Bevscape

KDP, La Colombe Partnership Shakes Up Canned Coffee Category

Keurig Dr Pepper announced on July 20 that it is investing $300 million in Philadelphia-based coffee company La Colombe, making it the second largest investor in the brand – behind majority owner and chairman Hamdi Ulukaya –with a 33% equity stake.

The long-term licensing, manufacturing and distribution agreement positions KDP to expand its coffee portfolio with a trailblazer in the ready-to-drink category. La Colombe is expected to benefit from KPD’s distribution network and the beverage giant’s influence on the coffee pod segment while using the capital infusion to “accelerate growth and pay off debt,” the company reported in a press release.

According to the two companies, KDP will begin distributing La Colombe products later this year with a launch of a K-Cup line planned for sometime in 2024.

“We are excited to partner with Hamdi and the La Colombe team to drive value for both companies,” KDP chairman and CEO Bob Gamgort said in a statement. “This partnership will enable KDP to expand its reach into high growth ready-todrink and super premium coffee segments and will meaningfully increase La Colombe’s availability to consumers.”

The expansion of its premium and RTD offerings comes as KDP has seen a slight decline in its coffee business. On its most recent Q1 earnings call, KDP leadership reported that coffee segment net sales decreased -1.3% to $931 million during the quarter as net prices increased 5.3% and volume fell -6.6%.

The deal should allow KDP to stanch some of the losses that are coming in its K-Cup business – sales dropped -6% in 2022 – and gives it another shot at tapping into the RTD coffee category, which has grown significantly in the past few years, powered largely by innovative, premium brands like La Colombe itself, as well as rising competitors such as Califia, STOK and Black Rifle.

KDP has been steadily building out a premium coffee pod business, landing recent partnerships with Philz, Intelligentsia and BLK & Bold. While La Colombe serves as a solid addition to its K-Cup business, the partnership represents an even more serious play in the RTD category for the strategic, with La Colombe’s vertically integrated canned coffee business giving it a new brand to pit against Starbucks’ Frappuccino and other brands like Monster and Super Coffee.

La Colombe started as a cafe and coffee roaster more than 30 years ago. The company initially made waves in retail with cold brew and single-serve nitro-infused lattes, the brainchild of co-founder and former CEO Todd Carmichael, who largely left the brand’s leadership team in 2021.

According to figures provided to BevNET by Circana, as of April 23, La Colombe’s RTD draft latte and other single-serve products had trailing 52week sales in combined retail channels (including C-Store, Grocery, Drug, Mass Market, Military and select Club and Dollar stores) of just over $28 million (a -4.3% decline over the previous 52-week period), while its ambient cold brew had sold just over $12 million during the same period (down -9.3%) and refrigerated coffee sales were at about $24 million, up 86% over the same time. Those retail figures don’t include the brand’s robust vending and on-premise sales, its cafes, ecommerce, or its roasting business.

The joint announcement noted that the $300 million investment represented a multiple of approximately three times La Colombe’s expected net sales for 2024. KDP will participate in any value created from the deal – something that worked well for the company with the sale of BodyArmor to Coca-Cola, for example, when the company took home approximately $800 million for its 12.5% stake.

“With a 30-year legacy of delivering the best coffee and exceptional brand experiences for our customers, we have become a beloved coffee brand with the highest standards of quality. This remarkable journey sets the stage for our continued expansion, and partnering with KDP is the ideal next step to accelerating our growth and continuing our mission of making people happy with coffee,” said Chuck Chupein, President of La Colombe.

PRIME Responds After Sen. Schumer Calls for FDA Investigation

As a pro fighter, Logan Paul has gone up against Damian Priest, Floyd Mayweather, and even his own PRIME co-founder KSI. But could his next public bout be with the senior Senator from New York?

In a letter sent to the agency on July 9, U.S. Senate majority leader Chuck Schumer (D-NY) called for the Food and Drug Administration to investigate PRIME’s energy drink line, arguing the beverage contains an “eye popping level of caffeine for a young kid’s body.”

