Larry T’s Brain-Twist Shutting Down
After nearly a dozen years developing some of the most innovative and off-the-wall products ever seen in the beverage industry, Brain-Twist is closing its doors. Company founder Larry Trachtenbroit confirmed to BevNET that the beverage incubation house, which is partly owned by The Coca-Cola Co. Inc., is in the process of winding down operations.
Although he declined to comment on the reasons behind Brain-Twist’s seemingly abrupt fall, Trachtenbroit stated that he is starting a new beverage innovation company called “ThinkIt-DrinkIt.” However, he demurred when asked about details on the new venture.
“I love the beverage industry; I want to be in the beverage industry,” Trachtenbroit said. “It’s still early for [ThinkIt-DrinkIt].”
Sources close to Brain-Twist told BevNET that Slap Energy, the company’s line of value-priced energy drinks, had recently been on unsteady ground with Wal-Mart, by far the brand’s biggest customer. Also hurting the company was that over the last year, Trachtenbroit himself had spent a significant amount of time and financial investment developing two new drink brands – Slap Frozen Energy, a line of slushie-like energy drinks, and Halo, an aloe drink brand.
Launched in 2001, Brain-Twist was founded as independently operating unit of Coke following the company’s purchase of Trachtenbroit’s Planet Java brand. Coke gave Trachtenbroit a three-year contract to develop new and innovative beverage brands quickly in what he described as an “entrepreneurial farm league” for the cola giant. Although the relationship bore few marketable ideas, Brain-Twist continued to operate after the contact with Coke ended, and launched a series of new beverage brands, including Cinnabon Coffee Lattes, Defense Vitamin Drinks, and Liquid Cereal, each of which gained some traction and interest, but eventually fizzled out.
Nevertheless, Coke still saw promise in Brain-Twist’s ability to develop new ideas, and in 2007 the company’s newly created Venturing and Emerging Brands (VEB) unit purchased a 20 percent stake in Brain-Twist. VEB President Deryck van Rensburg called VEB’s first investment – reported to be worth $5 million – as one that would garner ‘‘access to a pipeline of innovative ideas and products.”
Nielsen: Media Mix Drives Growth in Product Awareness
After polling more than 29,000 respondents from 58 countries, a new Nielsen survey found that a blend of media and word-of-mouth advertising results in the greatest consumer awareness for new products.
Moreover, Nielsen indicated that while sampling and traditional media continue to be critical to brand growth, social media and Internet communication is growing in importance, and quickly becoming a key element for a marketing mix.
Regarding traditional advertising methods, Nielsen’s survey found that 72 percent of consumers learn about new products after seeing it in a store, 70 percent say the same after a free sample, 59 percent cite television advertisements, and only 34 percent of consumers discover new products from marketing emails.
Considering word-of-mouth communication, 77 percent of consumers discover new products from friends and family, 66 percent do so from a professional expert, and 55 percent from work-related discussion.
Through the Internet, 67 percent of consumers learn about new products with an active search, 55 percent do so through a brand or manufacturer’s website, and 43 percent from social media.
On the mobile front, 27 percent of consumers say they learn about new products from text messages.
Whole Foods Demands Supply Chain Audits from Coconut Water Companies
Concerned about the speed with which coconut water companies have extended their supply lines to meet skyrocketing demand, vendors working with Whole Foods are being asked to supply audited certification that confirms they have ethical and responsible sourcing.
In a note sent to coconut water makers on Dec. 31, Whole Foods’ global grocery coordinator, Errol Schweizer, informed the company’s coconut water vendors of their need to be certified by agencies that have been pre-qualified by the retailer to conduct social responsibility audits.
“We are sending a heads up to our coconut water suppliers to make sure that their supply chains are free of forced labor, child trafficking, discrimination and other unacceptable practices,” Schweizer wrote. “We are also asking suppliers to be proactive in pursuing higher level ethical sourcing and sustainability certifications as well.”
As coconut water has grown, Whole Foods has been one of the most important retailers for the category. It is still the chief retailer for many brands, and failure to meet the company’s requests could be a huge blow to a growing beverage company.
