Icelandic Water Holdings, the parent company of premium water brand Icelandic Glacial, has entered into a partnership with Golden West Food Group Inc. to collaborate on marketing, sales and distribution for the latter’s two beverage brands, Bowery Coffee Co. and the forthcoming KÖE Kombucha.
The deal, which was finalized two weeks ago, is the first step in turning Icelandic Glacial into a multi-brand global beverage company, according to CEO Reza Mirza. The agreement does not include any investment in Golden West.
“This is a perfect marriage because Golden West’s expertise is in the food business, and our expertise is in the beverage business,” said Mirza, whose previous industry experience includes roles as president and CEO of Activate Drinks and as senior marketing manager at Nestlé Waters. “When you combine them both, I’m very excited about this relationship.”
Mirza explained that Icelandic had been looking for a cold brew coffee brand that was both shelf-stable and free from artificial ingredients and additives. While discussing the category with Mirza, a friend recommended that he speak with Josh Solovy, president of Golden West, about one of the company’s portfolio brands, Bowery Coffee Co. Based in Los Angeles, Bowery launched a five-flavor line of ready-to-drink cold brew coffee drinks in 10.5 oz. glass bottles last year. The products are currently available in select regions of Target and Safeway stores.
In Q1 2018, the brand will launch a new five-SKU line of canned, shelf-stable cold brew products in 8 oz. slim cans. Aside from a dairy-free black variety, four flavors — Original, Tahitian Vanilla, Mocha and Toasted Caramel — will contain milk.
“When we started interacting with Josh [Solovy] and Erik [Litmanovich], we found that we were all on the same page,” Mirza said. “We have the same vision, we know what it takes and we just clicked.”
The other Golden West beverage brand — a shelf-stable, organic canned kombucha line called KÖE — was not initially targeted as part of the deal, but Mirza said he was convinced to get involved after being impressed by the product’s positioning, both from a taste profile and a merchandising perspective. The five-SKU line — available in Lemon Ginger, Raspberry Lemon, Blueberry Ginger, Mango and Dragon Berry flavors — contains 5-10 percent fruit juice, depending on variety, and 20g of sugar. The products are presented as “less vinegar forward,” according to a brand representative at Golden West’s booth at the National Association of Convenience Stores 2017 show, held last month in Chicago.
“I said that if I can drink it, then instead of going after the hardcore kombucha user, which is only at 4 percent household penetration, why don’t we position it as a healthy alternative to sodas that tastes good and is good for your stomach?” Mirza said. “Again, this is my experience at Nestlé — when you see what’s really growing in the portfolio, it’s the S. Pellegrino in cans. This has 125 calories, 20g of sugar, it tastes good and is healthier than having a soda.”
Mirza said that although the agreement with Golden West is technically focused on sales, marketing and distribution, the partnership is “based on how do we build value and how do we build these brands together,” noting that he has been working on operational issues, finding co-packers and creating an overall go-to-market strategy for both KÖE and Bowery.
Distribution may be one of the most important long-term impacts of the deal; Icelandic Glacial is distributed through the Anheuser-Busch InBev (A-B) network, leading to speculation that both KÖE and Bowery could be integrated into the A-B system. Mirza noted that he the company was “very happy” with its partners at the beer conglomerate, which owns nearly 20 percent of Icelandic Glacial, and that its first option is always to work with existing distribution partners. However, nothing has yet been confirmed.
“Naturally, we have informed A-B that we are bringing these products in, but right now nothing has been finalized,” he said. “These are things that we will be working out in the next couple of weeks.”
Mirza added that each brand will have a specialized go-to-market plan, identifying Bowery’s cold brew products as having mainstream appeal while KÖE could potentially fill the void for shelf-stable kombucha in the natural channel. Both lines are being prepared for Q1 2018 launch.
Jared Smith, VP of sales for Stratus Group, the beverage division of Golden West, told BevNET that the company is planning to tap its innovation pipeline for both Bowery and KÖE next year. He explained that four to six additional flavors for KÖE are already fully developed, while Bowery will introduce a full line of dairy-free cold brew coffees in the same flavors as the aforementioned milk-based line. He also noted that Copper Cup Ginger Beer, a premium ginger beer packaged in 12 oz. slim cans, was also included in Golden West’s deal with Icelandic Glacial, and should launch in summer or fall of 2018.
Smith added that, although only KÖE, Bowery and Copper Cup are part of the initial partnership, Golden West would look to continue its relationship with Icelandic Glacial as further opportunities for collaboration present themselves.
“Anything we develop going forward, they are going to get first option,” he said. “We don’t want to overplan or overextend ourselves either. But we are not looking for other partners.”
Even with the new additions to the Icelandic Glacial portfolio, Mirza said that the premium naturally alkaline water line would remain the “engine” driving towards the goal of becoming a multi-brand beverage company. After launching a sparkling line in glass bottles earlier this year, Icelandic Glacial will debut flavored SKUs for the line, as well as a plastic bottle format, in 2018.
With three brands under the Icelandic Glacial umbrella, Mirza said that further expansion would only come after the existing products have been properly grown and developed.
“The business model is proven and we are expanding our sales team to grow all these brands,” he said. “For the next two years, we are going to have our hands full.”