The Latest News on the Brands You Sell

ADM Acquires WILD Flavors for $3 Billion

wild flavors 480Archer Daniels Midland (ADM) Company announced earlier this summer that it will acquire WILD Flavors GmbH for approximately $3 billion. According to a joint release, the transaction awaits regulatory approval and is expected to close by the end of the year.

The agreement will diversify the portfolio of ADM, a global supplier of food ingredients, animal feeds and biofuels, among other products. Chairman and CEO Patricia Woertz added in the release that the acquisition expands the company’s ability to serve evolving consumer demands, which includes the quickly-growing natural flavor and ingredients markets.

WILD Flavors, headquartered in Zug, Switzerland, serves as an ingredient supplier to more than 3,000 global clients in the food and beverage industries. The company has estimated 2014 net revenues of approximately $1.36 billion, according to the release.

Woertz said in a statement that the acquisition complements ADM’s recent ingredient acquisitions, which include a protein complex in Brazil and a soluble-fiber expansion in China. The company anticipates that the WILD Flavors acquisition will have estimated cost and revenue synergies of approximately $136 million by its third year.


Coke Pays $2.15 Billion for 16.7 Percent Stake in Monster

monster 150 (2)A long-discussed investment took place last month when the Coca-Cola Co. and Monster Beverage Corp. announced a long-term strategic partnership  that resulted in Monster selling 16.7 percent of its shares to Coke in exchange for a $2.15 billion payout and a swap of smaller portfolio brands. The global soft drinks giant will also distribute Monster internationally and increase its role in U.S. distribution.

According to the announcement, Coke will gain two seats on Monster’s board. The deal is expected to close late this year pending regulatory approval.

Coke has an option to increase its stake to 25 percent via open market purchases or through a negotiated transaction with Monster, per the agreement, which stipulates that over the next four years, Coke cannot exceed an ownership stake beyond 25 percent without Monster’s approval.

Coke has been Monster’s chief energy drink distributor since 2008, helping it become the most widely-sold energy brand in the country, one viewed a panacea for Coke’s declining core CSD business, with energy drinks growing to more than $10 billion and, for many younger consumers, a replacement beverage in the space that a soda might once have filled.

Monster will, in the words of a joint statement regarding the deal, become a “pure play” energy drink company, adding such formerly Coke-owned products as NOS and Full Throttle, as well as international brands Burn, Mother, Play and Power Play, and Relentless to its portfolio while spinning Peace Tea, Hubert’s Lemonade, Hansen’s Natural Soda and Hansen’s Juices to Coke.

Plugged into Coke’s massive global distribution network, Morgan Stanley analyst Dara Mohsenian sees the deal as having a tremendous upside to Monster’s international growth, and also noted that the swap in non-core portfolios plays very much in Monster’s favor. Monster may be losing its non-energy business, but it gains nearly $2 billion in annual retail sales of Coke-owned energy brands. Mohsenian contrasted the move with Coke’s side of the deal in which it acquires $165 million in wholesale sales of Monster non-energy brands, “with little profit contribution,” he added.


Vita Coco Coconut Water Sells 25 Percent Stake to Red Bull China


Vita Coco CEO Mike Kirban

Vita Coco CEO Mike Kirban

Reignwood Group, the parent company of Red Bull China, has purchased a 25 percent stake in All Market Inc., the owner of Vita Coco, the top-selling coconut water in the U.S. The investment is based on a valuation of $665 million for All Market. The agreement includes distribution of the brand’s portfolio throughout mainland China.

Michael Kirban, CEO and co-founder of Vita Coco, said that his company wasn’t shopping the brand or looking for the highest figure. Rather, he sought a partnership that gave shareholders liquidity and kept them aligned with the company on a global level.

“We’re not looking to sell the whole business until we’re able to prove what this business is really capable of,” Kirban said.

In China, through Vita Coco’s own sales and marketing team and with the approximately 2,000 employees of Red Bull China, Kirban expects the brand will launch in about 130,000 stores in the first quarter alone.

Kirban said that the Vita Coco team will work closely with Red Bull China to execute detailed business and distribution models in the country. He said that the arrangement will be very similar to a standard distribution agreement. He will continue to act as CEO and run the business at a global level, and board members Kirban, co-founder Ira Liran, beverage industry veteran Ken Sadowsky and Verlinvest will maintain their role in overseeing key decisions while adding a seat for the Reignwood Group. Meanwhile, Red Bull China will manage the brand with its existing accounts.


Lassonde Industries to Acquire Apple & Eve for $150 Million

Apple and Eve LOGOLassonde Industries Inc., a North American food and beverage conglomerate, will acquire Apple & Eve, LLC, a fruit juice company with a national footprint, for $150 million.

