The Latest News on the Brands You Sell

Zico Goes Back to Natural

ZICO_500mL_Organic_Natural_227x284ZICO is returning to a 100-percent not-from-concentrate portfolio of coconut water products, five years after adding a coconut water from concentrate line extension. The discontinuation of the concentrate formula comes as part of a greater revamp for the brand, which ZICO’s parent company, Coca-Cola, revealed shortly before the NACS show.

Coconut water made from concentrate isn’t the only thing on its way out at ZICO. The brand is also ditching its 14 oz. opaque HDPE bottles in favor of a 16 oz. clear PET bottle. To date, coconut water in such packaging has been seen almost exclusively with high pressure processed (HPP) brands like Harmless Harvest. ZICO adopting a clear plastic bottle for its on-the-go offering makes it the first larger conventional brand to do so. The best-known format for coconut water has been Tetra-Pak, which ZICO still uses for its not-from-concentrate products, particular those selling in the natural channel. Plastic bottles, on the other hand, are seen as having a broader user base, and as such have been aimed at convenience stores and other conventional retailers.

The transition from HDPE to PET and concentrate to not-from-concentrate will be complete by March of 2016, when ZICO will begin rolling out its entire lineup of beverages, including ZICO Pineapple, Watermelon Raspberry, Chocolate and its natural original flavor, in the new PET bottles. ZICO will continue to also be available in its 1 L, 11 oz. and 8.4 oz. Tetra Pak sizes as well.

These recent changes suggest a potential pivot in strategy for ZICO, which, upon first partnering with the Coca-Cola Company in 2009 placed heavy emphasis on the development and marketing of its from-concentrate HDPE bottles.

Monster Settles in Dealth of 14-year-old

Legal news website LawyersandSettlements.com reports that Monster Energy Corp. has settled several wrongful death lawsuits related to consumption of its energy drinks, including one that resulted in a payout of “substantial dollars,” according to an attorney representing one of the plaintiffs.

Details of the settlements have not been released, however, Bruce Schechter, an attorney with R. Rex Parris Law Firm, told LawyersandSettlements.com that Monster had recently paid the family of a a 14-year-old who in 2011 died of cardiac arrest. The family claims that the teen’s consumption of two cans of Monster Energy was the cause.

While the name of the family and amount of money they received was not made public, LawyersandSettlements.com reported that “one high-profile lawsuit was scheduled to go to trial,” and cited the case of Anais Fournier, whose age and year of death matches that of the aforementioned case. Fournier’s family has been represented by R. Rex Parris.

Coke Settles Vitaminwater Lawsuit

vitaminwater imageThe Coca-Cola Company has reached a settlement in a lawsuit that dates back to 2009, when consumer advocacy nonprofit The Center for Science in the Public Interest accused Vitaminwater of deceiving consumers on the true beneficial nature of the products. The Associated Press announced the proposed settlement, with a Coke representative telling the AP the company “was pleased to reach an amicable resolution of these cases. Although we remain confident in our legal position, it simply made no sense to continue this costly legal battle.”

As part of the settlement, Vitaminwater will add the phrase “with sweeteners” to two locations on its bottles, one of which will be prominently displayed alongside its name. The brand will also remove the phrase “vitamins + water = all you need,” “vitamins + water = what’s in your hand” and “this combination of zinc and fortifying vitamins can…keep you healthy as a horse,” from its labels. Additionally, Vitaminwater will no longer be permitted to make claims about the product’s efficacy in reducing the risk of eye disease or improving metabolic function.

The settlement, which is still pending approval from a federal judge, would require the company to begin changes to be in compliance with the terms of the settlement within three months, and complete them within two years. Coca-Cola will also have to fork up $2.73 million to cover the plaintiff’s attorney fees and expenses.

New Testing Methods Proposed

While lawsuits swirl and regulatory agencies try to sort through reports of kombuchas with higher-than-allowable alcohol levels, the American Herbal Products Association (AHPA) has gotten involved in the regulation of the kombucha industry. Last month, the trade group announced its support of the Craft Beverage Modernization and Tax Reform Act, a bill that would reduce excise taxes among other financial and regulatory burdens for kombucha brewers whose products contain more than 0.5 percent alcohol – the legal limit to be considered an alcoholic beverage under the Alcohol and Tobacco Tax and Trade Bureau’s (TTB) regulations.

Additionally, with backing from probiotic beverage brand KeVita, which in May pledged to contribute up to $100,000 for a Truth-in-Labeling initiative for the kombucha industry, AHPA has launched an educational program for kombucha brewers. AHPA, in a webinar, tackled the oft-complicated case of alcohol analysis with kombucha, an issue that’s been of concern to the category since 2010, when Whole Foods pulled kombucha products off its shelves over concerns regarding the beverage’s fermentation while sitting on shelves.

Presenter James Neal-Kababick, who serves as director of Flora Research Laboratories, touched on the issue of on-shelf fermentation while detailing the existing TTB-approved analytical methods for alcohol analysis in kombucha.

