It’s been one of the more promising developments in beverages, inaugurated by brands like Evolution Fresh a decade ago and a flock of cold-brew players more recently: a rash of refrigerated entries that offer a shockingly vibrant, fresh taste to those who’d gotten accustomed to the pallid flavor of highly pasteurized products, along with the promise of truly delivering the promised nutritional benefits. But it also has been a development that challenges the fundamental machinery of how the American beverage system operates, with elaborate, finely tuned mechanisms for producing, distributing and retailing shelf-stable products. Campbell Soup’s gruesome experience acquiring, operating and then divesting Bolthouse Farms might be the most explicit example of how different the cold channel is, but others, like Hain Celestial, with the business it built around the acquired BluePrint brand of juices and cleanses, have similarly struggled to keep such businesses on a steady course. I’d guess that even Evolution Fresh’s purchaser, Starbucks, has been disappointed at how arduous it’s proved to build that business outside the coffee shops, at retail.
The issue was thrown into relief for me a few weeks ago when I caught up for my newsletter with Yanni Hufnagel, a former college basketball scout and coaching assistant who’s devised an appealingly simple sports-drink-alternative and general hydrator called Lemon Perfect Cold Pressed Lemon Water that is a marvel of fresh, rounded taste and carries the exceedingly short, uncomplicated ingredient list that many consumers say they want to see these days. During our earlier encounters, Hufnagel had been a passionate, unwavering advocate of the refrigerated route to market, despite the advice he was receiving from prospective investors, distributors and employees that going shelf-stable would make for an easier lift. While Hufnagel was relatively new to beverages, he was no naïf: he’d undertaken a six-months-long deep dive prior to launch, and could discuss the pros and cons as articulately as beverage execs with years more experience. Shelf-stable? No way, Yanni vowed: he’s sticking to the cold box.
But lately, like so many others who’ve started from that position, Hufnagel has come around. As I was writing this column, he was undertaking his first production run of the now shelf-stable product, offering as justification the reasons he’d been hearing from the skeptics all along: broader retail display opportunities, access to the biggest DSD distributors, a more approachable price point, improved chances that a strategic would want to purchase the brand at some point down the road.
It’s not like the market is devoid of refrigerated distribution opportunities outside the captive systems harnessed by the big players. UNFI and KeHE draw extensive criticism, but they function at least as a delivery system and have been taking steps to up their service levels to early-stage brands. The city where I live, New York, is fortunate enough to support several cold-DSD options, with Dora’s Naturals and Rainforest probably the most robust, and a flock of more targeted ones in the mix. Still, if you’re a kombucha player, that’s not enough: early on, GT’s entered Dora’s on an exclusive basis, and Health-Ade followed into Rainforest. So if you’re a later arrival to the scene where do you go? That’s the situation the encouraged Brew Dr to find a way to keep its product essentially shelf-stable during the delivery cycle so that it could tap the huge generalist Big Geyser in New York along with beer houses around the country. (They all had to agree to install refrigeration in their warehouses to support the effort even if they didn’t refrigerate their fleets.) Some major houses, like Honickman Group, have undertaken controlled experiments with refrigerated distribution, while others drop compact refrigeration units on their existing fleets. But by and large we haven’t yet seen a meaningful wave of classic DSD operators adding that to their toolboxes. In another encouraging development, newer entrants like Joyride are building national footprints for kegged products, but refrigerated coverage still pales in contrast to the reach of shelf-stable soft drink bottlers, beer houses and independent generalists.
So the reasons to migrate to shelf-stable are compelling, as Hufnagel came to realize. Where does that leave the consumer, though? Maybe a little worse off, I’d venture, if you believe the promise of cold-chain products – particularly if shoppers are still being asked to pay prices approaching those of real-deal refrigerated entries. (Not LemonPerfect, which is taking its price down, I should note.) Take a shelf-stable brand like Purity Organic’s Superjuice, which mimicked the attributes of cold-pressed juices with its array of kale, spinach and coconut water, at a price somewhere in between its regular shelf-stable items and Evolution Fresh. Was that brand democratizing better juice, or simply taking its customers for a ride? That line didn’t get very far, so maybe shoppers concluded it was the latter.
This dilemma may be playing out most acutely these days with cold-brewed coffees. Black cold-brews can be a revelation to coffee drinkers with their rounded taste and absence of bitterness, but key brands that used to avow their commitment to refrigeration increasingly have been tilting toward canned shelf-stable versions layered with sugar and cream – improved versions of Frappuccino, maybe, but quite a distance away from being any kind of revelation. If you’re a Peet’s Coffee looking to ride on Dr Pepper trucks the impulse is understandable. Still, first-time cold-brew consumers encountering such items could be forgiven for wondering what all the buzz has been about. Democratization or dumbing down? You be the judge. (In fairness I should note that, on trips to Austin, I used to purchase refrigerated Chameleon concentrate if I had a fridge in my hotel room and shelf-stable Kohana if I didn’t, and did not perceive a huge gulf between the two.)
One final point. For some years, the market has seen a range of brands that essentially are shelf-stable but employ the guise of being refrigerated as a gambit to win placement in coveted retail spots like the produce section or dairy cooler. By some accounts, that was how Coca-Cola’s Gold Peak tea line first developed momentum, as an item whose produce-section presence conjured a degree of freshness and quality the product didn’t really deserve. Some argue that Odwalla and Naked juices are so cooked they aren’t really refrigerated any more either. Lately, a Swedish-based shelf-stable dairy-alternative brand called Sproud aims to make exposing this supposed scam a central part of its trade marketing, on the grounds that its faux-refrigerated plantmilk rivals are burning needless carbon to stay chilled and thereby undermining the sustainability claims they’re making through their use of non-dairy ingredients. Whether that’s an argument that resonates remains to be seen, but it highlights another way things are blurring. Like gender, maybe refrigerated and shelf-stable are turning out not to be binary after all.
Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.