Deals I: Hain Scoops Up BluePrint
Fast-growing BluePrint — which makes raw juices and direct-to-consumer juice cleanse products — has been scooped up by natural foods conglomerate Hain Celestial.
Boulder-based Hain made the announcement as part of its quarterly earnings report, but did not disclose the amount of money it paid out for BluePrint, founded by a pair of friends, Erica Huss and Zoe Sakoutis, in 2007.
Expansion has come fast for BluePrint, which was being shopped for deals over the spring and summer by investment bank Partnership Capital Growth Advisors. With a $20-$25 million run rate derived largely from the brand’s cleanse products, the company has had little presence in retail outside of Whole Foods, although that was expected to change as BluePrint recently switched to High-Pressure Pasteurization as part of its push into wider retail circulation, as that allows high-quality fresh juices to last longer in grocery stores.
The company also recently rolled out BluePrint Bars as part of its expanding product line.
Hain did not disclose the amount of money it was paying for BluePrint. Hain Celestial CEO Irwin Simon called BluePrint “an innovative leader.” Huss declined comment to BevNET, saying through a spokesman that the deal was not yet finalized.
Huss and Zakoutis — along with recently added beverage veteran Jim DiPietro, whom Hain announced is on board as the brand’s COO — will remain with the company and “continue to manage all aspects of BluePrint,” according to Simon. The Blueprint co-founders will report to John Carroll, the CEO of Hain Celestial United States.
Deals II: Money Raising the Weird Way – Pro NRG Lands $250K on “Shark Tank”
It may not have been the exact deal that Pro NRG founder Tanya Patruno was looking for, but walking away with a $250,000 investment offer on the reality TV show “Shark Tank” could end up being a critical win for her fledgling beverage brand.
Patruno, who launched protein-infused water Pro NRG earlier this year, landed an opportunity to pitch her brand in the hopes of landing new capital on “Shark Tank.” The show features a panel of veteran entrepreneurs, including Dallas Mavericks owner Mark Cuban and real estate guru Barbara Corcoran, who entertain offers to invest in an entrepreneurial business or product. In her appearance on the show, Patruno was seeking a $250,000 investment for a 15 percent stake in Pro NRG in the hopes of taking her brand national.
With San Francisco 49ers running back and Pro NRG endorser Brandon Jacobs at her side, Patruno told the panel that within three months of its launch, Pro NRG had $126,000 in sales and secured distribution in 3,000 locations in Manhattan, including convenience stores, delis, and big box retailers. While the panel was impressed with the company’s rapid growth, they were less than enthusiastic when Patruno explained that the cost to manufacture Pro NRG is $1.10 per bottle, wholesales for $1.80, and has a a retail price of $3.99.
“Do you realize that your distributors are making more money than you?” asked panelist Kevin O’Leary. “That’s upside down. You have to make more money than they do. That’s crazy.”
Although most of the panel quickly passed on Patruno’s proposal – reasons ranged from Pro NRG’s low profit margin to a difficult and competitive market for protein and sports drinks – FUBU founder and CEO Daymond John offered Patruno an investment of $250,000 for 30 percent of the company, contingent upon Pro NRG landing a contract with BADDASS, a protein and supplement company that John has a partnership with. Patruno accepted the offer, adding that Pro NRG would benefit from John’s expertise in branding and marketing. Though details of the proposed contact with BADDASS were not disclosed, the deal with John has recently been finalized, according to a Pro NRG spokesperson.
Armstrong Scandal Reaches Beverage Indsutry
Count FRS as one of the companies that severed ties with cyclist Lance Armstrong in the wake of a recent U.S. Anti-Doping Agency report that revealed him as a chemically-enhanced cheater throughout his career.
A host of prominent product companies, including Nike and Radio Shack, also ended endorsement deals with Armstrong. But few had as tight an alignment with the cancer survivor as FRS, as the quercetin base of the drink has long been touted for its potential as a cancer-fighting supplement. FRS had been associated with the Livestrong Foundation — which Armstrong chaired until his resignation following the USADA report — since 2007.
Armstrong has been an investor and member of the board of directors for the company, as well as a spokesman and “FRS Ambassador” for several years. Beer maker Anheuser Busch, for whom Armstrong has promoted Michelob Ultra, also said it would not renew its contract with Armstrong following its expiration at the end of the year.
In the wake of Armstrong’s departure, FRS quickly moved Tim Tebow, its squeaky clean spokesman, squarely to the forefront of a major marketing initiative.
Today, FRS announced a new national campaign promoting its relationship with the New York Jets quarterback, who, as a result of Armstrong’s departure, is now the premier endorser of its line of quercetin-based line of functional drinks and powders. The campaign, called “Time with Tebow,” includes new limited edition FRS bottles and packaging with images of Tebow as well as a “Meet Tim Tebow” contest, a coupon program for a free FRS product, and social media promotions designed to promote greater awareness of the Tim Tebow Foundation.
Politics: California Voters Say No to GMO Labeling, Soda Taxes
While Election Day yielded few changes within the overall political landscape in the U.S., three referendum votes in California that were likely to have a significant impact on the sale of beverages in the state were defeated.
In a closely watched vote, Californians said no to Proposition 37, an initiative that would have required mandatory labeling of genetically modified or engineered food and ingredients. The initiative would have also prohibited labeling or advertising of genetically modified food as “natural,” with some exceptions.
The ballot measure was backed by the organic foods industry and some consumer protection groups, but was opposed by a number of large food and beverage companies – including PepsiCo, Inc. and The Coca-Cola Co., Inc. It was rejected by nearly 53 percent of voters.
Prop. 37 was the focus of an intense bombardment of negative television advertisements. It was also heavily criticized by newspaper editorial boards, who said they feared additional government bureaucracy and taxpayer costs, as well as the potential for new, frivolous lawsuits and increased food prices.
Supporters of the initiative vowed to continue fighting for GMO labeling and indicated that they would now turn their attention toward the issue on a federal level.
“Federal GE foods labeling must now be the focus,” said David Bancroft, the campaign director for Just Label It, a national coalition of 600 organizations that support labeling of genetically modified food. “The same powerful interests that funded the campaign against Prop 37 have already had their lobbyists insert language in House versions of the Farm Bill, which, if passed, would strip federal agencies of their authority to regulate [genetically engineered] crops.”
Meanwhile, voters in two California cities rejected measures that would have added a one-cent-per-ounce tax on purchases of soda and other sugary drinks. Residents of El Monte and Richmond voted against the tax, which was intended to reduce rising obesity rates and supply a new revenue stream in both cities. However, the beverage industry, which, unsurprisingly, opposed the tax initiatives, launched a historic fight against the measure in El Monte, spending more than $1 million to defeat it.
Nearly 77 percent of the voters in El Monte opposed the new tax; while El Monte Mayor Andre Quintero, who was the top supporter of the measure, called the margin “insurmountable,” it was unclear if proponents would attempt to revisit the plan in the next election cycle.