New First Beverage Fund Adds VEB as Investor

Growing beverage companies have a new option for raising investment cash, and the Coca-Cola Co. has a new way to get involved in determining their future, taking a limited partnership stake in a new fund focused on non-alcoholic beverage brands.

First Beverage Ventures, the private equity arm of beverage investment and advisory company First Beverage Group, launched the new fund with Coke’s Venturing & Emerging Brands (VEB) group as a limited partner – along with several other investors – to invest in small and emerging beverage brands. Created as a “pledge fund,” each partner has agreed to put up a specific amount of cash and has the option to invest in any deal brought to the table.

Tom First, managing partner of First Beverage Ventures, told BevNET that investments would range from $2-6 million with $5 million likely being the average size of a single investment.

According to First, the group is looking at “relatively early-stage” beverage brands that already show strong consumer demand and is willing to make investment sooner than would most institutional firms.

First also stated that the fund would be making “a couple deals a year” over the next two to three years with opportunity for additional financial investment.

The fund expects to make one or two deal announcements in the next three to four months, according to Bill Anderson, the CEO and founder of First Beverage Group.

Anderson said in a statement that “through this fund we will be investing in small, high-growth and highly differentiated brands which are now in the sweet-spot of consumer demand and retailer focus.”

Shortly after launching, the fund also hired former Glaceau and Nantucket Nectars executive Jason Camillos.

U.S. Bottled Water Sales Totaled $11.8 Billion in 2012

A recent report from the International Bottled Water Association (IBWA) revealed that in 2012, overall consumption of bottled water jumped by 6.2 percent to 9.67 billion gallons, while sales increased by 6.7 percent, totaling $11.8 billion. The statistics were compiled by beverage consulting firm Beverage Marketing Corporation (BMC).

With every American consumer drinking an average of 30.8 gallons of bottled water last year, the report stated that per-capita consumption of bottled water was up 5.3 percent in 2012, and that the beverage increased in absolute volume more than any other beverage category in the U.S.

“Bottled water added more gallons to its per-person consumption rate in ten years than either ready-to-drink tea or sports beverages reached by the end of that period,” said Gary Hemphill, the managing director of information services for BMC.

Based on the numbers, and lifestyle shifts toward health and wellness, Hemphill said that bottled water is poised for future increases in per capita consumption.

“All signs point to U.S. consumers’ already displayed thirst for bottled water continuing in the years ahead,” Hemphill said. “Changes in per capita consumption indicate persistent interest in a product that consumers embrace as a healthful alternative to other beverages.”

Sugar Substitute Market Projected to be Worth $13.7 Billion by 2018

MarketsandMarkets, a market research and consulting firm, projects that by 2018, the global market for sugar substitutes will be worth $13.8 billion. Based on increasing awareness, consumption and demand for low-calorie sweeteners including stevia, sorbitol, tagatose, aspartame, sucralose and xylitol, MarketsandMarkets expects the sugar substitute market to achieve a compound annual growth rate (CAGR) of 4.5 percent over the next five years.

Estimated to be worth $10.5 billion in 2012, the sugar substitute market has benefitted from rising use of low-calorie sugar alternatives in many consumer products, and in particular, food and beverages, according to MarketsandMarkets. In the North American market, which accounts for 49 percent of the market share in 2012, consumers are increasingly shifting toward healthier consumption and lifestyles, and demand for low caloric foods and low intensity sweeteners is projected to grow by 3.9 percent from 2013 to 2018.

While North America is expected to continue leading the world in consumption of sugar substitutes, because of the increasing impact for demand of convenience health and functional foods and beverages MarketsandMarkets expects the Asian Pacific region (APAC) to drive the growth of the industry over the next few years. China and India are leading demand for sugar substitutes in the region due to their booming economies, which are resulting in changing lifestyles and a focus on alternate sources of sugar in convenience products.

New Report Ties Ginkgo to Cancer

Commonly sold as a dietary supplement and frequently used as an additive in a range of beverages, Ginkgo biloba has been found to cause cancer in mice and rats, according to a two-year study by researchers at the National Toxicology Program (NTP), an interagency program tied to the U.S. Department of Health and Human Services and the National Institutes of Health.

Over the course of the study, NTP researchers gave male and female rats oral dosages of Ginkgo biloba extract five times a week.The study concluded that Ginkgo caused thyroid cancer in male and female rats and male mice and liver cancer in male and female mice.

Following the release of the findings, the ingredient, which is often marketed for having brain-boosting functionality, was downgraded from “safe” to “avoid” by consumer advocacy group The Center for Science in the Public Interest (CSPI).

