BevNET Magazine

APRIL 27, 2012

SPECIAL

CRAFT BEER PACKAGE PAGE 34

THE LANDSCAPE OF CRAFT

CAN CRAFT GROW BEYOND LOCAL

WHAT LIES BEYOND STEVIA FORMERLY

STARBUCKS’ RTD COMPETITION

INTRODUCING NOW OUR NEWEST COCONUT WATER COMES WITH A HEALTHY KICK.

ZICO.com

contains natural caffeine

potassium magnesium sodium calcium phosphorus

as much potassium as a banana

supports natural hydration

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MAY 2012 M

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Contents • Volume

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10 • No. 3

Columns 4 FIRST DROP Lingering Taste 6 PUBLISHERS TOAST La Dolce Barry 22 GERRY’S INSIGHTS The Things I Don’t Know

Departments 8 BEVSCAPE BUSINESS Coke Buys Majority of ZICO 30

10 BEVSCAPE INNOVATION Lawsuits – and BPA 12 NEW PRODUCTS Pepsi Next...and 39 others 20 CHANNEL CHECK Mixes Upside Down 44 KEY CRAFT OFFERINGS Sessions for the Summer 48 PROMO PARADE Begin the Heineken Voyage

Special Craft Beer Package 30 THE LANDSCAPE OF CRAFT 34

34 BEERFEA TURES The New Branding Dynamics of Craft 40 COVERS TORY: THE MAN BEHIND THE MEGAPHONE Meet Stone Brewing Co.’s Really Loud Introvert

Features 24 FRAP FIGHTERS With RTD Coffee Brand News 46 STEVIA What Lies Beyond?

40

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Beverage Development Ingredient Supply Shots Energy Drinks Enhanced Waters and More Proprietary Flavors Premixes and Bases U.S. Distributor

By Jeffrey Klineman

LINGERING TASTE As I write this it’s been a day since the great rock drummer Levon Helm of The Band passed away, and as I write this and the memories have been flooding back sad and strong.

Exhausted by one too many failed sprints to my tape player when “Up On Cripple Creek” would start playing on Atlanta’s 96Rock, the first CD I bought was a two-disc compilation of The Band’s called “To Kingdom Come.” It cost the amazingly high price of $29.98 at Turtles record store. It’s amortized nicely, however, as 25 years later, i’ve still got both discs.

I can remember hearing it, dancing awkwardly around my room, loving the music but still equally thrilled knowing this music was mine, to enjoy whenever I wanted.

Songs that Levon Helm played on had that soulfulness and story that made it seem like you’d heard them before, even if you hadn’t, which is what a good song should do.

And now Levon Helm is dead, and, as the great writer Lewis Grizzard put it, I don’t feel so good myself. After all, here I am, one month from 40, Levon gone, family tucked in bed, writing a column on a Friday night.

And the reason I bring this up now is that I’m thinking about the memory of the senses. For me, it’s always been sounds within songs to take evoke places in my memories; also sometimes the taste of certain wines. But I remember hearing Gil Cassagne talk not too long ago, back when he was the CEO of Cadbury Schweppes Americas Beverages, about sharing a soda in his backyard with his dad, and how much that meant to him, as well, and how the taste of that same soda brought him back there.

When it comes to memories, vision is a sense that fails us the most. We hear things, we taste them, we smell or touch them, and they hit a part of our minds that is much more exact in what they evoke. When I hear an Arkansas twang in

4 BEVNET MAGAZINE APRIL/MAY 2012

a soulful tune, or a soft swinging drumbeat, I know where I am and where I was when I first heard it.

And I know that when Cassagne has a soda, sometimes he is back with his dad, in the backyard.

The people may be gone now, but the flavor, the sound, the feeling remains.

Hard to believe for something that costs $.98 and still has cost increases in the pricing architecture, or for something that cost $29.98 but is available now on a variety of web sites for free, so long as the feds don’t catch me.

We talk a lot about the functionality of beverages in this magazine, in this industry.

We talk about long lead functionalities and short leads. Sometimes, those leads are longer than we’ve ever imagined, and that’s just from the simple power of taste. And you can take all the talk about the things that might be bad for you – the sugar and the caffeine and the volume that’s way, way too loud, and you can think that, if they’re done right, the flavor remains, a faint taste on the tongue, or a drumbeat that never fades, even when the song is over.

Done right, they always linger. And that’s the power of taste.

••• With this issue, BevNET Magazine is harnessing the power of BevNET’s Brewbound editorial operation to focus on one of the most dynamic sectors of the beverage industry in a special Craft Beer editorial package.

At a time when larger brewers seem to be able to best exert their agendas through marketing and distribution, the craft brewer has offered consumers a dynamic, highmargin alternative based on the power of taste, variety, and quality ingredients. The category has grown as a profitable rising tide against ebbing mainstream volumes.

BevNET’s commitment is to covering the landscape of beverage innovation and its ability to create new revenue opportu-

nities for retailers, distributors and suppliers alike – and it is with that commitment in mind, as well as our interest with this fascinating part of the business– that we welcome you to enjoy this issue’s special extended coverage of craft beer.

MAGAZINE

By Barry J. Nathanson

www.bevnet.com/magazine

LA DOLCE BARRY

Barry J. Nathanson PUBLISHER bnathanson@bevnet.com

Jeffrey Klineman EDITOR-IN-CHIEF jklineman@bevnet.com

Ray Latif ASSISTANT EDITOR rlatif@bevnet.com

In January, I wrote out my last tuition check, so my wife and I took a celebratory vacation to mark the end of 22 years of paying to educate our two kids. After all, we live in NYC, and private schools don’t come cheaply. Neither did two college educations, nor law school for my daughter, to boot. We’ve decided it’s time to reclaim some of our lives.

Hence, we just returned from 10 glorious days in Rome and Florence.

The experience of taking in all those two cities had to offer was extraordinary.

The sites, the history, and culture, and yes, the food and beverages, were sublime. The Italians certainly know how to live, and to dine. A special thanks to Jeff Rubenstein, from Vita Coco, for his connection to a great feast in Florence, Francesco Vini. It is owned by Jeff ’s future sister-in-law and her husband and they couldn’t have been more gracious.

So how does this relate to my this column? I’m getting there. As I have done before, I surveyed the local beverage scenes, the selections and the differences in consumer patterns. (NOTE OF FULL DISCLOSURE: I also intend to write off some of the trip as a fact finding mission for the column. Which I tried to do with the tuition, as well, but have since come to terms with the fact that what my kids drank in college wasn’t deductible….)

So, here are some of the observations.

First, I didn’t see much portability on the streets, except for tourists. I am very cognizant that everywhere you go in the States, you see people toting beverages. It didn’t seem to be part of the culture. The selection in the supermarkets and bodegas was limited: I didn’t see dominant brands on the shelves, except for the Coca Cola portfolio. Water choices were vast, as were the price differentials. I would love to have the franchise for Acqua Panna in both cities, as it was the main offering in almost every restaurant. They don’t drink much tap water there, even though it was quite good. Again, that’s part of the culture.

Juices were very popular, both pure and blends. Again, the locals drink them at

6 BEVNET MAGAZINE APRIL/MAY 2012

SALES John McKenna DIRECTOR OF SALES jmckenna@bevnet.com

Adam Stern SENIOR ACCOUNT SPECIALIST astern@bevnet.com

Jeff Hyde ACCOUNT SPECIALIST jhyde@bevnet.com

ART & PRODUCTION Matthew Kennedy CREATIVE DIRECTOR Aaron Willette GRAPHIC DESIGNER BEVNET.COM, INC. John F. (Jack) Craven CHAIRMAN jfcraven@bevnet.com

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home, but on the streets, it was the visitors.

Wine, obviously, dominates everywhere.

Usually, the lower price house brands were the choice. Even at higher end restaurants, the choice was the house bottle.

I was struck by the fact that the majority of beer consumption was by the younger set, college age, and just above. It was also mostly foreign travelers consuming them.

The locals didn’t seem to imbibe.

What was interesting was that I didn’t see any of the exotic, boutique and functional beverages anywhere. No coconut waters, no relaxation, no protein drinks.

Nothing for mental acuity, or aching joints. We live in a world of functionality here, but Italy either doesn’t care, or no one has made strong attempts to introduce these drinks to the populace. Red Bull was the dominant energy drink, as expected, but even then the category consumption doesn’t come close to US usage.

Beverages are an integral part of every culture. Italy tends toward the traditional, as befits a land with such a long and rich history. They like the way they live. I don’t blame them.

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BEVSCAPE BUSINESS

The latest news on the brands you sell

Coca-Cola Finishes Purchase of Majority ZICO Stake Ending months of waiting, the CocaCola Co. has finally purchased a majority stake in ZICO Coconut water, consummating a deal that has lingered in the final stages since the early Fall.

Independent shareholders of the brand began to receive checks for their stakes in the company in April. Coke’s initial investment in the company, in 2009, was part of a combined $15 million round that divided a 20 percent stake between Coke’s Venturing and Emerging Brands group (VEB) and a group of entrepreneurs, distributors, and celebrities.

As with its purchase of Honest Tea in 2010, the rest of Coke’s investment was contingent on ZICO making certain sales goals.

“We’ve acquired an additional stake in ZICO,” confirmed Coca-Cola spokesman Scott Williamson in an e-mailed statement. “The additional stake validates the broad potential we’ve known ZICO had from the outset and is the natural progression for successful brands in which VEB has an interest. This further investment will

allow our companies to continue to drive growth opportunities and expansion of the brand and the coconut water category.”

Although exact sales figures are not available for the company, sources have indicated that sales were in the range of $45 million last year; additionally, the company’s advertising agency, Ignited, notes that ZICO tripled sales from 2010 to 2011.

Founded by entrepreneur and international businessman Mark Rampolla in 2004, ZICO was one of the three original coconut water brands (the others are O.N.E. and Vita Coco). It was the second to receive financing from one of the beverage giants, pulling Coke on board soon after PepsiCo invested in O.N.E. The company appears to have thrived with Coke as a partner, making a strong move into mainstream distribution via its move into an HDPE bottle and a from-concentrate format, although it continues to also sell a not-from-concentrate product as well. The company added a hot-selling chocolate flavor variety last year and also released a Latte line extension earlier this spring.

Fair Trade Grows Sales of Fair Trade Certified ready-todrink beverages grew by 37 percent in 2011, according to new SPINS data reported by Fair Trade USA. In a recent press release, Fair Trade USA cites rising consumer demand for Fair Trade products as well as a number of new beverages in the segment as chief reasons for continued growth.

“The 2011 SPINS data only further supports the idea that people want quality products that improve lives and protect the environment; they want to make every purchase matter,” said Mary Jo Cook, Chief Impact Officer at Fair Trade USA. Tea companies led the charge for Fair Trade beverages as brands including Honest Tea and Steaz introduced a number of new Fair Trade tea drinks in the past year, while others, such as The Republic of Tea, have begun converting their lines to include Fair Trade certified ingredients.

Coffee and coconut water brands have also contributed to the rise of new Fair Trade beverages. Coco Café, for example, melds organic, Fair Trade espresso with coconut water and milk, while raw coconut water company Harmless Harvest expects its line of drinks to be Fair Trade-certified by June.

Snooki – Yes, Snooki – Launches a Wild Cherry Soda Even if we could make this stuff up, we wouldn’t – Nicole “Snooki” Polizzi, the oft-mocked and ever-tanned star of MTV’s “Jersey Shore,” has launched her own soda. Yup. You read that right.

In collaboration with Rocket Fizz, a chain of franchise-owned soda and candy shops, Polizzi introduced Snooki Wild Cherry Soda, a cherry-flavored drink made with cane sugar as well as natural flavors and – much like her spray-on orange tan – artificial colors. The reality TV icon, who trademarked the name “Snooki” in early 2011, is in the midst of a whirlwind effort to expand her brand to a variety of consumer products, including perfumes,

8 BEVNET MAGAZINE APRIL/MAY 2012

headphones, sunglasses, and fake jewelry.

Considering that Snooki Soda would appear to lack any sort of mainstream appeal, Rocket Fizz, which is best known for its variety of novelty drinks, is perhaps the

best beverage company suited to take on Polizzi’s newest venture. Rocket Fizz carries a number of oddball brands including Judge Wapner Sodas, a line of soft drinks featuring an image of “The People Court” star emblazoned on each label, as well as the infamous Lester’s Fixins Sodas, a stomachchurning line of fizzy drinks that includes bacon, buffalo wing, and sweet corn flavors.

