WSJ: PepsiCo Confirms SodaStream Test
PepsiCo is set to begin a limited test of its soda brands for use in SodaStream International’s carbonation machines, according to The Wall Street Journal. Beverage Digest, an industry newsletter, first broke the news via Twitter, stating that the trial run is a 10-week test with PepsiCo introducing new “Homemade” versions of its flagship cola and Sierra Mist products.
The Journal reported that PepsiCo and SodaStream have agreed to a “small-scale, limited-time test” that will begin in the coming weeks. In a statement sent to the newspaper, PepsiCo said that it is “exploring multiple technologies in this space” and that “SodaStream is one of several companies we’re talking to about potential ideas for the future.”
In a separate statement sent to the Journal, SodaStream wrote that “there are currently no discussions between SodaStream and PepsiCo concerning any other form of broader business collaboration.”
PepsiCo’s test comes a few months before the Coca-Cola Co. is expected to launch a new line of pod-based beverages for use in Keurig’s soon-to-be-launched Keurig Cold system, which will allow consumers to make a variety of beverages, including carbonated ones, using its capsule-based technology. In February, Coca-Cola purchased a minority stake in Keurig and signed a long-term partnership with the company to produce a variety of pod-based Coke products.
Natural and specialty DSD distributor Greenshoots, which had just a few months earlier completed a multi-million-dollar capital raise, was faced with swelling bills, irate suppliers and a full-scale retreat from several distribution territories in October.
With several high-profile, trendy beverage companies on its roster, including BluePrint, GT’s Kombucha, Mamma Chia and Tumeric Alive, Greenshoots won supplier accounts with the promise of the application of DSD frequency and care to influential stores in channels that are used to setting their shelves themselves. But its core promise, better sets and service in natural and specialty retail for new and emerging brands, has frequently been offset by complaints about inconsistent execution.
BevNET spoke with executives from several beverage brands affiliated with Greenshoots, each of whom stated that the distributor had been delinquent and unresponsive regarding tens of thousands of dollars in unpaid bills. Some pointed the blame at Greenshoots’ rapid expansion and decision to take on huge retail accounts, including Safeway and Kroger, as the reason for its current troubles.
Brennan Corbin, Greenshoots’ co-director of business development, concurred.
“We grew too quickly as a company,” he told BevNET.
As a result, Greenshoots is now in the process of consolidating its distribution territory, and will focus its attention on California, which is its primary market. Corbin confirmed that Greenshoots has ended operations in the North Atlantic (“We were never profitable in that region,” he said) with specialty distributor Gourmet Guru acquiring the company’s distribution rights for the region. Greenshoots has also pulled out of Washington D.C. and Texas; Corbin expects that national wholesalers UNFI and KeHe will assume distribution for those markets.
As for Colorado, Corbin was uncertain as to whether Greenshoots would continue distributing in the state, but that as of now, there have been no announced plans regarding its status.
“Even though we’re consolidating, it’ll make our organization stronger,” Corbin said. “I want to take care of not only our brand partners, but our retail partners to make sure that if we are transitioning out of these regions that we do it the most seamlessly possible way. We’re going to be working with these companies and retail partners in California, so we need that relationship strong.”
While Corbin will be involved for mapping a strategy to address its revised distribution plans, it falls on Greenshoots CEO Ben Lewis and the company’s investors, including Pergament LOHAS Fund (which was the primary investor in its most recent capital infusion) to find the funds to pay for its outstanding debts. Nat Noone, the company’s original founder and CEO, left in the spring following the investment from Pergament. Lewis, who had started philanthropic brand GIVE Water as a college student, had come to the company in a leadership position in 2011, following his own investment in Greenshoots.
Corbin described Lewis as “working feverishly” to figure out a plan to pay suppliers.
Big Guys: Coke Names New CMO
On the heels of a disappointing quarter for the Coca-Cola Co., one that prompted a revision of its long-term strategic plans, the cola giant announced a major shake-up in its marketing department. Coke revealed that Joe Tripodi, its Chief Marketing and Commercial Officer, will retire at the end of February, 2015. His successor will be Marcos De Quinto, who has been President of Coke’s Iberia Business Unit and Vice President, Europe Group since 2000.
Tripodi had overseen Coke’s marketing efforts since 2007, having joined the company after holding CMO roles with Allstate Insurance Co., The Bank of New York, Seagram Spirits & Wine, and MasterCard International. Upon his appointment, Coke had for the first time unified corporate responsibilities of traditional advertising, point-of-purchase marketing and in-store sales under a single executive, according to Ad Age. He was seen as a source of stability in his position at Coke, which had cycled through several marketing executives in the decade prior.
