Coca-Cola Wins Arbitration With Monster Over ‘Energy’ Line
The Coca-Cola Company in June received a favorable decision in its arbitration hearing with Monster Energy Corp., paving the way for the soda giant to expand its new energy drink, Coca-Cola Energy, into markets worldwide.
The dispute hinged on the interpretation of terms in the two companies’ 2015 distribution agreement which prevents Coke from launching a product that will compete directly with Monster, with an exception for products introduced under the Coca-Cola brand.
In its ruling, the American Arbitration Association found that Coca-Cola Energy fell within that exception and did not represent a breach of Coke’s contract with Monster.
In a joint statement, Coke and Monster stated: “The companies respect the arbitrators’ decision and appreciate that the dispute was resolved amicably. While there was a disagreement between Coca-Cola and Monster over contractual language, the companies value their relationship and look forward to their continued partnership.”
The decision has potentially major implications for Coke’s future interests in the $12 billion U.S. energy drink category. Coca-Cola Energy, which contains 80 mg of naturally derived caffeine per 250 ml can, was introduced in a single SKU in Hungary and Spain in April, with further European expansion planned over the next 12 months. The product contains guarana extracts and B vitamins, and is marketed as “the only energy drink with a great Coca-Cola taste.”
Coke has not announced plans for a U.S. launch for Coca-Cola Energy. The Atlanta-based soda giant owns a 16.7% stake in Monster and distributes the brand’s products through its network of franchised bottlers in the U.S. and Canada.
New Age Agrees Terms to Acquire Brands Within Reach
New Age Beverages announced in June an agreement for the acquisition of Brands Within Reach (BWR), a deal which brought global brands such as NESTEA, Volvic, Evian and illy into the Colorado-based company’s portfolio.
According to New Age CEO Brent Willis, the transaction was made through a $500,000 payment, the transfer of 700,000 shares of stock, and the assumption of $2.5 million in debt by New Age.
Mamaroneck, N.Y-.based BWR is a marketing, branding and sales agency founded in 2003 by former Danone executive Olivier Sonnois. In addition to working with independent brands such as Kasumi Tea and Found, BWR works on brand licensing and distribution for select brands from within the portfolios of large strategics like Nestle (NESTEA, Volvic), Danone (Evian) and The Coca-Cola Company (illy ready-to-drink products).
New Age, a publicly traded company, will take over BWR’s existing agreements with those brands, which covers licensing and distribution for NESTEA, Volvic, and illy across all U.S. retail channels and for Evian in the natural channel. BWR’s other brands include Kasumi Tea, Found, and Saint-Geron Sparkling Water, as well as natural snacks Nature Addicts, Grande-Mere Lucien Georgelin and La Mere Poulard.
The combination of the two companies will bring New Age’s revenues to over $320 million, according to a press release.
Adding brands like NESTEA and Volvic is also part of New Age’s ongoing effort to become a “one-stop” outlet for better-for-you functional beverages. Willis said the licensing arrangement will work the same as the company’s existing arrangement with Marley Beverage Co., in which New Age pays a flat licensing fee and retains 100% of revenues. With new infrastructure to support them, the idea is to leverage global presence of BWR’s portfolio to “get the value out of the brands that we already have,” Willis said.
Bragg Live Food Products Acquired by Investor Group
Apple cider vinegar maker Bragg Live Food Products announced on June 25 its acquisition by an investor group led by private equity firm Swander Pace Capital.
Founded in 1912, Bragg has for decades been a stalwart independent brand in the natural and specialty CPG space. The company is a leader in the $160 million apple cider vinegar category with its line of ready-to-drink products and also produces lines of seasonings, liquid aminos, olive oils and vinaigrettes.
In addition to Swander Pace, Dragoneer Investment Group, entertainers Katy Perry and Orlando Bloom, and Pressed Juicery founder Hayden Slater have also invested. Financial terms of the deal were not disclosed.
Swander Pace CEO and managing director Andrew Richards told BevNET Bragg is a timely addition to the firm’s portfolio of health and wellness brands, which includes prior investments in companies such as PlantFusion and JR Watkins. He cited growing consumer interest in natural and healthy products as motivation for the acquisition, noting Bragg’s strong brand awareness and international distribution network will serve as a foundation for growth.
“Bragg is a business of scale in the natural space and it has a 100-year-plus heritage with a consumer base that is rabidly loyal and who care about the ownership,” Richards told BevNET. “So it’s a good fit for us because most of what we do is partner with families and entrepreneurs who have that same mindset of trying to further the health benefits of their companies.”
According to Richards, CEO Patricia Bragg — who has led the company since the 1950’s after the retirement of her father-in-law and founder Paul Bragg — will continue to be involved with the brand. While the company is looking to expand and introduce new innovations, Richards said the investor group is conscious of the brand’s legacy and will seek to maintain its authenticity with consumers moving forward. Even as the company explores new categories with additional food and beverage lines, Bragg will keep its core product portfolio and iconic red-and-yellow trade dress.
According to Richards, Katy Perry will play a prominent role in the direction of the brand. Perry is a member of the board of directors and has known Patricia Bragg since childhood.
According to SPINS, apple cider vinegar sales have declined by more than $33 million in the past year. As of May, branded products in the category were down year-over-year by 17.1% to $160 million.
Despite declines in the category, Richards said annual total sales for Bragg are approximately $150 million. Last year, a joint report by data analytics firm IRI and The Boston Consulting Group showed Bragg was the fourth fastest growing small-sized CPG company in the U.S. in 2017.