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La Colombe Signs Distribution Pact With Molson Coors

Philadelphia-based coffee roaster La Colombe has entered an exclusive 10-year partnership with Molson Coors Beverage Company to distribute the brand’s ready-to-drink coffee products in the drug and convenience channels starting in 2021, with plans to eventually transition distribution for all channels to the Molson Coors network over time.

The deal marks the latest addition to Molson Coors’ growing portfolio of owned and partnered non-alcoholic beverage brands and comes shortly after the announcement that the company will soon launch four new product lines developed through its partnership with L.A. Libations as well as a distribution agreement with sustainably-packaged water brand ZenWTR and Topo Chico.

“This is one more way we’re innovating beyond our traditional product lines to deliver what consumers want,” said Molson Coors president of emerging growth Pete Marino, in a press release. “It’s a mutually beneficial partnership for all; La Colombe will enhance its reach through our established distribution network, our distributors will benefit from access to another fast-growing, high-demand product they can offer their retailer customers, and Molson Coors adds an above-premium offering to the top of our non-alcohol roster of brands.”

La Colombe previously partnered with Molson Coors last year for the launch of its alcoholic Hard Cold Brew Coffee line, which was produced by the coffee roaster but distributed through Molson Coors’ wholesale distribution network.

Todd Carmichael, founder and CEO of La Colombe, said the brand views itself as a top player in the ready-to-drink coffee space, competing directly with strategics such as PepsiCo (which distributes Starbucks), Coca-Cola and Nestle. The new partnership now gives La Colombe the distribution muscle and support network it needs to dominate within the brick and mortar retail sector.

Though La Colombe’s new focus on the drug and convenience channels will primarily include grab-and-go products, Carmichael said he has a long pipeline of innovation focused on both single-serve and at-home occasions, but some of these products may be years away from a launch. As the Molson Coors partnership expands, the conglomerate will handle all new RTD product distribution.

Coke Cuts Continue, With Zico Next To Exit

The Coca-Cola Company announced it will discontinue coconut water brand Zico by the end of the year as part of a long term project to drop underperforming product lines from its portfolio.

The move comes after months of declining sales for the brand, which Coke acquired in 2013. According to market research firm IRI, sales of Zico have declined double digits across all product lines over the past year, with aseptic products down 33.3% in the 52-week period ending July 12. Zico’s products categorized as bottled fruit drinks declined 40.3% and refrigerated drinks fell 25.9% in the same period.

Launched in 2004, Zico helped create the U.S. market for coconut water along with Vita Coco and O.N.E. Long the second best-selling brand in the category, behind Vita Coco, Zico’s departure is set to reshape the coconut water market by creating room not just for smaller brands to rise up, but also presents an opportunity for its chief competitor to seize further market share.

In addition to Zico, Coke is also weighing whether or not to drop several other SKUs and product lines, including stevia-sweetened Coke Life, Diet Coke Feisty Cherry and regional soda brands such as Northern Neck Ginger Ale and Delaware Punch. The announcement comes just months after the company axed longtime portfolio mainstay Odwalla, stating in July that that decision came “at a time when it is more important than ever to evaluate where we can improve efficiencies in our business and operations.”

In a statement to the Wall Street Journal, a Coke spokesperson said the Zico decision comes as the company is “winnowing down” its product portfolio to focus on brands that can achieve a large scale.

In quarterly earnings calls over the past year, Coke CEO James Quincey has frequently talked about cutting underperforming “zombie brands” in order to streamline the conglomerate’s focus on its best-selling products. In the company’s Q2 call in July, referencing Odwalla, Quincey said the combined revenue of zombie brands on the cutting block made up approximately 2% of total company revenue and would require significant work and investment to scale and that it was more important to focus on recent acquisitions such as Topo Chico. As well, he noted the COVID-19 pandemic has forced the company to accelerate SKU rationalization plans.

Bang Moves to Terminate PepsiCo Distribution Agreement

Less than a year after entering an exclusive distribution agreement with PepsiCo that was touted as a blockbuster deal at the time, Bang Energy announced in November it had unilaterally “terminated” the relationship.

