Beverage Spectrum March 2006 by BevNET.com

MARCH 2006

VOL 4 | NO 2 C OV E R S TO RY

Trade Up To Luxury Light Today

Praying for Super Sodas How big CSD marketers are trying to reverse the category’s slide .......................

SPECIAL SECTION of youth-oriented beverages ........................

Learning from Beverages on the Cutting Edge

BevNET.com’s View

Competition for Glaceau

How spirits companies are adapting the promise of health

D E PA RT M E N T S

Bevscape

• Total beer category sales are down .7%* • Import segment sales are up 6.3%* • Light beer accounts for almost 50% of beer category volume*

Celebrities and their beverages Pepsi’s on-campus problem

Profit From The Import Margins That Heineken® Premium Light Delivers!

*Source: Beverage Marketing 9/30/05

Gerry’s Insights

Beer industry trends show a great opportunity for Luxury Light beers.

Launching Off-Premise April 1, 2006

Retailing…and teaching Publisher’s Toast

No Kidding!

Consumers increasingly want to treat themselves to small indulgences. Within beverages, they want to trade up to better quality products that are lighter in taste and texture.

With the momentum of a $70 million marketing campaign behind it, your consumers are sure to be asking for Heineken Premium Light. Don’t miss out — order now.

The First Drop

SPECIAL SECTION

A look at the new generation

Demand For Affordable Luxury Is Growing Fast

COLUMNS

F E AT U R E S

DrinkThink Liquid Intelligence’s Darrell Jursa reveals what every retailer should know about functional beverages...................................................

Making the Brand Launch Heineken Light? No Pressure. An interview with new Heineken USA President Andy Thomas.......................................

Flavor Focus The Prominent Pomegranate .............................................................................

Channel Check Happy imports, sad domestics

New Products Flavored waters from high-end wells

Promotion Parade Work for Smirnoff? Sign us up!

Fix My Mix Two Words: Pig Lips

March 06 | Beverage Spectrum

Ethical Portfolios

eanut allergies. Milk allergies. Obesity. The kids these days. What an unhealthy bunch. Right.

Let’s face it, folks: as they grow into their wallets, the latest generation of children is being bombarded with messages about the potential health hazards inherent in just about every product in your coolers, from juices (too many calories!) to energy drinks (too much caffeine!) to flavored milk (talk about sugar!). The urge to protect them from overdoing it is a noble one, but an equally noble project is teaching them to know their limits. Sugar is okay, sometimes. Calories can be enjoyable. Caffeine keeps America humming. Some people think it’s imperative that these limits be learned at home. A more nuanced view is that learning happens everywhere – and it’s getting to be important they be taught in, of all places, our stores. Like those stockbrokers who gather stocks together into “ethical portfolios,” retailers should also be able JEFFREY KLINEMAN to do well by doing good. EDITOR A beverage buyer I met recently told me she likes her cooler doors to tell a story; it’s my contention that those doors can also provide an education, running the gamut from indulgent CSDs to functional waters, providing enjoyment, refreshment and nutrition. Darrell Jursa makes a similar point in his column this month – you don’t just need to stock the product, you need to know what you’re stocking. And if you do, your customers will notice. If your store doesn’t turn its most popular bubbly sugar water with the same velocity, families will make up for it by coming to your store to satisfy a variety of needs. Beverage marketers and attorneys can argue all day as to whether the health of children is a familial responsibility or a regulatory one; the fact is that it’s not a bilateral question. We’re all responsible, and if we put in some effort, we’ll be rewarded with healthy

Beverage Spectrum | March 06

kids, who will turn into healthy adults, and the longer they live, the longer they can buy. Speaking of kids, there’s a special section this month on a new generation of beverages designed to satisfy their – insatiable! – sweet teeth while doing as little damage as possible. We hope it helps you think about kids’ beverages as an emerging area for consideration all its own. We’ve also got a story on mainstream CSDs, the very ones who are moving out of the cooler and into the hot seat of the public’s gaze. Big soda companies are trying to divert attention to other parts of their portfolios, but that’s a short-term fix. The long term solution, they know, is to develop something that brings more to the party than great taste, no matter where that taste comes from. Once someone comes up with a Super Soda, look out. What else would anyone drink, ever? Until then, though, we’ll be here, letting you know all about the products that are coming out to keep your coolers interesting and your profits healthy. And if you think we should hear from you, please, ring us up.

P U B L I S H E R ’ S

T O A S T

A Common Thread

ast summer, I had a casual talk-about-the-industry-lunch with my friend Bonnie Herzog, the Beverage Analyst for Citigroup. It is always good to share perspectives, especially between the publicly-traded “big guys” that Bonnie tracks, and the small, medium and large companies I follow intimately.

I told Bonnie that real innovation and creativity comes from the entrepreneurial players who live and breathe their brands. They are the most exciting stories to tell, and we should be the ones to tell them. Bonnie agreed, and our “Beverages on the Cutting Edge”conference call series was born. Over the course of the last few months we’ve interviewed some of the best and the brightest beverage people around. The stellar lineup has included Rodney Sacks, the CEO of Hansen’s; Lance Collins, the CEO of Fuze; Peter van Stolk, the CEO of Jones Soda, and Seth Goldman, the TeaEO (ever the iconoclast, aren’t you, Seth?) of Honest Tea. While each of the companies is unique, there are common themes that have resonated within each call. These thoughts are universal and you, our readers, could easily apply them to your own businesses: � Have a passion and love what you do. � Risk-taking is a must, don’t be afraid to fail, learn from it and move on. BARRY J. � Share the responsibilities with a terrific team (you don’t NATHANSON need ‘yes people’). PUBLISHER � Find a unique selling proposition that lets you differentiate yourself. � Create a signature that represents your brand or company, be it through packaging, advertising, marketing, promotion, or public relations. � Be the first to market whenever you can; initiation and response time are crucial. � There’s no such thing as an overnight success. Keep plugging away. � It okay to respect, admire, and sometimes borrow from your competitors (Ironically, when asked which other beverage executives they admired, each mentioned the other three. Sadly, none of them mentioned me.) � Make sure you’ve got proper funding. � Protect your margins and price point, and be proud of your high-end status. � Choose the right partners, respect their positions and make it mutually beneficial. � Know your consumer. “Beverages on the Cutting Edge” has been a educational journey hearts and minds of these executives. Learn from their success. Check BevNET (www.BevNET.com) for a schedule of upcoming calls. Next up is John Cochran, CEO of Fiji Water. I hope you’ll join us.

EDITORIAL: ADVERTISING: EDITORIAL ADVERTISING 1 Mifflin Place 1123 Broadway Mifflin Place 1123 3 rd 1Floor SuiteBroadway 301 Suite 300MA 02138 Suite New 301 York, NY 10010 Cambridge, MA New York,647-0501 NY 10010 Tel:Cambridge, (617) 715-9670 Tel: (212) Fax:02138 (617) 876-1279 ph. 212-647-0501 Fax: (212) 647-0565 bevspectrum.com ph. 617-715-9670 fax 212-647-0565 fax 617-876-1279 Publisher Publisher Barry J. Nathanson Barry J. Nathanson bnathanson@bevspectrum.com bnathanson@bevspectrum.com Editorial Director Editorial Director Beverage Spectrum/BevNET Beverage Spectrum/ BevNET John Craven John Craven craven@bevnet.com craven@bevnet.com Editor Editor Jeffrey Klineman jklineman@bevnet.com Jeffrey Klineman jklineman@bevnet.com Associate Publisher Associate Publisher John McKenna mckenna@bevnet.com John McKenna mckenna@bevnet.com Art Direction Keystroke Graphics Art Direction Keystroke ProductionGraphics Manager Matthew Kennedy Adam Stern Production Circulation Manager Manager Adam Stern Otis Kirchhoefer Circulation Manager Subscription inquiries Otis Kirchhoefer Adam Stern astern@bevnet.com 617/715-9679 Inquiries Subscription Adam ArticleStern Reprints astern@bevnet.com 500 copies or more 617-715-9679 FosteReprints Claudia Stachowiak cstachowiak@fostereprints.com Article Reprints 866/879-9144 500 copies orx121 more FosteReprints BEVERAGE SPECTRUM Claudia Stachowiak PUBLISHING INC. cstachowiak@fostereprints.com Chairman & CEO 866-879-9144 John F. (Jack)x121 Craven jack@bevnet.com

BEVERAGE SPECTRUM President PUBLISHING John Craven INC. Chairman & CEO craven@bevnet.com John F. (Jack) Beverage SpectrumCraven is published 8 times a year by Beverage Spectrum Publishing Inc. jack@bevnet.com

President Beverage Spectrum Publishing Inc. John Craven is a wholly owned subsidiary of BevNET.com, 1 Mifflin Place, craven@bevnet.com Suite 310, Cambridge, MA 02138 Beverage Spectrum is published 9 times a Telephone: 617/715-9670 year by Beverage Spectrum Publishing, Inc. Fax: 617/812-7740 Beverage Spectrum Publishing Inc. is a wholly owned subsidiary of BevNET.com, 1 Mifflin Place, Suite 300, Cambridge, MA 02138 The Association of Business Media Companies