“Ginkgo has been used in recent years to let companies pretend that supplements or energy drinks with it confer some sort of benefit for memory or concentration,” said CSPI executive director Michael F. Jacobson. “The evidence for those claims has been dubious, at best. The pretend benefits are now outweighed by the real risk of harm.”

A number of industry and trade groups quickly disputed the findings of report, claiming that the study was significantly flawed. In a statement, the American Herbal Products Association (AHPA) noted that that extract used in the study was not chemically similar to that used in products commonly sold in the U.S. The American Botanical Council (ABC), which formed a committee of medicinal plant science and toxicology experts to counter that claims of a 2012 draft report of the study, indicated that the dosage levels administered to the rats and mice was up to 55-108 times higher than levels of ginkgo extract that are “normally ingested” by consumers (120-240 milligrams per day).

Golazo Triples Distribution Throughout West Coast

Less than 18 months since the brand’s debut, Golazo, which markets a line of soccer-inspired energy and sports drinks, has more than tripled the number of retail locations where its products are sold. The company today announced that Golozo drinks will be sold in 1,600 stores in eight states throughout the West Coast, including all Safeway and Whole Foods locations in the region.

“Tripling our store count builds upon the sales success we are experiencing in the natural and general grocery channels throughout the Northwest,” Richard Tait, co-founder, Golazo said in a statement. “This recent expansion gives us access to some of the largest beverage markets in the country and the opportunity to put a Golazo can or bottle in the hands of players and fans everywhere from Fairbanks to San Diego.”

Having achieved an established foothold on the West Coast, Golozo, which Tait has described as “super methodical” in approaching new markets, remains focused on a distribution strategy based on three areas of focus:  the Latino community, the natural beverage channel, and, of course, soccer. In addition to marketing efforts that target the soccer community, Golozo recently partnered with two professional women’s soccer teams in the Pacific Northwest.


AQUAhydrate Finalizes Distribution Deals with Kroger, Safeway

Shortly before the departure of CEO John Cochran for Ole Smoky Tennessee Moonshine, AQUAhydrate announced that it has finalized distribution deals with the nation’s two largest grocery retailers, Kroger and Safeway. The agreements will bring the high alkaline and enhanced water brand into stores owned by the two chains and their subsidiaries in regions across the country.

“It’s exciting to see the support of two of the nation’s largest grocery retailers in our endeavors to reach more people with a genuine wellness product,” Cochran said.

While AQUAhydrate has been distributed nationally in GNC stores since November, the deals with Kroger and Safeway will dramatically increase the retail presence and mainstream availability of the water. Notably, the agreement with Kroger comes in the midst of plans to bolster its offering of emerging and better-for-you brands, with a particular focus on natural and organic products.


Zico Puts Some ‘Oomph’ Into National Ad Campaign

Under the wing of the Coca Cola Co., its majority stakeholder as of about one year ago, coconut water company Zico has launched a national advertising campaign, according to Ad Week.

Zico will spend between $2 million and $5 million on the campaign, which was produced by Butler, Shine, Stern & Partners, an ad agency based in Sausalito, Calif., and will include a series of television, online and outdoor advertisements in major markets including New York, Los Angeles, San Francisco and Atlanta.

The ad campaign centers around the slogan “put some oomph in it” as a way to promote Zico’s energizing qualities. A sampling of the TV ads include a baseball coach wearing too-tight yoga pants, a mud-covered man, a spoon-waving grandmother and a fitness-centric woman with a European accent.


Coca–Cola Looks to Mobile Gaming in New Marketing Campaign

Coca-Cola also launched its first all-digital advertising campaign.

Titled “The AHH Effect” and created by Wieden+Kennedy, a global advertising agency, the campaign focuses on digital gaming experiences for adolescent consumers. The games, which will be accessible on both mobile devices and computers, will include a variety of soda-inspired titles such as “Guide the Bubble,” “Happy Dance,” “Bottle Rocket” and “Ice Toss,” in which one click flings a piece of ice toward a constantly moving cup of Coke.

“This campaign is going to be a living experiment in true trial and error,” said Pio Schunker, the senior vice president of integrated marketing communications.

The campaign is a reaction to Coke’s belief that most adolescents turn to their phones if they’re not watching television. And while the games can be accessed on computers, Coke’s new marketing plan is grounded in the idea of capturing the attention of mobile users.

“All our experiences are designed to be inherently social and inherently sharable,” Schunker said.

Coke will also encourage adolescent consumers to create their own digital gaming experiences, which will then be thrown into a larger pool of entries. Coke will eventually select 61 digital gaming experiences as part of the campaign, and give each experience its own URL by adding an “H.” The 43rd experience, for example, will have 43 Hs in the URL. The selections will be constantly updated.


