The Flow: Q3 roundup and presidential tea

FINANCIALS
POTENCIA USA announced that the scheduled acquisition of POTENCIAL USA LLC and its POTENCIA Energy Drink Brand by PinPinHao has been terminated. PinPinHao will not make this acquisition. Reed’s, Inc. announced that it entered into a new co-pack production agreement with its primary brewery partner. The new agreement, effective November 1, 2008, extends for a period of three years from the effective date and grants Reed’s the option to extend the contract for an additional one year period. Under the agreement, Reed’s main co-pack facility will continue to brew and produce, bottle and package Reed’s products. The new agreement replaces Reed’s previous agreement with the its brewery partner. • Bossa Nova announced an exclusive partnership with Everything Nature do Brasil (ENdB), an industrial-scale superfruit cooperative. ENdB partners are responsible for approximately 40% of the world’s açai output and represent 40 years of experience in açai processing, with factories in strategic locations across the Amazon. This eight-year agreement provides Bossa Nova a long-term, scaleable and secure supply chain and an option to acquire controlling interests in a number of key facilities. The Coca-Cola Company is sticking to its decision to close its Binghamton, N.Y. facility this coming January. Senomyx, Inc., a company focused on flavor ingredients for the food, beverage, and ingredient supply industries, and Firmenich SA, the world’s largest privately-owned fragrance and flavor company, announced that they have entered into a collaborative commercialization and license agreement for S2383, Senomyx’s enhancer of sucralose. During the collaborative period, Firmenich will be granted exclusive rights on a worldwide basis to commercialize S2383 in virtually all product categories. Upon commercialization, Firmenich has agreed to pay Senomyx royalties on all sales of S2383 when it is sold either on a stand-alone basis or within a flavor system. Economic development officials have announced plans for a $49 million Pepsi bottling facility in Hattiesburg, Miss. The Pepsi South facility is expected to begin production in late 2009. Citing a “softening in demand for bottled beverages,” Calistoga Beverage Co., which bottles the Calistoga Water and Arrowhead bottled water brands, announced on November 5 the layoff of 78 percent of its workforce. Coca-Cola Bottling of Oregon plans a $35 million expansion of its plant near Interstate 5 to include Dasani water.

LAW AND POLICY
Pepsi-QTG Canada announced it will begin disclosing the amount of caffeine per serving in its carbonated soft drinks and iced tea beverages in Canada. Consumers will begin to see the new declaration below the Nutrition Facts table on labels of Lipton iced tea brands late this year, and on affected carbonated soft drinks beginning in 2009. Caffeine content on Pepsi-QTG Canada’s energy drink brands is already disclosed on the label.

PEOPLE
Former Coca-Cola North America president Jeff Dunn is now president and CEO of Bolthouse Farms juice company. Thomas Mattia, a senior vice president of worldwide public affairs and communications at Coca-Cola, will retire from his post and begin teaching a course at George Washington University on management and crisis communications as part of the school’s master’s degree program in strategic public relations.

NEW SKUs
Ocean Spray introcuced “BarPac” versions of their Cranergy energy drink and Ruby Red Grapefruit Juice Drink. BarPac bottles are customized for foodservice operators and are easy to open, pour and store. The bottles are designed to fit in the bar well without the hassle of transferring from one package to another.

DISTRIBUTION
Embodi becomes available nationwide in the natural and specialty grocery channels this month. The brand has its expanded its distribution and will be available in Mrs. Green’s Natural Market, Fairway Market, and Westerly Natural Market amongst many other natural and specialty grocery stores. Tizane Beverages is expanding into Massachusetts and Pennsylvania this week, and will be available throughout New England this January. Celsius Holdings, Inc. announced that it is teaming up with Polar Beverages to grow distribution throughout Massachusetts, Connecticut, Albany, Maine, Vermont, New Hampshire, northern New York, and other areas. Skinny Nutritional Corp. announced a distribution agreement with Seaview Beverage, a Snapple distributor in central New Jersey that has a network of over 1,500 retail accounts. Crazy Water, announced its introduction into 13 Whole Foods Market locations across Texas, Oklahoma and Louisiana. Coke Great Plains will distribute Brain-Twist’s Slap energy drinks. Swire Coca-Cola will take on Coca-Cola Consolidated’s Tum-E-Yummies kids’ drinks. University of Wisconsin-Oshkosh will continue to sell Pepsi products at campus dining facilities and vending machines for the next five years in exchange for an expected $988,000, according to The Northwestern, the campus newspaper.

MISCELLANEOUS
A UK study linked caffeine to low birth weight when pregnant women consume more than two cups of coffee per day. In a move that the smugglers must have chuckled over at the time, border protection officers found about 16 ounces of an illicit drug in a two cans of Coca-Cola flown in on a flight from Jamaica to Philadelphia. Honest Tea could be a tangential beneficiary of Barack Obama’s election. The president-elect is a known fan of Honest’s Black Forrest Berry product. CEO Seth Goldman told USA Today “We’d love for it to be the official drink of the new administration.” The reduction in the availability of sugar-sweetened beverages in schools may not effect how many sugar-sweetened beverages students consume, according to a study published in the Journal of Nutrition Education and Behavior. The Milwaukee City Birthday Party will celebrate “The Future in Freshwater” with a public contest to name a special brand of bottled water to promote the city.