Because coconut water already has strong roots in the natural products industry, many brands are already familiar with ethical sourcing models, either as a result of the demands of their retailers or because of their own social and ethical priorities. But at the same time, the footprint for coconut sourcing has grown with the category, which generated hundreds of millions of dollars at the retail level last year. What started as a product largely sourced in Brazil has migrated to Indonesia, the Philippines, Thailand, and Vietnam, among other countries.
“As the coconut water category has grown, so has the reach of our brand’s supply chains,” Schweizer told suppliers. “Unfortunately, we have seen very few brands actively market and promote their commitment to ethical sourcing and sustainability in this category. We do prioritize the few folks who have taken such heroic steps, but are now wanting to know what everyone else is doing.”
Schweizer did not cite any specific human rights or environmental abuses. Whole Foods has been proactively trying to advance social and ethical standards for its suppliers in recent years, most particularly in the area of cocoa, where it is trying to set minimum standards for chocolate products or those that use cocoa as an ingredient.
The standards are evolving to involve a “seed to shelf” look at supplier practices. In one notable situation, Whole Foods announced last year that it was removing Hershey-owned Scharffen Berger chocolate from its stores due to concerns about that product’s sourcing and child labor practices.
Starbucks Bullish on Iced Coffee, Fresh Juice And the rich (hope to) get richer.
Aiming to capitalize on growing year-round demand for iced coffee – and extend its domination of the ready to drink coffee category – Starbucks has launched a new line of bottled coffee drinks. The coffee giant introduced Starbucks Iced Coffee, a four-SKU line of blended coffee and milk products, at select grocery retailers in Boston, Hartford, New York and Philadelphia. The company will continue roll out the new iced coffees nationwide over the next three months, and the products will be available across the country by the end of April.
The new line will be distributed through Starbucks and PepsiCo’s North American Coffee Partnership (NACP), which already handles existing RTD Starbucks brands like Frappuccino.
According to data provided by SymphonyIRI Group, a Chicago-based market research firm, Starbucks had nearly $1.1 billion in sales of its RTD coffee products, which include Frappuccino, Doubleshot, and Seattle’s Best brands, in the 52-week period ending on Dec. 2, 2012. The RTD coffee category grew by 10.69 percent in dollar sales in the same period, and in its statement, Starbucks noted that “1 out of 5 beverages sold at Starbucks retail stores is a cold coffee beverage, with iced coffee driving the greatest growth.”
Packaged in a slim 11 oz. glass bottle, Starbucks Iced Coffee has a suggested retail price of $1.99 and is currently available in three varieties: Coffee + Milk, Coffee + Milk (Low Calorie), and Vanilla. The company stated that a fourth flavor, Caramel, will be available exclusively along the East Coast from Washington D.C. to Maine. Each variety features a label with the Starbucks logo, the words “Starbucks Iced Coffee” and two check marked boxes indicating that the product is made with (low-fat) 2 percent milk and is lightly sweetened. The flavors are distinguished by the different colored caps and wrapped labels on the neck of each bottle.
While the company offered no indication that it would be targeting calorie-conscious consumers, the new line will certainly offer an alternative to Starbucks’ existing line of indulgent Frappuccino products. Each variety of Starbucks Iced Coffee contains 0.5 grams of fat and 110-120 calories per bottle, with the exception of the low calorie product which has 50 calories. By comparison, Starbucks bottled Frappuccino drinks contains as much as 200 calories and three grams of fat per 9.5 oz. bottle.
It’s not just in iced coffee that Starbucks sees potential for significant growth. The company is also looking to enhance its position in super premium juices and 14 months after acquiring the brand, Starbucks today launched Evolution Fresh products in its cafés in New York City and Boston. The company said that while East Coast availability of Evolution Fresh will initially be limited to its stores in the two cities, the expansion “furthers growth plans to be in approximately 8,000 Starbucks and grocery locations by the end of the year.”