According to a press release issued November 17, Bang gave PepsiCo notice of termination on October 23, citing “multiple issues and concerns regarding PepsiCo’s performance since the parties’ distribution partnership began.” The release claims that PepsiCo is “no longer the exclusive distributor” of Bang or any other brands produced by parent company VPX Sports.

“Bang Energy has had, and continues to have, a remarkable 11-year relationship with many of its prior distribution partners, including the independent Pepsi bottlers,” CEO Jack Owoc said in a press release. “Therefore, we sincerely expected PepsiCo to execute at an even higher level based on their enormous resources and promises. Unfortunately, we were wrong. PepsiCo, you’re fired.”

In response to Owoc, PepsiCo reiterated in a statement to BevNET that it will remain the exclusive U.S. distributor of Bang Energy drinks through October 2023.

“We were disappointed to receive VPX’s … notice of termination without cause, especially given the rapid success we’ve had in significantly expanding the presence and availability of Bang Energy drinks,” the company said.

PepsiCo also noted that it will continue to fulfill its obligations under the contract, which does not include a minimum purchase commitment. The company said it will also be “defending and enforcing our exclusive rights granted in the agreement.”

The move follows months of declines for Bang, which began steadily this spring after a period of rapid triple-digit growth from $345 million in retail dollar sales in spring 2019 to over $1.1 billion this year. Since the first quarter, however, sales fell 1.3% to $1.09 billion in the 12-week period ending October 31, according to Nielsen. Overall growth for the 52-week period has slowed to 5.2% year-over-year.

In March, PepsiCo acquired Rockstar Energy for $3.85 billion in a move that was largely believed to be in anticipation of the then-forthcoming Bang deal. By acquiring Rockstar, which itself had experienced years of sliding sales, PepsiCo ended an exclusive distribution agreement and allowed the conglomerate to expand its energy portfolio, which also includes MTN Dew Game Fuel.

Speaking during the company’s Q2 earnings call in July, PepsiCo CEO Ramon Laguarta said the strategic was taking a “three-pronged approach” to the energy category, in which Bang played a significant role as its entry in the fitness energy sub-space while efforts to return Rockstar to growth and new innovations on MTN Dew would provide multiple use occasions.

PepsiCo itself has seen sharp declines in energy sales, according to Nielsen, down 12.5% to $1.06 billion in the 12-week period and down 10% for the 52-weeks.

Moving ahead, Bang’s decision to pull out of the agreement once again leaves the energy space at an uncertain crossroads. This spring, DSD distributors, retailers and competing brands saw the partnership as resetting the direction of the category due to the heightened presence of strategic players and disruption to DSD portfolios.

Bang’s departure to PepsiCo left many Anheuser-Busch InBev DSD houses without a leading energy player, creating a void that many competitors in the performance energy space rushed to fill. The growth of brands like A-Shoc, Nutrabolt (C4) and Celsius — the latter two of which are projected to eclipse $100 million in sales this year — has given those distributors more viable options to fill those open slots.

Noting that many beer wholesalers were disappointed to lose their distribution rights to Bang in the first place, Nik Modi of RBC Capital Markets wrote in a research note that the termination may be “a precursor to a partnership with another beverage company,” potentially one in beer that can “acquire the assets rather than just distribute them.”

OXIGEN Closes $15M Series B Round Featuring Celebrities, VCs

OXIGEN, maker of a line of oxygen-enhanced waters, announced in October that it had raised $15 million in a Series B funding round, backed by individual investors including pro athletes, musicians and venture capitalists.

The round follows the addition of Golden State Warriors point guard Stephen Curry as an investor and partner in August. As Curry moves into the role of the global face of the brand in advertising campaigns, fellow NBA star Kevin Love and country music singer Brett Eldredge join this round as fellow investors.

Additional participants include Ezralow Companies CEO Bryan Ezralow, JMG Capital principal Jonathan Glaser, Casamigos Tequila co-founder and Discovery Land Co. CEO Michael Meldman, Hudson Pacific Properties CEO Victor Coleman, film producer Neal Mortiz, Pritzker Private Capital CEO Anthony Pritzker, author Daniel Yergin and former congressman Dick Gephardt.