Q3 REPORT ROUNDUP
Celsius Holdings
, Inc. reported net sales for the three-month period ending September 30, 2008 of $435,000 – a decrease as compared to $508,000 for the three-month period ending September 30, 2007. The company also reported a net loss of $1.8 million (or $0.01 per basic and diluted share) for the three months ending September 30, 2008. This compares with net loss of $784,000 (or $0.01 per basic and diluted share) for the three months ending September 30, 2007. Cott Corporation announced its results for the third quarter ending September 27, 2008. Third quarter revenue was down 9.5% to $420.5 million as compared to $464.5 million in the prior year, as lower volumes were partially offset by higher average net prices. Average selling price per filled beverage case was up 0.7% as compared to the third quarter of 2007. Overall beverage case volume was down 10.1% to 198.5 million as compared to the third quarter of 2007. North American beverage case volume was down 10.0%, due to the continued decline in CSDs. Jones Soda Co. announced results for the third quarter ending September 30, 2008. Net revenue for the third quarter of 2008 was $8.7 million compared to $11.7 million in the third quarter of 2007 due primarily to lower direct to retail and DSD channel sales. The company’s direct to retailer decrease is primarily attributable to the discontinuation of certain business at Wal-Mart and lower Sam’s Club business, somewhat offset by gains from our agreement as the exclusive supplier of canned soda to Alaska Airlines. Jones’ DSD decrease is primarily due to lower shipments in the Midwest and Northeast, with some of this decrease offset by increases in shipments to Eastern Canada. Gross margin for the third quarter of 2008 decreased to 11.1% compared to 28.6% in the third quarter of fiscal 2007. Gross margin in the third quarter 2008 was negatively impacted by higher freight costs and fuel surcharges, as well as a provision of approximately $564,000 primarily for aged non-core inventory products. Operating expenses for the third quarter of 2008 increased to $6.2 million from $6.1 million in the corresponding period in the prior year. Included in the third quarter of 2008 operating expenses were incremental costs related to employee compensation and severance costs, offset by a decrease in selling expenses. • Hansen Natural Corporation reported financial results for the three and nine months ended September 30, 2008. Gross sales for the 2008 third quarter increased 17.0 percent to $325.2 million from $277.8 million a year earlier. Net sales for the third quarter increased 15.3 percent to $285.0 million from $247.2 million in the same quarter last year. Gross profit as a percentage of net sales was 52.4 percent for the three months ended September 30, 2008, compared with 51.9 percent for the comparable 2007 quarter. Net income for the third quarter of 2008 increased 14.5 percent to $52.4 million, compared with $45.8 million last year. Within the DSD segment, gross sales of Monster(r) and Java Monster(tm) products increased 17.1 percent during the 2008 third quarter.

PROMOTIONS/APPEARANCES
Redux Beverages and Cocaine energy drink announced that it is hosting a major new online band competition “Cocaine Rocks” on the energy drink’s social website http://drinkcocaine.ning.com/. Zevia announced that its stevia-sweetened carbonated product, in six months of being on the market, has climbed to second place in its category, according to SPINScan Natural. All Sport has been named the official isotonic sports drink for Baylor University Athletics. All Sport now has the exclusive pouring rights at the university’s athletic venues and will participate in joint sponsorship of a number of promotions, fan entertainment and community outreach events. Tizane Beverages will be highlighted at the Washington D.C. Central Kitchen’s Capital Food Fight fundraising event November 11 and are already on the organization’s new high-quality “Capital Cart” vending cart at 8th and H Street, NW in Washington, D.C., just launched in October, 2008. On Thanksgiving Day, Macy’s will welcome an Ocean Spray float to its lineup. Poker pro Johnny Chan announced a multi-year sponsorship deal for All-In Energy Drink as the official energy drink of the World Series of Poker. Ocean Spray will launch its first animated television special — “Cranberry Christmas” — at 7:30 p.m. on Monday, December 8, on ABC Family. The special will re-air on ABC Family on Saturday, December 13, at 12:30 p.m. glaceau will replace Dasani on sidelines at the NCAA championship games. Chicago United, a membership organization that promotes corporate diversity and inclusion announced that Indra K. Nooyi chairman and chief executive officer of PepsiCo, will be the recipient of the Chicago United 2008 Bridge Award that honors exemplary leadership in support of advancing diversity and inclusion at the board of directors’ level. Major League Gaming announced the details of the Dr Pepper Collegiate Challenge, a program launched in conjunction with Dr Pepper to give $10,000 for tuition to the nation’s top collegiate video gamer at http://www.mlgpro.com/tuition.