Snooki Wild Cherry Soda will be available exclusively in Rocket Fizz stores located in Southern California, Nevada, Nebraska, Arizona, and Colorado. No word on whether Polizzi is considering a line extension, but it would be a good guess that some sort of orange flavor is in the works.

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BEVSCAPE INNOVATION

Product development & marketing news

Lawsuits Part 1: Is Simply Orange “Misleading”?

Lawsuits Part 2: Judge Hammers Muscle Milk Complaint

Pushed By CSPI, Coke and Pepsi Changed Caramel

It turns out that even beverage giants aren’t immune from the recent outbreak of lawsuits infecting the industry. In April, Coca-Cola was hit with a lawsuit claiming that the name and marketing of the company’s Simply Orange brand are misleading. The suit, filed in an Illinois federal court, contends that the beverage is not simple orange juice; rather, it is juice that is heavily processed and contains added flavorings and constituents to change its color, consistency, taste, and aroma.

In the lawsuit, plaintiff Randall Davis states that chemically engineered “flavor packs” are added to Simply Orange, yet consumers pay a premium for the product based on their belief that the juice fresh and untainted by artificial ingredients. The lawsuit claims “Coca-Cola misrepresented that Simply Orange was 100% pure and natural orange juice when in fact it was not.”

Davis is accusing Coke of fraud and misrepresentation and pursuing classaction status.

In response to media inquiries about the lawsuit, Coca-Cola spokeswoman Susan Stribling stated, “This lawsuit has nothing to do with misleading consumers and everything to do with lining class action lawyers’ pockets … it is a meritless case against which we will vigorously defend ourselves.”

A federal judge smacked down a class action lawsuit filed against the makers of Muscle Milk, saying the plaintiff hadn’t met the standard of proving the marketing of the brand is false and misleading.

The plaintiff, Claire Delacruz, alleged that Cytosport Inc., which manufactures Muscle Milk and other ready-to-drink and powdered sports-related beverages, is in violation of multiple California consumer protection laws including false advertising and negligent misrepresentation, by leading consumers to believe that Muscle Milk products are healthy and nutritious.

Delacruz claims that while Cytosport markets Muscle Milk as a product that “should be regularly consumed to help them diet and live a healthy lifestyle,” she notes that almost 50 percent of the products’ caloric content comes from fats, and “are equivalent to fat-laden junk food.”

Although U.S. District Judge Claudia Wilken agrees that Cytosport’s claims that Muscle Milk contains “healthy fats” and that the product is a “nutritional shake” might mislead consumers, she stated that Delacruz’s complaint lacks sufficient detail for the suit to proceed. Wilken noted that “the term ‘healthy’ is difficult to define and plaintiff has not alleged that the drink contains unhealthy amounts of fat, saturated fat or calories from fat, compared to its protein content, based on any objective criteria.”

Delacruz had seven days to appeal the ruling via an amended complaint.

Coca-Cola Co., Inc. and PepsiCo, Inc. both said they will change the way they add caramel coloring to their flagship sodas after a study by the Center for Science in the Public Interest revealed the presence of a carcinogen in some containers.

The changes were made to avoid a California law requiring products that contain known carcinogens to put a cancer warning on their labels.

The companies said they had instructed their manufacturing facilities to change the process by which the caramel color is produced.

CSPI found the presence of low levels of the chemical 4-methylimidazole in some samples of Coca-Cola and Pepsi during tests it had run in February. As a result, the organization had petitioned the Food and Drug Administration to ban the use of caramel coloring manufactured in a way to yield the byproduct.

The American Beverage Association also released a statement that its member companies would adjust their own caramel coloring processes to meet the California standard, although products already on the market were not a reason for health concerns.

According to the FDA, consumers would need to drink hundreds 1,000 cans of soda a day — or more — to cause any concern, although CSPI disputes that, saying any carcinogenic presence should cause concern.

10 BEVNET MAGAZINE APRIL/MAY 2012

Senator Urges FDA to Investigate Energy Drinks In recent years Senate Majority Whip Richard Durbin (D-Ill.) has pushed for increased oversight of the food, beverage and supplement industry on many fronts; recently he sent a letter to FDA Commissioner Margaret Hamburg to investigate the caffeine content in energy drinks.

Durbin said the letter came after he learned the story of 14 year-old Anais Fournier, who died last December of a cardiac arrhythmia due to caffeine toxicity after drinking two 24 oz. Monster energy drinks over a 24-hour period.

Fournier’s mother has been actively telling her daughter’s story since then and is pushing for increased legislative action and parental awareness concerning energy drinks.

“Consuming large quantities of caffeine can have serious health consequences, including caffeine toxicity, stroke, anxiety, arrhythmia, and in some cases death. Young people are especially susceptible to suffering adverse effects because energy drinks

market to youth, their bodies are not accustomed to caffeine, and energy drinks contain high levels of caffeine and stimulating additives that may interact when used in combination,” wrote Durbin in his letter to Hamburg. “The glossy marketing tailored to youth has worked – 30 to 50 percent of adolescents report consuming energy drinks.”

Durbin contends that while many energy drinks are marketed as dietary supplements,

the FDA does have the ability to enforce caffeine limits and additives in the products if they are being sold as beverages.

“Most energy drinks are currently marketed as dietary supplements, therefore they do not need to establish evidence of their products’ safety or adhere to a limit on the level of caffeine. At the same time, many energy drinks come in single-use containers ranging from 8oz to 32oz and are marketed like beverages. Rockstar Energy Drink’s website says, ‘enjoy this fully refreshing lightly carbonated beverage.’” he wrote. “If the FDA makes a determination that energy drinks are beverages with high levels of caffeine and additives that raise safety concerns, the agency would have the authority to limit the level of caffeine and require the manufacturers to provide scientific evidence that ingredients such as guarana, taurine, and ginseng are safe for their intended use and in combination with caffeine and other energy drink ingredients.”

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APRIL/MAY 2012 BEVNET MAGAZINE 11 3/9/12 9:42 AM

NEW PRODUCTS

The newest options for cooler and shelf

CSDs PepsiCo has launched Pepsi Next. The product contains 60 calories per 12 oz. can, 60 percent fewer calories than regular Pepsi.

The new product also has 60 percent less sugar than the flagship cola and is sweetened with a blend of high fructose corn syrup, aspartame, ace-k, and sucralose. The product is sold in a variety of package sizes and distributed nationally. For more information, please call (914) 253-2000.

Double-Cola has launched new graphics and new packaging designed to connect youthful consumers, featuring the brand’s tagline: “refreshingly smooth.” The newly branded Double Cola and Diet DoubleCola cans and 12-packs are now available in stores. For more information, please call (423) 267-5691 x 200.

Q Drinks has introduced a new cola flavor to its line of sparking drinks. Q Kola is made with a number of organic fruits and spices including cinnamon, cloves, coriander, kola nut, lemon, lime, orange and nutmeg. The cola is lightly sweetened with organic agave, contains no sugar or high fructose corn syrup, and contains 70 calories per serving.

Q Kola is packaged in 750 mL and 8 oz. glass bottles and has a suggested retail price of $2 for the 8 oz. size ($7.99 for a 4-pack) and $6.99 for the 750 mL bottle. For more information, please call (718) 801-8787.

Lorina has introduced a new 14.2 oz. single serve PET bottle for its line of premium French sodas. Lorina will package its top selling flavors - Sicilian Lemon, Pink, Blood Orange, Pomegranate, and Strawberry – in the new bottle. The products are distributed in gourmet and conventional stores in the U.S. and Canada and have a suggested retail price of $2.49 – 3.49. For more information, please call (305) 779-3085.

Green Bee Soda has launched Ginger Buzz. The all-natural soda is handcrafted with fresh ginger, wildflower honey, and coriander; it contains 60 calories per 12 oz. glass bottle. The product is sold individually and in 4-packs for $2.39 and $8.99 respectively and distributed in restaurants and specialty stores in Maine, Massachusetts

12 BEVNET MAGAZINE APRIL/MAY 2012

and Rhode Island. For more information, please call (800) 494-0802.

Bruce Cost Ginger Ale has added a new Passion Fruit flavor to its line of unfiltered ginger ales. The new flavor blends fresh passion fruit and a touch of turmeric with Bruce Cost Original Ginger Ale. The product is available at specialty and food service retailers throughout the country including Whole Foods, BevMo, and Caribou Coffee for a suggested retail price of $1.99 per 12 oz. glass bottle and $6.99 per 4-pack. For more information, please call (212) 488-0661.

Jones Soda Co. has launched a new allnatural sparkling line of sodas. Jones Au Naturel sparkling drinks feature organic agave syrup, stevia, pure cane sugar, and green tea extracts. Each 16.9 oz. bottle of Au Naturel has 35 calories, seven grams of sugar and five grams of fiber. The line comes in three flavors: Green Apple A Day, Lemon Limelight and Orange Ya Glad Its Mango. Au Naturel has a suggested retail price of $1.79 per bottle and will be available for purchase at www.jonessoda.com and natural grocery retailers. For more information, please call (206) 624-3357.

Mr. Pink Ginseng Drink is a new, allnatural, ginseng-infused lifestyle beverage.

The drink contains 1000 mg of high-grade ginseng and 100 percent of the recommended daily value of vitamins B3, B5, B6, and B12. The product is packaged in a 12 oz. can and contains 75 calories. Sugar-Free Mr. Pink Ginseng Drink contains the same ingredients and has zero calories. Each variety has a suggested retail price of $2.49 to $2.99. Mr. Pink Ginseng Drink is distributed in hundreds of stores in Southern California, and in luxury hotels in Las Vegas. For more information, please call (805) 969-3744.

TEA Honest Zero has launched Honest Zero Passion Fruit Green Tea. It marks the first extension of Honest Zero into glass bottles.

The product is distributed nationally at natural food stores and other retailers, including Whole Foods Market, Sprouts and Earth Fare and has a suggested retail price of $1.49 per 16 oz. bottle. For more information, please call (301) 652-3557.

NEW PRODUCTS

The newest options for cooler and shelf

Guayaki has launched a new line of sparkling yerba mate beverages. The drinks are USDA organic and GMO-free and come in three flavors: Classic Gold (cola), pomegranate/cranberry, and grapefruit ginger. Classic Gold has 120 mg of caffeine per serving while the other versions contain 80 mg. The products are distributed nationally and have a suggested retail price of $1.99. For more information, please call (888) 482-9254.

Dr Pepper Snapple has launched Snapple Diet Half ‘n Half Lemonade Iced Tea. The half lemonade, half iced tea blend is made with green and black tea and contains ten calories per 16 oz. bottle. The drink is sold at participating retailers nationwide in 16 oz. bottles for $1.39 and 6-packs for $5.99. It is also available in 32 oz. and 64 oz. bottles and 16 oz. 12-packs. For more information, please call (646) 935-4145.

has 80 mg of caffeine and 45 calories per 8 oz. serving and is packaged is a turquoise blue 16 oz. can. Rockstar Coconut Water is distributed nationally and has a suggested retail price of $2.99. For more information, please call (702) 939-5535.

Radioactive Energy Drink has been reformulated and relaunched in 16 oz. cans from Rexam. The drink contains a unique blend of vitamins, antioxidants and has no artificial colors, no preservatives and no high fructose corn syrup. The new Radioactive cans utilize a fluorescent ink that glows in the dark under a black light. Radioactive has a suggested retail price of $1.79 - $2.29 and is currently available at select retailers in California, Nevada, Illinois, Arizona and New Mexico.

For more information, please call (888) 4894569.

FUNCTIONAL DRINKS ENERGY DRINKS Red Bull has launched Red Bull Total Zero.

The new product boasts a zero calorie/carb/ sugar formulation and a “new twist” on the classic Red Bull flavor. Red Bull Total Zero will be distributed nationally, and packaged in the brand’s iconic 8.4 oz. can. The product will also come in 12 and 16 oz. sizes and also sold in an 8.4 oz. 4-pack. Total Zero will be line priced with Red Bull’s flagship and sugar-free varieties as an 8.4 oz. can will have a suggested retail price of $2.19, and the 12 and 16 oz. cans will be priced at $2.99 and $3.79 respectively. For more information, please call (310) 393-4647.

Hiball Energy has reformulated its line of sparkling energy waters and organic energy drinks. The drinks are now packaged in cold-activated, lightweight 16 oz. aluminum cans. When a can reaches a temperature of 45 degrees Fahrenheit, bubbles on the can’s graphics turn from white to blue — indicating that the beverage inside is at the optimal temperature for drinking. Highball drinks are distributed nationally. For more information, please call (303) 460-3537.

