Upon Return, Expo West Confronts Climate Challenges
It was back to business at Expo West after a two-year COVID-19 enforced layoff. Before the booths opened on Wednesday, attendees found themselves wrestling with two themes during much of the “pregame” programming — opportunity and urgency.
Urgency was reflected in both Tuesday’s traditional Climate Day event — something embodied by Rev. Lennox Yearwood Jr., founder and president of the Hip-Hop Caucus, an architect of P-Diddy’s “Vote or Die” movement and a longtime social justice activist, who reflected on the extreme weather conditions brought on by Hurricane Katrina in 2005 and the upheaval in that disaster that was concentrated on the largely Black population of New Orleans as a disaster that created “climate refugees in our own country.”
Yearwood went on to draw a line from those events to those taking place in the ongoing invasion of the Ukraine by Russian forces. The upshot: the same ethos that has created climate change is battling for the increasingly scarce resources that continue to amplify climate change.
To the good, however, there’s opportunity: the growth of a natural products industry, alternative energy, and more important, the energy of the youth who are increasingly terrified and disappointed by the inaction of previous generations. As a legacy for those to come, Yearwood urged, look at where the attendees might be able to contribute to an audience 100 years from now, and think about what they might do to improve environmental outcomes.
Wednesday’s opening convocation stressed that opportunity, while acknowledging the challenging forces that have continued to plow the way for natural, organic, and better-for-you products.
The audience gave a wildly enthusiastic welcome to a touchpoint event that has returned after two years. In a tripartite presentation, New Hope Prexy Carlotta Mast, SPINS EVP Kathryn Peters, and Whipstitch Managing Director Nick McCoy, laid out the burgeoning sector’s economic status while folding in renewed interest in diversity, the environment, COVID, and the current crisis in the Ukraine.
As part of the intro, Mast announced that New Hope was making a $100,000 donation to Jose Andreas’ chef’s collaborative, which has been providing meals to Ukrainian refugees during the Russian onslaught.
Back to enthusiasm: with so many Americans looking at their health, looking at immunity, the Natural & Organic universe is going to hit $400 billion by 2030, Mast announced. The industry is filling out in all the right places, Peters noted, hitting about 25% of CPG, — but providing 68 % of the overall CPG industry’s growth. Food and Beverage are about 70 percent of that category total.
Adversity is creating opportunity, as well, McCoy pointed out: even the much hyped inflation that’s been an issue in 2022 hasn’t fallen on smaller brands, health-and-wellness focused companies quite as hard. The 7% inflation rate has been matched by 7% pricing growth for brands in the SPINS database, he noted, but that growth is highly over-indexed by the big brands. Health and wellness brands, he said, have raised their prices around 5%, leaving room for them to also take price increases to keep up, making for fatter overall margins.
But to keep those returns growing, all three speakers again echoed the challenge expressed the day before: companies with diverse leadership are outperforming those that skew less diverse, McCoy noted, and products that are part of movements like organic and now regenerative agriculture are growing ahead of conventional. In the face of environmental disaster and years of unequal wealth distribution, the speakers seemed to be saying, the stakes are high, but the crisis is also an opportunity.
Sproud Brings European Influence With Vanilla Flavor, Carbon Cloud Score
Despite living in the shadow of a certain other Swedish oat milk brand, pea-based non-dairy milk maker Sproud has found a growing consumer audience for its line of European-styled shelf-stable 1 liter cartons since launching in the U.S. in 2020. After filling out key roles over the past year – including bringing on Bill Lange as General Manager for North America and Sara Berger as CEO – the company has set the target of generating around $57 million in revenue within the next three years by introducing new flavors – the latest being vanilla, which was sampled at Expo West – while bringing greater attention to its environmental credentials.
To do so, Sproud is looking to its home market in Europe for inspiration. The new Vanilla flavor has been available in stores across the Atlantic for some time, where the formulation contains around 9 grams of sugar per serving. That has been slashed roughly in half for the North American version, which is set to hit stores in June. Meanwhile, the brand will also begin integrating a verified climate “score” on the front of pack that is already on its European versions. Working with third-party climate auditor Carbon Cloud, which also counts Oatly and TENZING as partners, Sproud will highlight the specific climate and emissions impact of each product, measured in the amount of carbon dioxide equivalent (CO2e) per kg, on the carton. Though the metric is aimed more at helping manufacturers gauge and understand their role in shaping climate change, the badge offers a quick visual quantification for consumers on the shelf that Sproud hopes will help drive attention to its efforts.
Capturing that attention in a loud and crowded plant-based milk space has been a challenge for the brand since the beginning, which again goes back to its roots in Europe, where shelf-stable ambient milk is a significantly larger piece of the fluid dairy category. That’s not so much the case in the U.S., but without an intentional push by the company, Sproud has been able to migrate out into dairy coolers at select retailers without changing its price. But despite soaring category growth, reps at the brand’s booth noted that the focus remains on proving out the concept with natural retailers (Sprouts nationwide, Whole Foods SoPac region) while seeding the product at a handful of conventional chain grocers, including Giant and Shaw’s.
Functional Sodas Keep Popping Up
After the first wave of gut health friendly functional soda brands like Olipop, Poppi, Culture Pop and Health-Ade Booch Pop established the grounding for a new CSD subcategory, the space is beginning to fill out with a number of new product launches at Expo West.
Brands including TEAONIC, Mortal Kombucha, Turveda and Mission Loop debuted better-for-you functional soda lines, reflecting a bigger push into this emerging space for small and mid-size brands. As well, Humm Kombucha showcased its previously announced probiotic soda and seltzer line front and center at its booth where CEO Matt Witherell said the line is already performing well online with its seltzer offerings outpacing the sodas.