“With other types of alcoholic beverages there is a means to stop fermentation,” said Neal-Kababick. “Hops in beer, sulfites in wine, liquors are distilled. With kombucha, you still have the mother in the product and as long as you have live yeast and a food source those yeasts will continue to ferment the alcohol. For that reason you will see an increase in ethanol unless you do something to stop fermentation, but the stopping of fermentation techniques is in opposition to the desires of the makers of kombucha. It’s a little bit of a pickle.”

Sam LaBonia, president of Memphis-based Cornerstone Labs, followed Neal-Kababick, further exploring the aforementioned “pickle” as well as other testing challenges unique to kombucha.

“Everyone needs to understand that it’s a live product, which means it’s continuing to ferment in the bottle” said LaBonia. “We’ve done numerous shelf life studies and they all end up going above 0.5 percent at some point whether it’s one month or two months. It’s a live product, and that’s what people like about it.”

Earlier this year, in partnership with industry trade group Kombucha Brewers International, LaBonia developed a sample handling protocol to improve the accuracy and consistency of alcohol test results for kombucha products. LaBonia detailed his lab’s testing method, gas chromatography with mass spectrometry, along with the aforementioned sample handling procedures designed to minimize false positive results.

Both presenters would acknowledged the financial burden and challenges imposed on small kombucha brewers when trying to remain compliant with TTB guidelines, but stressed the importance of quality control and standardization for the industry.

“By industry stakeholders coming together and pooling resources, they can make these more affordable by sharing the load, just like laboratories come together to collaborate and reduce the cost of investigation and analysis,” Neal-Kababick added.

Coke Redistributes Distribution

The Coca-Cola Company has signed letters of intent with three U.S. bottlers as part of the business’ ongoing refranchising efforts, granting new distribution territories across seven states. In a press release, Coca-Cola North America president Sandy Douglas said “We are confident that we are building a model that is modern, agile and consumer and customer focused. The progress announced today continues our efforts to balance national scale and local capability, and will help us increase our leadership and competitive advantage in the U.S. business.”

The new bottlers include Tampa-based Coca-Cola Beverages Florida, Chicago-based Great Lakes Coca-Cola Distribution (a subsidiary of beer distribution giant Reyes Holdings), and Atlantic Coca-Cola Bottling Company, out of Atlantic, Iowa.

Accordingly, Coca-Cola Beverages Florida will now take on territories in north Florida, including Brevard, Daytona, Jacksonville, Gainesville and Orlando. Great Lakes Coca-Cola Distribution will handle Coke’s distribution for all of Michigan, the bulk of Wisconsin, and select portions of Minnesota, Iowa and Illinois. Atlantic Coca-Cola Bottling Company has been granted southeastern Iowa, western Illinois and northeastern Missouri.

According to the press release, Coca-Cola-owned bottler Coca-Cola Refreshments has now sold off more than 30 percent of its sales and distribution rights to independent bottlers like the aforementioned ones, a number the company is aiming to bring to the 50 percent mark by 2017. In May, Coca-Cola handed over distribution rights in 10 states to Coca-Cola Bottling Co. Consolidated.

Agua Brands Grabs $3 Million

agua_500Agua Brands has landed a minority investment from Horizons Ventures, the Hong Kong-based private investment arm of Asia’s long-running richest man, Li Ka Shing. The flavored, caffeinated water brand announced the investment in a press release, with Agua president Michael Venuti stating the brand “will have a tremendous platform and international presence working as partners with a global powerhouse whose brand and technology investments have shown internationally acclaimed success.”

Company co-founder and former Glaceau COO Carol Dollard echoed Venuti’s sentiment in a call with BevNET, saying Agua’s strategic alliance with Horizons will allow the brand to take advantage of the investment firm’s massive global network spanning the food, beverage, and technology industries. Specifically, the partnership will make way for Agua Brands’ expansion outside the United States, beginning in Asia, where Dollard says Horizons Ventures “sees immediate opportunity for the energy line.” Dollard declined to disclose the size of the investment. A Securities and Exchange Commission record indicates that the company recently completed a raise of $3 million; Christopher Lai, who works at Horizons, is also named as a director of the company on the same record.

Previously known as Agua Enerviva, the brand dropped the second half of its name in May as part of a greater brand revamp which also saw new labels and the addition of a “Low Calorie” call-out on towards the bottom of its bottles in an effort to distance itself from other higher calorie beverages in the enhanced water category. The brand furthered its move in that direction in September with the launch of its zero-calorie and caffeine-free “Fruit Essence” line extension.

Powell & Mahoney Mixes in Money

Craft mixer brand Powell & Mahoney has completed its first round of outside investment, pulling in new capital from three sources, including Fenwick Brands, a middle market investor and operator focused on the consumer packaged goods space.

Powell & Mahoney co-founder and CEO Mark Mahoney said in a press release that the company plans to use the proceeds to expand distribution and build brand awareness of its all-natural, handcrafted cocktail mixers.