Operated by Congo Brands, PRIME’s sports drink line launched in January 2022 and is now one of the fastest growing beverage brands in the country thanks to its nigh-instant popularity with Paul and KSI’s fanbase and has been particularly desired among kids and teens.

According to Circana, as of April 23, 2023 PRIME’s core hydration line had become the fifth largest brand in the sports drink category – just behind Electrolit, and catching up – reporting over $273.1 million in retail dollar sales at a four-digit growth rate. The brand has also launched internationally, including the U.K., Australia and more.

But it’s PRIME’s canned energy drink, introduced in January, that has Schumer calling for an investigation. The line contains 200 mg of caffeine per 12 oz. can, which places it well above products like Red Bull, Monster and Rockstar, but is about in line with the caffeine content offered by other next gen energy drinks like Celsius, Ghost and C4. It even rates well below the 300 mg per 16 oz. caffeine loads offered by Bang and Monster’s Reign.

The FDA considers up to 400 mg of caffeine per day as being safe for “healthy adults,” bearing in mind there is a wide variation in caffeine sensitivity person to person. On its website, the agency refers consumers to their healthcare providers to receive guidance on monitoring childrens’ caffeine intake.

The company is now defending its products and said it is open to talk with the FDA about industry guidelines. In a statement to BevNET, the brand said it is “very important to make the distinction” between its non-caffeinated PRIME Hydration line and the energy drinks, noting that PRIME Energy “con-

High Brew Sells Majority Stake to Beliv

High Brew Coffee, one of the first “third-wave” canned cold brew brands in the U.S., was acquired by Latin American beverage portfolio company Beliv in late July.

Beliv has taken a 78% stake in the company, with the remaining 22% still owned by High Brew’s investors and its founder and CEO David Smith. Smith will remain with the brand as a consultant. Financial terms of the agreement were not disclosed.

“This acquisition is essential to continue developing a wellpositioned and solid portfolio, backed by a consumer-centric vision,” said Beliv founder and CEO Carlos Sluman in a press release. “With High Brew we are adding a disruptive product in a booming category, through its distribution to 15,000 sale points in the U.S. and the collaboration with 54 strategic partners”.

“Undoubtedly, we share the same identity, commitment and vocation,” Smith stated, adding that “sustainability will continue to be a differential value in the operation since High Brew needs the best beans to make the best coffee, and this means supporting all those who participate in the value chain.”

Founded in 2013, High Brew helped to kickstart the cold brew coffee trend in the U.S. In 2016, it received a $4 million investment from CAVU Venture Partners and entered into a stra- tains a comparable amount of caffeine to other top selling energy drinks, all falling within the legal limit of the countries it’s sold in” and that the line is “not made for anyone under the age of 18.”

“As a brand, our top priority is consumer safety, so we welcome discussions with the FDA or any other organization regarding suggested industry changes they feel are necessary in order to protect consumers.”

Circana reported that PRIME Energy had surpassed $42.5 million in U.S. retail dollar sales in the 52-weeks ending April 23, after fewer than four full months on the market.

However, PRIME’s wide popularity with kids has already led schools in the U.K. and Australia to issue bans for the energy drink in school out of concern for student health.

Schumer claims there’s been little difference in the online marketing between PRIME’s caffeine free hydration line and its energy drink, arguing that the brand “feverishly targets” kids, and he suggested any FDA investigation should focus on both ingredients and marketing.

Star Buzz: Blake Lively Launches Low-Alc RTD

Blake Lively is the newest celebrity to jump into the booze world, although she’s already had one foot in the door.

Lively’s Betty Buzz, a sparkling mixer brand, announced in June its newest venture, Betty Booze, a low line of lowalc, premium sparkling cocktails.

The launch is part of the company’s strategy “to win new audiences and occasions by challenging conventions of taste in sparkling beverage – and beyond,” read a statement.

Betty Booze will debut with three 4.5% ABV cocktail offerings made from highquality fruits, spices, herbs, and spirits, that come in 4-packs of 12 oz cans for $14.99. Flavors include: Sparkling Tequila with Lime Shiso, Sparkling Tequila with Oak Smoked Lemonade, and Sparkling Bourbon with Apple Ginger Sour Cherry. The new product is rolling out in most key markets this year with plans to expand nationally by spring 2024.