Mission Loop, a Canadian cold-pressed juice brand now making the leap into the U.S. via Sprouts stores next month, displayed its new line of probiotic sparkling sodas, available in Clementine, Ginger and Strawberry flavors. The sodas are currently available nationwide in Canada and will accompany five of the brand’s top selling juices in the U.S. retail launch.
Meanwhile, wellness beverage brand Turveda showcased a comprehensive rebrand as the company pivoted its entire line from glass bottled tonics to become a canned “Prebiotic Super Soda.” President and co-founder Dev Chakrabarty described the new products as if “Olipop and VIVE Wellness Shots had a baby,” while citing Asian-inspired sparkling water brand Sanzo as a point of reference for its focus on Indian and Asian ingredients. The new functional line moves the brand past turmeric exclusivity and now features three SKUs: Zesty Lemon Spicy Ginger with turmeric and cinnamon, Blood Orange Passion Fruit with amalaki, and Lavender Vanilla with ashwagandha.
Following a familiar naming convention, TEAONIC debuted a new line extension dubbed Fresh Pop, but moved away from gut health to offer three flavors with immunity, detox and “chill” functions. Startup brand Mortal Kombucha also introduced Mortal Power, a soda line made with prebiotics and varying functionalities including caffeine, collagen and electrolytes. Longtime kombucha maker The Bu is also getting in on the trend, introducing a four-SKU line of 5 calorie, zero-sugar sparkling probiotic waters in new 12 oz. slim cans.
Crafted Cocktails Climbing High
As the pandemic drove more consumers to create cocktails at home, mixer brands have benefited greatly from the rise in amateur mixology over the past two years. And Crafted Cocktails, founded in 2013 by CEO Felicia Vieira, learned first hand just how big the trend is.
Vieira told BevNET that the brand has grown 5x since 2020 from about $1.5 million in annual revenue pre-COVID to over $6 million today. While Crafted Cocktail’s own branded products have been a driver, a significant portion of the growth comes from expanded private label operations as the company has quietly been creating custom products for Williams Sonoma, Ahold Delhaize, and as of last month Target stores nationwide.
The company is also expanding its distribution and ecommerce business, including a new partnership with Faire.com.
At the show, Crafted also introduced several new products, including three additions to its shrubs line (Mandarin Orange, Meyer Lemon and Grapefruit), a reformulated version of its Pina Colada mixer, and a new line of organic tonic waters which will retail for $6.99 per 4-pack of 12 oz. bottles.
Milkadamia Teases Cross-Category Innovation Wave
As its name suggests, Milkadamia was founded with a simple product proposition: macadamia nut milk. However, that business has quickly expanded to include a variety of flavors and innovations and at this year’s show the brand introduced a number of new products playing in various categories.
Though not yet available for sampling, the company is preparing to launch a keto-friendly “Drinkable Dessert” line in Oatmeal Cookie and Apple Pie flavors. According to COO Jim Amos, the line was inspired by consumers who said they regularly allowed the brand’s macadamia creamers to sit unrefrigerated and solidify, forming a smoothie-like texture. With an on trend keto positioning, the low carb, low sugar Drinkable Desserts are expected to be out around Q4 this year.
Ready-to-drink coffee and chai lattes are also expected around the same time, said marketing manager Kristian Espinal Vazquez. The category extension, he said, is natural as the brand aims to own the macadamia nut ingredient across not just food and beverage, but the broader CPG space; Milkadamia is also debuting a skincare line packaged in sustainable cardboard cartons.
However, the upcoming launches shouldn’t overshadow the products Milkadamia is rolling out now. The company has also introduced two new seasonal flavors of its flagship plant-based milks (Salted Caramel and Pumpkin Pie).
“We want to make sure we’re using macadamia in as many ways as possible,” Vazquez said.
Targeting Wider Audience, Cloud Water Cuts Price Shifts to Cans For Hemp Line
In contrast to some of the hype witnessed in pre-pandemic years, the buzz around CBD beverages has been less, well, buzzy, at least over the first few hours of the trade show on Wednesday. But for New York-based Cloud Water, which emerged as an early category pioneer upon launching in TK, consumers’ growing awareness and familiarity with CBD drinks is also the sign of a more competitive landscape, and an opportunity for it to move the brand in a more mainstream direction.
At its booth in the North Hall, Cloud Water shared samples of its new 12 oz. can format for its five-SKU core hemp extract-infused (25 mg) line of lightly sweetened sparkling drinks, with the latest flavors being Half Tea & Half Lemonade, Watermelon & Ginger and the adventurous Dark Chocolate & Strawberry. Reps at the brand’s booth noted that in moving away from its more expensive 12 oz. aluminum bottle, it has also been able to drop the price from $4.99 to $3.99 per unit, an acknowledgement that CBD may have started to outgrow its premium positioning as it becomes a more ubiquitous ingredient in beverages. The product will continue to move through mainly independent accounts via distributors like Big Geyser in New York City and Hi Touch in Los Angeles. However, all eyes are on Sprouts ahead of the natural retailer’s CBD beverage reset this spring, with speculation that it could become the first national grocery chain to kick the doors open for the category.
While keeping an eye on those developments, the brand is also continuing to develop its three-SKU, non-CBD Cloud Water + Immunity line, which has been in 12 oz. cans since launching in 2020. Recent distribution gains for that product include Giant, Sprouts (California), Bristol Farms and a pilot test at CVS.