BevScape

Year-End Brings Big Deals:

Talk about saving the best for last: after a year in which plenty of money had already been thrown around, there was a big closing rush, as a pair of strategic investors made big bets on evolving beverage categories.

First up was the Coca-Cola Co., Inc., which in early December completed its fast-moving courtship of the dairy protein drink Core Power, bringing former Coke employee Steve Jones’ two-year-old brand into the fold.

The purchase came just two months after the company revealed that it would begin distributing the entrepreneurial brand on a national basis, and only six months after it began to deliver the brand to stores in the Midwest.

Core Power, a branded beverage venture that was spawned by one of the country’s largest dairy cooperatives, will be run independently while under Coke’s ownership, according to Jones, a former marketing executive with the soda giant.

He said the acquisition represents the first major move into the $12 billion dairy industry by either Coke or rival PepsiCo. Pepsi’s “Blue System” currently distributes Muscle Milk, an independently owned protein beverage that ushered in a new era of direct-store-distribution (DSD) protein drinks several years ago.

With an innovative protein-isolating manufacturing process in hand, Jones said he believes that Core Power can provide a new level of milk-based functionality to the Coke portfolio, one that he believes may ultimately catch Muscle Milk, which exceeds $250 million in sales.

“We think we can broaden the protein platform beyond the weightlifter and the athlete,” Jones said. “I would love to launch a product that meets so many consumer need states where they are.”

For a milk-based beverage, the category Core Power – originally called “Athlete’s HoneyMilk” – wants to dominate what Jones called “milk-plus.” In that area, soy, hemp, and nut-derived milk substitutes have become nearly a $1 billion business, according to recent sales figures from the Symphony/IRI Group, which tracks retail sales.

Next, the day after Christmas brought a big stocking full of cash to the owners of BluePrint, the fresh juice and cleanse brand that was closed on by natural foods conglomerate Hain Celestial.

The deal, which was initially announced in November, is expected to increase the operational capacity of Blueprint and the availability of its line of single-serve bottled juices, which are currently sold in a number of natural retailers in the Northeast and Southern California. Financial terms of the transaction have not been disclosed.

“We see great potential with the BluePrint brand as consumers increasingly seek the benefits of the nutrients, enzymes and fresh taste of raw juice,” Irwin D. Simon, the president and CEO of Hain Celestial said in a statement. “We plan to leverage the BluePrint brand across our portfolio and create a larger retail presence for the BluePrint brand.”

Launched in 2007, BluePrint products generated approximately $20 million in sales in 2012, according to Hain. While BluePrint Cleanse, the company’s direct-to-consumer juice cleanse business, generates most of the revenue for BluePrint, Hain will look to build upon the rapid growth of the brand’s BluePrint Juice line, which is sold in a number of national, natural and gourmet retailers including Whole Foods and Dean & Deluca.

“Hain Celestial’s commitment to supporting a healthy lifestyle is reflected in their portfolio of products, and they are the ideal partner with whom we can grow and expand the BluePrint brand,” BluePrint founders Zoe Sakoutis and Erica Huss said in a statement.

Coke wasn’t done either, however: in an operational move announced just after the start of the new year, the company announced it was buying up Sacramento Coca-Cola Bottling Company, the 6th-largest independent Coke bottler in the U.S.

Sacramento Coke Bottling was founded in 1927, and distributes Coke products in all or part of the nine California Counties of Sacramento. The company employs over 460 people.

“We are proud of our 85-year legacy of service to the community and have come to the decision that the time is right to transition the business to The Coca-Cola Company,” said Rob Siebers, President and CEO, Sacramento Coca-Cola Bottling Company. “We believe this is the right action to ensure the continued success of Coca-Cola in Northern California.”

While the purchase price was not disclosed, in a statement, SCCBC noted that the sale was approximately nine times earnings before interest, taxes, depreciation and amortization (EBITDA).