Beverage Spectrum | March 06

Celebrities Love Beverages… in Bizarre Ways! BIZARRE WAY #1: THIRSTUAL REALITY

ormula 50, the Glaceau offering based on a co-marketing deal with the rapper 50 Cent, makes an appearance in the December video game release, 50 Cent: Bulletproof. Last year, the M-rated game was listed in the Family Media Guide’s “Top 10 List” for “most violent.” Not that the drink is violent in and of itself – it’s actually closer to violet, if you’ve seen it. Girly color aside, Formula 50 helps save the day during the game, helping “power up” former drug dealer and megapopular rapper 50 Cent as he runs the streets with his “G-Unit soldiers – Lloyd

Banks, Tony Yayo and Young Buck” to “exact revenge on his enemies” after said villains “bucked” poor 50 “nine times and left him for dead,” according to the game’s description. How do 50 and the G-Unit soldiers lose power? Hey, it takes energy to kill a man, even a virtual one. 50 Cent: Bulletproof was written by

Sopranos scribe TerryWinter. Given the fact that the 50 Cent was shot for real nine times back in 2000, it’s a shame he didn’t have his purple beverage around back then. To date, there’s no research to say whether Formula 50 drunk by a real game player will help your performance when you play Bulletproof, but it would sure make 50Cent – and Glaceau head honcho Darius Bikoff -- delighted if you tried to find out. Just don’t buck them and leave them for dead if it doesn’t. We’d hate for you to have Tony Yayo and Young Buck on your tail.

BIZARRE WAY #2: ROCKY VI: THE ENDORSEMENT

BIZARRE WAY #3: BECAUSE THE JAPANESE LOVE SYRACUSE HOOPS

urity, thy name is Sly! Yes, movie star, sex symbol and magazine mogul Sylvester Stallone is going to have his own bottled water brand. A product made by Glacia Nova, an Auburn, Wash.-based beverage company that owns the rights to the 10,000-year-old Mount Rainier Carbon Glacier, Sly Pure Glacial Water will hit the shelves later this year. Glacia Nova consultant Larry Spangler said he believes the muscled, brooding, at times incomprehensible Stallone could bring in “$200 million standing still” by putting his mug on the bottle. Spangler says he got the idea while watching Stallone talk about fitness on the televised radio show “Imus in the Morning.” If it works out, it will likely be a pretty profitable idea; the initial price point for the water is expected to be $2.50 per bottle. That means you could trade four bottles for the price of a movie ticket.

Beverage Spectrum | March 06

armelo Anthony, the forward for the Denver Nuggets and former one-year-wonder with the Syracuse Orangemen, is involved with a new energy drink called C1.5. Anthony’s uniform number is 15. Anthony, an offensive force for the underwhelming Nuggets, became mildly infamous last year when he was filmed in an underground “Stop Snitching” DVD designed to discourage witnesses from testifying in legal cases involving alleged street gang members. Of course, for those familiar with Anthony’s primary shortcoming as a player – Pass the rock, ‘Melo, pass the rock! – the tag line for the product suggests itself: “C1.5: Stop Snitching. Start Passing.” For some odd reason, the drink will first be available in Japan. No U.S. launch date has been set.

Also available in Natural Orange Made with Volvic Natural Spring Water No artificial sweeteners or flavors Now available in North America

Introducing MICHELOB ULTRA® AMBER -- the full-flavored, full-alcohol light beer. With its rich amber color, 114 calories, 3.7 grams of carbs and 5% alcohol by volume, Michelob ULTRA® Amber delivers a unique consumer point of difference in the light beer category.

EXECUTIVE MOVES

epsi-Cola North America has promoted Cie Nicholson to Senior Vice President and Chief Marketing Officer. PCNA also promoted Meena Mansharamani to the newly created position of Senior Vice President, Innovation and Insights. Strong Brands, LLC, a New York City-based brand marketing house, has appointed Laura Belocas, a veteran in the wine and spirits industry, to the post of National Marketing Director. Ms. Belocas will be overseeing the marketing of Floot, a new canned sparkling wine, and 80 Strong, a new Kentucky Bourbon. Bravo! Foods International Corp. selected Stan Harris as its first Chief Marketing Officer. Harris' firm, Harris Ideas, previously served as the agency of record for Bravo! IZZE Beverage Company has announced that SoBe founder and former CEO John Bello joined the company's board of directors. Bello is also a partner with Sherbrooke Capital, the venture capital group that led the $6.35 million equity-financing round for IZZE this past January. FUZE Beverage LLC announced that Bob Miller has joined the company as Executive Vice President of Sales. Prior to joining FUZE, Miller was the Vice President of Sales and Marketing for SoBe Beverages. Hood River Distillers, the Northwest’s oldest and largest importer and producer of distilled spirits, has announced the promotion of Erik Svenson to director of sales for the Northwest region. Svenson previously worked for E & J Gallo and Louis M. Martini. Hood River also hired Gary Goatcher as Controller. In this newly created position, he is responsible for accounting, payroll and banking. Kevin W. Keane, former Assistant Secretary of Public Affairs for the U.S. Department of Health and Human Services (HHS), has been hired as senior vice president for communications for the American Beverage Association. The ABA also hired James A. McGreevy III as vice president for state and local affairs for the association. A veteran of political campaigns, from 1999 to 2005, McGreevy was an associate with Larkin Hoffman Law in Minnesota. In that position, he represented client interests before the Minnesota Legislature and administrative agencies. David “Bump” Williams, the former head of IRI’s beer, wine, and spirits practice, has been named Vice President (cont’d) of Sales for Yuengling Beer Co.

Beverage Spectrum | March 06

RETAILERS ON WARM BEER LAW: “THAT’S COLD!”

wo Midwestern state legislatures have raised the hackles of grocery and convenience store owners with proposed laws that would affect the sale of cold beer. The proposals were posited as a way to cut down on drunk driving, operating on the notion that those consumers who would crack a cold one on the way home would be less likely to crack a warm one. In Missouri, Sen. Bill Alter has proposed a measure – based on a question from a fifthgrade student studying state government – that would cost stores their liquor licenses if they sell beer colder than 60 degrees. In Indiana, where warm beer is already the rule, the state Senate is reviewing a bill that would ban convenience stores and gas stations from selling beer altogether. Already through the House, the measure would allow those stores currently selling beer and wine to continue to do so for at least a limited time. But when renewal time comes, all bets are off. The bill has caused a rift between liquor sales channels in the Hoosier State, as package stores would stand to benefit from further restrictions on C-Stores. File both under “Red States with Blue Laws.”

The combination of these unique attributes and Anheuser-Busch’s tradition of producing great tasting beers, has taken light beer to a new level and captured the attention of adult males looking for a light beer with a full-flavor profile.

WITH LIGHT BEERS CONTINUING TO DRIVE BEER CATEGORY TRENDS, MICHELOB ULTRA® AMBER WILL DELIVER A NEW RUSH IN LIGHT BEER SALES.

CONFERENCE CALENDAR Natural Products Expo West 3/23 – 3/26/2006 Anaheim, Calif. Aquatech USA 3/28 – 4/1/2006 Rosemont, Ill. NACS Governance Meetings 4/3 – 4/4/2006 Chicago, Ill.

American Dairy Products Annual Meeting 4/30-5/3/2006 Chicago, Ill. NACS Southwest Regional Grassroots Event 5/2-5/4/2006 Dallas, Tex.

American Beverage Association Spring Fly-In 4/25-4/26/2006 Washington, D.C.

CORRECTION

In the Jan-Feb issue of Beverage Spectrum a “Brand News” story on the product Celsius contained an error. Celsius does not have 77 calories per 12-oz. bottle, as stated in the story. As a “calorie burning soda,” Celsius has between 5 and 10 calories per bottle, and claims to burn up to 77 calories by raising the drinker’s metabolic rate for a 3-4 hour period.

EXECUTIVE MOVES

Pepsi vs. the Pests

iña Santa Carolina has designated Sven Bruchfeld as Chief Winemaker. Bruchfeld is charged with establishing a new winemaking vision for Viña Santa Carolina and will oversee all operations at the winery in Santiago. Tropicana Products, Inc., has promoted Rick Gomez to chief marketing officer (CMO) of Tropicana. Gomez will continue to report to Tropicana President Greg Shearson. In his new role, Gomez will build brand equity for the juice leader and guide long-term innovation and marketing activity across the Tropicana chilled portfolio Pepsi-Cola Bottling Company of New York, one of Pepsi-Cola North America’s fastest-growing franchise organizations, has named Terry Ryan its executive vice president, effective March 13. A 30-year veteran of PepsiCo, Ryan began his career as a route driver for the Pepsi-Cola Company in New Jersey. AmBev announced that Miquel Patricio will replace Carlos Brito as the new Zone President for North America. Patricio rejoins the North American team from Western Europe. The International Bottled Water Association (IBWA) announced that V. Tom Gardner has joined the association as Manager of Communications. His primary duties include media relations, IBWA Web site management and general communications activities to support members, staff and IBWA initiatives. The Distilled Spirits Council of the United States (DISCUS) today announced the appointment of Ben Jenkins as the organization’s new communications director. Jenkins most recently served as press secretary for the Republican Governors Association (RGA) in Washington, D.C. Mike Johnson has joined that National Beer Wholesalers Association as Vice President, Federal Affairs. Further changes to the Association’s lobbying arm include the promotion of NBWA Public Affairs Director Michelle Semones to the position of Vice President, Public Affairs and the promotion of NBWA Washington Representative Holly Lass to the position of Director, Federal Affairs.