The actor, who herself doesn’t drink alcohol, worded her inspiration for the line carefully. Another high profi le recent ready-to-drink cocktail launch, Jennifer Lopez’s Delola, received some criticism from fans who pointed to comments from Lopez referencing her alcohol-free lifestyle.

“These are the recipes I’ve been making for loved ones for years. But I have four kids now. And I’m tired. So here they are in a can. Enjoy. Responsibly… ish,” Lively said in a statement.

Known for her roles in shows like Gossip Girl and fi lms such as The Sisterhood of the Traveling Pants, Lively, working alongside co-founder Andrew T. Chrisomalis, has found a niche in the mixer category, which grew double-digits following consumers making their own cocktails at home during COVID lockdowns. Mindful drinking trends have also helped fuel start-ups in the space.

Since 2021, Betty Buzz has reported year-over-year retail sales growth, ex- tending its distribution to the UK and Canada, and becoming the official sponsor of the UK-based Wrexham Association Football Club (AFC), which is coowned by Lively’s husband actor and gin entrepreneur Ryan Renolds. tegic distribution agreement with what at the time was Dr Pepper Snapple Group, prior to its transition into Keurig Dr Pepper (KDP). In 2018, the brand closed a $20 million Series C round. Though its distribution arrangement with KDP has since ended, High Brew is sold in 15,000 retail locations nationwide –including Whole Foods, Sprouts, Albertsons/Safeway, Kroger, H-E-B, Costco, Raley’s, Wegmans and The Fresh Market – as well as online. The brand offers 11 flavors made with 100% Arabica beans.

The move into low-ABV cocktails comes as the no/low $11 billion global business is projected to grow 7% in volume over the next four years, according to IWSR.

According to the release, the deal fits into Beliv’s U.S. expansion strategy, which has focused on building a portfolio of better-for-you beverage brands through acquisition (such as its 2021 purchase of kombucha brand Big Easy) and innovation (plant-based energy line OCA).

While it proved pivotal to establishing the cold brew trend, High Brew has since seen much of its market share overtaken by competitors in the set like Starbucks, Danone North America’s STOK, La Colombe and Chobani.

Market research firm Circana reported retail dollar sales of High Brew cold brew coffees was down -31% to about $4.8 million in the 52-week period ending April 23. Ecommerce data was not included.

Coffee Connection: Equator Teams With Swiss Dairy Giant on Premium RTD Cold Brews

Equator Coffee is teaming with Swiss dairy giant Emmi AG on a joint venture that kicks off with the launch of a fourSKU line of premium refrigerated cold brews this summer.

For publicly traded Emmi Group, a more than century-old milk and cheese processor that raked in over $4 billion in revenue last year, the partnership with San Francisco Bay Area-based thirdwave coffee specialists Equator represents its entrance into the U.S. RTD market, but its international presence in the category is well established. The company’s Caffe Latte brand is a leader in Europe, selling over 200 million units annually of its mini to-go coffee cups, according to the company.

Former KeVita and Ugly Drinks exec Brett Lanford is leading the Emmi Equator RTD project, which formally launched in 2022, three years after Emmi’s leadership and Equator co-founders Helen Russell and Brooke McDonald agreed to form a U.S.-based LLC. The specialty coffee roaster has been around since 1995 and has developed traction in culinary circles through collaborations with chefs like Tanya Holland and Brandon Jew, but is previously untested in the RTD world.

“We believe that coffee is more than just a beverage,” said Russell in a press release. “It’s a way to connect with others, to create memories, and to build community. We’re delighted to team up with Emmi on a premium cold brew range that broadens our existing selection of specialty coffee and lets customers enjoy the experience they’ve come to expect from Equator Coffees while on the go.”

Despite Emmi’s success with Caffe Latte, its U.S. release takes a decidedly different approach, starting with the packaging. That may be due to copyright restrictions – Dyla Brands’ Forto coffee reportedly has the patent on coffee cup packaging for RTDs – but not according to Lanford, who identified glass bottles as one of the primary distinguishing factors gleaned from a year’s worth of R&D and consumer testing, along with Fair Trade and organic certification.