Coke has been streamlining operations over the past three years, and this most recent deal comes 14 months after the cola giant acquired Great Plains Coca-Cola Bottling Co., which, at the time, was the fifth-largest independent Coca-Cola bottler in the United States, for $360 million. Coke also acquired Coca-Cola Enterprises Inc., its largest bottler in North America, for $12.3 billion in 2010.

Big Brewhaha Over Craft vs. Crafty:

It’s becoming the battle of the year: the Brewers Association (BA) and its members taking aim at large brewers like AB Inbev and Miller Coors over their marketing of higher-quality beer under the guise of labels that indicate a false independence.

But there are plenty of other brewers caught in the crossfire as well, including stalwarts like Schell’s, Yuengling, Goose Island, and the Craft Brew Alliance (CBA), and they aren’t happy about it.

The fight began with a December editorial broadside launched both in print and online in which the BA lashed out at “crafty” beers produced by international brewing conglomerates. The editorial was part of what the BA promises will be a long battle to increase consumer awareness of the definition of craft beer.

The BA, which represents the business interests of craft brewers, was able to land an Op-Ed piece in the St. Louis Post-Dispatch on Wednesday headlined “Craft or Crafty? Consumers deserve to know the truth.” The BA marketing team followed up with a release to its media list attempting to generate stories that will underscore the difference between products owned or assisted by larger breweries and those made by its constituents, knocking “crafty” beers that fall outside BA’s own definition of “craft.”

“We call for transparency in brand ownership and for information to be clearly presented in a way that allows beer drinkers to make an informed choice about who brewed the beer they are drinking,” noted the statement.

According to a chart included in the release, “crafty” products include higher-end offerings like Blue Moon (owned by Miller/Coors) and Shock Top (owned by Anheuser Busch/InBev) as well as brands like Goose Island (Bud-owned as of last year), and Craft Brew Alliance (CBA) brands Widmer, Kona and Red Hook (partially owned by Bud). Taken together, in 2011 those brands sold about 3.7 million barrels of beer — nearly the equivalent of the 4 million brewed by top three craft brewers Boston Beer Co., Sierra Nevada and New Belgium. And that’s not even counting other large, popular “non-craft” breweries like Yuengling, Dixie, and Straub.

“I’d say what we’re doing is pointing a bright light on this part of the beer industry by showing who’s behind some of the beers that are essentially being marketed as small brewer beers,” said Paul Gatza, the director of the Brewers Association

Several brewers, large and small, took issue with the statement, however, releasing public comments defending their position in the brewing world.

“The question we have for the Brewers Association is ‘why are we being punished for brewing with a locally grown ingredient, which started out of necessity, and has continued out of tradition?’” asked Jace Marti, the Brewmaster at Schell Brewing. “And why is it only bad to use adjuncts if you are brewing an American Lager, yet perfectly acceptable to use them in basically any Belgian style of beer, IPA’s or double IPA’s?”

Tenth and Blake president and CEO Tom Cardella also responded recently with a statement, challenging the BA’s “crafty” designation of the company’s Blue Moon brand.

“Whether people call them craft or some other title is fine with us. We’ll just keep brewing great beer,” noted the statement.

It’s a membership imperative, BA director Paul Gatza told Brewbound yesterday, to “point a bright light on this part of the beer industry by showing who’s behind some of the beers.”

Among the brewing practices the BA called outside the purview of craft are those that may use “adjuncts” like corn or rice to “lighten rather than enhance flavor.”

But Marti – whose “adjunct” offerings make up more than 60 percent of Schell’s total annual output, which leaves him outside of BA membership – believes his company has the same goal, nevertheless.

“We are fighting the big guys just like they are,” he said. “Why fight us if we are doing the same fight they are?”

Indeed, the BA, while garnering publicity with the campaign, nevertheless found its profile as the defender of the craft faith under attack from some media circles. During one interview on FOX Business, Julia Herz of the BA appeared shrill and strident, while Time Magazine labeled the entire episode a “Beer Cat Fight.”

Like lots of cat fights, expect this one to get louder before it finally ends.