Beverage Spectrum | March 06

epsiCo has a brand new enemy: no, we don’t mean Coca-Cola, or even Glaceau. We mean Bambi. The Purchase, N.Y.-based beverage giant is facing an onslaught of whitetailed deer. The fast-growing species enjoys munching on the manicured foliage available in suburban locales, and Purchase is smack in the middle of what used to be their natural habitat. To keep the varmints off the company’s 150-acre corporate campus – which features the massive Donald M. Kendall sculpture garden, complete with plantings – PepsiCo has proposed the erection of an 8-foot mesh fence and a set of rodent-annoying ultrasonic beams. The deer are pretty productive when it comes to destruction, munching through $30,000 to $40,000 worth of plants annually, according to news accounts. That’s nearly as much as PepsiCo made off of Pepsi Blue, but neighbors aren’t thrilled with the idea of the fencing, claiming it would be an eyesore. Still, with 150 acres around, maybe they could go after the deer in a slightly more sporting way. Call Dick Cheney. He’ll know what to do.

THE SIMPLE LIFE OF VODKA

ometimes, a product comes along that’s so exciting that we have to toss aside all editorial credibility and stand behind it, hoping that the manufacturers will call us and offer a job. But Diaka isn’t it. Diaka, well, Diaka is just plain weird. What is this stuff? Diaka is a new high-end vodka brand developed by a guy named Rudy Vogel. Great, you say. We carry new high-end vodkas all the time. Ah, but this is different, Rudy says. Diaka is vodka that’s filtered through diamonds. Hence the name. And if that’s not enough of a selling point, check out Rudy’s cloak-and-dagger rap. “This particular vodka was perfected over five years in a secret lab in Poland,” according to Rudy. “I can’t tell you where we were working on it.” As one would expect because of its glittering filtration medium, Vogel says that Diaka – still missing a distributor – will be a “vodka of sophistication,” the kind of product that will be enjoyed by captains of industry and the arts, the kind of product that will be more expensive than Stoli Elit, but whose price doesn’t matter because anyone with the good sense to drink it won’t care how much it costs. Which, of course, led us to ask the obvious question about the target audience. And Rudy confirmed it. It’s Nicole Richie.

When it comes to kids’ drinks, we know what your customers want. Moms are looking for a vitamin enriched, low calorie alternative they can feel good about. Kids just want something fun and

™

great tasting. With HogWash, they get both—a fun, ™

fruity juice drink without a pigpen full of calories. For information on HogWash or other West Loop Beverage offerings, call Leo Novosel at 312-222-7460 or visit us at www.westloopbeverage.com.

com's VIEW

vitaminwater – Where’s the competition? BY

JOHN

CRAVEN

ver the last decade, vitaminwater has exploded from a tiny company with a dream into a major industry player. In fact, they’ve reached a level of success that only a handful of beverage companies have ever achieved – and even fewer have sustained. What’s more interesting about it is the relative lack of competition faced by vitaminwater on its way up. It’s quite a different scenario from the world of energy drinks, where a swarm of products tried to take on Red Bull almost from the start.

So far, many of vitaminwater’s competitors have largely tried to use a “metoo” strategy rather than innovation to win shelf space. We've seen and tried pallets of products with the same vaguely pharmaceutical bottles and labels with perky new age chatter on the side, all sweetened with crystalline fructose and bearing names that evoke pleasant states of being, but none of them have done anything but ape the fresh appearance and attitude of vitaminwater. And we’ll have a hard time believing in the sustainability of any of them until they innovate, even just a little bit. As this is not a commodity product, me-too is not going to work. How can a competitor compete with vitaminwater? Again, if we look at the energy drink category, you’ll see that the secondand third-place companies aren’t selling a copycat product: they built share on a different sized package and a different image. Small differences, but even things that might be considered small points of difference, like can size, can have a huge impact. The proof is in the pudding – or in the IRI numbers, as the case may be. So, to help our retail and distributor readers keep their eyes open for the right type

of competitor, here are a couple of ideas for ways that one could compete with vitaminwater. 1. Come at it from the energy drink side. There’s an obvious crossover here. Energy drinks – at least the ones that lead the category – sell their products because of their functionality and the image that they promote. In fact, the functionality and image are very similar to what vitaminwater promotes. If Red Bull, Monster, or Rockstar-branded competitors hit the market, with energy drink attitude, it would certainly be worth a gamble. 2. Come at it from the organic /high-endside. It’s worked in other categories – come up with an angle that gives the consumer a

Beverage Spectrum | March 06

reason to reach for something better. An obvious brand might be Honest Tea – “Honest” is a great brand name and has done a good job with its recent PET packaging. An organic formulation and a visibly different bottle could be enough to get consumers to bite. 3. Take to the offensive Definitely not the path of least resistance, but someone – who could be launching a product or not – could challenge vitaminwater’s formulation. Not that there’s anything wrong with it – but it’s not something that’s talked about too often and it’s certainly not a place where consumers are extremely educated. Making claims of functionality is a risk if someone “calls your bluff” and it’s one that most companies would likely be blindsided by. Of course, so would the retailers who would feel the trickle-down impact. While these ideas may be worth nothing more than the time it took you to read this, what you should certainly realize is that the copycats are NOT the right products to take a gamble on, unless you specialize in liquidation, or giving things away.

John Craven is the founder of beverage-industry watchdog The BevNET.com, based in Cambridge, Mass. The BevNET.com’s goal is to test nonalcoholic beverages—primarily soft drinks—and to provide a written critique of each one on its Web site, bevnet.com. With more than 1,100 reviews posted since 1996, The BevNET.com has become an internationally recognized resource for beverage industry professionals.

C H A N N E L

C H E C K

C H A N N E L

TOPLINE CATEGORY

ENERGY DRINKS

VOLUME

SPOTLIGHT CATEGORY:

52 Weeks Ending 1/22/2006

BEER

CSDs

52 Weeks Ending 1/22/06 Leading Brands Dollar, Unit Sales

$13,328,350,000

Tough year for Anheuser-Busch brands, as the numbers show, except for residual bumps

–1.3%

from introduction of Budweiser Select. Also big share drops for regular Coors and Miller Genuine Draft, showing that full-calorie isn’t the place to be for domestic premium. In fact, the best place to be might be Mexico, as Corona, Tecate, Modelo Especial and Dos Equis

BOTTLED WATER

all show nice gains. Definitely a fine year for imports overall, unless you’re from Canada.

DOMESTIC PREMIUM Bud Light Budweiser Miller Lite Coors Light Natural Light Michelob Ultra Light Busch Light Miller Genuine Draft Miller High Life Busch Budweiser Select Keystone Light Milwaukees Best Light Michelob Light Natural Ice IMPORT Corona Extra Heineken Corona Light Tecate Labatt Blue Amstel Light Becks Guinness Draught Modelo Especial Newcastle Brown Ale Pacifico Fosters Lager Labatt Blue Light Saint Pauli Girl Bass Ale SOURCE: Information Resources Inc.. Total U.S. food, drug and mass excluding Wal-Mart

Dollar Sales

Change vs. year earlier

$1,333,044,736 $804,747,456 $709,803,008 $596,782,656 $283,698,208 $218,728,896 $199,828,272 $183,489,456 $175,982,320 $170,697,936 $133,730,504 $90,475,208 $84,500,496 $82,951,008 $82,360,240

–0.68% –7.71% 2.01% 2.45% –2.48% –19.08% 1.36% –7.70% –4.67% –4.76% 17,316.98% 1.63% –3.92% –14.53% 2.60%

Dollar Sales

Change vs. year earlier

$452,169,568 $273,523,008 $110,242,712 $79,177,784 $50,826,392 $48,054,040 $45,306,500 $42,716,072 $41,045,120 $39,703,396 $37,955,432 $34,704,784 $27,587,504 $24,969,494 $23,843,800

9.06% 5.80% 8.46% 5.15% –4.83% 3.87% 1.44% 4.44% 44.39% 19.39% 6.88% –9.00% 6.87% 6.54% –3.53%

$4,011,791,000

Beverage Spectrum | March 06

PRODUCT

Dollar sales

Change in Share vs. year ago

Red Bull Monster Energy Rockstar Full Throttle SOBE Adrenaline Rush SOBE No Fear AMP SOBE Lean Rip It Hansens Lost Energy

$230,100,100 $48,811,340 $45,551,540 $24,637,860 $21,269,770 $20,893,360 $20,152,640 $3,396,168 $3,115,887 $2,525,669