“As we continue the growth trajectory of Powell & Mahoney, we recognized Fenwick as a unique partner who brings deep consumer product knowledge and hands on experience as owner-operators to our team,” Mahoney said. “We are very excited about working with Fenwick to grow our business into the future.”

Mahoney told BevNET that the company exceeded its initial funding goal of $1.5 million, having received investment from Fenwick, aseptic beverage manufacturer and co-packer Leahy-IFP (which produces the company’s foodservice line of mixers) and a private investor. Powell & Mahoney had initially planned to secure new funding through CircleUp, an equity crowdfunding platform that enables companies looking for capital to attract potential investors via its online portal. The company eventually funneled its investor group through CircleUp.

“As far as facilitating information, [CircleUp] was fantastic and we really liked the platform,” Mahoney said. “After the process began, we started going to some strategic partners. We took on one private investor who wants to remain anonymous. Leahy [also] invested in Powell & Mahoney. And then we had a relationship locally with someone from Fenwick Brands [who] made an introduction to president Melissa [Baker]. We decided that with those three, we were going to exceed our goal of $1.5 million in the raise. We felt fewer people would be better for us, and we didn’t want to have a lot of investors at a lower level.”

In Shocker, Dogfish Head Sells a Stake

DogfishSeptember was a month of big brew deals, but the end of the month provided one of the most controversial: Dogfish Head, the country’s 13th largest craft brewery announced it has sold a 15 percent stake to LNK Partners, a New York-based private equity firm that has previously invested in companies like Niman Ranch, Performance Bicycle, Beachbody and Au Bon Pain, among others.

Specific financial terms of the transaction were not disclosed. On its website, LNK said it typically invests between $50 — $150 million. Half of those investments are for minority equity positions, according to the firm.

LNK will obtain one seat on Dogfish Head’s board of directors, which currently has five voting members, as well as informal advisors. The brewery’s primary goal, Calagione said, is to fuel enough growth that it can eventually repurchase LNK’s 15 percent stake and keep Dogfish Head “family-controlled” for the next decade.

“They understand the primary goal is that the family buys them out at the end of their investment,” Calagione said, declining to comment on the specific timeline for the potential buyback.

For now, the money is important as it will allow Dogfish to continue growing, especially as the market continues to become more crowded with better-funded competition. The company recently completed a $50 million expansion, financed primarily through bank debt, as well.

“We lived through the first great shakeout of the craft era in the late 90s as brewers, beer geeks and mom-and-pop entrepreneurs,” he said. “Now as we go into the next most highly competitive moment in our industry, I see that it is not just home brewers and mom-and-pop entrepreneurs navigating this moment next to us.”

Increased investment activity in the sector caused Dogfish to reassess its options, Calagione suggested. Indeed, a rash of craft beer deals have taken place in just the past month.

“A lot of the people that are coming into the space are coming from outside of craft beer,” Calagione said. “We thought it would be helpful to have some external resources who have way broader experience in helping brands navigate competitive moments in

In a statement, LNK managing partner David Landau described Dogfish Head as a “rare combination of a great management team and a great brand.”

“The team is incredibly talented and proven successful, and even more importantly they have the utmost integrity and they are just terrific people,” Landau said. “LNK deeply respects that Dogfish will remain a family-controlled business, and we’re very excited to be backing Sam, Mariah [Calagione’s wife] and Nick [Benz, Dogfish’s CEO] as they continue to grow the Dogfish brand while maintaining its authenticity and its premium off-center position. We look forward to helping and supporting the Dogfish team in any way we can.”

Calagione has publicly opposed selling to large international brewers like Anheuser-Busch InBev or MillerCoors; a deal with a private equity firm like LNK means Dogfish can continue to call itself a craft brewer under the definition established by the Brewers Association.

The announcement was September’s sixth craft transaction: Lagunitas Brewing sold a 50 percent stake to Heineken International; Saint Archer Brewing sold a majority stake to MillerCoors; Golden Road Brewing and Virtue Cider sold to Anheuser-Busch InBev; and Cisco Brewers is currently in talks to sell a minority stake to Craft Brew Alliance.

A Quieter October?

In October, things calmed down a bit: if you consider ongoing discussion of a proposed Anheuser Busch/InBev merger with Miller-Coors calm. But for craft brew watchers, there were still some financial items of note.

ThePike_300x300Seattle-based Pike Place Brewing announced the sale of a “significant minority” stake to three key employees: Drew Gillespie, Vice President Operations; Patti Baker, Vice President Controller; and Gary Marx, Executive Chef.

In a conversation with Brewbound, Pike co-founder Charles Finkel, 72, said the decision to sell stemmed from a desire to “ensure the long-term continuance of the company.”

“It is my background to work for companies that have been in business, in several cases, for hundreds of years,” he said. “I don’t plan to do this forever and I don’t plan to live forever. But Rose Ann and I do plan to be around for the foreseeable future. This is an opportunity for us to have our business continue and for us to be involved in it as long as we can be.”

Mr. Finkel said the company considered other succession alternatives, including an employee stock ownership plan, but ultimately determined that taking steps to transfer the business to key employees would help ensure Pike’s legacy.