By Ray Latif
Larry Trachtenbroit is nearly two decades into a career in the beverage industry that has brought him cash from Coke – twice – and the respect of his peers. He’s demonstrated a near-legendary ability to produce wildly innovative products on a regular basis. Of course, legend can be tough to live up to, particularly when compared to profit and loss sheets. On the one hand, Trachtenbroit – or Larry T, as he’s often called – has been lauded as an innovator with a knack for off-the-wall originality: he’s put everything from cereal to pastries to pure sensation into a can and sold them all as beverages; he’s developed brands for sale to big companies and he’s shown surprising flexibility with the ones he’s kept for himself. But, while his talent as an innovator has translated into a long and profitable career, his products have struggled to find solid footing in the market. In fact, with the exception of Slap Energy, a line of highly caffeinated drinks, his brands have all been discontinued, none lasting more than five years.
Nevertheless, there was Trachtenbroit, marching across the stage at a recent industry conference – along with none other than a supermodel – to introduce his latest product, Halo. According to Trachtenbroit, Halo, due out in April, is an aloe juice-focused drink that incorporates other on-trend features like coconut water and energy in a low-sugar package. According to the rest of the world, Larry T, whose decidedly un-supermodelesque figure is typically swathed in New York Jets Jerseys and Hawaiian shirts, is working with none other than Petra Nemcova.
Oh, that Larry T. He’s just full of surprises. Here’s another one: when contacted by BevNET about the launch, the normally verbose Trachtenbroit had to be coaxed into the conversation, initially only allowing that he was using aloe because he thought it had a lighter and crisper flavor profile than other natural and functional beverages, and that some of the profits would benefit Nemcova’s foundation.
“It’s a great emerging category, one that wasn’t as polarizing as, say, acai or coconut water,” Trachtenbroit said.
If the absence of joking, of gloating, of dwelling on the partnership with Nemcova seems odd – after all, this is an industry where half the publicity seems to surround which product is being sipped by either Alex Rodriguez or one of the Real Housewives of New Jersey – then it should now be stated that many of Trachtenbroit’s encounters with the beverage industry have been unconventional as well. Call them the stuff of legends.
In the early 1990s, Trachtenbroit was the owner of a busy one-hour photo store in Hampton Bays on Long Island. The shop was known to be popular among local A-list actors who loved the service, if not the bustling throng of other customers waiting for their photos. Ever the one to please, Trachtenbroit built a back room where his high-profile clients could wait for their photos in a relaxed environment and even enjoy a cup of coffee.
Trachtenbroit – an entrepreneur to the core – eventually transformed the back of the photo store into a full service, high-end coffee bar, and the small business became a launching pad for a chain of coffee shops called Planet Java. Within a couple years, Trachtenbroit also started a premium coffee supply business for fast food franchises, and by 1996 he was distributing coffee to hundreds of restaurants in metro New York.
Armed with a successful retail and distribution business, Trachtenbroit believed that there was even greater potential for the Planet Java brand, particularly after Starbucks launched its line of ready-to-drink Frappuccino products in a joint venture with PepsiCo. Trachtenbroit saw space in the developing category, and offering consumers a premium alternative to the Frappuccino brand was his point of entry. Trachtenbroit began working with Dallis Brothers, a local roaster in Queens, NY, to formulate and bottle an RTD iced coffee under the Planet Java name.
“Larry is very forward thinking; his idea was to upgrade, to give people better-quality coffee than they were used to,” said Herb Dallis, the former chairman of Dallis Brothers.
Of course, creating a premium iced coffee was only half the story. The wily entrepreneur saw the massive growth of the Frappuccino brand and knew that Coca-Cola would attempt to the level the playing field with a similar product of its own. After months of discussions, Trachtenbroit eventually convinced Coca-Cola Enterprises (CCE) – Coke’s second largest bottler in the U.S. at the time – to distribute Planet Java in New York and New Jersey. By the end of 2000, the brand was moving an estimated 100,000 cases.
The numbers weren’t eye-popping, but they were enough for Coke to see Planet Java’s potential as a national brand. The cola giant purchased Planet Java in January 2001 at a price reported to be less than $10 million. Coke also gave Trachtenbroit a three-year contact to create a new innovation unit with relatively free reign to develop new beverage brands quickly and without the long lead time commonly associated with other Coke products.
Trachtenbroit named the unit “Brain-Twist” and described it as an entrepreneurial farm league for Coke, one that would target younger beverage consumers, including teens and college graduates. The mantra was simple: “If it looks good and tastes good, we’ll sell it… it could be bubble gum juice,” Trachtenbroit said.
The only problem was that while Trachtenbroit had done well in selling Planet Java to Coke, Coke hadn’t done a good job selling Planet Java to consumers. In fact, around the same time that Trachtenbroit’s contract ended, in 2004, the cola giant discontinued the brand. It had fallen out of favor with Coke’s independent bottlers, many of which preferred high volume, less complex beverages that could maximize production runs.