42.2% 177.9% 88.6% 3,402.6% 36.8% 100.2% 38.5% 33,547.4% 259.6% 64.1%

BEER $8,646,950,912

+0.4% CHILLED FRUIT BEV $3,434,011,000 –1.5%

SPORTS DRINKS $1,439,509,000

RTD TEA/COFFEE $951,294,000 +19.6% SOURCE: Information Resources Inc. Total U.S. food, drug, mass excluding Wal-Mart

52 weeks through 1/28/06

PRODUCT

Dollar sales

Change in Share vs. year ago

Coca-Cola Classic Pepsi Diet Coke Diet Pepsi Mountain Dew Sprite Dr Pepper Caffeine Free Coca-Cola Diet Dr Pepper Diet Mountain Dew

$1,961,800,973 $1,598,984,358 $1,198,136,239 $810,559,580 $726,635,879 $600,365,899 $592,944,028 $376,961,904 $268,695,664 $227,807,701

–0.1% –0.7% 4.2% 0.9% 4.1% 2.2% 3.9% –5.0% –1.1% 8.3%

ON THE MOVE: Diet Mountain Dew

SOURCE: Information Resources Inc. Total U.S. food, drug, mass excluding Wal-Mart

SOURCE: AC Nielsen/Citigroup Total U.S. food/drug/mass

SPORTS DRINKS

PET WATER

52 weeks through 1/22/06

PRODUCT

Change in Share Dollar sales vs. year ago

PRODUCT

Dollar sales

Change in Share vs. year ago

Gatorade Powerade Gatorade Frost Gatorade Fierce Gatorade X Factor Gatorade All Stars Gatorade Xtreme Gatorade Ice Gatorade Endurance Private Label

$670,322,400 $197,061,800 $134,692,700 $105,170,800 $95,982,340 $89,904,540 $22,722,250 $18,111,450 $13,784,170 $6,901,352

Aquafina Private label Dasani Poland Spring Propel Dannon Arrowhead Deer Park Crystal Geyser Ozarka

$430,818,900 $394,399,000 $349,270,400 $201,930,500 $186,891,100 $158,487,200 $145,370,100 $108,312,300 $83,404,460 $80,219,930

16.4% 25.2% 24.9% 21.8% 40.1% 28.1% 16.2% 18.8% 0.8% 33.6%

30.4% 24.7% 13.7% 15.1% 41.9% 30.1% –0.4% –67.3% 7,714.0% –3.5%

ON THE MOVE: Gatorade Endurance

ON THE MOVE: Propel

SOURCE: Information Resources Inc. Total U.S. food, drug, mass excluding Wal-Mart

BOTTLED JUICE/ SMOOTHIES

ICED COFFEE/ CAPPUCCINO

PRODUCT +21.3%

CSDs

ON THE MOVE: SOBE Lean

+17.6%

(Beer: food & drug only)

52 weeks through 1/22/06

C H E C K

V 8 Splash Fuze Refresh Sobe Slim Fast Optima Slammers Starburst Private Label Snapple Elements Kikkoman Pearl Cal C Vip

52 weeks through 1/22/06

Change in Share Dollar sales vs. year ago $20,002,310 $6,828,803 $5,560,108 $5,466,514 $804,521 $205,578 $200,009 $121,978 $94,974 $83,876

–29.3% 49.4% 8.2% 353.0% N/A 193.0% –76.6% 46.0% –61.1% 6.5%

52 weeks through 1/22/06

PRODUCT

Dollar sales

Change in Share vs. year ago

Frappuccino Doubleshot Wolfgang Puck Starbucks Kahlua Havana Caffe D Vita Mr Brown Main St Cafe Royal Kona

$159,503,100 $24,968,900 $5,237,110 $1,449,486 $844,028 $408,715 $193,772 $126,293 $108,613 $84,859

20.2% 43.5% 429.8% 31.0% 9.6% –12.2% 2.7% 8.0% –26.5% –70.1%

ON THE MOVE: Slim Fast Optima

ON THE MOVE: Wolfgang Puck

SOURCE: Information Resources Inc. Total U.S. food, drug, mass excluding Wal-Mart

March 06 | Beverage Spectrum

N E W

Metromint branches out.

P R O D U C T S

CSDs IZZE Beverage Company has launched a re-designed 8.4-oz. can in a brighter, easier-to-read style. The newly redesigned can is now available in Sparkling Blackberry, Sparkling Clementine, Sparkling Pear and Sparkling Pomegranate. IZZE Sparkling Juice, an all-natural blend of pure fruit juice and sparkling water, is free of caffeine, artificial ingredients, high-fructose corn syrup, and all other refined sugars. For more information, contact IZZE at (303) 327-5515. …

Also popping up with new packaging is Steaz Organic Green Tea Soda, which will be available in four-pack carriers beginning this month. They are made from a specially designed cardboard that resists tearing, even when wet. Available in Raspberry, Key Lime, Root Beer, Orange, Ginger Ale, Lemon Dew, Grape, Cola and Diet Black Cherry, the launch of the four packs coincides with the beginning of the 2006 beverage season. For more information, call Steaz at (215) 321-8330.

Bottled Water Sanfaustino Calcium Water, an all-natural calcium alternative that delivers 45% of the adult RDA for calcium in each one liter bottle, is now available in four all-natural

New Drink Reviews on BevNET.com (From Jan. 10 to press time; to see reviews, go to www.BevNET.com) Saranac Sodas

flavors: Lemon, Lime, Mandarin Orange and Raspberry Lime. The company expects to see its flavored calcium waters at the store level by May 2006. The addition of allnatural flavor essences is the first change to Sanfaustino Calcium Water since its source was discovered in Umbria, Italy, in 1894. The flavor essences in Sanfaustino Flavored Calcium Waters are all-natural and free of preservatives, calories, sugar and artificial sweeteners. This product is available in 1-liter and 8oz. servings. …Seawright Holdings, Inc. has begun bottling Seawright Springs Premium Natural Spring Water. Available at fine grocers and restatruants, it is one of the first high-end bottled waters completely produced and bottled in the Baltimore/Washington area. Seawright Springs is one of the largest natural springs on the East Coast and produces over 300 million gallons of mineral-rich spring water per year from a source in Augusta County, Va. For more information, please visit www.seawrightsprings.com. …Moving from Foggy Bottom to shapely bottom, a (where else) California company is launch-

Wateroos

Gatorade Rain

Xcyto Energy Drink

Sundia Watermelon Juice

Rip It: New Flavors

Black Cherry Vanilla Coke

Pit Bull Sugar Free Energy Drink

Thorpedo Ultra-Low GI Water

Welcome to the mellow taste of Spearmint. You probably already know Metromint Peppermint with its big bold Jet Set Energy

taste. Spearmint is subtle. Peppermint shouts. Spearmint whispers, refreshes, and gently enlivens the spirit. Made with pure water, and absolutely no preservatives, Metromint Spearmint delivers all-natural refreshment

Wadda Juice

with nuance. And like its popular cousin Peppermint, it contains no sweeteners and no calories. Nothing but real mint, and a smooth, sophisticated taste. From kids and urban hipsters looking for the cool new drink, to workout moms wanting quick refreshment,

Jammin’ Nectars Guanabana

Metromint is pioneering the all new mintwater category. Now available nation-wide. Distributor or retail inquiries: 415 979-0781. E-mail us at info@metromint.com. Or log on to www.metromint.com.

Pure. Simple. Mintwater.™ 18

Beverage Spectrum | March 06

N E W

P R O D U C T S

ing Sexy Purified Water, which features an ever-shifting cadre of scantily-clad women on its labels. The label models are paid $.25 per bottle. Retailers can request a mixed case (24 per case), of water with various types of female models or a specific ethnic group to better satisfy their customer base. The 16-oz. bottles encourage buyers to “peel and save.” For more information, call (310) 279-7469. …For the under-18 set comes Wateroos, the nation’s first ready-to-drink boxed water made especially for children. Set to quench a growing thirst for a healthful alternative to sugar-packed fruit juices, Wateroos is targeted at nutritionally oriented parents seeking a fun, convenient, healthy alternative to juice for their pre-schoolers. There are two varieties: Original Wateroos and Apple Flavored Wateroos. Both are packaged in colorful, interactive drink boxes complete with a straw. Wateroos is packaged in six packs of 237-ml. boxes with a SRP of $3.29. For distribution and sales inquiries please call Maddie’s Beverage Co at (650) 2924908. …Joining San Faustino with a flavored extension are Volvic Natural Lemon and Volvic Natural Orange, both of which are now available across North America. Volvic Lemon and Orange are infused

Beverage Spectrum | March 06

N E W

P R O D U C T S

with a hint of natural lemon and orange essence and are packaged in a 500-ml. wide-mouth bottle. Call Volvic at (914) 777-1426 for ordering and distribution information. …In allAmerican flavored waters, the newest thing is Aquafina FlavorSplash Grape, the fourth flavor in the FlavorSplash lineup. With zero calories, carbohydrates, or sugar, this product is available in 20-oz. bottles, 16.9-oz. sixpacks and 16.9-oz. 12-packs. For more information, call (914) 253-2950. …HINT water has added three new flavors: Pear, Peppermint, and Tropical Punch, to its line of zero-calorie, zerosweetener flavored waters. Hint is being promoted through placements on television and awards shows. For more information, call (805) 565-4122.