“The other thing that we heard [from consumers] was wanting something that tasted like it came from a cafe,” he said. “And so that was something we leaned into heavily: getting that right balance of coffee to milk to sugar ratio with our recipes so that you get that cafe experience you get that crafted beverage feel.”

The final result aims to align the straightforward (and sweeter) flavors favored by RTD fans with Equator’s serious coffee credentials: organic, Fair Trade certified cold brews in 8.5 oz glass bottles in four varieties– Pure Black, plus the dairy-based Hint of Milk and Sugar (16 grams of sugar), Velvet Mocha (18 grams) and Hint of Vanilla (16 grams). The suggested price is $3.99 to $4.99 each.

The Emmi Equator joint venture is just one of several divisions of the Swiss corporation operating independently in the U.S., and certainly the leanest. Lanford is leading the business alongside VP of sales Ryan Sowards, who joined the company after helping another glass bottle coffee brand – Lucky Jack – expand its reach from specialty to conventional grocery channels in the later 2010s. Each company will retain its existing sales teams for other parts of its respective businesses, whether wholesale coffee or dairy, while manufacturing of the RTDs is being handled by a California-based co-packer.

Getting an early start has paid off: Sowards was already talking with San Francisco area retailers about the prod- uct while it was still being finalized, Lanford said, securing a slate of 270 stores to enter on day one, including Safeway, Whole Foods, Mollie Stone’s, Nugget and others. The line has since entered Erehwon in Los Angeles, with Bristol Farms set to come online next month. The company is also working with The Touch Agency as a broker.

In terms of marketing, Equator’s RTDs will be featured alongside the roaster’s whole bean coffees within existing social channels. The brand is also hoping that placements inside its 10 cafe locations across California will help lift awareness for the new product.

Even as momentum behind RTD cold brew continues, the venture faces a complex route to growth. Despite its partnership with an international goliath (JAB Group), fellow Bay Area specialty roaster Peet’s struggled to gain traction for its similarly positioned glass bottle, refrigerated cold brews, even with its own dedicated cold-chain distribution setup.

Within single-serving coffees, La Colombe’s new partnership with Keurig Dr Pepper (KDP) may result in tighter competition for placements, although that product is shelf-stable.

“I just saw a white space here that Equator can be a national brand,” Lanford said. “There’s this great opportunity to introduce this beautiful, early stage third-wave coffee to the entire U.S. market and I just wanted to be a part of that.”

MASH Appeal: Boylan-Owned MASH Rebrands with Ambitions Beyond N.Y. Market

Founded in 1891, craft soda maker Boylan Bottling has proven it knows a thing or two about maintaining a national beverage business. And in revamping its sparkling fruit drink line MASH, it’s aiming to do it a second time.

Earlier this summer, Boylan announced a rebranding and new format for MASH, moving the product from proprietary 16 oz. plastic bottles to 12 oz. slim cans. As well, the products have been reformulated to remove artificial coloring and the line has been reduced from six flavors to four, with the updated offering featuring Ripe Mango Blood Orange, Pomegranate Blueberry, Grapefruit Citrus Zing and Watermelon Lemon Lime.

It’s a big change for MASH, which launched in 2008 as a lighter indulgence drink built around “smashing” together different fruit flavors. Each can contains 60-70 calories and is sweetened with fructose and sucralose.

According to Boylan Bottling COO Chase Slepak, MASH has been a small but profitable business for the company, however it has consistently struggled to break out beyond its cult favorite status in independent New York City delis and bodegas, where it has been serviced by DSD house Big Geyser. Outside of New York, the brand is sold as a grab-and-go beverage in quick service restaurants and in “very, very limited grocery” accounts with fewer than 10 distribution partners, Slepak added.

“I’ve heard multiple people refer to it as a bit of a sleeper brand,” Slepak told BevNET. “The liquid is great, but it just never really had mass appeal outside of the Northeast and in a few secondary markets.”

