is sponsoring a huge online giveaway, including free cases of Pimp Juice, hats, T-shirts, and more. All that visitors to PETAWorld. com have to do to win is test their knowledge in a quiz about why Pimp Juice beats the competition by not conducting cruel animal tests, what’s wrong with fur, and why some of the biggest names in hip-hop have gone vegetarian.

Consumers who answer all five questions correctly become official “P.I.M.P.s.” No, not that kind of pimp, but a “Positive Intellectual Motivated Person”— because they understand that having compassion for those who cannot defend themselves is a sign of strength and intelligence. Pimp Juice claims some of its competitors conduct cruel animal tests, intentionally infecting them with diseases, and pumping them full of juice. Ocean Spray, Welch’s, and Tahitian Noni recently halted animal tests after hearing from PETA.

Pimp Juice joins Masta Killa, Dead Prez, Pharrell Williams, Missy Elliot, and Russell Simmons in teaming up with PETAWorld to fight injustice against animals.

For more information and to take the quiz, visit PETAWorld.com.

EXECUTIVE MOVES

Ardea Beverage Co, creator of airforce Nutrisoda, has hired Jennifer Ashley as the new in-house registered and licensed dietitian.

Rob Pagano has been elevated to the position of Vice President Sales and Marketing – Spirits for Glazer’s of Missouri.

The Coca-Cola Company named J. Alexander M. “Sandy” Douglas, Jr. president of Coca-Cola North America. Douglas, who had been senior vice president and chief customer officer for the Company, replaced Donald R. Knauss, who accepted a role as chairman/CEO with Clorox.

Indra Nooyi was named CEO of PepsiCo, following the announcement that current Chairman and CEO Steve Reinemund would retire in May, 2007.

Atomic X Hydration Company announced that Jim Graney had joined the company’s sales team as National Sales Manager.

Pernod Ricard USA appointed Steven Brauer Vice President and General Manager, Pernod Ricard USA Wines.

Jeff Revious has returned to Go Fast Sports & Beverage Co. to oversee sales and distribution nationally and directly manage business development and account maintenance throughout the U.S.

Andrew A. Salzman has joined Information Resources, Inc. as executive vice president and global chief marketing officer.

John Cahill, CEO and Chairman of Pepsi Bottling Group, stepped down as CEO and was replaced by COO Eric Foss.

Jeff Popkin has taken the position of Senior Vice President of Sales at Mark Anthony Brands.

Vitazest Vitamin & Fruit Enriched Water, a product of Triple A Products, LLC, selected industry veteran James M. Lee as its first Chief Operating Officer.

The National Beer Wholesalers Association hired Jesse McCollum as Washington Representative.

ANTIOXIDANTS – THE NUMBERS ARE IN

Everyone’s using the “a-word” – “antioxidants” – these days, but it’s really hard to figure out what these little compounds’ role actually is when it comes to combating cancer.

Regardless, chances are, if you make a beverage, you’re saying your product has got ‘em. In fact, whole sales campaigns are being structured around antioxidants, meaning that there’s a lot of money riding on microscopic particles that may or may not work.

Recently, a group of researchers attempted to determine the highest total concentration of antioxidants in more than 1,000 foods and beverages.

Their top five? Blackberries, Concord grapes, artichoke hearts, walnuts and strawberries. While these items ranked higher than other favorites like blueberries, pomegranates, and cranberries, according to the study, most dark-colored fruits and veggies are higher in antioxidants than other foods.

Which may or may not be important.

AMPED IN THE GLIMMER CITY

Energy drinks have become the stars of your shelf sets over the past few years. Now, they’re taking a primary role in a new forum: prime time.

This fall, a number of young Los Angeles guys with star aspirations – and the energy drink company they work for – will be featured on a new MTV “reality show” called Twentyfourseven.

Loosely inspired by the movie Diner, Twentyfourseven follows the group of friends and associates as they try to achieve success in their own, individual careers while helping to launch Freedom Beverage Company. Freedom makes energy drinks and water, marketing it with a label featuring a fiery phoenix.

Greg Carney, a party promoter and the boyfriend of celebrity/ actress Hayley Duff, is the show’s co-producer and one of its stars, as well as the president of Freedom Beverage. The multi-titled Carney says he was inspired to start an energy drink company after visiting the “Rockstar Mansion,” a home owned by Rockstar Energy Drink, which is based in Los Angeles.

“After seeing that, I basically knew that anything was possible,” Carney says.

While anything might be possible, Carney knows he has a long road. The show will follow him as he pitches the product to outlets like Circle K and 7-Eleven. Carney and his friends embark on guerilla marketing campaigns, taking the drink to clubs and parties, and try a major launch party in Las Vegas, as well.

“Energy drinks are a crowded field,” Carney admits. “In most bars, people have been trained to order a Red Bull. Our main promotions will be underground clubs all over LA. It’s going to be colored, glow in the dark, and it’s going to stand out. It’s more of a lifestyle kind of drink, for the young people.”

For Carney and his cronies, energy drinks are the fuel that keeps them going from party to job to film shoot and beyond.