The Quebec-based company entered a definitive agreement through US Juice Partners, LLC, a subsidiary, to enact the agreement. According to the release, the deal will give Lassonde 90 percent equity interest in the brand and its distribution. The other 10 percent will go to members of the Lassonde family through their existing equity interest in US Juice Partners and a contribution toward the acquisition.

Apple & Eve, based in Port Washington, N.Y., was founded by the Crane family in 1975 and has since become one of the more pervasive ready-to-drink juice brands in the mainstream market. Its portfolio includes more than one hundred different juice products under the Apple & Eve brand name, as well as a variety of sub brands — Sesame Street, Fruitables, Waterfruits, Organics and Quenchers. The company also owns and markets juice products under the brand names Northland, Seneca and The Switch.


Vitaminwater Reverses Course

Less than two months after Vitaminwater changed its formula with a new sweetener blend of cane sugar and stevia, the brand has brought back its original formula.

Immediately after Vitaminwater announced the stevia addition on June 12, fans littered the brand’s social media pages with harsh, often vulgar repudiations.

On July 31, Vitaminwater announced on its Facebook page that it would revive the old formulation:

“We tinkered with the taste of vitaminwater. And our fans haven’t had the greatest things to say about it. So we’re changing back to the taste you know and love. We’ll be sharing regular updates with you as we ramp up production. We tip our bottle caps to you, vitaminwater drinkers.”

Fans responded to the Facebook post with praise for the move. One consumer exclaimed, “WE WON, my childhood has
been restored.”

The revamped beverages will hit shelves in the fall and will be available nationwide by the winter, according to Vitaminwater.


Vita Coco Vaults Into the Sports Drink Category

Vita Coco SportHaving invested heavily in the rollout and marketing of its mainstream-oriented lemonade flavor, Vita Coco is making an even bigger push to reach everyday consumers with the introduction of a new sports drink line.

Vita Coco Sport is the culmination of the brand’s partnership with Target, which was announced in April as part of the mass retailer’s “Made to Matter” program, one that aims to increase its customers’ access to natural and organic products.

Packaged in 18 oz. slim grip PET bottles, the beverages are made with coconut water, filtered water, sugar, natural flavor, citric acid, sea salt, fruit and vegetable juices (for color) and come in five varieties: fruit punch, orange, dragon fruit, lemon lime and black cherry. Each beverage contains 50 calories and 10g of sugar per 8 oz. serving. As for electrolytes, the beverages feature 120mg of sodium and 210mg of potassium in each serving.

As for wider distribution of the line, Vita Coco will evaluate the performance of the program at Target before making a decision for a broad rollout, Kirban said.


ZICO Unveils New Coconut Water Blends

Meanwhile, competing brand ZICO has introduced Chilled Premium Coconut Water & Juice Blends, a new line of 100 percent juice products from the Coca-Cola-owned brand that is set to debut this month.

Packaged in 1.5 L Tetra Paks, the products are aimed at reaching mainstream consumers who want to make better choices when it comes to healthy eating, but are not willing to compromise on taste, according to Lorna Peters, Chief Marketing Officer, ZICO.

The new ZICO Chilled Juice products are made with not from concentrate coconut water and, in the case of the blends, fruit juice with no added water. Initially available in three SKUs –Orange, Pineapple Mango and “Natural” — the beverages contain five electrolytes and are touted as having “up to 50% fewer calories than regular fruit drinks.”

ZICO has laid out a retail strategy in which the new products, priced at $7.99, will be marketed and sold at conventional grocers, specifically in the refrigerated cases of natural food sections.


Brewers Association: U.S. Brewery Count Eclipses 3,000

There are now more than 3,000 breweries in the U.S., according to Bart Watson, staff economist with the Brewers Association’s (BA), a trade group representing craft breweries.

Through the end of June, the BA counted 3,040 breweries, which marks the first time the U.S. has crossed the 3,000-brewery threshold since the 1870s.

Watson said the sustained rise in the number of U.S. breweries represents a “return to the localization of beer production.”

The BA count is based on the number of brewing facilities actively selling beer in the marketplace, but does not include breweries-in-planning, alternating proprietorships or contract brewers who do not possess a brewers notice. The count also only includes brewing facilities that are not counted as “someone else’s facility” in an effort to prevent double-counting, which would otherwise inflate the figure.


Mintel: Sales of Craft Beer Could Eclipse $20 Billion in 2014

Sales of craft and craft-style beer will likely eclipse $20 billion in 2014, according to a new report from market research firm Mintel.

Of the $20.4 billion in craft sales that Mintel has predicted for this year, the firm believes more than 84 percent ($17.2 billion) will come from Brewers Association-defined craft brewers.

Mintel had originally forecasted that craft beer sales could exceed $18 billion by 2017, but now believes that figure could actually double in the next five years. Citing consistent year-over-year growth trends, an improving economy, product innovation and an engaged consumer base, the firm said that combined sales of craft and craft-style beer could surpass $36 billion in 2019.