One big issue holding MASH back, Slepak said, was also what some at the company saw as its greatest strength: the unique squat plastic bottle. While the bottle design helped to entice consumers, it was difficult for retailers to fit onto glide racks, took up more ambient shelf space, and made multipacks impos-

Oatly: Forecasts Slashed After Asia Slowdown

Oatly is pushing to simplify and streamline its operations after a disappointing quarterly earnings report saw the Swedish oat product maker slash its 2023 revenue forecast range from 23% to 28% to a dire 7% to 12%. Still, CEO Jean-Christophe Flatin said the company continues to make “progress towards our goal of achieving profitable growth in 2024.”

“As expected, we continued our sequential improvement of gross margin and increased our advertising investments to continue to fuel growth,” Flatin said, adding that he still expects the company to achieve its target Q4 gross margin percentage in the high 20s and hit positive adjusted EBITDA in 2024.

Overall, revenue increased 10.1% year-over-year to $196 million; on a constant currency basis, revenue was up 11.1%. Gross margin increased 340 basis points in the quarter (+19.2%), with volume rising 3%.

Oatly’s sagging business in Asia was a particular focus during the quarter; last year’s optimistic outlook was driven in part by predictions of a “large post-pandemic tailwind” in the region that “has not materialized,” admitted COO Daniel Ordoñez. However, revenue during Q2 dropped 14.9% ($6.5 million) to $37.2 million. In response, the company announced actions around “simplification of the portfolio of products and reduced operating costs.”

In the post-pandemic era, Flatin said, consumers have ”behaved differently than we had originally expected, and we need to adjust.”

Elsewhere, Oatly performed better. With supply issues seemingly addressed, revenue in the Americas was up 19.4% ($10.1 million) to $61.8 million in Q2, driven primarily by price increases across all customers and channels. Around 51.2% of Americas revenue was from retail, compared to 55.3% in the same period last year. EBITDA improved $8.1 million to a loss of $12.6 million, down from a loss of $20.7 million. The oat milk brand is targeting around $85 million in cost savings in 2024, with fewer project-related expenses, less spending on outside consulting and the elimination of certain jobs. Marketing will not be part of those cuts, however. Back in March, Ordonez noted that, with U.S. supply chain snags under control, “The reality is now we can unleash the power of the brand.” sible to produce – effectively killing any chance for the brand to grow in conventional grocery stores.

Although moving into a canned format risks robbing MASH of a defining visual difference, the switch also has some big benefits beyond simplifying logistics. Aluminum packaging gives MASH a boost in its sustainability bonafides, while also giving it more flexibility in use occasions; the company noted that the new design has a “mocktail” feel, better positioning the product as a mixer or non-alcoholic alternative in addition to basic refreshment.

The cans have already begun rolling out to stores in New York through a prelaunch with Big Geyser and the company will support the rebranding this summer with a marketing campaign focused on bodegas, including point of sale displays and branded trucks. For a company that traditionally keeps its ad expenses as minimal as possible – it spends next to nothing annually to promote the core Boylan soda brand – the increased marketing support reflects a big investment in MASH.

According to brand and insights manager Cassidy Meyer, the new campaign will kick off in August and will bill MASH as “the second best thing you’ll find in a bodega” – second only after the bodega cat, of course.

“It’s really targeting that younger consumer that likes the tongue-in-cheek self aware brand attitude,” Meyer said. “We know we’re not Coke or Pepsi, we’re not the functional beverage that will make your life 100 times better. We’re just a really good product that’ll go great with the sandwich that you’re grabbing.”

Boylan will also support MASH with new hires on the sales and marketing team, while Slepak noted that the brand has restructured its national accounts team to focus more on expanding MASH outside of NYC, with new distribution partners coming online this summer including a bigger push into Massachusetts.

“We’re in a unique situation where for a lot of the country it’s not a refresh, it’s a new product,” Slepak said. “For legitimately 90% of the U.S. it’s a new brand, but for that 10% legacy market where we’ve been very successful, it’s a refresh. So our strategies are very different, kind of by geography and market given those unique challenges.”