“We just didn’t see the opportunity,” said Ron Wilson, the former president of the Philadelphia Coca-Cola Bottling Co.
When Trachtenbroit’s contact with Coca-Cola ended, he formed Brain-Twist as a legally separate and independent entity, yet still remained close to the company through collaborations and partnerships with Coke-affiliated bottlers
and emerging beverage divisions. Over the next seven years, Brain-Twist would create a unique and diverse – albeit mostly unsuccessful – mix of beverages.
In 2005, Trachtenbroit took another shot at the RTD coffee category with Cinnabon Coffee Lattes, a line of coffee drinks licensed through an agreement with Focus Brands Inc., the parent company of Cinnabon Inc. As with Planet Java, Trachtenbroit enlisted a major Coke bottler, this time Coke Consolidated, to distribute Cinnabon Lattes. Yet while contemplating distribution plans for the line, the bottler decided that it would be more prudent to purchase the brand outright. Trachtenbroit agreed and sold the Cinnabon Latte brand, along with licensing rights from Brain Twist and Cinnabon Inc., to Coke Consolidated’s new BYB division, a brand-focused subsidiary specializing in new beverage innovation.
Shortly after that purchase, Coke Consolidated also snapped up two other innovative Brain Twist products: Defense Vitamin Drinks, a pioneering line of so-called “immunity boosting” beverages, and Respect: Mind and Body, a line of natural, New Age beverages with the tagline, “You’re not artificial, why should your drink be?”
Brain-Twist continued to push the envelope with unique and inventive beverage brands. The company followed its introduction of Cinnabon and Defense drinks with Liquid Cereal, a shelf-stable blend of crushed cereal and fat-free milk, and Fair Warning, a beverage line designed to create heating or cooling sensations when consumed, though without any actual differences in temperature.
Here’s the thing, though: although those new brands garnered a great deal of interest and critical acclaim throughout the industry, each would be swept off shelves and discontinued within two years of their launch amidst a lack of distribution partners, weak sales, and weaker than expected consumer interest.
Despite the failure of these brands, Ken Sadowsky, the executive director of the Northeast Independent Distributors’ Association (NIDA) and a longtime beverage investor, noted that Trachtenbroit has been and continues to be successful because of his innovative and creative approach to new beverages, and, more importantly, he has a buyer for his ideas.
“We need more beverage innovators, and he’s definitely one of them,” Sadowsky said. “The jury’s still out [on his products], and he’s got assets and liabilities, but he’s got a buyer for his mind. If you’re sitting in the chair of [Coke CEO] Muhtar Kent with his incredibly speculative portfolio, expectations aren’t that high for a company like Brain-Twist, and Larry’s found a great little niche.”
Indeed. Soon after its formation in 2007, Coke’s Venturing and Emerging Brands (VEB) unit purchased a 20 percent stake in Brain-Twist, reportedly at a cost of $5 million. VEB President Deryck van Rensburg hailed VEB’s first investment as
one that would garner ‘‘access to a pipeline of innovative ideas and products.”
Before the Halo presentation, that pipeline could be summed up in one word: Slap.
With the VEB investment in hand, Trachtenbroit sets his sights on the rapidly developing energy drink category and launched Slap, a so-called “multi-stage energy supplement,” with a formulation and branding that once again showcased Trachtenbroit’s ability to think outside the box. The line included an innovative green tea and energy hybrid, and a “Frost” flavor that encompassed elements of Brain-Twist’s Fair Warning products – each sip gives consumers a purported cooling “sensation.” Trachtenbroit also pumped 100 mg of caffeine into each 8 oz. serving of Slap drinks and claims that the products contain “25 percent more energy” than leading energy drink brands.
Though VEB did not require Brain-Twist to place Slap in the hands of Coke bottlers, the brand grew quickly as it gained presence within the Coke system. Slap was sold alongside Coke’s Full Throttle and NOS energy drinks and by early 2010, CCE was distributing the product in most of New York state, with a number of smaller Coke bottlers selling Slap in the Midwest. Trachtenbroit was optimistic about expanding his distribution lines in the Coke system as Brain-Twist made a strong push into the West Coast and began testing a value-based marketing strategy with pre-priced $0.99 cans. Trachtenbroit was quoted as saying that Slap’s volume could approach 1 million cases in 2010, up from about 100,000 in the previous year.
Later in the year, however, Brain-Twist found a new and unusual source of distribution as the company aligned itself with Anderson Merchandising, a so-called “rack jobber” that distributes a diverse array of products including magazines, newspapers, DVDs, and books. Anderson initially tested Slap in 1,000 Wal-Mart stores and – positioning the brand as a value alternative to Red Bull and Monster – priced the product at $0.98 per 16 oz. can. The strategy was largely successful and led to Slap gaining chainwide distribution at all 3,600 Wal-Mart stores across the country.