Juices Odwalla has added the flavor and benefits of pomegranate to its popular juice lineup with new Odwalla PomaGrand 100 percent juices. They come in three flavors: PomaGrand Pomegranate Juice, Pomegranate Mango and Pomegranate Berry. All three varieties are 100 percent juice enhanced with wild berry extract. Odwalla PomaGrand will be available in 450-ml. Grab-n-go recyclable plastic bottles at a suggested retail price of $3.99. Marketing support includes public relations and advertising, neckringers, truck snipes, D46720cspm 1

March 06 | Beverage Spectrum

12/8/05 21

1:04:33

N E W

P R O D U C T S

bookends and product sampling. To learn more, visit www.Odwalla.com or call 1.800.ODWALLA. …In other Coke-owned juice company news, Simply Orange Juice Company is extending its line of not-from-concentrate juices into the chilled juice drink category with Simply Lemonade and Simply Limeade. Both will be available in the 1.75-L clear PET carafe introduced with Simply Orange orange juice. The new products will be sold in supermarkets nationwide beginning in February at a suggested retail price of $2.49, and will be supported in 2006 with in-store promotions, a national FSI and a national print advertising campaign. For more information, call (404) 6761070. … Naked Juice has launched three new flavors: Naked Juice Rainforest Acai, Naked Juice Pomegranate Acai and Naked Juice Red Machine, three antioxidantpacked juices that are available nationwide in 15.2-oz. PET plastic bottles. For more info contact (626) 812-6022. … Leading Brands, Inc. has

launched LiteBlue Reduced Calorie Blueberry Juice Cocktail. The product will initially be available in a rectangular 64-oz. PET bottle. Sweetened with a combination of cane sugar and Splenda, LiteBlue contains 50% less calories than the Company’s successful line of TrueBlue Blueberry Cocktails. Lite-

able in 18-oz. glass bottles, there are now a total of four beverages in the Refresh line, which also sells for $1.49. For more information, call (908) 687-1762….Honest Tea has added Pomegranate Blue to its Honest Ade line. The 50-calorie per serving juice drink comes in a 16-oz. PET bottle.

Spirits

Blue is available in two great flavors: Blueberry and Blueberry/Raspberry. The product will be distributed nationally. For more information, call Leading Brands Inc. at (604) 685-5200…. Fuze Beverages has added three new vitamin-rich flavors. Dragonfruit Lime and Blueberry Raspberry have been added to the Slenderize line, which delivers a natural metabolic formula of L-Carnitine, Super Citrimax, Chromium and Vitamin C along with their full flavors. Both come in 18-oz. glass bottles. There are now a total of six beverages in the Slenderize line, which come with an MSRP of $1.49. Fuze has also added Strawberry Banana to its Refresh line. The product is fortified with seven significant vitamins including: A, C, E, B3, B5, B6, B12 plus Calcium. Avail-

Beverage Spectrum | March 06

Baileys Original Irish Cream has announced the addition of two new flavors, Baileys Caramel and Baileys Mint Chocolate. These new flavors will be made available in time for St. Patrick’s Day and for a limited time only, beginning this month. Both will be offered at grocery, liquor, club and drug stores. The product will be available in 750-ml bottles retailing for approximately $18.99. The launch of the new flavors will coincide with a fully integrated marketing effort that includes merchandising and sampling (in select locations). For more information, call (646) 223-2000. …Out of Kentucky comes a new member of the bourbon family, 80 Strong. This small-batch product features a label with a

N E W

P R O D U C T S

tattooed pin-up girl and 50s style lettering. For more information, call Strong Spirits, Inc. at (859) 422-4981. …From across the pond comes Glenrothes Select Reserve, a non-vintage single-malt Scotch available nationwide to fine wine and spirits establishments. MSRP is $45 for a 750-ml. bottle; for more information, call (212) 477-8090. …Hey, who knew they made rum in Nepal? Apparently Sir Edmund Hillary, because he swigged from a bottle of Khukri Rum after conquering Mt. Everest. To give everyone else a chance, Liquid Treasure is importing Khukri in visually stunning 375-ml. handcrafted, dagger-shaped bottles. Khukri Rum is also available in a 750-ml standard bottle, labeled Khukri Rum. Distribution of Khukri Rum in the U.S. is beginning in select markets with distribution scheduled to extend nationally in the next few months. For distribution or sales information call (215) 8853685 or email Liquid Treasure at DougLTI@comcast.net.

Wine Blackstone Winery welcomes two new additions to its family of balanced wines: 2003 Blackstone Napa Valley Cabernet Sauvignon and 2003 Blackstone Sonoma Coast Pinot Noir, both of which join Black-

stone’s mid-tier Prestige Appellation Series. The series features wines from the best microclimates and soils of both Napa and Sonoma Counties. Crafted and bottled at the winery in Kenwood, in the heart of the Sonoma Valley, wines from this tier highlight the regional character typical of these esteemed winegrowing areas. Both the new 2003 Blackstone Napa Valley Cabernet Sauvignon (suggested retail price $20) and 2003 Blackstone Sonoma Coast Pinot Noir (suggested retail price $15) will be available nationally at select on-premise accounts and fine wine retail stores. For more information call Pacific Wine Partners at (425) 482-7359. …From Australia comes Alice White 2005 Cabernet-Merlot, a blend of 65 percent Cabernet and 35 percent Merlot, available to retailers nationwide this month. The 2005 Alice White Cabernet-Merlot features appealing elements of each varietal: plum and dark berry aromas, along with vibrant fruit flavors and well-integrated smoky, mocha, oak notes. The wine is smooth and round on the palate. For more information, call (707) 2557667. …Canandaigua Wine

Beverage Spectrum | March 06

Company is launching five wines from Houghton, Western Australia’s mostawarded winery: Houghton Chardonnay, Semillon-Sauvignon Blanc, ChardonnayVerdelho, Shiraz, and Cabernet-ShirazMerlot. They will be distributed nationally at a suggested retail price of $15. For more information contact Canandaigua at (425) 482-7359.

Meet Michelob ULTRA Amber, an American-style light lager with a surprisingly deep amber color now available nationwide. Michelob ULTRA Amber is the first extension of the Michelob ULTRA brand. It contains 3.7 grams of carbohydrates, 114 calories and 5 percent alcohol by volume (ABV) per 12-oz serving. Priced on par with the popular Michelob ULTRA, Michelob ULTRA Amber is available in 12oz. slope-shouldered glass bottles and comes in six, 12-, 18-, 20- and 24-packs and in 1/2 and 1/6 barrel draught kegs. It is sold in grocery stores, convenience stores, restaurants, bars and clubs throughout the country. The marketing of Michelob ULTRA Amber is supported by a full line of pointof-sale and merchandising materials in addition to outdoor, radio, print and television advertising including a spot during this year's Super Bowl. For more information, call Anheuser Busch at (314) 577-3866.

skimmed milk powder, fortified with vitamins and carbonated. Targeted to kids of all ages who hate milk but love soda, the products are available in delicious Strawberry and Fruity PeachMango flavors, packaged in 16.9-oz. PET bottles and 8.5-oz. slim-cans. The product has a two-year shelf life. For more information, call (954) 793-0637. …Lifeway Foods, Inc. has added Greek Style Kefir, an exceptionally tangy, rich and decadent whole milk kefir to its ever-growing product line. Similar to Lifeway’s Original Kefir, this product is made with full fat milk and cream for a thick and indulgent taste. Made with all-natural ingredients including Lifeway's ten live and active Probiotic cultures that promote a healthy immune and digestive system, it is also high in protein, calcium, and essential vitamins and minerals.For more information, contact Lifeway Foods Inc. at (847) 9671010 or e-mail at info@lifeway.net.

Dairy

Tea/Coffee

Global Beverage Enterprises Inc. has announced the launch of America’s first sugar-free milk-based carbonated beverage line, Kool Cow Sparkling Drinks. Kool Cow Sparkling Drinks are made from fat-free

PepsiCo/Starbucks juggernaut is giving birth to baby juggernauts: Starbucks Iced Coffee and Starbucks Iced Coffee Light will be made with Starbucks Italian Roast Coffee and some milk and sweeten-

Beer

ers. It will be available late this month in Starbucks Company-operated retail stores, and regular and light varieties will be available in convenience and grocery stores nationally beginning in May. Both products will be packaged in 11-oz. cans. Additionally, North American Coffee Partnership (the aforementioned juggernaut) is introducing two line extensions within its Starbucks DoubleShot and bottled Starbucks Frappuccino brands. Starbucks DoubleShot Light, in 6.5-oz. cans, is a rich blend of espresso and a touch of cream but with lower fat, calories and sugar than its predecessor. It will be available in May, as will the Starbucks Strawberries and Crème Frappuccino, a coffee-free blend of strawberries and lowfat milk, which will be sold in 11-oz. bottles. …Tibetan Tea has added a 12-oz. can with more vibrant colors on the label. Infused with all-natural ingredients, Tibetan Tea is a sparkling black and herbal tea blend enhanced with ginseng, guarana, ginger and sweetened with a touch of honey. It provides a “kick” in the way of a light, mild

effervescence. Tibetan Tea is distributed nationally. For more information or distribution information, call (818)241-8339 or visit www.tibetantea.com.... The folks at Honest Tea have added a new tea to their 16-oz. PET plastic line of bottled teas, Tangerine Green Tea. Calling it “the world’s first organic diet beverage,” the product has only 5 calories per 8oz. serving and is sweetened with agave syrup and fermented organic cane sugar. …Honest Tea also has two new teas in 16-oz. glass bottles, Just Green Tea and Just Black Tea. These are the nation’s first organic unsweetened RTD teas. Both are Fair Trade Certified.