Evolution uses high-pressure pasteurization (HPP), a process that uses pressure instead of heat to inhibit bacterial growth in raw foods and beverages, to make its ultra-fresh juices safe to drink. HPP also extends the shelf life of the products – which are blended and bottled in California – albeit only by a couple of weeks. The shorter shelf life is likely one of the reasons that the line of cold-pressed juices has been sold exclusively on the West Coast.
However, it appears that Starbucks is ready to leverage the sales and volume strength of its stores in the New York and Boston markets, which could limit the amount of time that the juices sit awaiting purchase.
Starbucks introduced six varieties of Evolution Fresh to the stores: Sweet Greens and Lemon, Pineapple Coconut Water, Orange, Apple Berry + Fiber, Mango + Fiber and Super Green. The products will range in pricing from $3.95 to $5.95. To support the new distribution, Starbucks will host in-store sampling events beginning tomorrow in New York City, and in Boston next week.
As with Starbucks stores on the West Coast, Evolution Fresh will replace PepsiCo-owned Naked juices in its New York and Boston locations. The juices will be distributed directly from Evolution Fresh’s juicery in San Bernadino, Calif., which is slated to be replaced by a new high-tech, 260,000 sq. ft. manufacturing facility that the company is building in Rancho Cucamonga, Calif. The new plant is scheduled to open later this year and will enable Evolution Fresh to produce four to five times the amount of juice as its current facility, a leap in production that will support its push eastward, according to the company.
Mintel: Craft Beer Will Be $18 Billion Market By 2017
Despite declining performance for domestic and imported beer, the craft beer market has risen strongly and appears poised for even greater heights, according to a new report from market research firm Mintel.
The report reveals that sales of craft beer more than doubled from $5.7 billion in 2007 to $12 billion in 2012. And the upward trend shouldn’t stop there; Mintel also forecasts that by 2017, craft beer sales will reach $18 billion.
“Unlike its domestic and imported beer counterparts, craft beer has been able to defy overall beer market trends and continue expansion during the economic downturn and subsequent slow recovery,” Jennifer Zegler, a beverage analyst at Mintel, said in a press release. “While the craft and craft-style beer category remains a small segment of the $78 billion U.S. beer industry, the category has been able to stabilize the overall beer industry, which has experienced volume declines in the domestic and imported beer categories since 2008.”
Statistical data reaffirms Mintel’s optimistic outlook for craft beer. Mintel polling indicated that 24 percent of beer drinkers said that they drank more craft beer sold at stores in 2012 as compared to 2011, and 22 percent claim they consumed more craft beer in bars or restaurants.
Mintel identifies consumers aged 25-34 as the craft beer market’s primary age range. While 50 percent within this age range drink craft beer, only 36 percent of all other U.S. consumers drink craft. This age range also notes taste as an important part of drinking craft. 43 percent of millennials and Generation X prefer the taste of craft to domestic, compared to 32 percent of Baby Boomers.
However, the often advanced taste and brewing process leads to premium pricing. As a result, only 17 percent of millennials and 18 percent of Generation X say that craft is a better value than domestic, and 56 percent of consumers say that domestic is a better value than craft.
Moreover, Mintel notes that “corporate-owned craft-style brands such as Blue Moon, Leinenkugel’s, and Shock Top are offering consumers a point of entry into the segment through wide availability, mainstream marketing, and approachable taste profiles.”
And while “full-flavored craft beer options [are] not yet an everyday choice for most beer drinkers,” Mintel noted that 45 percent of consumers say they would try more craft beers if they knew about them.
“Despite the variety of beer releases created by craft breweries, craft beers are not yet everyday beer choices for most drinkers due to a lack of understanding about their taste profiles,” Zegler said. “To continue growing, craft beer must be its own best advocate and expand appeal beyond millennials who are most likely to consume craft beer. An additional barrier is lack of knowledge. Craft brewers need to focus on education through tastings and classes that inform consumers about the differentiation in flavor between craft beer and other alcoholic drinks.”
A sense of community and local pride has added to craft beer’s consumer appeal. Mintel found that 50 percent of craft beer drinkers express interest in locally-made beer, 25 percent are interested in buying craft beer where it was brewed, and 39 percent are influenced to buy craft beer that has a relatable personality.