According to founder and CEO Blair Bentham, the “vast majority” of the Series B participants previously invested in the brand’s 2018 Series A round, which raised $13.5 million. The financing, he said, has been a lengthy process marked by frequent extensions and rising goals (initially OXIGEN aimed to raise $10 million and was prepared to close the round around March, but upped the ante when Curry began talks with the company in the spring).

While Curry has embraced becoming the face of OXIGEN, with his image being included in point of sale displays and in television ads, other high profile investors such as Love and Eldredge will not serve as brand ambassadors per se. However, Bentham said they have already helped grow brand awareness by promoting the brand on their social media channels and in interviews. Additionally, Curry and Love’s involvement has opened up sales opportunities to NBA teams, he added.

Other investors hailing from the finance and private equity world, Bentham said, have been able to expand OXIGEN’s networks with manufacturers and suppliers, helping the company to “streamline logistics.” Investor Mike Meldman, who is also the founder of hydration beverage Recover 180, has similarly provided OXIGEN with “different opportunities” through his ownership of real estate and resort firm Discovery Land Co.

Most of the financing, Bentham said, will be primarily used for marketing as OXIGEN aims to position the brand as a mainstream product. This year, the brand launched a series of television ads, which have run on ESPN as well as online, focused on the slogan of “Recover & Rise.” The spots highlight essential workers during the COVID-19 pandemic and the campaign also includes a giveback program where the company will donate $5,000 to a winning applicant’s charity of choice.

The financing also comes as the brand prepares to transition its nationwide distribution from predominantly wholesale to a broad DSD network for its roughly 47,000 accounts. In recent months, the brand has expanded into chains such as 7-Eleven, CVS, Shop Rite and Stop & Shop.

Cann Recruits Goop’s Gwenyth Paltrow As Investor, Brand Advocate

Cannabis-infused beverage brand Cann announced in late October that it had received investments from a roster of high profile backers including Goop founder Gwyneth Paltrow; actors Rebel Wilson, Ruby Rose and Darren Criss; NBA point guard Baron Davis; singer Tove Lo and YouTuber Casey Neistat. The collective size of the new funding was not disclosed.

Based in Los Angeles, Cann produces several lines of ready-to-drink “social tonics,” including a core line which contains 30 calories, 2 mg of THC and 4 mg of CBD per 8 oz. can, a Lite line with reduced sugar, and a “Hi Boy” line containing 50 calories and 5 mg of THC per 12 oz. can. The brand is currently sold in over 200 licensed cannabis dispensaries throughout California, Nevada and Rhode Island and previously raised $5 million in seed financing earlier this year.

According to Cann co-founders Luke Anderson and Jake Bullock, the celebrity investors will not only help promote the brand but also work to normalize cannabis beverages as a socially-acceptable alcohol alternative. While many entertainers associated with cannabis culture, such as rapper Snoop Dogg and actor Seth Rogen, have lent their support to startups, Anderson said those backing Cann are largely mainstream tastemakers who will help break down stigmas and stereotypes.

“We knew that because our product looked and felt so different [from other cannabis brands], it appealed to consumers that aren’t necessarily going to the dispensary yet, so we wanted to find an army of people who did not carry that same stigma and could help advance the conversation,” Anderson said. “With this group, they’re all very, very savvy business people who have track records of successful investments, if not running their own companies successfully.”

Anderson said the impact of the investors is already being felt, noting that earlier this year Paltrow promoted Cann on her social media channels, prompting an influx of requests from consumers new to the category who asked why the product was not available at stores such as Whole Foods and Erewhon. As a startup, Bullock said that Cann does not currently have a sizable marketing budget, making the platforms of Paltrow, Wilson, Rose and others a valuable tool for growing brand awareness.

Though dollar amounts of investments were not disclosed, Anderson said Paltrow owns a small but “non-trivial” stake in the brand.