Malternatives Coors Brewing has added Hard Punch flavor to its Zima XXX brand. The bold red malternative is 5.9 percent alcohol by volume and is available in 12-oz. bottles, sixpacks and 24-oz. cans. It will be supported through point of sale, print advertising and a new Zima XXX Web site. For more information, call Coors Brewing at (303) 277-5805.

March 06 | Beverage Spectrum

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CSDs are on the slideâ&#x20AC;Ś can functional ingredients and flashy packages turn things around? BY JEFFREY KLINEMAN

rust the Coca-Cola Co. to turn soft drink consumption into What does that mean? Basically, it means that Mary Minnick knows not just hard science. when youâ&#x20AC;&#x2122;re thirsty, but also why youâ&#x20AC;&#x2122;re During a December meeting with analysts, Mary thirsty. But lately, despite having science Minnick, Cokeâ&#x20AC;&#x2122;s new president of marketing, strategy, and on its side, the company that pioneered innovation, told analysts and shareholders that the company the modern beverage industry hasnâ&#x20AC;&#x2122;t had finally gotten into the â&#x20AC;&#x153;underlying psychology of been able to get you to drink its bestknown product. beverages,â&#x20AC;? coming up with the â&#x20AC;&#x153;17 basic need states that In what would have been unthinkable involve why consumers drink beverages.â&#x20AC;? to previous generations of Coke leader-

Beverage Spectrum | March 06

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ship, sales of carbonated soft Carbonated Soft Drinks drinks are in the midst of a have long been an anchor steady decline, their market of the beverage retailer’s share eroded by other fastcooler, offering reliable turn growing beverage categories and constant demand. They like water, sports drinks, and are still the best sellers in energy drinks. The share of the beverage case and CSDs as the refreshment Coca-Cola is still the beverage of choice began world’s most recognizable falling in the mid-90s, but brand. But for many retailover the past six years it has ers, those products are also Coke CEO Neville Isdell started melting like ice on a taking up shelf space – he might reverse a hot day. Last year, according that they wish they stock slide, but can he to Morgan Stanley’s Bill rev up soda sales? could use for fastPecoriello, soda’s “share of growing, higher-marstomach” dropped by 3.6 percent, and gin categories. even the diet sodas that have kept the cat“Of course, I wish I didn’t egory from being a complete disaster had have to take as much soda,” declining sales numbers. says Debbie Giucastro, the “Consumers are still looking for alter- chief buyer for Aldin Associnative beverage choices and ates, which owns a small nutritionally advanced prod- chain of convenience stores ucts,” rather than CSDs, says in Connecticut. Information Resources Inc.’s She’s not the only one. At Sheila McCusker, who a recent beverage conference, recently completed a massive distributor George study of the importance Kalil made it clear that CSDs of health claims in food weren’t the profit center they products. have been in the past. In addition to com“In half the U.S., there is petition from new products, zero money made on carbonthere’s also the change in the perception ated,” he said, calling CSDs a of what CSDs stand for: long a nostalgic “very, very difficult business.” companion bringing to mind sweet taste Nevertheless, it’s a necessary one, and and sweeter memories, they are fast Giucastro and Kalil know it. Coke, Pepsi, becoming an estranged lover, one whose and Cadbury-Schweppes are responsible sweetness was built on a mound of fat- for 89 percent of CSD category sales, and tening calories. For many consumers, the their fizzy products remain a pillar of the good feelings aren’t enough. They want beverage category. But to stay that way, to consume drinks that won’t just taste good, but that will make them feel good, as well. For many consumers, the ones who are migrating to energy drinks and water, and nutriceuticals and teas, it’s no longer enough for a CSD to stimulate a strong emotion. That’s a feeling the increasingly applies to retailers, as well.

Beverage Spectrum | March 06

they’ve hit upon a need state of their own: the need to reverse the claims that CSDs hurt you, and come up with a way for them to make you better, or at least less round, all the way around.

Diets Aren’t Enough Those changes mean more than just removing the sugar and pumping in artificial sweeteners, the big change that helped support CSDs for years. Soda manufacturers have come to recognize the distinction between products that can do no harm and products that can just plain do more. Those with long memories will remember that Coke once toyed with a pair of nutrient-added soft drinks, a calcium-added version of TaB and a carbonated fruit drink with Vitamin C called Raintree. Neither made it into circulation, but despite those early failures, Minnick has made it clear that finding a way to fortify sodas with nutrition is still a long-range plan for Coke. The company has created the “Beverage Institute of Health and Wellness” with an aggressive focus on patents and technology. While the Institute issues reports on the effects of beverages, it also tests new beverage formulations with an eye towards solving the main problem with healthful ingredients. What problem it that? They tend to fall apart in CSDs , according to Minnick, who

told the conference that keeping “a robust platform” is the key for the near-term, but “the ingredients science side of it we believe is long term.” “[The nutrition area] is where we’re finding a lot of layers of complexity,” Minnick told the analysts. “Sometimes nutrition and health is defined as ingredient-driven in a beverage….In some cases it’s defined as calorie driven. Bottom line is all of these need-states charts point to the fact that we need a greater portfolio of greater depth.” Sodas with functional ingredients aren’t just on Minnick’s mind. Dave Burwick, then Pepsi’s chief marketing officer, suggested during a meeting in October that CSDs could carry functional ingredients. And this January, PepsiAmericas bought Ardea Nutrisoda, a slim-can collection of high-margin, low-calorie, “functional sodas” outright. Meanwhile, Minnick has hinted at a Diet Coke Plus and, in December, told analysts her company would “experiment with a Sprite Zero Plus in a couple of markets.” And what might be a big secret domestically is in plain sight in Japan, where Coke sells a Fanta with Vitamin C. Some well-known sodas have already begun integrating some functional ingredients in the U.S., as well, most prominently through Cadbury-Schweppes, which saw a good bit of publicity and some initial share increases through 7 UP Plus, a lightened version of its core brand enhanced with calcium and sweetened with fruit juice. That product – partially born of the desperation that came with the loss of the company’s distribution ties to Pepsi bottlers – helped shore up the 7 UP brand upon its introduction in late 2004. Even though it has since slipped a bit, the idea of a health-promoting mainstream soda

PROJECTED U.S. SOFT DRINK MARKET COMPOUND ANNUAL GROWTH has erected the framework for the brand supplement, invented by Brain Twist, and, 2009(P) Compound Annual following a trial in France, the parent comto 1980 adjust– even more, and rumors existGrowth

6.2% 5.1% 3.7% 2.8%

2.2%

1.6%

1.2%

0.6%

0.5%

1975– 1980– 1985– 1990– 1995– 1996– 1997– 1998– 1999– 2004– 1980 1985 1990 1995 1996 1997 1998 1999 2004 2009(P) (P) Projected

SOURCE: Beverage Marketing Corporation

pany is expected to introduce coffee-flavored and caffeine enhanced Coca-Cola Blak in the U.S. later this year. Meanwhile, it’s hard to say what Pepsi’s long-term plan is for its own core CSDs. While the company last summer marshaled its marketing forces somewhat behind Diet Pepsi, giving it ‘flagship status,’ executives have made it clear that Multi-Function its drinks business is no longer “About The category may soon envelop The Cola,” – quite a turnaround from the many of the characteristics company’s use of that tag line over the of the products to past few years. which it’s been losIndeed, PepsiCo has ing share: through impressed Wall Street by Mountain Dew turning away from CSDs and MDX and Vault, committing to the so-called Coke and Pepsi are “total beverage” strategy, adding energy ingredients to which includes the highly their citrus sodas, and they successful brands Aquafina, are also planning on releasGatorade, and Tropicana, as ing a souped-up Sprite later well as the New Age conthis year; Coke bottlers are tender SoBe. PepsiCo only putting their current freedom makes 23 percent of its profCoke’s Innovation Guru to “bolt on” products by its from CSDs, while at Mary Minnick: She knows test-marketing Defense, a why you’re thirsty, but Coke, it’s about 80 gimmicky canned vitamin can she get you to drink? percent.And by acquiring

that the product might try to lose its preservatives altogether, putting it in great shape for breaking through the doors of natural foods markets. In the shorter term, CSD manufacturers aren’t just looking to vitamin or nutrient enhancement, but are still trying for function.