Rockstar has introduced a new coconut water and energy drink. The non-carbonated beverage contains a base of 10 percent coconut juice and an energy drink blend; it is sweetened with stevia and sucrose. The product

14 BEVNET MAGAZINE APRIL/MAY 2012

Sambazon has launched two new smoothies.

Chocolate Almond Coconut Milk Protein Superfood Smoothie is made with vegan, organic protein and acai. Supergreens Superfruit Smoothie includes grasses, kale and sea greens along with acai, mango and banana. Both products are packaged in 10.5 oz. bottles and have a suggested retail price of $2.99. The smoothies are currently distributed in Whole Foods Market nationwide and will gradually roll out into other retailers in the next few months. For more information, please call 877-726-2296.

ALO is introducing a new flavor called ALO Escape. ALO’s new Escape flavor features a blend of pineapple, guava, and seabuckthorn berry along with 25 percent aloe vera juice and pulp base. The product is packaged in ALO’s square-shaped 16.9 oz. bottle and has a suggested retail price of $1.99-2.49. ALO is distributed nationally in a number of grocery stores and specialty and natural foods retailers including Safeway, Ralph’s, Whole Foods, Wegman’s and Vitamin Shoppe. The brand is also sold regionally at Walgreens, 7-Eleven, Costco, and Rite-Aid. For more information, please call (800) 223-4438.

Cobá has introduced a new Horchata flavor to its line of aguas frescas. The product is made from all-natural ingredients and sweetened with 100 percent organic cane sugar.

NEW PRODUCTS

The newest options for cooler and shelf

Cobá describes the new Horchata flavor as slightly creamy and light in body with notes of cinnamon and vanilla. The product will be packaged in Cobá’s proprietary 16 oz. glass bottle – shaped to resemble an authentic Mexican frescas barrel – and sold at a suggested retail price of $1.99 – 2.49. Cobá will distribute Horchata along with its Mango, Jamaica, Tamarindo and Guayaba flavors in Northern and Southern California, the Pacific Northwest, Rocky Mountains, Florida and Texas. For more information, please call (323) 691-2019.

LEMONADE MADE has launched three new organic varieties to its lemonade line. MADE Half & Half is the first organic green tea-lemonade combo on the market. MADE Blackberry Lemonade is created with organic lemon and blackberry juices. MADE Pink Lemonade is produced with organic strawberry juice. The new lemonades have a suggested retail price of $1.99 per 16 oz. bottle and are distributed in four major markets including Chicago and New York. For more information, please call (847) 386-6670.

Minute Maid has introduced Minute Maid Light Pink Lemonade. The p roduct contains 15 calories per 8 oz. serving and is packaged in a clear 59 oz. recyclable PET bottle. The lemonade is distributed nationally and has a suggested retail price of $2.49.

For more information, please contact (713) 669-3126.

COCONUT WATER Zola has launched Zola C oconut Water.

The coconut water is sourced from Thailand, not from concentrate and contains no preservatives and no added sugar. The beverage is packaged in a 17.5 oz. can has 55 calories per 8 oz. serving. The product is distributed nationally and has a suggested retail price of $2.49. For more information, please call (415) 775-6355.

Harmless Harvest has launched a new 16 oz. PET bottle for its 100 percent raw and organic coconut water. The new package size has a suggested retail price of $4.99 and is distributed nationally – along with its 8 oz. counterpart – at natural foods stores, grocery

16 BEVNET MAGAZINE APRIL/MAY 2012

stores, and co-ops. For more information, please contact (347) 688-6286.

MILK MADE Drinks has launched Charley’s Premium Milk, a ready-to-drink shelf-stable flavored milk. The product is fat-free and rBST-free and contains up to 15 grams of protein in each 14 oz. bottle. The milk comes in Chocolate and Strawberry flavors and is currently distributed in convenience stores in select markets. For more information, please call (847) 386-6670.

Organic Valley has launched Organic Valley Grassmilk, an organic specialty milk produced from cows that are 100 percent grassfed. The milk is sourced from pasture-raised cows grazing in the pastures of California’s north coast. The cows eat only fresh grasses and dried forages, such as hay and do not eat supplemental grains or soybeans. Organic Valley Grassmilk comes in three varieties whole, two-percent and fat-free – and has a suggested retail price of $5.49 per 64 oz. container. Grassmilk is distributed at natural food stores and food cooperatives. For more information, please call (888) 444-6455.

WATER Noah’s California Spring Water has introduced a new oxygen-infused spring water.

Noah’s Oxygenated Spring Water comes from Adobe Springs in California and contains eight times the amount of oxygen in regular spring water. The product is packaged in a Rexam 12 oz. SLEEK can and has a suggested retail price of $1.29. Noah’s Oxygenated Spring Water is currently available at select retail locations in California, Nevada, Idaho, Utah, Oregon, Ohio, Pennsylvania, New York, New Jersey, Connecticut and Tennessee. For more information, please call (209) 521-1777.

BEER Anheuser-Busch has introduced Michelob ULTRA 19th Hole Light Tea & Lemonade, an iced tea and lemonade-flavored alcoholic drink inspired by the golf course classic.

Available nationwide for a limited time, ULTRA 19th Hole is available in single-serve and 4-packs of 16 oz. cans and is distributed at convenience stores, select golf courses,

bars and restaurants. For more information, please call 314-577-9637.

Shock Top Belgian Wheat has introduced its latest seasonal beer, Shock Top Lemon Shandy, which will be available through the end of July. The beer is an interpretation of a classic style - a refreshing and smooth wheat beer complemented by spices and natural lemonade flavor. At 4.2 percent ABV, Lemon Shandy will be available nationwide in 6- and 12-packs of bottles, 12-packs of cans, and on draught. For more information, please call (314) 577-2579.

SPIRITS Concannon Vineyards has teamed up with Ireland’s Cooley Distillery to launch Concannon Irish Whiskey. A refined blend of malted barley and corn, the whiskey is craft distilled and matured in bourbon barrels for a minimum of four years. A portion of the spirit is then finished in Concannon Petite Sirah wine barrels for four months before blending.

Concannon Irish Whiskey has a suggested

retail price is $24.99 for a 750 mL bottle and is distributed at specialty shops and fine liquor stores across the U.S. For more information, please call (415) 567-6988.

Glenmorangie has launched Glenmorangie Artein, the third release in its award winning Private Edition range. ‘Artein,’ Scots Gaelic for stone, is a blend of two-thirds specially selected 15 year-old whisky and one-third of 21 year-old whisky. The spirit started its maturation in American white oak exbourbon casks before individually spending a period of extra maturation in Super Tuscan wine casks. Glenmorangie Artein features an aroma of ripe red berries, honeysuckle and fresh mint and flavors of sun-soaked baked fruits such as ripe apricots, peaches and plums. The limited-edition whisky is 92 proof and has a suggested retail price of $79.99 per 750 mL bottle. For more information, please call (212) 991-3816.

GREY GOOSE has launched GREY GOOSE Cherry Noir, its first new flavor in five years. The vodka is a blend of GREY

APRIL/MAY 2012 BEVNET MAGAZINE 17

NEW PRODUCTS

The newest options for cooler and shelf

GOOSE Vodka and premium cherries including rare black cherries hand-picked in French Basque Country. The flavor is distributed nationally and is available in 375 mL, 750 mL and 1 L sizes. The 80 proof spirit has a suggested retail price of $29.99 for a 750 mL bottle. For more information, please call 917-351-8664.

The Captain Morgan Rum Company has introduced Captain Morgan Black Spiced Rum. The product is crafted using Caribbean Blackstrap rum and select ingredients, including rich clove spice and premium cassia bark, and is finished with double charred blackened oak. The rum features flavors of cinnamon and clove, as well as hints of spice and vanilla. Captain Morgan Black Spiced Rum is available nationwide and has a suggested retail price of $21.99 for a 750 mL bottle. For more information, please call (646) 223-2019.

35 Maple Street — the spirits division of Sonoma-based The Other Guys (TOG), has introduced Uncle Val’s Botanical Gin. The premium gin is produced with a variety of botanicals including juniper, cucumber, lemon, sage and lavender. The product is 90 proof and has a suggested retail price of $3540 per 750 mL bottle. Uncle Val’s Botanical Gin is available nationwide in restaurants and high end wine and bottle shops. For more information, please call (707) 933-1704.

CIROC Ultra Premium has launched CIROC Peach Vodka. The vodka features flavors and aromas of fresh peaches and a hint of orchard fruits. The product is 70 proof and available in 50 mL, 200 mL, 375 mL, 750 mL, 1L and 1.75L bottles. CIROC Peach is distributed nationally and has a suggested retail price of $34.99 for a 750 mL bottle. For more information, please call 203-229-4876.

VnC Cocktails has launched a new line of 200 mL mini shakers. The all-natural cocktails are produced with New Zealand vodka or premium tequila and contain 150 calories per 100 mL serving. The drinks come in four flavors - Vodka Mojito, Margarita, Pomegranate Cosmo and Pacific Breeze – and have a suggested retail price of $3.45.

VnC Cocktails are sold in 14 states through-

18 BEVNET MAGAZINE APRIL/MAY 2012

out the U.S. For more information, please call (310) 432-0020 x149.

Marie Brizard Liqueurs, a French purveyor of spirits and liqueurs, has introduced Chocolat Royal Liqueur. The product is a dark chocolate liqueur is 34 proof and made with premium cocoa beans and features aromatic notes of vanilla and caramel with sweet intense chocolate. The suggested retail price of a 750 mL bottle is $27.99. Chocolat Royal Liqueur is distributed in 14 states throughout the U.S. For more information, please call (561) 750-3500.

Diageo has launched Bushmills Irish Honey. The new, original blend was created with Bushmills Original Irish Whiskey, which is triple-distilled with premium malted Irish barley and pure Irish water, and blended with a touch of Irish honey.

Bushmills Irish Honey has a suggested retail price of $24.99 for 750 mL bottle, and will be available exclusively in the United States for a limited time. For more information, please call (646) 223-2326.

Jim Beam has introduced two new flavors for its Red Stag by Jim Beam line: Red Stag Honey Tea and Red Stag Spiced. Red Stag Honey Tea contains both honey and tea flavors and Red Stag Spiced is enhanced with flavors of cinnamon and spice. Both use Jim Beam four-year-old bourbon as a base and are 80 proof. The products are distributed nationwide and have a suggested retail price of $17.99 for a 750 mL bottle. For more information, please call (847) 444-7657.

Castle Brands has introduced Gosling’s Dark ‘n Stormy, a ready-to-drink cocktail blend of Gosling’s Black Seal Rum and Gosling’s Stormy Ginger Beer. The new beverage contains 9 percent ABV and is sold in 4-packs of 8.4 oz. cans for a suggested retail price of $7.99-8.99. Gosling has launched Gosling’s Dark ‘n Stormy in select markets and will eventually distribute the product nationally. For more information, please call (646) 356-0200.

Bärenjäger Honey Liqueur has announced the brand’s first-ever line extension: Bärenjäger Honey & Bourbon. The product is a

blend of premium honey liqueur, Kentucky bourbon whiskey, pure honey, and all-natural ingredients. It is hand-crafted by Schwarze & Schlichte, one of Germany’s oldest familyowned companies with over 340 years of distilling knowledge and tradition. The liqueur is 70 proof and available in the 1 L, 750 mL, 375 mL, and 50 mL bottles. Bärenjäger Honey & Bourbon is distributed nationwide and has a suggested retail price of $28.99 for a 750 mL bottle. For more information, please call (914) 637-5752.

The Wine Group has introduced a new line of premium rum as an extension of its flipflop wine brand. flipflop rum features both silver and spiced expressions. flipflop Silver Rum is four-times distilled and 80 proof. flipflop Spiced Rum contains spices and natural flavors and is 70 proof. flipflop rum is available in a 750 mL for a suggested retail price of 13.99 and a 1.75 L bottle for $22.99. The rum is currently shipping to select markets. For more information, please call (559) 266-6548.

Funkin is a new all-natural fresh-fruit cocktail mixer. The product contains no high fructose corn syrup, artificial colors, flavors or preservatives and comes in Strawberry Daiquiri, Cosmopolitan, Sour mixer and Mojito flavors. Funkin cocktail mixers have a suggested retail price of $7.99- $9.99 for a 1 L Tetra Pak container and is sold at BevMo, Amazon.com and Total Wines and More. For more information, please call (323) 337-9042.