Federal Legislators Introduce Mandatory GMO Labeling Bill

With a stated purpose of establishing “a consistent and enforceable standard for labeling of foods produced using genetic engineering,” legislators in the U.S. House of Representatives and U.S. Senate have introduced a new bill that would require mandatory labeling of genetically modified (GMO) foods and ingredients.

The bill, known as the “Genetically Engineered Food Right-to-Know Act,” was introduced by Sen. Barbara Boxer (D-Calif.) and Rep. Peter DeFazio (D-Ore.), and would amend the Federal Food, Drug, and Cosmetic Act to “require that genetically engineered food and foods that contains genetically engineered ingredients be labeled accordingly.”

Sponsors of the bill state that while the U.S. Food and Drug Administration (FDA) requires labeling of more than 3,000 ingredients, additives and processes, the agency has resisted labels for genetically modified foods. In 1992, the FDA issued a policy statement indicating that it does not consider genetically engineered foods to be materially different from non-GMO foods.

“Americans have the right to know what is in the food they eat so they can make the best choices for their families,” Sen. Boxer said in a statement. “This legislation is supported by a broad coalition of consumer groups, businesses, farmers and fishermen and parents who all agree that consumers deserve more – not less – information about the food they buy.”

The bill notes that more than 60 countries, including the U.K. and all other countries in the E.U., have laws mandating disclosure of GMO ingredients.

In November, a similar bill in California known as Proposition 37 was voted on and rejected by state residents.

Sweat Starts New Gig at In Zone

Back home in Atlanta, former FRS CEO Carl Sweat has joined kids’ beverage outfit In Zone Brands as its Chief Marketing and Commercial Officer.

Sweat, who has over 25 years of experience in the beverage industry and held senior leadership roles at Starbucks and the Coca-Cola Co., will handle “strategic leadership and execution of In Zone’s branding, marketing, innovation and sales efforts,” according to a statement from In Zone.

Sweat’s new role brings him back to Atlanta after three rocky years with N. Calif-based FRS. Criticized for a number of bold, but ultimately unsuccessful, sales strategies and multi-million dollar marketing expenses, Sweat left the company in January in what was called “a mutual separation.”

At In Zone, which markets TummyTickler and Bellywashers beverage brands, Sweat is expected to extend the company’s foray into health and wellness drinks. In Zone recently launched its first organic apple juice as part of its TummyTickler Tots line, and company CEO Jim Scott noted that Sweat will be “instrumental in fueling our growth and product innovation.”

“Carl’s exceptional background combines marketing, general management leadership and health and wellness beverage experience, and he has the insight to help shape the future for In Zone,” Scott said.

PepsiCo Tests New Flavor-Infusing Fountain Dispenser

Freestyle, meet “Touch Tower.”

Four years after the launch of Coca-Cola’s Freestyle, an innovative soda fountain dispenser that allows consumers to create customized drinks, PepsiCo will begin testing “Touch Tower,” a new machine that gives people the ability to add a variety of flavors to a range of its soda brands, according to the Associated Press. News of the test launch was first reported by industry publication Beverage Digest.

Unlike the vending machine-sized Freestyle, “Touch Tower” appears to be small enough to sit atop a counter and is designed for restaurants and other on-premise retailers of fountain soda that don’t have a lot of space for a large dispensing unit. Fitted with a tablet-like screen, “Touch Tower” enables consumers to add up to four flavor shots – lemon, cherry, strawberry or vanilla – to eight varieties of PepsiCo –owned drink brands, including Pepsi and Mountain Dew.

PepsiCo, which has approximately 30 percent of the overall fountain soda business in the U.S., will initiate a series of test launch of “Touch Tower” in five Denver-area locations of Garbanzo Mediterranean Grill. If successful, it’s likely that PepsiCo will broaden availability of the machines to other chain restaurants where its products are sold, including Taco Bell, Pizza Hut and Kentucky Fried Chicken.

Dogfish Head on Pace For 202,000 Barrels in 2013

While the large domestic beer companies blamed sluggish first quarter sales on bad weather, Dogfish Head, the country’s 13th largest craft brewery saw positive volume gains, regardless of the climate.

In a letter sent to the company’s distributors in May, Adam Lambert, the company’s vice president of sales, said its shipments were up 13 percent while depletions were up 15 percent. The Delaware-based craft brewery said it is on pace to brew and sell 202,000 barrels this year, up from 172,617 in 2012.

“In a very tough first quarter for our industry, we are grateful that you spent the time and energy on making sure we hit our business objectives,” Lambert wrote.