March 06 | Beverage Spectrum

A SPECIAL SECTION FROM

Nutrisoda, PepsiCo may have outflanked Coke again, getting itself the potential to quickly send a nutriceutical troop into battle if 7 UP Plus proves to be a trend-setter. At Cadbury, they’re still tinkering with the formula for 7 UP Plus; Vitamin C has been pulled out, but the calcium remains. There have been rumblings that the regular 7 UP brand might soon switch to “natural” preservatives. But old habits die hard. At the same time the company began experimenting with additives, it also watched with pride at consumers new love affair with Dr Pepper, despite the fact that the heavy, super-sweet brand is more representative of a classic soda than its crisp stable mate. Dr Pepper took the industry by surprise, growing last year when its chief rivals did not, helped by its diet and cherry vanilla flavor extensions, both of which surpassed retailer expectations. For retailers, the idea that CSD companies might be working towards the introduction of a product that produces both enjoyment and salubrious effects is cold comfort. On a day to day level, they demand products that will turn over. That’s why CSD makers are looking to packaging and line extensions early on, while they try to find a way to reverse the slide.

The Smaller, the Better At the same time that it’s trying to find ways to pack more nutrition into its CSDs, Coke is also trying to salvage its core product in the same way that manufac-

turers of snack foods are – by putting less into the bottle. According to Minnick, the company will soon release a smaller, 100-calorie package. For companies like Nabisco and Kraft, those packages have successfully put the brakes on sales losses by actually turning the perceived negative aspects of their offerings – calories – into a new, seemingly diet-conscious “treat”-sized product. Retailers should also watch for a higher-style Coke bottle. The company is trying for hipper placement in on-premise locations abroad with an aluminum bottle to appeal to the young, and domestically is trying to find the right slot for “Coke Glass” – a return to the glass bottle of its nostalgic heyday. Nevertheless, these packaging initiatives are attempts to fight the slide, rather than add a new class of consumers. In the 1980s, the big soda companies made a breakthrough in customer acquisition through diet products, which helped them add new customers while keeping those who might otherwise have left the category altogether. Barring a discovery that would make colas just plain good for you, that might have been their last big gulp. Pepsi’s Burwick has argued that it’s going to take more than just the use of artificial sweeteners or a new package to keep CSDs viable. He sees a large variety of products as the key, and has warned bottlers that they need to be

Beverage Spectrum | March 06

prepared to handle an explosion of SKUs. From a product diversity perspective, that sort of thinking has already taken hold in other categories, like functional waters, energy drinks and even teas, which run the gamut from perceived heart health promoters to super-sugary lemon treats serving a variety of needs.

Fighting the Slide Retailers have been bewildered by the flood of flavor extensions over the past few years. While some, like Mountain Dew Code Red, were able to piggyback onto a still-growing brand’s momentum, many others – like Coke or Pepsi with Lime – have turned to flashy ad budget expenditures. The flavor wars seem to mirror each other right now: Coke and Pepsi Vanilla; Cherry Vanilla extensions for Coke and Pepsi as they light out after Dr. Pepper; a rumored Dr. Pepper coffee flavor; the midcalorie cola debacles of C2 and Pepsi Edge. Minnick herself acknowledged the calculating nature of flavor extensions while meeting with analysts in the winter, saying they were necessary “because frankly it prevents defection and experimentation, it brings news to the trademark….In some places, it’s a pure interest play.” But it’s not a long-lasting one. Coke pulled Vanilla Coke shortly after announcing it would introduce Wild Cherry Vanilla Coke. The bump from extensions has not lasted long; it’s hard to know if these short term interest plays will be enough to keep consumers and retailers interested. And it makes the long-term functional soda plays all the more important: because if the interest starts to wane, there’s no way they’ll be able to maintain their good credit.

MARCH 2006

Kidding by: andy murray

• Beverage companies get serious about marketing health to minors • Key Products

Beverage Companies get serious about marketing health to minors B Y A N D Y M U R R AY

ordan Kerner never thought of himself as a nutrition crusader. Then came fatherhood, and with it, fears that his children might end up joining Generation O – as in “obese.”

Soon, Kerner found himself in the kitchen, taking ordinary fruit juices and

watering them down so his two sons could have a nutritious juice drink with-

Special Section | March 06

out all of the calories. Why should it be so hard, he wondered, for parents to feed their kids something that tasted good, but was still good for them? Like the good former Internet entrepreneur that he is, Kerner decided to build a company out of that question. The product? Waddajuice, a hybrid juice-water blend with a unique spillproof cap. While weight concerns might sound weird coming from an Internet guy – i.e., someone who helped knit a whole new blanket of inactivity to throw over the couch potato – he’s not the only one who’s engaging in profit-driven altruism for the benefit of the sippy-cup and Sloppy Joe crowd. Kerner might soon be pining for the good ol’ days when the road was clear and the goal was noble. Companies that have long sought to tailor their vitaminenhanced juices and waters solely to the mat-toting Yoga crowd are flooding the market and sizing up a smaller, slightly more youthful audience. “We really see kids as a huge opportunity,” said Nicole O’Connor, Nestle Waters’ consumer communications manager for new product launches. The payoff for finding a product that speaks directly to children is considerable. Kids between the ages zero and 12 were estimated to have spent more than $40 billion last year, and that number is expected to grow to $51.8 billion this year, according to Boston College sociologist Juliet B. Schor. But companies are far less interested in the amount of direct spending children represent than the wide range of household purchases they can influence, from beverages to vehicles. That “influence market” is estimated to be some $670 billion annually, Schor estimates. “Kids are empowered in family deci-

sion making in a truly unprecedented way,” Schor said. And concerns for those little decision makers is also on an unprecedented rise. Stunned by the relentless rise in childhood obesity figures, federal and state governments have begun pressuring most public schools to eliminate carbonated soft drinks and processed foods from lunch lines. Schools have until July to devise new nutrition goals, according to new federal regulations, and demand for nutritious alternatives to popular snacks is reaching an all-time high. Sugary snacks were big sellers for years, and many public schools Waddajuice – or public school- entrepreneur based organizations Jordan Kerner and teams – are wondering how they can replace them in vending machines without losing muchneeded revenues. Meanwhile, lots of parents are carrying around the same concerns as the ones that drove Kerner to start Waddajuice – that the products they pull out of the convenience store cooler to give to their kids will make them as round as a beach ball. Beverage makers, large and small, think they have the answer. Using a number of new sweeteners and flavorings – both natural and artificial – companies think they have come up with an entire new class of designer beverages – ones that will deliver the rock-’em, sock’em fruit flavors kids crave, but have enough nutritional cachet to impress Mom. Pediatric dieticians are also taking a hard look at the new beverages, wondering if their nutrition plans may have a few holes as well. While many support par-

BRAND NEWS Wild Waters Wild Waters is launching a new line of fortified waters for kids that uses a blend of sugars, including Erythritol from Cargill. Erythritol is an all natural nonnutritive (diet) sweetener that can be found naturally in fruits like grapes and pears and is re-produced through a natural fermentation process. It has the same attributes of sugar without the negative stigma associated with some artificial, high intensity sweeteners. Wild Waters combines erythritol with natural fruit flavors and crystalline fructose to claim 50 calories per 8-oz. serving. Wild Waters is also fortified with 10 percent of the RDA for calcium and six other important vitamins and minerals.

drink that comes in two flavors, Strawberry and Peach Mango. It has a two-year shelf life and comes in 8.5-oz. cans and 16.9-oz. PET bottles. Mighty Milk Made by CytoSport, the manufacturer of Muscle Milk, Mighty Milk Nutritional Drink for Kids is a highly nutritious, lowsugar drink that contains 14 grams of high-quality protein, plus essential vitamins and minerals for sustained energy. Aimed at active kids whose busy lifestyles demand access to nutritious snacks on-the-go, it has only 4 grams of sugar per serving, is lactose free, and comes with its own straw. Tampico

Kool Cow Global Beverage Enterprises Inc.’s Kool Cow sparkling drink is a sugar-free, vitamin-enriched, milk-based carbonated

Special Section | March 06

Tampico Beverages has two new beverage platforms aimed at children and families. Tampico Plus launched earlier this year. It’s a vitamin and calcium fortified, reduced sugar line. Available in half-gallon plastic containers, it’s aimed at kids because it is loaded with vitamin A, C, D,

ents cutting way back on the number of carbonated soft drinks and high-fructose corn syrup-sweetened products their children drink, registered dieticians like Kristina Elsaesser still think enhanced vitamin waters or fortified fruit juices need to be looked at as an occasional dietary treat, not a regular staple. “I think the best thing to do is to eat a balanced diet,” said Elsaesser, who practices in Maryland and has worked at the Children’s National Medical Center in Washington, D.C. So it’s a hard row to hoe. George Carey, president of Just Kid Inc., a Connecticutbased consultancy based on marketing to minors, says that of the nearly 1,400 new “better-for-you” products targeted at kids that the firm has tracked in the last six months, fewer that 12 have sur vived long enough to be considered viable products. Those odds mean that retailers need to pick carefully. “The road is littered with people who have done this the wrong way,” said Carey, whose clients include blue chip personal products giants such as CocaCola and 3M, as well as fledgling startups such as Wild Waters Inc. Still, the profits are out there, and the health proposition is just one of the keys; so are taste and packaging.