C

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FLAVORED MALT BEVERAGES Phusion Projects has announced two new Four Loko flavors, Coco Loko and Peach, and a new Four Loko XXX Limited Edition flavor, Strawberry Lemonade, which replaces the current Four Loko XXX Limited Edition flavor, Blueberry Lemonade.

Each flavor contains 12 percent ABV and is packaged in a 23.5 oz. can. The three products will begin appearing on store shelves later this month and have a suggested retail price of $2.49 to $2.99. For more information, please call (888) 901-6344.

APRIL/MAY 2012 BEVNET MAGAZINE 19

CHANNEL CHECK

What’s hot – and what’s not – in stores now

SPOTLIGHT CATEGORY

ENERGY DRINK MIXES & SPORTS DRINK MIXES 52 Weeks through 3/18/2012 SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart.

For both energy drinks and sports drinks, the idea of single-serve mixes has been turned upside down by the arrival of Mio, the teardrop-shaped liquid mix from Kraft that has also drawn other large producers to the table, like the Coca-Cola Co., Inc. The liquid is giving reinforcement to Kraft, which also runs category leader Crystal Light as well on the energy mix side, while Gatorade and Propel from PepsiCo continue to dominate sports drink powders. Not much is reflected here on a pair of growing mix-oriented products, the “push-to-mix” caps championed

by Activate and the rolled-up powder tabs like Nuun, but that has a lot to do with the channel dynamics at work here: natural and specialty isn’t represented.

TOPLINE CATEGORY

VOLUME

52 Weeks through 3/18/2012

BEER $22,546,622,000

4.41%

BOTTLED JUICES

- 1.10%

$5,125,318,000

BOTTLED WATER $8,019,955,000

ENERGY DRINKS $7,942,376,000

SPORTS DRINKS $4,170,359,000

TEA/COFFEE $3,351,349,000

2.80%

17.49%

6.55%

5.17%

SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart.

20 BEVNET MAGAZINE APRIL/MAY 2012

Brand

Dollar Sales

Change vs. year earlier

Crystal Light Energy On The Go

$14,747,250

5.52 %

MIO Energy

$8,504,032

N/A

Private Label

$2,458,186

0.49 %

4C Totally Light 2GO Energy Rush

$1,329,270

57.14 %

FRS Healthy Energy

$297,228

-13.51%

ZIPFIZZ

$278,529

-51.08%

EMERGEN-C Immune Plus

$236,755

-57.23%

Power Edge On The Go

$124,587

9.00 %

Intense NRG

$98,121

-32.83%

Crystal Light Energy

$94,675

35,543.64 %

Gatorade Perform

$87,167

532.45 %

4C Totally Light 2Go

$80,930

-45.91%

Power Edge

$76,955

-7.92%

ZizzZazz

$31,414

-77.46%

Xtreme Peptime Mini White

$15,422

-75.42%

Blue Monkey

$8,423

N/A

Powerade

$5,179

-95.58%

4C Totally Light Tea2Go Energy Rush

$4,316

N/A

PHD 2Go

$3,974

140.25 %

4C Totally Light Energy Rush

$3,813

N/A

Brand

Dollar Sales

Change vs. year earlier

PROPEL ZERO POWDER

$18,908,800

29,932.31

GATORADE

$13,726,350

(29.64)

GATORADE G2 PERFORM

$7,314,002

12.67

GATORADE PERFORM

$7,299,837

65.60

GATORADE FROST

$3,218,615

15.32

PROPEL

$2,958,219

(88.00)

MIO ENERGY

$2,552,832

N/A

POWERADE ION4

$955,000

90.59

PROPEL CALCIUM

$627,896

(85.68)

PRIVATE LABEL

$177,113

(42.18)

REPLENISH

$59,821

5.83

GLEUKOS

$14,577

(13.70)

TANG SPORT

$13,338

(81.93)

PURE SPORT RECOVERY

$10,334

(47.54)

G2

$7,898

(44.73)

RW KNUDSEN FAMILY RECHARGE

$2,563

N/A

G2 STICKS

$2,350

(99.61)

RW KNUDSEN RECHARGE PLUS

$2,261

N/A

CLIF SHOT

$2,212

N/A

$806

N/A

PROPEL ZERO

BOTTLED FRUIT DRINKS Brand

HOT! Fuze Dollar Sales

Change vs. year earlier

ENERGY DRINKS Brand

HOT! Monster Rehab Dollar Sales

Change vs. year earlier

Hawaiian Punch

$185,385,000

1.80%

Red Bull

$2,720,167,000

18.67%

V8 Splash

$126,067,800

11.96%

Monster Energy

$1,433,840,000

21.90%

Lipton Brisk

$99,284,860

92.24%

Rockstar

$487,961,800

13.99%

Tampico

$91,750,070

-0.22%

NOS

$242,666,200

11.95%

Snapple

$72,649,000

14.31%

Java Monster

$206,982,500

21.36%

Monster Mega Energy

$205,910,300

16.29%

Monster Rehab

$185,015,100

2,348.91%

Rockstar Recovery

$147,309,200

97.36%

Amp

$145,976,700

4.79%

Full Throttle

$97,630,930

-7.71%

Bug Juice

$67,241,790

-19.01%

Private Label

$66,435,980

6.21%

Tum E Yummies

$64,443,700

40.35%

Fuze

$60,366,330

3,257.72%

Fuze Slenderize

$56,047,870

-10.94%

SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart.

52 Weeks through 3/18/12

SPORTS DRINKS Brand

Gatorade Perform Powerade Ion4

NOT! Bug Juice

HOT! Powerade Zero Ion4 Dollar Sales

Change vs. year earlier

SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart.

52 Weeks through 3/18/12

TEA Brand

NOT! Full Throttle

HOT! Arizona Arnold Palmer Dollar Sales

Change vs. year earlier

$2,036,140,000

6.61%

Arizona

$618,007,200

-1.67%

$670,265,300

3.62%

Lipton Brisk Tea

$289,300,000

3.74%

Lipton

$254,894,400

-11.68%

Gatorade

$431,664,900

9.87%

Gatorade G2 Perform

$421,971,000

13.37%

Snapple

$189,358,400

2.51%

Powerade Zero

$186,066,500

-0.33%

Arizona Arnold Palmer

$154,474,000

43.56%

$148,155,300

-8.72%

$146,809,800

12.15%

Gatorade Cool Blue

$58,240,220

34.77%

Lipton Pureleaf

Gatorade Frost

$57,156,170

13.96%

Diet Snapple

G2

$49,071,180

-19.37%

Nestea

$99,454,070

-7.85%

$88,107,050

11.07%

$81,210,820

38.34%

Powerade

$39,910,440

4.88%

Gold Peak

Powerade Zero Ion4

$30,221,910

6,385.64%

Lipton Diet

SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart.

52 Weeks through 3/18/12

BOTTLED WATER Brand

Private Label

NOT! G2

HOT! Smartwater Dollar Sales

Change vs. year earlier

SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart.

52 Weeks through 3/18/12

DOMESTIC BEER Brand

NOT! Lipton

HOT! Coors Light Dollar Sales

Change vs. year earlier

$1,035,867,000

4.58%

Bud Light

$5,373,273,000

1.64%

Aquafina

$690,407,200

-3.56%

Budweiser

$2,072,064,000

-1.21%

Dasani

$644,872,300

4.89%

Coors Light

$1,969,665,000

4.01%

Vitaminwater

$644,872,300

-8.19%

Miller Lite

$1,685,132,000

-0.04%

Poland Spring

$396,135,400

-1.45%

Natural Light

$1,097,036,000

-1.41%

Nestle Pure Life

$388,502,900

18.85%

Busch Light

$737,632,500

0.91%

Smartwater

$368,773,900

23.64%

Busch

$680,833,100

1.12%

Deer Park

$245,189,000

1.66%

Miller High Life

$500,778,300

-0.02%

Vitaminwater Zero

$212,410,400

20.70%

Keystone Light

$483,861,700

1.36%

Ozarka

$197,256,200

3.30%

Natural Light

$362,085,600

3.10%

SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart.

52 Weeks through 3/18/12

NOT! Vitaminwater

SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart.

52 Weeks through 3/18/12

NOT! Natural Light

APRIL/MAY 2012 BEVNET MAGAZINE 21

By Gerry Khermouch

THE THINGS I DON’T KNOW It’s been a monthly ritual of mine spanning quite a few years by now: finding time on a weekend to sit down with a favorite relaxation beverage (lately it’s been Dogfish Head Indian Brown Ale) and write the column you’re reading now.

But I’ll confess that, despite having spent nearly two decades following the beverage industry, I’m still a bit uncomfortable in this role. As I tell newcomers to the business who phone me for advice, after two or three months in the trenches, you’ll surely know way more than I do.

So, this month, I thought it would be refreshing, and maybe therapeutic for me, to fess up on some of the things I don’t know about beverages. Questions I wish I had the answers to, but that continue to haunt me. By the way, if you think you do know the answers, by all means send in a comment and let the rest of us in on it.

How valuable is prior industry experience in launching a new brand?

I’ve often discussed my admiration for the dedicated beverage tinkerers who’ve created brands like AriZona, Vitaminwater, Fuze and Monster Energy. Truth is, though, some of the most interesting, and sometimes successful, new brands have come from people from entirely outside the industry – whether we’re talking the coconut water brands Vita Coco, Zico and ONE, or SoBe, or Rockstar Energy, or functional entries like Function Drinks or Ojo eyecare drinks.

Meanwhile, as I’ve noted in this space before, second acts by big beverage winners rarely are as successful as the first, even with the benefit of all that added experience from the first go-round. So, then, does experience really help? Could it be that the benefit of knowing the minutiae of how to build a brand is offset by hard-wired patterns of conventional thinking that don’t similarly encumber newcomers to the category? I wish I had an answer to that.

22 BEVNET MAGAZINE APRIL/MAY 2012

Is it really so vital to get your new brand into the market well ahead of the summer selling season?

The rule of thumb used to be that, if your new product doesn’t get onto store shelves ahead of the peak summer selling season, you’ve basically wasted a year. But I’ve begun to wonder whether that’s really true. If the new mantra for innovative brands is to build them slowly and organically, working out the kinks off-Broadway, so to speak, then is it really so tragic if you don’t launch with a bang, with half a dozen facings in all the key retail chains?

Or are you better off launching a bit more modestly, finding nooks wherever you can, making your mistakes on a small scale and, perhaps, building consumer buzz that may get bigger retailers more interested down the line? Is it possible that the offseason doldrums may be a better time to get a look from distributors and retailers than amid the din of peak-season promotions from bigger brands?

Is a dose of cynicism necessary for success on a grand scale?

In my newsletter, I often point to a syndrome I’ve perceived in which there’s money to be made off consumers who’re looking for psychological cover – and it can be flimsy cover at that – for urges they know they really shouldn’t be indulging. So if you want to slake their craving for sweet drinks, throw in some trace amounts of vitamins or antioxidants and give it a name like Vitaminwater – bingo! They’re happy, you’re happy.

Starbucks, as I’ve sometimes noted, has built a substantial business around having the grown-up connotations of coffee disguise that what it’s really purveying, with its Frappuccinos, is milk shakes for adults. Meanwhile, beverages with greater integrity – whether in the form of true efficacy or flavor with no sweeteners – can go begging for shelf space and consumers. Call it cynicism or call it con-

cessions to broader tastes, but is this still really necessary to succeed?

Are beverages a high- or low-involvement category?

Over the years I’ve heard various theories as to how emotionally invested consumers are in the beverages they consume. Beer or spirits, yes – those are status badges flaunted in social occasions. But nonalcoholic beverages, in the view of some marketing experts, are a “low-involvement” category – in other words, one in which consumers make their purchasing decisions with a minimum of muss and fuss because they really don’t have much emotionally invested in the outcome.

By that logic, it’s silly to aspire to offer much more than refreshing taste, a pretty package and a fair price. But I wonder sometimes – recalling, say, Snapple during its heyday, when consumers deluged its front woman Wendy with calls and letters – whether that’s ever entirely been the case. And these days, when I see the sophisticated way that brands like Guayaki or Sambazon weave together their brands’ health benefits, social causes and environmental initiatives, it’s hard to see why consumers couldn’t be brought to see these purchases as a statement of their own values and personality. So, highinvolvement or low-involvement?

I could come up with a dozen more questions like these, but that would only cement the notion that the one issue in beverages with which I’m truly conversant is all the things I don’t know. Or maybe it would just confirm what we likely all already know: beverage innovation is a spooky, unpredictable affair with no infallible rules.

Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.

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STARBUCKS IS SURROUNDED. It might not mean much now, but there is an evolving set of Frappuccino options out there, coming after the longtime category leader from every retail channel.