But it’s not just consumers that Cann is hoping to convert through its influential backers. Anderson noted that the nascent THC-infused beverage market is still a small sliver of overall cannabis sales and dispensaries are often not equipped to upsell ready-to-drink beverages — making it difficult to scale the brand or receive strong in-store placement when many dispensaries lack basic tools such as coolers. Driving demand for the product could help the channel to pay more attention to the beverage space, he suggested.

According to Bullock, Cann is currently focused on expanding its footprint and increasing production in its existing markets and plans to open new facilities in Colorado, Illinois, Massachusetts and Washington over the next 6-8 months. Of the over 700 licensed dispensaries in California, he said Cann is only in about 200 but is targeting an additional 300 doors it hopes to add in the near future.

Currently, Cann is among the better selling cannabis beverage brands, with internal data showing high organic repeat customer rates — over 60% in the last month, Anderson said, adding that for many cannabis brands 20% repeat is considered strong. The company has sold over 2 million units so far this year, he said.

Pabst Blue Ribbon Branded Cannabis-Infused Seltzer Launches in California

The Pabst Blue Ribbon name is now attached to a new non-alcoholic, THC-infused, lemon-flavored seltzer, as the Los Angeles-based beer manufacturer announced the formation of Pabst Labs, a licensed cannabis company based in Los Angeles, as well as the launch of a non-alcoholic, THC-infused, lemon-flavored seltzer, Pabst Blue Ribbon Cannabis Infused Seltzer, in California.

In a press release in October, the company said Pabst Labs was started by a group of cannabis beverage experts and ex-Pabst Brewing Company employees with whom the brewing company struck a licensing agreement to use the Pabst Blue Ribbon moniker. A free one at that.

Pabst Labs brand manager Mark Faicol, who worked for the brewing company for 4.5 years, told the Los Angeles Times that Pabst Labs is a separate entity and the beer company has “no financial stake, and they’re not going to share in any of the sales. But they did give us the rights to use the brand with no fee.”

Pabst Labs will control the production, marketing and sales of the non-alc, THC-infused seltzer.

“Pabst Blue Ribbon has an incredibly loyal and passionate customer base who are open to change and embracing new ideas,” Faicol added in a press release. “We’ve spent a long time creating a quality product for both new and experienced users, and believe the entry of an established brand can help kick-start the cannabis drinks category.”

Each 12 oz. can of Pabst Blue Ribbon Cannabis Infused Seltzer contains 5 mg of THC and checks in at 25 calories and 4 grams of sugar.

The product is being tested in “a select group of California dispensaries,” as well as being sold directly to consumers with next-day delivery in the San Francisco Bay Area, Los Angeles, Sacramento and Humboldt County via shop.PabstLabs.com. A 4-pack of 12 oz. cans retails for $24 online, while a 24-pack sells for $120.

Liquid Death Raises $23M in Series B Round

In terms of raising funds, canned water brand Liquid Death has been making a killing.

In October, the California-based brand announced the closing of a $23 million Series B funding round led by an unnamed family office. The round also saw participation from Convivialite Ventures, punk musician Fat Mike of the band NOFX, sports analyst Pat McAfee and prior investor Velvet Sea Ventures, among others.

The round brings the brand’s total fundraising to $34.25 million, following a $9 million Series A round which was announced in February. At the time, Liquid Death was available in about 2,000 accounts nationwide.

In September, the company announced it had added 1,000 7-Eleven locations in Southern California. The company has also continued to focus on targeting unconventional accounts for water brands, such as liquor stores, tattoo parlors and bars.

This spring, the brand launched an unflavored sparkling water, it’s first product extension since launching in 2018.

In a statement, Liquid Death founder and CEO Mike Cessario said the round will primarily support online and retail growth, as well as funding new marketing campaigns, which have become the brand’s hallmark.

“Over the past six months, we’ve seen high growth like never before,” Cessario said. “Our online sales are hitting new records every month, and we’ve rolled out to thousands of new retail stores through our deals with Whole Foods and 7-Eleven. We’ve also continued to build the most fun and irreverent brand in the health space with campaigns like our Greatest Hates album release, Hardcore Norm Porn and most recently our Killer Baby Name Generator.”

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