Nevertheless, the announcement came at time when Coke faced pressure from shareholders to reinvigorate sales and profits, which tumbled by 14 percent in the last quarter. To that end, the company laid out a five-point plan in hopes of stemming the tide, one that included an initiative to “strategically targeting brand and growth investments that leverage its global strengths.”
Amid declining sales of soft drinks, much of it driven by concerns about soda consumption and links to health-related problems, including obesity, Coke has faced pressure from shareholders to cut costs and increase productivity. Earlier this year,Coke had pledged to save $1 billion per year through 2016 and has continued to streamline operations by selling company-owned distribution territories in North America, the majority of which will be in the hands of independent bottlers by 2017, according to Coke.
Nevertheless, introspection (and agitated investors) has led to the expansion of a cost-cutting strategy that will now aim to save Coke $3 billion a year by 2019. The company said it would also refranchise “a substantial portion” of its remaining distribution territories (those not unloaded by 2017) no later than 2020.
Coke laid out four steps that it believes will improve productivity as a way to save $3 billion annually: restructuring the company’s global supply chain, including manufacturing in North America; implementing zero-based budgeting across the organization; streamlining and simplifying its operating model; and driving increased discipline and efficiency in direct marketing investments.
Despite its revised strategy, Kent noted that Coke expects “the macroeconomic environment to remain challenging through 2015” and that “the initiatives announced today will take time to produce results.” Accordingly, Coke has adjusted previously announced financial targets and projects its 2015 numbers to bear similarities to lackluster returns of 2014.
Little Guys: Orgain, Project Fresh Pick Experience
Boosting their leadership ranks with proven veterans of the food and beverage industry, protein shake company Orgain and FreshBev, maker of cold-pressed, high pressure processed RIPE Craft Bar Juice cocktail blends and Project Fresh juices, recently announced top-level moves intended to mold the strategic vision of each company.
Orgain, which also sells a line of protein powders, has tapped Carter Elenz as president and named Kristen Deshaies as chief marketing officer of the company. Both Elenz and Deshaies have held executive roles at dairy foods giant Stonyfield Farm as well as Seventh Generation, which markets environmentally-safe household products.
Elenz, who has also worked with Garden Burger and the Quaker Oats Co., most recently held positions at U.S. Cellular as an executive vice president, and as the interim chief marketing and sales officer of Aseptia Inc. and Wright Foods, Inc. In 2010, Elenz joined functional beverage company Sensia as CEO and later transitioned to an advisory role with the company, where he also sits on the board of directors.
Deshaies cut her teeth in the CPG industry with an eight-year stretch as a brand manager at Ben & Jerry’s before joining Seventh Generation in 2007, moving her way up the ranks to become senior director of marketing at the company. In 2011, Deshaies joined Stonyfield Farm, working her way to become vice president of marketing before leaving the company in July, 2013.
On the cold-pressed side of the refrigerated shelf, FreshBev has been rolling with its RIPE and Project Fresh lines and recently enlisted Philippe Roederer as president to help manage growth. Roederer came to FreshBev in July as a 24-year veteran of the beverage industry beginning at Clicquot Inc. in 1991, where he spent nine years and helped develop Veuve Clicquot into the number two Champagne brand in the U.S. He later worked with private equity firm Hicks, Muse, Tate and Furst to help restructure and sell Mumm and Perrier-Jouet Champagne, before joining Voss USA as CEO in 2002, later becoming President, Voss Americas in 2006.
Roederer “will work closely with founders Michel Boissy and Ryan Guimond in growing Freshbev’s distribution from select East Coast markets to a national scale,” according to a statement from the company.
WhiteWave Acquires So Delicious For $195 Million
Adding to its already strong presence in dairy-alternative products, The WhiteWave Foods Company announced last week that it has acquired So Delicious from the brand’s existing shareholders for approximately $195 million.
So Delicious has already generated a national footprint for its plant-based beverages (coconut, almond and cashew milks), creamers, cultured products and frozen desserts. The non-GMO brand recorded net sales of $115 million for the 12-month period ending on June 30, 2014, according to a WhiteWave release, and is expected to continue growing in the second half of 2014.
“The acquisition of So Delicious represents a great addition to the WhiteWave portfolio and fits squarely within our strategy of driving growth in our core businesses,” Gregg Engles, WhiteWave chairman and CEO, said in the release. “It builds on our platform of Silk and Alpro branded products by expanding plant-based capabilities and providing new category opportunities.”
Even before the deal, WhiteWave had established its foothold in the alternative dairy category with Silk and, to a lesser extent, Alpro. Still, Sara Loveday, senior marketing communications manager for the company, spoke about the deal like an NFL general manager stockpiling assets. It’s a strong brand, she said, that offers growth potential and entry to new categories — namely, cultured products and plant-based frozen desserts.