Marketers have known there’s an opportunity in coffee for a long time – as far back as 2009 “Lizard King” John Bello was touting it as Adina’s strong suit – but it’s been hard on brands as they’ve been more focused on going head-to-head with the Frap instead of growing the category.

That’s changing. Now, a group of products has started to broaden the idea of RTD coffee into a set of options that could leave the Frappuccinno as one strong tree in a forest of many.

“I always noticed that Starbucks owned the category,” said Vita Coco CEO Mike Kirban, whose company recently purchased a controlling interest in espresso/ coconut water blend Coco Cafe. “But when I tasted something that tied into it, I knew there was something there.”

“Look,” he said, “It’s a billion dollar category and I know it’s not going to take 50 percent share from Starbucks. But I’ll take 10 percent of the share. That’s a nice little $100 million business.”

The chief stumbling block for many brands has been to offer a consumer education set that even indicates an alternative to the idea of cold coffee as coming from any other source but Starbucks: for a long time, the Frap and its espresso linemate, the Doubleshot, have been the twin storylines of the RTD coffee category.

In conventional channels, they’re still the big play, a recognizable brand with a strong distribution ally.

Here’s the thing, though: retailers are getting behind alternatives. Fresh Market, for example, has pushed both Illy Issimo and now Coco Cafe into its sytem, and both of those products are now being pushed into wider release, Issimo in drug channels like CVS and Coco Cafe into

24 BEVNET MAGAZINE APRIL/MAY 2012

Target. Meanwhile, Marley’s One Drop, provals arranged by distribution partners which has been on a tear since its release LA Libations and Big Geyser. In New as a flanker brand to the company’s York, Big Geyser is also getting the chance relaxation-focused teas, is also offering an to play with a glass package for the prodalternative at the supermarket level. uct, which gives it another angle of attack.

And there’s more on the way. Vita Coco With some of the successes, Larsen told isn’t the only coconut water company BevNET, “Illy has landed.” trying to mix hydration with caffeination: Of course, there’s one other player who both Zico and AriZona are rolling out is also introducing consumers to the idea coconut/coffee blends as they attempt to that there are fresh faces in the RTD cofcombine the emerging trend. fee category: Starbuck’s itself. While the That combination joins another, stron- company has been able to get its Seattle’s ger hybridization of coffee, the coffee enBest brand in front of consumers, it may ergy drink, as a way for consumers to enalso help to create a mindset among them ter the category. Java Monster is almost a that there’s more than one brand to turn to $300 million brand in its own right (per for that coffee lift. After all, the consumer Symphony/IRI and extrapolated over doesn’t necessarily know that Seattle’s Best un-covered channels like Wal-Mart); with is produced by Starbuck’s: They’re just seeRockstar Roasted also having strong dising another can, another option, in a space tribution in the Pepsi system, that creates that is rapidly offering a lot of them. another strong set Brand Dollar Sales Change vs. year earlier of choices for the Frappuccino $580,314,500 7.02 % coffee craver in Doubleshot $276,327,600 14.31% convenience stores and other chanSeattles Best $21,690,190 248.83 % nels where the Doubleshot Light $8,625,847 -12.04 % Frappuccino has a Private Label $8,434,319 2.66% following.

Illy Issimo $5,498,066 344.01% That, combined Emmi $856,706 -28.10% with other options, is starting to clue Starbucks Doubleshot $814,959 N/A consumers to the Marleys One Drop $495,417 N/A idea that coffee Community $452,037 17.08% can travel. Behind Main St. Cafe $222,655 -9.84% Tom Larsen, the General Manager Wolfgang Puck $168,173 127.57% of the Illy brand, Havana $138,252 -41.77% Coke’s VenturPacific Organic $137,646 19.22% ing and EmergCaffe D Vita $81,878 42.92% ing Brands unit Bustelo $80,048 N/A is starting to get some wins at retail Adina $80,041 -55.62% – taking the higher Bryne Dairy $57,241 24.58% end coffee product Mr. Brown $55,074 20.86% into wider circulaCopper Mountain Hot 2 Go $41,216 N/A tion with carefully coordinated apSOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart. 52 Weeks through 3/18/12

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BRAND NEWS

RTD Coffee

Bean & Body has introduced two additions to its line of organic shade grown coffee drinks: Vegan, a dairy-free offering, and Horchata, a refreshing decaffeinated alternative. The products are Fair Trade Certified organic, ORAC certified, and packed with antioxidants. Bean & Body is available in seven flavors.

Chameleon Cold Brew recently launched its organic Fair-Trade certified coldbrewed coffee at Whole Foods Market, New Leaf Markets, and Andronico’s in Northern California and at HEB’s Central Market throughout Texas. The products is now available in TX, CA, CO, NV and LA with additional stores and markets coming online throughout the spring.

ZICO has introduced ZICO Latte, the

coconut water company’s first caffeinated product. The product is a blend of coconut water from concentrate, sugar, coconut cream, coffee and vanilla; it contains 120 calories per bottle and has 85 mg of caffeine. The product is expected to officially launch in June.

Imbibe has launched Frio Cappuccino.

The drink is a lightly sweetened blend of coffee and milk, and served in a 9.5 oz. glass bottle. Frio Cappuccino iced coffees are available in Regular, Mocha and Vanilla versions.

RealBeanz has announced that the brand

is now available throughout the U.S. as the company has signed new distribution agreements in the Northeast Corridor, Mid-Atlantic, Southern and Western regions of the U.S. The new agreements bring RealBeanz to thousands of retailers.

RealBeanz is an RTD gourmet iced coffee combining premium-brewed coffee beans and artificial growth hormone-free milk (rBST free), with functional ingredients including vitamins and herbs.

Whitewave Foods. International Delight,

the brand known for its line of premium flavored creamers, has launched a new line of iced coffee for home or on-the-go. The new Iced Coffee line is the first of its kind to combine coffee, real milk and cream in a ready-to-serve half-gallon container. The products are brewed with 100 percent premium Arabica coffee. International Delight Iced Coffee is now available in the refrigerated dairy aisle at grocery retailers and select club stores nationwide. The new line is available in three popular coffeehouse flavors – Mocha, Vanilla and Original.

28 BEVNET MAGAZINE APRIL/MAY 2012

Alpina Foods. Alpina has announced

the latest addition to its line of dairy products: Juan Valdez Café Latte. The product is an all-natural blend of handpicked Colombian Arabica coffee beans and fresh-from-the-farm skim milk.

It is low-fat, has no artificial flavors or sweeteners, is a great source of protein and calcium, and has less carbohydrates, calories and sodium than competitors.

Copper Mountain Beverages has intro-

duced Hot2Go Ready-To-Drink Coffee Lattes. The beverages are made from a special blend of Central American coffee beans and come in French Vanilla, Hazelnut and Mocha flavors in both regular and light versions. The lattes are ready to drink after 60 seconds of microwave heating.

Coco Café is a ready-to-drink blend of organic, Fair Trade espresso, fresh coconut water and low fat milk. The product is packaged in an 11.1 oz. Tetra Pak size and has a suggested retail price of $2.99. It’s available at Whole Foods in Southern California, The Fresh Market, and will soon be available in other national and regional grocery and retail chains, including Target.

Simpli has launched a coffee flavor to its

line of Oat Shakes. The product is made with premium coffee beans and contains 25 mg of caffeine. Packaged in an 8.4 oz.

Tetra Pak, the drink is vegan, made with all-natural ingredients and contains no soy or GMOs. AriZona Beverages announced plans to introduce CocoZona Espresso, a caffeinated twist on its original 100 percent pure coconut water, CocoZona. Packaged in a

100 percent recyclable and re-sealable aluminum bottle, CocoZona Espresso contains 50mg of caffeine per bottle and zero fat and zero cholesterol. The drink has 70 calories per 14.5 oz serving. Like all AriZona beverages, CocoZona Espresso has no preservatives, artificial colors or artificial flavors. The product was scheduled to debut in the New York metro area in March, continuing national distribution throughout the year.

juice and green coffee extract from 100 percent Arabica beans. Unlike the traditional process, the green coffee extract used in Starbucks Refreshers beverages is unroasted resulting in a beverage with a mild flavor while still retaining naturally occurring caffeine. At 60 calories per 12 oz. can, the beverages are available in Raspberry Pomegranate, Strawberry Lemonade and Orange Melon, in lightly sparkling, ready-to-drink form.

Illy is moving three of its flavors— Cap-

Kohana Coffee has announced the introduction of an organic, fair trade “shelfstable” Cold Brew Coffee Concentrate.

It is extracted from the finest organic, fresh craft roasted beans without using heat, producing a naturally sweet, low acid, 100 percent natural coffee concentrate. Kohana Cold Brew can be served hot or as iced coffee in single servings.

Kohana Cold Brew is packaged in a 32 oz. PET bottle and makes between 12 and 15 drinks per bottle.

puccino, Latte Macchiato and Mochaccino — into 9.5 oz. teardrop glass bottles.

Monster. Java Monster recently changed

the names of some of its lineup. Java Monster Lo-Ball became Java Monster Vanilla Light; Java Monster Original became Java Monster Kona, and Nut-Up became Java Monster Toffee.

Starbucks has launched Starbucks Refreshers, a new line of made from real fruit

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www.D rinkCo coCafe .com APRIL/MAY 2012 BEVNET MAGAZINE 29

THE LANDSCAPE OF CRAFT HOW WE GOT HERE

BY RAY LATIF

From the now-ubiquitous Samuel Adams commercials urging viewers to “Take Pride in Your Beer,” to appearances by Dogfish Head Beer founder Sam Calagione on both The Today Show and The Martha Stewart Show, craft beer has slowly made its way into American households, and is undeniably one of the fastest growing categories within the beverage industry. According to recent Brewers’ Association data, craft breweries sold nearly 11.5 million barrels of beer in 2011, up from 10.1 million barrels in 2010, with total dollar sales of craft beer leaping to an estimated $8.7 billion, up 15 percent the previous year.

Despite significant gains in sales and consumption, mainstream education and awareness of craft beer remains hazy. And while miniscule marketing budgets play a role, the biggest barrier to consumer acceptance may be the very notion of craft beer itself. What differentiates a “craft” beer from a “regular” beer? What is a “craft” brewery? And, better yet, what the heck does “craft” even mean?

Before getting too deep into terminology, let’s back up for a moment, and take a brief look at the evolution of craft beer in the U.S., as well as the laws and organizations that govern the category.

30 BEVNET MAGAZINE APRIL/MAY 2012

HOW WE GOT HERE Though small breweries have a long history in the U.S., the 1970s marked a turning point for independent and regional brewers, as much as it did for the notion of American beer. Within the decade, consumers began to transition away from consumption of traditional beer styles and toward that of effervescent, low-calorie lagers, often referred to as “light beer.”

The shift was, in large part, perpetuated by highly effective and widely visible marketing campaigns engineered by the country’s large, industrial-sized breweries, including Anheuser-Busch, Miller, and Coors.

Changing consumer tastes resulted in a huge decline in the number of independent brew houses and a spate of brewery consolidation. By the end of the 1970s, there were only 44 breweries in the U.S. with expectations that the number would eventually drop into the single digits. (A quick fast-forward, just for comparison’s sake: at last count, there are nearly 2,000 American breweries in operation today.)

Spurred by a lack of bold and flavorful options in the marketplace, a growing number of individuals began to embrace homebrewing, even though the craft (hint, hint) was, at the time, an illegal one. By the end of the decade, however, grassroots lobbying efforts to repeal federal restrictions on home-brewed beer and wine finally succeeded. In 1978, U.S President Jimmy Carter signed into law a bill that allowed for the production of 100 gallons for a single adult, and 200 gallons for a household with two or more adults.

The new law had a significant impact in reviving disappearing beer styles and brewing traditions, and opened the door to a few small breweries, including The New Albion Brewery in Sonoma, Calif., and the Boston Beer Company, maker of Samuel Adams.

These breweries became the foundation for a new so-called “craft beer” industry, which crept into the 1980s and quietly made its mark via the popularity and growth of higher quality beers accompanied by a steady rise in regional distribution.

The renewal of small breweries also gave rise to a number of industry and trade organizations established to support the growth of craft beer through the develop-

least 50 percent of its production volume in either all-malt barley beers or in beers which use adjuncts (such as rice and corn) to enhance rather than lighten flavor.