Despite the positive growth predictions, however, Mintel found that a “relatively low percentage” of beer drinkers (23 percent) regularly consume craft beer. Still, amongst 25-34 year-olds, the segment’s heaviest users, 29 percent of the survey’s respondents said they drink craft beer.


Red Bull to Pay $13 Million for False Advertising Settlement

Red Bull GmbH has agreed to pay more than $13 million to settle a proposed class action lawsuit that alleges false advertising of its energy drinks.

The plaintiff representing the class, Benjamin Careathers, said he had been drinking Red Bull since 2002 as part of the lawsuit he filed on Jan. 16, 2013 in U.S. District Court of the Southern District of New York. The suit argues that Red Bull misleads consumers about the superiority of its products with its slogan “Red Bull gives you wings” and its claims of increased performance, concentration and reaction speed.

The suit states that a 7 oz. cup of drip coffee contains approximately 115 to 175 milligrams of caffeine, depending on the blend, and a 12 oz. serving of Starbucks coffee costs $1.85 and “would contain far more caffeine than a regular serving of Red Bull.” An 8.4 oz. can of Red Bull contains 80 milligrams of caffeine.

Despite Red Bull’s denial of wrongdoing, the company has voluntarily withdrawn and revised marketing claims challenged in court, according to the plaintiff’s motion.

The settlement could include millions of individuals who purchased at least one Red Bull can over the past 10 years, offering class members the option of a $10 cash reimbursement or two free Red Bull products with an approximate retail value of $15 (Red Bull would cover shipping costs).

“Red Bull settled the lawsuit to avoid the cost and distraction of litigation,” the company wrote in an e-mailed statement to BevNET. “However, Red Bull maintains that its marketing and labeling have always been truthful and accurate, and denies any and all wrongdoing or liability.”


California Judge Dismisses Hain Celestial Suit

Claiming that studies submitted as evidence against BluePrint juice actually contradicted plaintiffs’ allegations against the brand’s ads and labels, a federal judge has tossed out a potential class-action lawsuit involving the brand.

It marked the second dismissal since February of a suit alleging that BluePrint ads and labels are misleading.

The lawsuit’s dismissal was based on the fact that scientific arguments in favor of the effects of high-pressure processing (HPP) as a way of deterring bacterial growth were cited in the very same documents that the plaintiffs were using to prove HPP’s lack of effectiveness.

A lawyer for the plaintiffs, Samuel F. Alamilla and Colleen King, had argued in their complaint that HPP is “similar to those of cooking and pasteurization, namely the destruction of vitamins, nutrients, live enzymes, nutritional value, and health benefits.”

In seeking a class action against BluePrint, Alamilla and King had alleged the company had misled consumers by claiming on BluePrint bottles and the company’s website that it was  “100% Raw,” “Raw and Organic” and “Unpasteurized.” The suit also compared high pressure processing (HPP) to pasteurization and claimed that Hain misled consumers by not disclosing information about nutritional deprivation.

In an odd twist, however, the plaintiffs submitted two articles which noted that the HPP process has “little or no effects on nutritional and sensory quality aspects of foods,” according to U.S. District Court Judge Vince Chhabria.

“The articles the plaintiffs cite thus contradict the allegation upon which their entire complaint hinges — namely, that pressure treatment deprives juice of nutritional value to a similar degree as pasteurization,” Chhabria wrote in an order dismissing the case. “To the contrary, both articles repeatedly make the point that pressurization has less impact on nutritional value than pasteurization.”


Three States Sue 5-hour Energy, Allege Deceptive Marketing

5-Hour-Energy-shotIf their own products don’t do the job, a pile of lawsuits should be enough of an afternoon pick-me-up for the makers of 5-hour Energy.

Oregon, Washington and Vermont have sued Living Essentials, which markets 5-hour Energy, and parent company Innovation Ventures for deceptive and misleading advertising. The suits question the product’s marketed sources of energy, alertness and focus. The company states that these effects are derived from a blend of ingredients, but the suit alleges that these effects are a result of caffeine consumption alone. The suits also question if 5-hour Energy is appropriate for adolescents aged 12 years and older.

Oregon Attorney General Ellen Rosenblum, no stranger to targeting 5-hour Energy, filed the suit in Multnomah County Circuit Court in Portland. At the end of December, in response to marketing claims, Rosenblum asked the company to prove that doctors recommend the product and that users don’t experience a post-caffeine crash.

The three states seek a permanent injunction that would prohibit the company’s allegedly deceptive advertising, along with civil penalties and restitution to customers.

A 5-hour Energy representative said the Oregon suit is “grasping at straws” and is a form of “civil intimidation,” according to Reuters.

In January, Northridge, Calif.-based Medicus Research conducted a study on the product’s efficacy and found that it sharpens cognitive function for six hours. The cross-over study was randomized, double-blind and placebo-controlled.