Pat Finn, co-founder and managing partner at Finn Capital Partners, said there’s no question that the deal will lead to portfolio cannibalization. However, he likes the move because, to Loveday’s point, it gives WhiteWave a brand that has found rare cross-category success with both beverages and frozen desserts, which, he said, are high-growth areas.
So long as WhiteWave establishes unique positioning for Silk and So Delicious almond milks, both brands can coexist in the same beverage category, he said.
“There’s plenty of evidence that seemingly cannibalizing brands can live under an umbrella,” Finn said, “but it takes some hard work to make sure that they stay differentiated.”
MetaBrand Capital Pours $6 Million into Runa
Entrepreneurial experience – both positive and negative – broad capabilities, and a whole lot of money are now part of the mix at Runa, the Guayusa-based “clean energy” brand following MetaBrand Capital’s nearly $6 million investment in the growing company.
In a call with BevNET, Runa president Tyler Gage and MetaBrand founder Eric Schnell explained that the investment will allow Runa to use both the cash infusion and MetaBrand’s long, varied reach throughout the food and beverage industry to grow its drinks business.
“Having a substantial amount of capital from a great partner is a different thing for us – we know we can focus on the business,” and not on the fundraising, Gage noted. Famously starting Runa right out of college with partner Dan MacCombie, he added, “We knew we were on a long road. Thankfully we’ve had the results now to merit a much larger investment, and we want to put capital behind it to grow sales, reduce costs for the next couple of years.”
According to Schnell, the key to the investment was that Runa’s emphasis on “clean energy” as the brand’s point of differentiation from other teas or energy drinks seems to be gaining traction outside of the natural channel, which serves to incubate many new products.
“Part of the inspiration to invest is their proving out the concept at such an early stage,” Schnell said. “It crosses categories much more easily than the typical product. Mainstream retail, food, drug, and mass, is adopting the brand at a much greater rate, and we see it as being capable of sourcing volume much more quickly than others that have been stuck in natural. We have some nice data and case studies of success.”
Beverage Industry Wins & Losses
The beverage industry saw wins and losses in the results of midterm election ballot questions. As projected, Massachusetts voters emphatically voted against Question 2, an initiative that would have expanded the state’s bottle bill to include 5-cent deposits on bottled water, sports drinks and other beverage containers not currently covered on the bill. Over 73-percent of the Commonwealth voted against the measure, in what will be seen as a victory for the bottling and grocery industry, as well as anyone opposed to shelling out an extra nickel for their bottled water.
On the West Coast, Berkeley, California became the first city in the country to pass a tax on soda, with 75-percent of Alameda County voters approving the measure to place a 1-cent-an-ounce tax on sugary drinks. Berkeley voters overcame massive spending by the American Beverage Association in order to pass the bill.
“We’re saying no to Big Soda,” said Berkeley Mayor Tom Bates, according to the Associated Press. “We’re saying that Berkeley and the rest of the country need to pay attention that soda is such a destructive product.”
San Francisco, however, despite garnering over 50 percent of the vote, failed to pass a similar measure because the bill required a two-thirds majority to pass. Berkeley’s Measure D had no such requirement. Former New York City Mayor Michael Bloomberg, who unsuccessfully attempted to keep large soft drinks out of the Big Apple, donated $83,000 to the Berkeley initiative.
Additionally, in the latest series of failed GMO legislation, Colorado and Oregon voters voted against requiring companies to label foods that contain genetically modified ingredients. However, in a narrow victory of just over 1,000 votes, residents of Maui County, Hawaii decided to temporarily ban genetically engineered crops.
SweetWater Sells Minority Stake to TSG Consumer Partners
Another top-50 craft brewery sold a piece of its business to private equity when Atlanta’s SweetWater Brewing announced that it had sold a minority interest to TSG Consumer partners, a private equity firm that invests in middle-market consumer brands.
“Having recently had some folks in our investor pool who were ready to start allocating funds towards their kids’ college tuitions, we began looking for ways to create liquidity for some of the old timers while also bringing on a new minority partner that could potentially add long-term value to our brewery,” company founder Freddy Bensch said in a statement.
Specific terms of the deal were not disclosed.
In the statement, Bensch described TSG as “likeminded people who share our solid core values.”
“Operationally speaking, SweetWater will remain unchanged whatsoever, and we will continue business as usual as we strive to keep making the best beer we possibly can,” Bensch said. “We look forward to the future and taking it to the next level…one beer at a time.”