The Brewers Association defines segments of the craft beer industry in terms of production volume as well as how breweries distribute their products. The BA designates craft breweries as follows: microbrewery, brewpub, contract brewing company, and regional craft brewery. ment of knowledge sharing programs, sales and marketing support, and government relations boards. These organizations included the Association of Brewers (which also included the American Homebrewers Association and the Institute for Brewing and Fermentation Studies) and the Brewers’ Association of America.

In 2005, the two groups merged to form the Brewers Association (BA), a memberfunded and operated trade association whose mission statement is “to promote and protect small and independent American brewers, their craft beers and the community of brewing enthusiasts.” In addition to supporting the overall promotion of craft beer, the BA plays a key role in defining industry terminology and the designation of craft brewery segments.

DEFINITIONS: WHAT WE TALK ABOUT WHEN WE TALK ABOUT CRAFT BEER According to BA guidelines, an American craft brewery must adhere to three specific guidelines: it must be small, independent, and traditional. Here’s what they mean by that: SMALL: Production of less than 6 million barrels per year, excluding flavored malt beverages.

INDEPENDENT: A brewery that is has less than 25 percent ownership or controlling economic interest by a member of the alcoholic beverage industry that is not a craft brewer.

TRADITIONAL: A brewery that produces only malted barley-based beer or has at

MICROBREWERY: A microbrewery produces less than 15,000 barrels (1 barrel = 31 gallons) of beer per year. Microbreweries must sell 75 percent or more of their beer off-site and have relative flexibility in the way they can distribute, pursuant to individual state regulations in which the brewery operates. In most states, a microbrewery can sell its products via the traditional three-tier system (brewer to wholesaler to retailer to consumer), and/or the two-tier system (brewer acting as wholesaler to retailer to consumer), and/or direct to consumers through on-premise sales.

Microbreweries have become the fastest growing segment in the craft beer industry; of the 250 new brewery openings in 2011, 174 were microbreweries.

A significant percentage of microbreweries start out as a “nanobrewery,” a very small brewery operation often launched by home brewers attempting to turn their craft into a career. Like any other brewery, and despite its tiny size, a nanobrewery must be licensed by the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB).

BREWPUB: A brewpub is a restaurantbrewery that sells 25 percent or more of its beer on-site. The beer is brewed primarily for on-premise sales and often dispensed directly from a brewpub’s tanks. Brewpubs can sell beer “to go” and distribute to off-site accounts, however, the BA re-categorizes a brewpub as a microbrewery if its off-site beer sales exceed 75 percent of beer production.

Brewpubs currently represent the largest segment of craft beer. Of the 1,940 craft breweries in operation last year, 1,063 were brewpubs.

APRIL/MAY 2012 BEVNET MAGAZINE 31

CONTRACT BREWING COMPANY: A contract brewery is one that hires another brewery to produce its beer - known as the producer-brewery - and/or a brewery with limited capacity that hires another brewery to produce additional quantities of its beer. A contract brewery handles the marketing, sales, and distribution of its beer, while the brewing and packaging of its beer is left to its producer-brewery.

Contract brewing is often the quickest and least expensive route to starting a new beer company. Most contract breweries pay flat fees to its producer-brewery based on a number of barrels produced. The benefits are clear: a contract brewery can build its brand without the difficult and time-consuming process of acquiring state and federal brewing licenses and none of upfront capital costs associated with the construction of a brewing facility.

A similar business model is that of an “alternating proprietorship,” or “altprop” for short. While the BA does not designate

an alternating proprietorship as a specific craft beer segment, the term is used by the TTB to describe an arrangement in which two or more people share the physical premises of a brewery. In most cases, an alternating proprietorship represents a contract in which an existing brewery with excess brewing capacity rents space and equipment to a tenant brewer, often a new entrant into the beer business.

REGIONAL CRAFT BREWERY: A regional craft brewery produces between 15,000 and 6,000,000 barrels of beer annually. With a growing number of microbreweries increasing production and expanding into new distribution territories, the number of regional craft breweries is on the rise, yet the segment is still the smallest within the craft beer industry. Nevertheless, these larger operations represent the largest sales growth for craft beer, so much so that the Brewers Association created what has come to be

known as “The Sam Adams Provision.”

Up until 2011, the Brewers Association based the production ceiling for a craft brewery on a 1976 tax code which defined “a small brewery” as one that produced less than 2 million barrels of beer per year.

By 2010, however, the Boston Beer Company (BBC), the largest craft brewery in the country and manufacturer of Samuel Adams beer, was approaching 2 million barrels of production, with expectations that it would exceed that amount within a short number of years.

While the BA refuted claims that it was changing its definition of craft beer in response to the growth of BBC, on December 20, 2010, the BA’s board of directors voted to alter the BA’s designation of “small” craft brewer to refer to “any independent brewery that produces up to 6 million barrels of traditional beer.”

Notably, BBC is currently – and has always been - the only craft brewery that produces over 1 million barrels of beer.

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Can craft beer brands learn to travel?

By Jeffrey Klineman To take a look at the conundrum of craft beer branding, one need look no further than the Men’s Room.

Beg Pardon?

Stay with me. Here we go.

34 BEVNET MAGAZINE APRIL/MAY 2012

Men’s Room Red is a beer made by Seattle’s Elysian Brewing. Elysian is a 19,000 barrel-per-year brewing company that began in 1996 as a single brewpub; after 12 years, in 2008, the company started getting serious about moving from onpremise to wholesale brewing, borrowing capacity from New Belgium in exchange for helping brew a small batch collaboration product for the Fort Collins, Colo.based company in its own tanks in Seattle.

Elysian’s launch as a brewpub coincided with Seattle’s place as an early adopter in the craft beer movement, and its beers and pubs became something of a local fixture, growing with the city’s beer scene behind products like Dragon’s Tooth Stout and The Wise ESB. But its best-selling beer didn’t emerge until several years later, when the company began to develop a relationship with a local afternoon drive-time radio show called The Men’s Room. As Seattleites, the hosts of The Men’s Room had begun to drink Elysian, occasionally mentioning it on the air. One day they were pre-gaming at the brewpub and were befriended

by Elysian CEO Joe Bisacca, who decided to brew a batch of product and name it after the show, calling it Men’s Room Red. This arrangement worked well for the show hosts and for the brewery as well; on air, the hosts began touting not just Elysian beer but Men’s Room Red. After selling 12 kegs the first night, the brewery reached out to the radio station and the two groups arranged for a portion of Men’s Room Red sales to be donated to a local branch of the Fisher House Foundation, which provides low cost lodging to veterans and military families receiving treatment at military medical centers.

The interest in the beer reverberated in the community. That was 18 months ago.

Since then, the variety has taken off – the company sells about 4000 cases of 22 oz. bombers a month, as well as 600 kegs, and it has added about 400 draft accounts, according to sales and marketing director Ma tt Thompson.

For Elysian, the success of Men’s Room Red is that it has allowed the company to deepen its brand in the Seattle area. And it’s significant because this kind of success

is being replicated in breweries across the country, all of which have shown tremendous skill at getting local and regional crowds interested in their products, and further, creating a resonant relationship between the products and consumers.

But here’s the problem, which is one that’s emblematic of the way craft beer brands have grown: “This story is great for the local market,” Thompson says, “But who is going to know about it in Pennsylvania?”

The answer is obvious – no one – but it begs another question, which is whether the way that craft is growing is one that is ultimately good when it comes to fulfilling the potential the category holds for the distributors, the retailers, or the suppliers themselves.

“The authenticity of regional brands and local brands has made for some that are very strong,” says Joth Ricci, the Managing Director at First Beverage Group. “But in a lot of cases, it’s made it very hard for those brands to do what they call ‘travel.’”

Put more starkly, he adds, “One of the reasons you don’t have national craft beer brands is they don’t have the knowledge of how to break into a new, local geographic market.”

GROWING INWARD Of all the growing categories of the beverage business, craft beer is absolutely the hottest. The growth numbers – more than 12 percent in volume, 15 percent in dollars, for the second year in a row -- are splayed all over this magazine and innumerable beer web sites. They present a strong contrast when matched up against conventional beer, just as the growth rate of the energy drink category has big soda company executives weeping in their sodas.

But the growth of craft beer has occurred in a way that the growth of energy drinks has not: craft is growing up, but it’s also growing in. The number of new breweries in the U.S. increased by 250 last year, and there were 915 in planning at the end of 2011. Brewery capacity is also expected to increase by at least another 10 percent in the next two years, and many breweries are doubling or tripling their own capacity to meet demand. Still, experts say that

most of that new beer will go to the same regions, the same consumer set, as the breweries deepen their local connection.

“Ten years ago, we saw more breweries that were looking at the national picture,” says Paul Gatza, Executive Director of the Brewers’ Association. “At the same time there were a lot more companies that started taking a deeper approach, to be in fewer markets, but stronger in those markets.”

That means the even though craft beer is now huge, craft beer’s brands are not.

Look at the top 20 brands, and there’s an average share of 3.6; take out top brand Boston Beer – which has a share of 18.5, and the rest of the pie drops to 2.8. Take out Sierra, the next highest – at 11.2 and no brand has a double-digit share.

That means that craft beer has evolved into a national phenomenon with local legs.

For wholesalers aligned with the big beer companies, the numbers offer few clues as to which craft companies they should offer their limited, valuable space to when they know they could just throw a few more kegs of Bud onto the truck.

For those who specialize in craft and specialty offerings, there’s still a weighty balancing act to account for the companies that are worth long-term commitments, and which ones will have trouble drawing consumer interest.

That diversity of brands presents a problem not just for distributors and retailers, but for brewers as well. For the brewers, the sheer velocity of new companies entering the space means that even as the category has grown, one brewer is still easily substituted for another. Few have made themselves essential when it comes to building a portfolio. And if they stop being the flavor of the month locally, they have nowhere to go.

“Craft is kind of stuck in its own paradigm,” says Greg Owsley, the chief branding officer of New Belgium Brewing from 1996 to 2011. “Brewers feel the only way they can succeed is to be small, inventive, pastoral, but someone is going to have to break out of that.”

With the rapidly growing number of brewers and the high level of quality advances, the consumer is starting to have near-limitless access to good, high-end

APRIL/MAY 2012 BEVNET MAGAZINE 35

beer. But, Owsley says, if they don’t start improving their ability to transmit branding cues, they run the risk of being lost on the shelf.“If you don’t have fabulous beer, you don’t last long in craft anymore – it’s now something you have to have to get in the door,” Owsley says. “But in order to expand, you have to have a story that’s relevant and reverberates in a certain way.”

That doesn’t mean that branding does not exist in craft beer. In fact, when measuring the intended effects of branding, that increase in consumer loyalty and identification with products, craft beer brands excel. The problem is that they excel only as far as the limits of that much larger brand they’re competing within: and that brand is craft beer itself.

“There’s something about being associated with craft beer as a community that lends something else,” says Paul Gatza, Director of the industry trade group the Brewers Association. “It says you’re small, you’re part of craft. With other products, branding tries to differentiate. But with craft, the category is already leaning toward differentiation, while you’re also part of a community, a community that represents small, traditional, unique, and somewhat cool.”

(Unless, of course, you trespass, by succeeding. For example, no less a brewer than Sam Calagione, the founder of legendary craft brewery Dogfish Head recently decried the tendency of the category to eat its young as they become better known, wading into a set of online forums to complain that posters “still spend their time knocking down breweries that dare to grow.”

“Beer geeks are having a bit of social validation right now,” Owsley says, “But I see the culture getting a bit oppressive. Consumers don’t want to have to read the Beer Advocate every time they order a freaking beer. They want to go into places and feel like they can win every time they go in.”)

Here’s the not-so-hidden secret of craft brewers, derived from extensive interviews and discussions with brewers, distributors, and other members of the industry: for many of them, just being part of that community is enough.

But that community is likely to be subject to the laws of the marketplace, no 36 BEVNET MAGAZINE APRIL/MAY 2012

matter how philosophically driven it might be. Nanobreweries become microbreweries. Brewpubs start to name beer for radio shows, and soon enough it’s in 6-packs.

Investors want to see growth and returns.

The dynamics of the category might mean that some companies ignore the instinct to “grow or die,” but all of them will, and that can cause companies to have to make hard choices in the long term.

“I love the psychology for most of these guys,” Ricci says. ”I love why they’re in the business, why they love what they do, why they do what they do, and what’s important to them. They’re not interested in becoming the next Sierra Nevada. That’s just a massive pain.”

RECESSION TIMING For a long time, the craft breweries were able to ignore the competition paradigm because of a lucky kind of timing. According to Gatza, the slow growth period that followed the first bust of craft brewing in the 1990s meant that brewers were more careful with the way they grew their brands this time around.