Using a similar value proposition model, Slap also scored a direct distribution deal with Casey’s General Stores. Casey’s, which operates a chain of 1,600 convenience stores in the Midwest, sells Slap for $1.79 per can and 2 cans for $2.22.
He’s continued to innovate behind Slap as well and plans to launch a new frozen energy product called Slap Frozen Energy. Set to launch this April, the slushie-like product contains the same energy formula as Slap Energy and is packaged in a resealable pouch with the tagline, “Freeze It. Squeeze It. Get Slap’d.” Trachtenbroit said that Slap Frozen will initially be distributed in all Wal-Mart and Casey’s stores as well as in a number of smaller retailers in 10 Northeast states through a budding DSD network of ice cream distributors.
Slap has shown traction in Wal-Mart and Casey’s, but thus far Trachtenbroit says he has not tried to leverage any of the knowledge or distribution power from his partners at VEB to try to help the brand grow. He said that VEB “doesn’t do much for” Slap and, when asked to elaborate, Trachtenbroit said that Coke simply holds an equity position in Brain-Twist. VEB declined to comment for this article.
It appears that he’s keeping Coke hands-off when it comes to Halo as well. Despite his longstanding relationship with the cola giant, Trachtenbroit told BevNET that VEB has no direct involvement with the project.
It’s a far cry from the glowing comments that Trachtenbroit made about Coke in a 2002 article in Brandweek, when he was asked a similar question about the extent of Coke’s influence and involvement in Brain-Twist.
“We can do anything we want as far as drinks go, and we have Coke’s resources available,” Trachtenbroit told the magazine. “They’ll help us with any issue we have.”
While VEB may not be involved in Halo, when it goes into production it will mark the first time that a Coke-affiliated company gets involved with an aloe product domestically. As a brand, it does have some on-trend characteristics – aloe has been gradually moving into the mainstream, and L.A. Libations, another innovation-focused brand house recently launched a similarly low-calorie aloe water, Aloe Gloe.
Danny Stepper, the co-founder of L.A. Libations, said that he is hoping Halo will be “a massive success,” particularly as Aloe Gloe is currently the only American-made aloe drink on the market. Having another such product would enhance mainstream exposure for aloe and benefit the category as whole, he said.
“I’m bullish for them,” Stepper said. “We need a good competitor [for aloe beverages] that’s made in the U.S. There will be a lot of room for winners.”
As for Nemcova, the celebrity supermodel known for her appearances in Sports Illustrated’s Swimsuit Issue and Victoria’s Secret catalogs, Trachtenbroit declined to say whether she is a financial investor in Halo. He did say that she had a significant role in the naming, formulation and branding of the beverage. Nemcova will also play an important part in promoting the aloe drink and its relationship with her Happy Hearts Fund, a non-profit foundation that rebuilds schools in areas struck by natural disasters.
But Trachtenbroit said that Nemcova will not be the focus of Halo’s marketing campaign. Instead, the company will focus on a message of “good for you, doing good” – a reference to the healthy qualities of the beverage and the company’s philanthropic endeavors. Trachtenbroit was quick to point out that while there is a vast amount of scientific research on aloe’s health benefits, Halo will make no specific claims about the ingredient.
Instead, he focused on the products’ market segmentation: he said that Halo will attempt to leverage the growing interest in ingredient against longstanding beverage platforms in sports and energy, a key point of differentiation from other aloe drinks currently on the market. Halo will initially roll-out in two varieties: Reboot, an isotonic-focused drink made with 5 percent coconut water; and Bounce, an aloe/energy hybrid with natural caffeine derived from guarana. Each beverage will contain 30 calories and 15 percent aloe juice.
Though Trachtenbroit said that some tweaking would be likely, early images of the product show Halo packaged in a 16 oz. hourglass-shaped plastic bottle with a white wraparound label. The label features an image of several overlapping green and blue circles (presumably meant to look like halos) at the top and an aloe leaf near the bottom. Multi-colored swaths adorn the front of the label to differentiate between each variety (violet and blue for Reboot, and peach and yellow for Bounce).
Trachtenbroit said he is aiming for an May 1 release for Halo – and while he said that he and his team are identifying Halo’s target demographic and deciding on the most appropriate retail channels for the drink, he estimated that the company will have a “plan of attack” completed soon.
Considering the growth potential for aloe drinks – and the lack of any established leadership in the still-nascent category – establishing a leadership position with a strong brand could redefine Trachtenbroit’s career. A hit would make for two solid brands in a row, and move him from inconsistent “enfant terrible” to consistent performer, from innovator to brand-builder. Of course, if it doesn’t – or even if it does – chances are Trachtenbroit will move onto another project soon enough.