Bevscape Business

GILDING THE ILLY

Ilko, the joint venture between Coca-Cola and Illy, announced it will launch a broader U.S. and European roll-out of its jointly developed ready-to-drink coffee, Illy Issimo, which had been test marketed in New York and Los Angeles.

Vinay Kapoor, chief executive of Ilko, told Dow Jones that distribution will avoid large retailers, favoring select outlets and university stores which would better fit the brand’s luxury image.

Dow Jones reported that Ilko intends to reach 30 percent of the premium ready-to-drink coffee market by 2012, and plans to enter the Japanese market later this year.

The product will compete with Starbuck’s canned coffee drinks, produced and distributed in partnership with Pepsi. Starbucks’ lines stand atop the currently-rocky RTD coffee category, which Information Resources Inc. reported in February had contracted by 12 percent in club, drug and convenience stores.

Illy Issimo represents Coca-Cola’s fourth attempt at marketing a coffee product. The beverage giant also experimented with a coffee-cola called Coke Blak, a coffee line co-branded with chocolate company Godiva and another co-branded with coffee chain Caribou Coffee.

With Illy Issimo, though, Coca-Cola has taken the unprecedented tack of employing respected independent distribution houses Big Geyser in New York and Haralambos in L.A. Both distributors have reputations as expert brand builders in their respective markets.

CRAFTY COMPETITORS

The Brewers Association announced that small independent craft brewers continue to gain alcohol market share. From 2007 to 2008, estimated sales by craft brewers increased 5.8 percent by volume and 10.5 percent in dollars. The association estimates 2008’s craft brew sales at $6.34 billion, up from $5.74 billion in 2007. That pushed the crafts houses’ overall share of the beer category to 4.0 percent of production and 6.3 percent of retail sales.

These increases came at a time when the cost of running a craft house is on the rise and overall beer sales are down. The Beer Institute reported that February’s beer consumption was 1.6 percent less than the same period the year before, and The Brewers Association reported that the cost of operating a small brewery increased more than 39 percent in the period from November 2007 to November 2008. The Association said today’s craft brewers face many challenges including access to ingredients and raw materials, increased pricing for materials and supplies and competition for shelf space at the retail level.