“A lot of craft brewers happened to be fortunate that in the mid-2000s, they had invested in capacity, and they had it online,” he says. When the recession hit, “craft was continuing to grow, and they weren’t crunched for capacity when lending dried up.”

Now, with the money loosening up, expansion is the word. But how well-prepared are these companies to change their local-is-best model to start moving into new territories? With so many new breweries growing in those same local markets, increasing competition locally, isn’t there pressure to start to penetrate new areas?

Certainly, some brands are feeling that urge. While the top two craft brands, Boston Beer and Sierra Nevada, can both make the argument that they are national brands (Sierra’s argument will be stronger when it completes construction of its East Coast brewery) two others, New Belgium and Lagunitas, are also pushing to increase their geographic distribution and amp up their capacity. With the barrelage increasing, eventually, some of these brands are going to have to learn to travel.

Getting smaller isn’t an option, according to Owsley. “Now we’ve got guys in

Change vs. year earlier

Brand

Dollar Sales

Samuel Adams

$238,448,700

4.72%

Sierra Nevada

$144,562,800

14.79%

New Belgium

$106,591,900

15.62%

Shiner

$79,517,740

22.79%

Deschutes

$42,067,630

12.21%

Widmer

$41,868,510

3.90%

Redhook

$33,786,840

4.16%

Magic Hat

$29,550,590

19.85%

Pyramid

$24,608,910

-1.14%

Kona

$22,566,400

48.44%

Long Trail

$22,022,250

7.77%

Lagunitas

$21,427,530

61.30%

Stone

$19,080,680

28.73%

Great Lakes

$17,429,060

22.67%

Bells

$16,879,900

23.03%

Goose Island

$16,658,390

14.43%

Sweetwater

$15,424,400

36.75%

New Glarus

$14,726,530

33.09%

Harpoon

$14,070,230

22.08%

Boulevard

$13,542,040

4.34%

Ninkasi

$13,277,620

104.26%

Alaskan

$12,720,190

6.89%

Lost Coast

$12,522,840

15.61%

Saranac

$12,274,990

1.28%

Bridgeport

$11,732,660

13.89%

Dogfish Head

$11,699,910

17.35%

Abita

$11,313,590

15.07%

Full Sail

$10,807,430

-2.93%

Rogue

$8,104,942

16.80%

Shipyard

$7,582,118

17.95%

Anchor

$7,413,294

12.53%

Full Sail Session

$7,328,259

20.68%

Firestone

$5,915,447

36.33%

Schlafly

$5,807,943

23.87%

Flying Dog

$5,656,966

22.15%

Brooklyn

$5,148,636

26.09%

Saint Arnold

$5,028,920

59.85%

Big Sky

$4,843,620

29.63%

Gordon Biersch

$4,794,929

-10.85%

Bear Republic

$4,378,931

80.32%

SOURCE: Symphony/IRI Total food/drug/c-store/mass excluding Wal-Mart. 52 Weeks through 3/18/12

their garages, Gypsy brewers, and they just keep re-manifesting. At some point, you’re going to go down the rabbit hole with that. The exoticism of the recipes, the next one has to go further and further.

Having every beer sound like it’s an appetizer at a tony restaurant, eventually, is going to go back on them.”

Ricci points out that the local strength of so many craft breweries has led to a broad fear that “the craft beer industry is going to become the wine industry,” with too much diversity of style to create any kind of mass impact.

That’s not to say that the business is hurting now – in fact, look beyond the lack of national brands, Ricci says, and you can actually see industry leaders beginning to innovate inside their own locales – much like wine regions become known for a particular varietal.

“A lot of the problem that I have with the way people look at the category is that they only view it traditionally: where are these brands going to develop,” he says. “But in developed marketplaces, you’re seeing entirely new channels for them to do so. What happens is that… you see spinouts of that business, like smaller, independent retailers, beer-centric markets, where they’re showcasing different parts of the category.”

One perfect example? A craft beer growler program in upstate New York based in convenience stores.

“When businesses are strong enough,” Ricci says, “You see people coming in to take advantage.”

But developing new markets is a harder bit of branding – which takes us back to the Men’s Room, and Elysian itself.

See, Elysian isn’t planning on staying a 19,000 barrel per year Northwest regional brewery forever. The company has built capacity for another 46,000 barrels, and, Thompson says, it doesn’t have plans to contract out that capacity for anybody.

The beer, eventually, is intended to travel.

To do that, though, the company has to help develop markets in new areas, much as it has locally.

Elysian has what Thompson calls a “multi-tiered” branding strategy to get this done, and it relies on extreme beers brewed to celebrate the potential that the year 2012 may signal the Apocalypse, as some believe was dictated by the Mayan 38 BEVNET MAGAZINE APRIL/MAY 2012

Lagunitas and New Belgium, are also pushing to increase their geographic distribution and capacity.

calendar. As such, Elysian has had monthly “12 Beers of the Apocalypse” releases in cities it is attempting to penetrate, like Pittsburgh. The company works hard with distributors in new areas to identify the perfect location to release these highquality apocalyptic beers, and then builds outward in those areas, introducing them to products like Men’s Room or Dragon’s Tooth Stout after an Apocalypse party.

He concedes that there are a lot of breweries aiming for those trendsetting bars – often the hip beer bar of the moment – but shows that he understands brands aren’t built in just one account. “There’s plenty of taps for everyone at the moment,” he says, “But you have to focus on that next tier of accounts with the distributor. “ “When we go in, we try to recognize bars as trendsetters, and count on the halo effect,” Thompson says. “For us, it’s a slow build, not a sprint.”

NEW CHANNELS There are some craft beer models that are trying to take a running start, as well, attempting to short cut the “build local” model by adopting national branding ideas. The movement toward lower-alcohol “session” beers is, for example, identifieable with a national movement to replace traditional premium beer with a similarly light and accessible, but better-crafted style. The development of channels like Whole Foods has also created the potential for new beer to debut and go national quickly, so long as the capacity is there.

“The retailers are getting much more knowledgeable about the craft segment,” says Gatza. “When you have a big launch from a retailer, people are going

to pay attention.”

That’s why an understanding of the new rules of craft branding is so important: as so many new beers enter the marketplace and there is so much consumer choice, branding elements need to be in place to help consumers make sense of the marketplace. They’re different, as Ricci says, but they’re there, and they’re becoming increasingly necessary.

So what’s the key to identifying brands that can travel? Owsley spent a lot of time considering this question as he looked to break New Belgium into new markets – a process that owner Kim Jordan still approaches gingerly: she recently told Craft Beer News that moving into six new states one year “nearly killed us.” Owsley has come to believe that it is about creating a brand that stands for something greater than the region. For New Belgium, the brand has been able to travel because of the company’s principles, which he calls “being humble and being smart.”

“Every little communication point at New Belgium was a chance to express our story. The coasters were like postcards. It’s the little details – call New Belgium, you get a live person.”

While those specific branding ideas aren’t easily replicated, the principles behind them are. And, he says, the industry should be able to notice the brands that are expressing it.

“It needs to be beyond, ‘look at us, we’re small!’” he says. “There’s all that camaraderie around craft beer, but eventually, you need to think of it as a competition. Find some way to develop a story so that if people enjoy the beer they’re ready to come back for another. Or two more, even.”

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PROUD TO SERV E CRAFT BREW ERS

THE MAN BEHIND THE MEGAPHONE

BY CHRIS FURNARI

GREG KOCH SAYS HE’S AN INTROVERT. Recently, Greg Koch, introvert, held a book tour, where the Stone Brewing Co. CEO has, at each stop, stood on a barstool with a megaphone, shouting this rallying cry: “If you are with me in sending the message to the man that says ‘no longer - no longer will we put up with fizzy yellow beer’ can I get a hell yeah?!?”

After that, Greg Koch, introvert, jumps into the assemblage, crowdsurfing across the outstretched arms of a few of his loyal customers.

Here’s more introversion: search for Greg Koch on Google, and you find hundreds of on-camera interviews, speeches to aspiring entrepreneurs, and a keynote presentation to more than 1700 brewers at the 2009 Craft Brewers Conference. You’ll find him walking across the stage to receive an Ernst & Young Entrepreneur of the Year award.

You’ll find him dragging his comradesin-arms together to produce the muchviewed “I am a Craft Brewer” video.

You’ll find him promoting his history of Stone Brewery, The Craft of Stone Brewing Co., by actually waving oversized signs on a busy street corner in

San Diego. You’ll find him on the cover of this magazine, downing a beer where Stone has broken ground for a hotel.

Introvert?

Okay. For the moment, we’ll take the man at his word, that he’s just using this bombastic character to overcome his own shyness. Why does he even need the act?

Particularly at a time when so many in the beer industry are watching every move that Koch and Stone make, as the company has become something of a standardbearer in stalwart artisanship, it would seem that it’s something everyone could live without. But Koch downplays it.

“The whole megaphone thing and the bombastic side of me is sheer fun,” Koch says. “It is always just in the moment. I stand on a bar top and give a megaphone speech maybe three minutes a month.”

If that’s the case, if it’s a defense mechanism, it’s understandable. After all, Koch has had to take many stands, both public and private, since he and partner Steve Wagner started Stone in 1996.

“When we were concerned about our very survival, in the beginning, I was very uptight and focused,” he said.

There was plenty to be uptight about.

For the first few years, Koch says, the company was “bleeding money,” losing between $10,000 and $40,000 a month, and its refusal to compromise and play the “pricing game” with potential retailers wasn’t winning it many friends. The potential cost savings of contract brewing were off the table. And then there are the beers themselves, like highly hopped versions of Stone Pale Ale and the eventual Arrogant Bastard Ale, the company’s best known release that stood in direct contrast to the typical mass-produced beer he rails against.

“I’ve always considered us to be a philosophy based company,” Koch says. “It’s not like we predicted the future. We just started with a very simple matrix of what we would and wouldn’t do.”

Eventually, there was some payoff, although it wasn’t without its hairy moments. And some concerns about how those principled stands might reflect on Koch himself. “I realized,” Koch says, “That I might be coming off as an asshole.”

Koch recalls his first meeting with a buyer for Safeway, North America’s second-largest supermarket chain, in 1998.

APRIL/MAY 2012 BEVNET MAGAZINE 41

The buyer was baffled when Koch said he wouldn’t be offering any promotional pricing in exchange for shelf space.

“When I left that meeting, I was pretty certain that we were s—t out of luck,” he said.

A few weeks later, a Safeway purchase order came across Koch’s desk, no doubt a nod to his steadfast refusal to play the price war.

“We’ve had a lot of pressure to price discount over the years and we never have,” Koch said. “Our job isn’t to discount, but to make sure that our beer is worth the price from a consumer and retailer perspective.”

And as with many craft beer companies, more and more people are starting to think Stone offerings are worth the price.

Stone, currently ranked as the 11th largest craft brewery in the country, according to the brewers association, is unique not just for its beer and its CEO, but also because it operates in every tier of the beer industry. The brewery produced 148,000 barrels of beer in 2011; its distribution arm sells 34 craft brands throughout Southern California. Stone’s restaurant is known for serving up some of the best locally-sourced, organic food in all of San Diego – while running competing beers through its taps.

And it’s working: last year, the Stone operation pulled in $84 million in revenue, according to Koch.

But Koch and company want more.

Stone is investing more than $50 million into an expansion that includes an additional 250,000 barrels of capacity, a new 400-seat restaurant and experimental brewhouse, and even a 50-room hotel. And that’s just domestically. The company also has plans to open a European brewery, as well.

That combination of ambition and principle, as well as the less-than-introverted bar act, however, has at times reflected negatively on Koch himself.

After the announcement that the company was headed to Europe, for example, one person wrote in an online chat “I admire his gumption but I am incredibly leery of his arrogance.”

If that was an isolated remark, it would be one thing, but online conversations on various beer blogs – the preferred mode of communication for much of the craft beer

42 BEVNET MAGAZINE APRIL/MAY 2012

The Introvert’s partner, Stone Brewing Co. co-founder, Steve Wagner.

movement – are littered with stuff about Koch, who has been called everything from a “finger-wagger” to a “jerk-off.”

Even worse, at times Koch has wandered into the comment section after these detractors, whom he derides as “the one percent.”

“I don’t like it when one percent of the crowd controls the conversation,” Koch says. “It’s not a reflection of me when a couple of people have been cranky on a blog. It’s a reflection of them.”

So then why respond?

“Every once in a while I try to disarm it, which maybe is a foolish hope” he said.