Data through March 31 from Symphony IRI also indicates strong growth for the company. Total Dogfish Head brands grew 29 percent in volume and 31 percent in dollars on “large base,” Lambert reported. 60 Minute IPA grew 24 percent, while 90 Minute IPA – the company’s fastest growing brand – grew 42 percent, even with an average case price of $63.30. If those trends continue, 90 Minute will grow into the company’s number one dollar-performing brand in the grocery channel by the end of the year.

The company sells 49 percent of its beer in six “close-to-home” states (Delaware, New Jersey, Maryland, Virginia, Pennsylvania, and New York).

Crown Beverage Packaging Launches Topless Beer Can

The “topless beer can” was unveiled by Crown Beverage Packaging at the 2013 Craft Brewers Conference (CBC) in Washington D.C. The new technology does highlight some of the interesting ideas craft brewers are exploring to help their brands stand out in a crowded category.

The official trademarked name for the technology is 360 End, a removable can lid originally developed by Crown Holdings in 2010 for the FIFA World Cup. Brian Thiel, a regional sales manager for the company said one major benefit of the package is a reduction of waste at large events.

Craft brewers love the technology for a much more sensory reason.

“Craft brewers spend a considerable amount of time creating recipes and choosing the types of aroma hopes that go into a beer,” said Thiel. “Now the consumer has their full attention and their nose is basically right in the drink.”

The first craft beer company to use the technology is Pottstown, Pa.-based Sly Fox Brewing Company, but Thiel said Crown received a lot of attention from CBC attendees and this week, hundreds of 360 End samples are being mailed to craft brewers across the country. He also said the 360 End costs roughly 2.5 times more than the company’s current “SuperEnd.”


Manhattan Beer Distributors Picks Up Shiner, Schlafly and Pyramid Brands

Manhattan Beer Distributors, one of the country’s largest beer wholesalers, confirmed to that it has signed distribution agreements with three top 50 craft beer brands: Shiner, Schlafly and Pyramid.

The Bronx, NY-based wholesaler will launch the Shiner brand of beers — owned by The Gambrinus Company — throughout New York City.

Manhattan Beer began selling Schlafly beers in New York City on May 15 and Pyramid beers on Long Island and in the Hudson Valley at the end of May.

The new additions should strengthen a portfolio of craft offerings that includes large brands like Boston Beer Company and F.X. Matt, as well as coveted craft brands like Avery Brewing and Captain Lawrence.

“We are better suited for larger craft brands,” said Robert Mitchell, Manhattan Beer’s General Sales Manager. “That’s not to say that we can’t do smaller brands — because we have plenty of those — but few distributors in this market would have the money, desire and resources to bring in the initial volume for brands like Shiner.”

Manhattan Beer sold about 1.5 million cases of craft beer in 2012, Mitchell said. With the addition of Shiner, Schlafly and Pyramid brands, the company projects that its craft sales will surpass 2 million cases in 2013. Manhattan Beer also sells MillerCoors and Grupo Modelo products, which helps to bring its overall case count to about 35 million, Mitchell said.

Bell’s Brewery to Open New Facility in Michigan’s Upper Peninsula

Bell’s Brewery will continue to fortify its brand with a new facility in Michigan’s Upper Peninsula.

The Kalamazoo-based brewery recently announced its purchase of a 3.16 acre lot in Escanaba, Mich., a small city that sits on the cusp of Little Bay de Noc. The Escanaba City Council approved the purchase, which will function as the home of Upper Hand Brewery, a new division of Bell’s Brewery that will brew and bottle a variety of beers for distribution across Michigan’s “U.P.” and adjacent northern states.

The purchase is part of a company-wide $15 million investment and the new brewery will employ five people. The construction, which will be handled by local contractors and suppliers, and equipment will cost about $2.5 million and will be completed in about 18 months. New beer recipes have already been brewed at the Kalamazoo brewery and served at the adjacent Bell’s Eccentric Café.

After visiting the Escanaba area in March, Bell said that he was drawn by its central location and the cooperation from local government and business leaders. Vicki Schwab, the Delta County Economic Development director, started providing Bell with information about the community and possible building sites last year.

Stone SVP Steps Down, Announces New Director of National Sales

A key member of Stone Brewing Co. has stepped down after 16 years with the company.

Arlan Arnsten, Stone’s senior vice president of sales, announced that he was leaving the company “to pursue interests outside of the craft beer industry.” Coinciding with his departure, Arnsten announced the promotion of Jason Armstrong to director of national sales, a new position at Stone.

In his five years with Stone, Armstrong previously served as a regional brewery representative in Texas and a regional sales manager in Louisiana, Missouri, Iowa, Minnesota and Illinois. As the director of national sales, he will oversee all of Stone’s sales to distributors throughout the continental United States. All of Stone’s regional sales managers and regional brewery representatives will report to him.