SweetWater is the third craft brewery to announce a private equity transaction in the last 30 days. Earlier this month, New York’s Southern Tier Brewing said it had sold partial ownership to Ulysees Management LLC. In September, Utah’s Uinta Brewing announced it had sold a percentage of its business to The Riverside Company.
It’s also worth noting that TSG recently partnered with Russia’s Oasis Beverage to purchase Pabst Brewing. TSG has previously invested in beverage companies including Muscle Milk owner Cytosport and Vitaminwater maker Glaceau. The company has offices in New York City and San Francisco.
10 Barrels for A-B InBev
Anheuser-Busch InBev, the world’s largest brewer, announced plans to acquire 10 Barrel Brewing, a small but fast-growing craft brewery based in Bend, Ore.
Projected to brew over 40,000 barrels in 2014, 10 Barrel currently distributes its products in Oregon, Washington, Idaho and Vermont. The company also operates a brewery and pub in Bend as well a satellite brewpub in Boise, Idaho with plans to open a third brewpub location in Portland, Ore.
Financial details were not disclosed, however 10 Barrel and A-B InBev executives discussed the acquisition, as well as A-B’s growing interest in the craft category, during a phone call with Brewbound earlier this month.
10 Barrel co-founder Jeremy Cox said the decision to sell was driven largely by his company’s rapid growth and the need for a more mature infrastructure.
“We had some challenges growing the business,” he said “About three months ago, we realized we needed to find a strategic partner to help us with that.”
Those challenges – hiring, sourcing raw ingredients and managing rapid growth – led 10 Barrel’s three founding partners to explore an exit strategy.
Indeed, 10 Barrel’s growth was rapid, even by today’s industry standards. In 2013, the company grew its production nearly 300 percent, to 23,500 barrels. And, with 2014 volumes quickly approaching the 45,000-barrel mark, the company decided it needed the help of a strategic partner who could provide capital as well as industry expertise.
“It was strategic all the way,” said Garrett Wales, who launched the business with Jeremy Cox and his brother, Chris Cox in 2006.
Dogfish Head, Harpoon Shuffle Execs
Dogfish Head announced significant changes to its executive leadership team, including the departure of longtime vice president of sales, Adam Lambert, who will leave the company to pursue a new opportunity within craft beer.
The Delaware-based craft brewery also announced it would promote current chief operating officer, Nick Benz, to the role of CEO.
Lambert – who began his career with Dogfish Head in 2008 and helped grow the company’s sales from 75,000 barrels to a projected 233,000 barrels in 2014 – shared the news in a note to fellow Dogfish employees and industry friends.
“Sam and the team at Dogfish Head took me in and allowed me to steer the ship as VP of Sales,” he wrote. “I have lived, breathed and cherished this role for almost seven years. At this moment in my life I’m looking forward at the chance to move to a part of the country I have always enjoyed. Having a deep admiration for all that is Michigan; I will be packing up and moving to a new chapter in my life.”
Lambert joined Dogfish Head from Oregon’s Rogue Ales & Spirits, where he served as the national sales and marketing manager for more than five years. In November, he’ll take over the new vice president of sales for New Holland Brewing, which grew production by 42 percent in 2013 and is currently expanding with a new brewery, distillery tasting room and restaurant.
Calagione will continue in his role as president, founder and chairman of the board while Mariah Calagione will continue as vice president, the company said. Dogfish Head is currently looking to hire a new vice president of business operations who will oversee non-beverage business, a statement said.
Meanwhile, Harpoon Brewery announced it will promote Charlie Storey, the Boston-based company’s current vice president of marketing, to the position of president.
Storey, who joined the company in 1996, will oversee marketing, retail and festival initiatives and also manage the brewery’s distribution arm. In addition, Storey will assist Harpoon co-founder and CEO, Daniel Kenary, with strategy and business development, the statement said.
“I believe Harpoon, and the craft beer segment in general, has tremendous opportunity for growth and will continue to be a driver in how U.S. consumers perceive beer,” Storey said in a press statement. “I am especially excited to be in a leadership position at an employee-owned company. It is impressive what can happen when everyone works together towards a shared goal.”
In July, Harpoon announced that six of the company’s eight shareholders would sell at least part of their ownership stakes to an employee stock ownership plan (ESOP). As part of the transfer, it was announced that co-founder Rich Doyle would sell his entire interest and step down as CEO, but maintain a part-time role in sales and marketing initiatives. In August, the company transferred 48 percent of its shares into the ESOP.
Harpoon added that it would also promote brand manager Chris Bonacci, who has been with the company since 2002, to assistant vice president of marketing. In his new role, Bonacci will oversee the brand team – which includes digital media, communications, design, promotion and Harpoon Helps, the philanthropic arm of the brewery.