“Sometimes people treat me like I’m not a person, but then they go off talking about

me publicly on a blog. I sometimes will respond because I am a passionate guy and I believe in what we are doing.”

So there you have it – if, in fact, Koch is actually an introvert, he has reason to have to sometimes take on the guise of something else. Even if the company is founded on the principal of making beer that is truthful in origin and process, sometimes the defender needs to come from a murkier place. At times, passion has to trump introversion, turning the introvert outward, revealing the strong value system that lies within.

Given the results, it certainly justifies the occasional shout-out. Even from a megaphone.

Brewbound

A better way to experience beer

By Christopher Furnari

Key Craft Offerings: As the summer buy-in season approaches, craft brewers across the nation will switch gears from the boozy barley wines that typify the winter months and transition to more light and refreshing beers. This issue, we feature a number of lower alcohol offerings, called “session beers” for their ability to be consumed in larger quantities over a single occasion – i.e. they’re new versions of the beer to have when you’re having more than one.

These selections can be an integral part of the SKU mix for retailers, providing volume sales for a category that typically receives most of its fanfare in the limited release department.

Boston Beer Co. is introducing Samuel Adams Belgian Session to its Summer Styles Variety 12-Pack this April, effectively joining other craft brewers on the low-ABV bandwagon. Belgian Session is a crisp, bright version of a traditional Belgian beer with fruity, slightly spicy flavors from Belgian yeast. It checks in at 4.3 percent ABV, allowing the drinker to enjoy multiple beers during a “session.” The Summer Styles Variety 12-Pack is available nationwide for a suggested retail price of $13.99.

Deschutes Brewery will bring back Twilight Summer Ale in May to 6-packs, 12-packs and on draught. This 5 percent ABV brew is perfect for the warm summer months.

Twilight is balanced, complex, crisp and refreshing. It is smooth from start to finish and is the perfect complement to a backyard BBQ. If you live in any of the 16 states where Deschutes beers are sold you can pick up a 6-pack for a suggested retail price of $8.99.

Alaskan Brewing will reintroduce its Raspberry Wheat Ale this June. Part of the Pilot Series, this beer is an American-style Wheat Ale with of raspberries added during fermentation (nearly 1 lb. per gallon). The flavor of the raspberries lends a tartness that balances the full-bodied wheat profile and malt sweetness. It is available for a limited time in AK, AZ, CA, CO, ID, MN, MT, NV, OR, WA, WI & WY for a suggested retail price of $8.99.

Brooklyn Summer Ale made its way to cans around this time last year, and it returns this

44 BEVNET MAGAZINE APRIL/MAY 2012

year in bottles, cans and on draught. Summer Ale is a modern rendition of the “Light Dinner Ales” brewed in England from the 1800s until the 1940s. It is refreshing and flavorful without being too heavy. Summer Ale checks in at 5 percent ABV and only 150 calories for the health-conscious imbiber. It is available everywhere Brooklyn beers are sold for a suggested retail price of $8.99 per 6-pack.

Flying Dog is releasing 12 new beers this year, including Underdog. Underdog is actually replacing Tire Bite Golden Ale and will be the first canned Flying Dog beer. With this product, Flying Dog has created a yearround beer especially appropriate for hot and humid East Coast summers. It has great hop character, yet is light and sessionable at 4.7 percent ABV and only available in DC, MD and VA. Underdog has a suggested retail price ranging from $7.99 to $9.99.

Saison Du Buff, the popular collaboration between Victory Brewing Co., Stone Brewing Co., and Dogfish Head, is being re-brewed and released in April. It will look and taste the same as last year’s version and will be distributed to all CA, CO, DE, GA, IL, MA, MD, ME, NC, NJ, NY, OH, PA, VA, VT. Saison Du Buff checks in at 6.8 percent ABV and is brewed with rosemary, sage, thyme and lemon. Only 300 barrels with the Victory Brewing label will be released, and each 12 oz. bottle will be sold individually. Typical retail price is between $3 and $4 per bottle.

The newest release from Dogfish Head is 75 Minute IPA, a blend of the wildly successful 60 and 90 minute IPA’s. The brewer blends the two Dogfish Head favorites, adds maple syrup and allows it to carbonate naturally.

The carbon dioxide trapped during bottle conditioning gives 75 Minute IPA a soft and velvety mouthfeel. 75 Minute IPA is dryhopped with whole-leaf Cascades and should prove to be quite complex. Previously only available on draught at the brewpub, this special-release beer will make its way to 750 ml bottles this month. It will be available in most markets where Dogfish Head beers are sold for a suggested retail price of $8.99.

Talk about rising to the challenge.

After initially being introduced only gingerly by the beverage giants, Stevia (or Rebaudioside A) has become the non-caloric sweetener of choice for new brands, entrepreneurial and big-company manufactured alike. It turns out that even as companies were concerned about its mixability in the first year of its introduction to the mainstream, flavor houses were busy refining it for prime time.

Take Vitaminwater 10, for example – originally a product released with great fanfare, Coke wasn’t willing to part completely with the “crystallized fructose” that had sweetened Vitaminwater for so long. Problem was, the 10 didn’t work as well as Zero from a marketing standpoint; fortunately, from a formulation standpoint, things were evolving – by the time Coke needed to move to Zero, stevia was ready. Since then, the Zero component has become a huge part of the health-conscious Vitaminwater consumer base.

Since then, Stevia has gone everywhere – the formulation intelligence has improved, so that the product is used with the right flavors, and the range of those flavors has broadened. It’s proven to work with tea, with CSDs, even with energy drinks. Products looking to tamp down their calories and move onto natural product channel shelves

46 BEVNET MAGAZINE APRIL/MAY 2012

have flocked to the sweetener. Because of its all-natural origin, products that use stevia are better able to access those natural and specialty retail channels with an innovative aura around them, such as Whole Foods.

That’s aura can be enough to build a brand – Zevia, for example, has thrived within Whole Foods while sweetening itself solely with stevia.

But the sweetener may have reached its limit.

Recent news that Diamond Foods was putting out a Stevia/Sugar mix indicates that the sweetener has become pervasive on the one hand but has jumped the stevia shark on the other: once that sugary cut is in place, it indicates that there’s some level of consumer unhappiness with the overall outer edges of the product.

It has happened before – for example, sucralose didn’t work for many consumers without Ace-K. Nutrasweet also became a baking mix – and then an afterthought – not too many years ago. That seems to indicate that there’s something of a lifecycle for non-caloric sweeteners, and even though Stevia still seems to have a lot of runway ahead of it, there has to be someone out there, somewhere, wondering what the next sweetener in the cycle will be.

Here are some potential sources: 1. Agave Nectar – along with Stevia, less processed ingredients are expected to grow

to about $1.4 billion by 2015, and Agave Nectar is emerging as an alternative to high fructose corn syrup, according to a recent report by Freedonia, a research firm.

2. Monkfruit – Also known as Lo Han Guo, beverage marketers haven’t given up on this highly effective sweetener. While early beverage attempts were killed off because of expense, a recent Tate & Lyle report indicated that in certain types of products, like dairy, the sweetener works better in smaller, more cost-effective doses. It also has a more consumer-ready aura, with the idea that it is coming from fruit winning some over more easily, according to the company. Additionally, it’s less bitter than stevia – and might even work in a mix with that product.

3. Tongues – Scientific firms, like Senomyx, continue to work on enzymes that may allow sugar to taste more intense in lower doses.

4. Oligosaccharides – these are actually lower-calorie sweet carbohydrates derived from enzymes. They are slightly less sweet and digestibility remains the biggest hurdle, according to researchers.

5. The rest of the plant – according to PureCircle marketing executive Jason Hecker, there’s more than one possible sweetener that can be derived from the stevia leaf. In fact, one PureCircle stevia-based sweetener contains nine different kinds of sweetener components – all farmed from the leaf.

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PROMO PARADE

Promotions, events and specials for the industry

Begin the Heineken Voyage Heineken has unveiled the details of Begin Your Voyage, the brand’s summer retail and on-premise program offering jet set-minded consumers the chance to win legendary Heineken festival and event experiences offered worldwide. Running May through September, Summer Voyage provides adult consumers the opportunity to elevate their summer experiences, and retailers and on-premise operators the tools they need to drive summer sales of Heineken and Heineken Light.

To kick off Heineken’s Summer Voyage program, TV advertising will reveal how consumers can participate in the program while encouraging them to choose Heineken and Heineken Light as their summer beer of choice. Custom designed displays, engaging POS, and sampling events (where legal) will be available to help drive awareness and engage consumers across all channels while providing details on how to text in for the chance to win exclusive experiences including Ultra Music Festival, Outside Lands, TriBeCa Film Festival and the US Open, among other exciting international experiences.

Summer also plays host to a variety of gatherings closer to home including bar-b-ques and outdoor entertaining. At c-store and grocery channels, cross-merchandising offers will provide shoppers with savings throughout the store and the chance to win Summer Voyage prizes throughout the program period. Instant rebate (IRC) and mail-in rebate (MIR) (where legal) will be available on the purchase of Heineken and Heineken Light and select items including meat, seafood, spices and marinades at grocery and hot and freshly prepared foods, ice and non-alcoholic beverages in c-stores, compelling consumers to pick up Heineken and last-minute items for their gatherings. Program materials will also be available in Spanish to engage Heineken’s multicultural consumers throughout the summer.

LaCroix Sparkling Water, Paramount Pictures Partner for Re-Release of Titanic in 3D LaCroix Sparkling Water has partnered with Paramount Pictures to celebrate the re-release of the blockbuster movie “Titanic,” now newly remastered and in 3D. In conjunction with the film’s upcoming release, LaCroix has developed “Titanic”-inspired mocktail recipes and has launched a romance-themed Facebook sweepstakes offering a chance to win a four-day, three-night vacation for two at a Sandals Resort. The campaign is also being promoted on the official “Titanic” Facebook page, leveraging its 18 million person fan base, and via targeted publicity events in select cities.

48 BEVNET MAGAZINE APRIL/MAY 2012

Coca-Cola Invites People to Unite in “Perfect Harmony”

Coca-Cola has launched its second annual “Perfect Harmony” initiative in which songwriters and music fans will get the chance to help write to create a new song with award-winning artist Jason Derulo. The winning song will be performed onstage at this year’s finale of “American Idol,” the longtime reality television singing competition. Individuals can log on to www.AmericanIdol.com/PerfectHarmony where they can listen to the opening segment of a song-in-the-making by Derulo.

Each week, hopefuls from around the country, ages 18 and up, will submit their own lyrics to contribute to the song.

Following each of the four submission phases, Coca-Cola will select the top three lyrics and then fans, ages 13 and up, will have their say as they vote for their favorite. The lyric with the most votes will then be incorporated into the song, which Derulo will perform on the first night of the two-night finale of “American Idol,” airing Tuesday, May 22 on FOX.

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PROMO PARADE

Promotions, events and specials for the industry

Lipton and Ladies Bowling The Bowling Proprietors’ Association of America (BPAA), the bowling industry’s premier trade organization, has announced it has formed a partnership with PepsiCo and 100% Natural Lipton Iced Tea, entitling the renowned beverage brand as an official sponsor of the 2012 Bowling’s U.S. Women’s Open.

100% Natural Lipton Iced Tea will serve as the “Official Thirst Quencher” of the 2012 Bowling’s U.S. Women’s Open, which will be held under the iconic Virginia Street arch in Reno, Nevada - the “biggest little city in the world.” The partnership will include 100% Natural Lipton Iced Tea branding throughout the event space, prominent brand exposure on-site, as well as on the event’s website and in press materials, and multiple sampling stations in downtown Reno for the duration of the event, taking place June 21-27, 2012.

For the second consecutive year the Bowling’s U.S. Women’s Open, bowling’s most prominent women’s event, will be televised on ESPN2, and this year’s tournament will mark the first-ever women’s outdoor bowling event under the lights of the Reno Arch.

H2O Overdrive Presents the Over the Hump Mountain Bike Race Series Innovative Health Solutions LLC, the maker of H2O Overdrive and H2O Overdrive HYDRATE, announced that it will be the presenting sponsor for the Over the Hump Mountain Bike Race Series, which kicks off at Irvine Lake in California on May 22. Over the Hump debuted in 2009, and quickly became one of the most popular mountain bike racing events in the country. The race course has been designed to challenge all levels of riders and offers a variety of scenic terrain with views of Irvine Lake and Santa Ana Mountain Range. Riders will wrap through various terrain; from pine-tree-laced road above the lake to single track along the cottonwoods. Racers can preregister for $25 by visiting RaceOC.com.

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