“We drink, like, eight a day,” he says. “I don’t know if that’s good for us, but basically, partying 24-7 and not getting any sleep, we need to drink the stuff if we want to do business.”

The business of the set of friends extends beyond energy drinks. There are film producers, a reggae singer, an actor and assorted other friends with traditional Hollywood aspirations. But the energy drinks are the stuff that binds them together.

“I just know that energy drinks have helped me do everything,” Carney says. “That’s our drug.”

HOT BEER NEWS

It’s a good time to be a microbrewer. That’s the word from the Brewers Association, which reported that the volume of craft beer sold in the first half of the year was up 11 percent over last year – the third straight year the growth rate has increased.

The sales were up across several channels, including grocery, convenience, drug and liquor stores.

Unlike the last great craft beer boom – one that took place a decade ago – it appears that the growth isn’t just the result of a massive glut of new breweries opening up. The growth has come from existing breweries, according to Brewers Association officials.

The Brewers Association, which claims more than 800 different brewers as members, indicated that dollar sales were up even more than volume growth, close to 16 percent.

While it still represents a small slice of the overall domestic brewing picture, craft brewing is one of the few segments of the beer category to grow consistently in the past few years.

In another hot segment, imported beer, it appears that it’s not such a good time to be an older brother.

Heineken has had great success with its newly released Heineken Light, but it is trying to make sure that success hasn’t stolen the thunder of its other low-calorie product, Amstel Light. According to the publication Advertising Age, sales of the latter product were off more than 10 percent this summer – and while ad campaigns have tried to differentiate between the two beers, it appears as if Amstel’s pre-Heineken Light status as the light beer from the Heineken brewery is under attack.

In response, Heineken is taking the Amstel image upscale – where it will likely have to compete with those same growing masses of craft beers.

File under: Sibling Rivalry.

CORRECTION

In the July-August 2006 Beverage Spectrum Bottled Water Buyer’s Guide print edition, the South Beach Beverage Co., Inc. or “SoBe Beverages,” was incorrectly listed as SoBe, Inc.

MORE FUEL FOR ENERGY BRANDS

Energy Brands, the parent company of much-ballyhooed enhanced water marketer Glaceau, finally put months of speculation about its future to rest by announcing that an Indian conglomerate, the Tata Group, had invested nearly $700 million in the company.

Tata, a family-owned company that owns several tea and tea product companies, including U.S. based Tetley, bought out the TSG Group, a California-based venture capital company that had provided later-round financing to Energy Brands. While TSG Group executives would not comment on the amount of their initial investment, one publication, The Daily Deal reported it at $40 million – meaning that Tata paid 17 times that amount to purchase its 30 percent stake.

Much of the investment will be directed towards increasing Glaceau’s retail shelf space and improving on the company’s ability to fill that shelf space, according to Glaceau founder J. Darius Bikoff.

“The big objective that we have is getting a lot more shelf space so that we have the holding power not to be out of stock at retail, and that, all by itself, can perhaps double or triple our revenue,” he said.

Glaceau’s strongest product, vitaminwater, as well as trailing products smartwater and fruitwater, have shown triple-digit growth over the past few years, particularly in the Northeast. Bikoff marveled during his Aug. 24 press conference discussing the deal that “if you walked around New York today, I think you would see more bottles of vitaminwater than bottles of Coke and Pepsi combined.”

But that growth has been hampered by a lack of ability to meet a commensurately increasing demand, as well as by retailers’ unwillingness to deal with a company that has been surrounded by rumors it would be sold to the Coca- Cola Co. or PepsiCo, Bikoff said. In Tata, however, Bikoff claims that he has found a stakeholder with similar values.

Analysts who looked at the deal observed that Tata had followed a generous estimate of the value of Energy Brands – $2.2 billion – and that even a high-end estimate of Glaceau’s sales, $340 million (more likely closer to $200 million, according to many reports), made the valuation more than six times’ the company’s annual earnings.

The rich price might point to a belief in large international potential for Glaceau products, according to one investor.

While Bikoff mentioned that potential, telling an Indian reporter to “save your thirst for us,” he also alluded to several still-untapped domestic channels, like stadium sales, restaurants, and food service as sources for new income. Within a few days of the announcement, Tata executives were discussing the possibility of bringing a lower-cost nutrientenhanced water to underprivileged Indian families, but they also made it clear that the Indian company was interested in letting Glaceau grow domestically and realize some of its potential for at least two years before beginning to move it across the Atlantic.

Regardless, Bikoff and Tata executives agreed that part of the attraction for both sides was a synergy that dealt with changing international nutrition and consumption patterns – a selling point that some retailers feared could end up a lower priority were vitaminwater, in particular, to have been picked up by one of the soda giants.

Much of Glaceau’s traction has come through traditional offpremise channels, and Bikoff, who referred to the largely independent network of direct store distributors as the “Glaceau network,” made it clear that his company’s growth will have to continue that way.

“The initiatives are going to be around more shelf space, more frequent deliveries, more busy coolers, more displays, more of everything that we’ve already started to do that’s worked so well,” he said.