Fighting for Transparency
Here’s a math problem for you: if the show floor at Natural Products Expo West 2014 encompassed over 1 million square feet, how big do you think the proverbial elephant in the room (in this case, the Anaheim Convention Center) would have to be?
Gargantuan, for sure, and for beverage exhibitors at the event, it was clear that the mammoth in the room is known as Whole Foods. The clout and sway of the natural grocer was in full display at Expo West, particularly in its quest to offer “full GMO transparency” in its stores by 2018. Speaking with dozens of beverage companies at the event, it was clear that Whole Foods was the driving force behind many of the decisions to certify products as non-GMO.
Beverage executives described Whole Foods’ buyers as offering gentle nudging and encouragement toward non-GMO certification, as opposed to giving an outright directive. However, some stated that Whole Foods had a slightly larger influence, indicating that the retailer gave explicit instructions about the placement of non-GMO stamps on product packaging.
And while most appeared to be aligned with the mission of Whole Foods, despite the relatively inexpensive cost of certification — via non-profit group The Non-GMO Project — several bemoaned the length of the process, which can take over a year to complete, according to some.
Meanwhile, a few organic beverage companies took issue with adding a non-GMO stamp to their labels, fearing that it would be redundant and confusing to consumers, as USDA Organic standards prohibit the use of GMOs. Others worried that consumers would begin to equate non-GMO with organic certified.
While Whole Foods was on the minds of many, new kids beverages, coconut waters, and a variety of new other products, including cold-pressed juice and kombucha were on display, as well as a variety of “insert your plant here” waters – all trying to be the next big vertical, including maple water, barley water, artichoke water and beyond.
Meanwhile, big changes came to emerging brands. Health-Ade kobucha added Ramon Canek, the former COO/VP of operations for Millennium Products, the producer of GT’s Kombucha. Essentia Water showed off a slate of new employees, including head of strategy Neil Kimberley and marketing chief Paul Curhan. Kevita had Zico vet Bill Lange on hand, and revealed it would be going to market through Pepsi’s Naked Juice operation. Bakhti Chai found new financing, and shortly after the show, so did Runa.
Cold-Brew coffee seemed to be morphing into the category of the moment. High Brew – run by a team that included the founders of Sweet Leaf Tea, David Smith and Clayton Christopher – was readying a wide-ranging launch, while Chameleon Cold Brew had also decided to move past the concentrate model and go with RTD varieties. Califia Farms also showed its mettle with a variety of products, but it was a variety of cold-brewed single-serve products made with almond milk that had the new brand in the spotlight.
Still, much of the interest came back to Whole Foods – a company that tried to reassert itself as the leader of the pack for the LOHAS consumer via its transparency push by providing guidance to a number of companies. For Third Street Beverages, a pile of teas and lemonades bore the mark of long consultations about labeling imperatives with Whole Foods execs. But with Target and Wal-Mart also walking the floor, and announcing their own high-profile LOHAS initiatives, who could blame the prime mover of the channel for trying to assert itself so strongly?
The answer is a transparent one, indeed.
Craft Hits Eight Percent of Beer Market
The craft brew train kept on rolling in 2013 as production from the country’s smallest beer makers grew 18 percent, according to data released by the Brewers Association (BA) as part of its annual report on the U.S. craft beer industry. The BA – which represents the interests of small and independent brewers – announced that consumers spent an estimated $14.3 billion on craft beer last year, up 20 percent from the $11.9 billion spent in 2012.
Craft production volumes also accelerated in 2013, to 15.6 million barrels. That’s up from the 13.2 million barrels of beer the craft brewers made in 2012, representing 7.8 percent of the total beer market.
“With this stellar year, craft has now averaged 10.9 percent growth over the last decade,” noted BA staff economist Bart Watson.
With craft’s current pace of growth — as well as a much-discussed revision of the BA’s definition of craft brewer — Watson said he believes 2014 will be the year that BA-defined ‘craft beer’ finally captures 10 percent of total beer volumes.
“Given the first two months of scan data, I would say it is likely,” Watson said, pointing to reports from Nielsen, GuestSciences and IRI.
IRI recently pegged craft volumes in multi-outlet and convenience channels as being up 20 percent through Feb. 23.
Additionally, the BA highlighted the number of brewery openings in 2013, counting 413 openings and just 44 closings, bringing the total number of U.S. craft breweries to 2,768, a 15 percent increase over 2012.
The BA has made changes to its reporting system over the past year, the result of bringing a staff economist on board. At this time last year, the BA had originally reported that drinkers had spent about $10 billion on craft beer.
“We had been underestimating what was being sold on-premise,” Watson said. “We now use a more rigorous method of estimating and take a more detailed look into the channels and pricing to have a better sense of craft’s retail value.”