The Good 4 U knot Producing a vitamin-enhanced water that untied the Gordian knot of good-for-you vs. good taste was exactly what Kid Fuel President Donna Bimbo set out to do. As

BRAND NEWS E and calcium with 50 percent less sugar than many juice drinks. Tampico Flavored Water Beverages is a line of zero calorie, naturally-flavored water beverages with a tropical fruit twist. Old Orchard Old Orchard Brands has added two “kid-friendly” flavors to its highly successful line of Healthy Balance fruit juice cocktails, Healthy Balance Fruit Punch and Healthy Balance White Grape fruit juice cocktails. Healthy Balance features a 75 percent reduction in sugar, carbohydrates and calories when compared to similar fruit juice products. Additionally, these beverages contain 20 to 27 percent juice, are preservative free, and sweetened using Splenda no-calorie sweetener. The U.S. selling price for a 64-oz. bottle of Old Orchard Healthy Balance averages between $1.49 to $1.99, depending on region and retailer. The Old Orchard Healthy Balance line of fruit juice cocktails includes eleven other flavors: Cranberry, Cranberry Raspberry, White Cranberry, Cranberry Grape, Apple, Apple Kiwi S t r a w b e r r y, Apple Cranberry, Apple Raspberry, Grape, Prune, and Ruby Red Grapefruit.

Special Section | March 06

Rudy Flying Colors The first beverages to be launched as an exciting new line of vitamin-packed, fruitflavored drinks that offer nutritious alternatives to today’s high-sugar beverages for children, Rudy Flying Colors has only 10 grams of sugar per 8-oz. serving, and is packed with 35 percent of the recommended daily value of Vitamins A, C, D, E and four of the B vitamins. Rudy Flying Colors has no fat or cholesterol and only 56 calories per serving, and contains Xylitol. Distributed in the Southeastern U.S., the product is available in: Blue Raz (blueberry), Black Cherry, Citrus Storm (lemon/lime), Glacial Grape and Red Berry (strawberry). Wateroos Maddie’s Beverage Company has introduced Wateroos, the nation’s first and only family of ready-to-drink boxed water beverages designed especially for children. Wateroos is for nutritionally-oriented moms seeking a fun, convenient, healthy drink option for their pre-schoolers.

Bimbo puts it, kids don’t need any more energy, they just need fuel that is better for them. “Everything we put in Kid Fuel is directed to growing more healthy bodies,” Bimbo said. So Kid Fuel’s line of vitamin-enhanced waters use the same crystalline sugar found in fruit juices, but have only 50 calories per 8-oz. bottle. Kid Fuel relies on neotame, an artificial sweetener with one-fifth the calories of other artificial sweeteners, to enhance the flavor it delivers, while adding vitamins like Vitamins C, B-6, B12 and calcium. While the nutrients in the bottle may have been targeted at school lunch programs and parents, Bimbo knew not to let the health benefits define the product. She also wanted flavor and packaging that delivered the colorful, intensely flavored juices kids love. So after Kid Fuel solved the good taste-good for you dilemma with neotame, she came up with six flavors: peach, lemonade, kiwi-strawberry, grape, orange and fruit punch. “The overwhelming response we got from moms was, ‘If it looks too healthy, I’m going to like it, but my children are not going to be interested,’” Bimbo recalled. Kid Fuel has orders with schools in Pennsylvania and Florida and is setting up sales and marketing teams in New York, New Jersey, Illinois, Michigan and California, Bimbo said. Others try to untie the knot through design. Better flavor was a key concern for Kerner, Waddajuice’s founder – especially after Arnold Greenberg, a founder of Snapple teas and an investor in Waddajuice, told Kerner he had to make the juice pure, meaning no artificial sugars or sweeteners. But he was also obsessed over the bottle’s closure, wanting to make sure it was something even young chil-

BRAND NEWS Wateroos is available in Original Wateroos, which is 100 percent purified water, and All-natural Apple Flavored Wateroos, made from 100 percent filtered water with a hint of natural apple flavoring containing no sugar, sweeteners or artificial ingredients. Wateroos is packaged in a colorful, interactive drink box complete with a straw and is designed to make water fun for kids to drink. Waddajuice

Oompa-loompa tropical juice; Frobscottle swiggle berry juice or Sherbert slurper citrus juice. Water Sensations

A healthy on-the-go juice beverage with a patent-pending kids sports cap, Waddajuice combines a healthy juice and a spill-proof container to offer single-serve convenience. Waddajuice is made with only the purest ingredients: juice, purified water and vitamins, with no added sweeteners, flavors, dyes, preservatives or additives. Waddajuice comes in four kid-favorite flavors: Apple, Orange, Wild Berry and White Grape. Each is bottled in an 8-oz., plastic, easy-to-hold container. The Big J A British company, the Big J has a unique range of licensed Roald Dahl fruit juice drinks which contain no added sugar, sweeteners, additives or preservatives Each with its own colourful character packaging, the drinks are available in a 250ml cartons in 3 delicious flavours;

Special Section | March 06

Water Sensations is a clear, liquid natural flavor enhancer for any kind of water that requires no stirring or shaking once it’s poured into the bottle. It is available in six natural fruit flavors – peach, orange, strawberry/kiwi, grape, mixed berry and lemon. Water Sensations comes in single serving, unique bottle-shaped, foil liquipacks that pour easily into any bottle, glass or pitcher of water. Water Sensations is in major supermarkets in the northeast, midWest and mid-Atlantic U.S., and at select Target stores across the country. PepsiCo Quaker Milk Chillers are made with 2 percent reduced-fat milk and fortified with calcium and seven essential vitamins. They are available in three flavors – chocolate, strawberry and vanilla and come in 14-oz. single-

BRAND NEWS serve plastic bottles in convenience stores, grocery stores, drug stores, mass merchandisers, school vending machines and select foodservice accounts. They are sweetened with a blend of natural and no-calorie sweeteners including sucrose, sucralose (Splenda), and acesulfame potassium. Produced using leading-edge aseptic technology, Quaker Milk Chillers have a six-month shelf life. dren could open easily, but also strong enough to ensure freshness. Kerner settled on a formulation that was a mixture of purified water, fruit juice, and vitamins that boasted between 50 and 70 percent less sugar than regular fruit juices. After much work by Castle Copackers of New Kensington, Penn., Kerner said the company also came up with a unique seal that could be easily opened by children and didn’t require removing an underlid seal. The seal, which uses a silicon-based valve that restricts juice flow, is awaiting approval from the U.S. Patent Office. “The question is what is going to compel people to buy my product because we’re not going to spend millions on advertising. I think packaging is a key. It has to be good and it has to be convenient and work for parents’ hectic schedules,” Kerner said. So far customers can’t seem to get enough of the Waddajuice taste, Kerner said. The company has already begun limited sales through bottled water distributors in Connecticut and has received numerous calls from school officials. The company also plans to tackle convenience stores and wholesale clubs as part of a multi-prong sales approach. “People are calling every day and

In Zone Brands The creator of the “interactive beverage category,” Atlanta-based In Zone Brands is poised to be a first-mover again with WaterPop, a hybrid product combining the sweet taste of flavored water with a sour candy top through which the 8-ounce beverage flows. WaterPop has a $1.49 SRP. For retailers, the novelty and shelf-appeal of WaterPop will help generate excitement and incremental revenues in the store. On warm display or in cooler glides, the product

Special Section | March 06

allows for multiple placement options. The first two WaterPop flavors, Apple-Strawberry (Water-Candy) and Cherry-Fruit Punch, hit store shelves in February. Stonyfield Farms Stonyfield Farms aims its Juice Smoothies at the active crowd. Refreshing and thirst-quenching, these are great for going to or from the game, or anywhere on the go. Juice Smoothies have 100 percent of a kid’s recommended daily amount of Vitamin C, plus they’re all natural and organic. They have 30 percent fewer calories than other drinkable yogurts and zero grams of fat. Available in two flavors, Surfin Strawberry and Orange Strawberry Banana Wave, Juice Smoothies come in four packs of 6-oz. bottles.

Belcher Soda

Excuse Me LLC’s Belcher Soda is a lowcalorie carbonated fruit drink with four “cheeky” fruit flavors. It’s made with 10 percent fruit juice and 100 percent of children’s RDA of Vitamin C, B-6, B-12, Niacin and Pantothenic acid. As you might have guessed, this kind of product is extra-carbonated.

Michael Fox, marketing executive for Talking Rain, has helped reposition the drink as a juice drink.

school lunch programs are coming to me now,” said Kerner. One company that doesn’t have to worry about its advertising budget is Nestle Waters North America, the $3 billion bottled water division of the Swiss food giant. For such a large company, it’s putting a lot of faith in a kid-sized package: this year, it plans to introduce the Aquapod, its new 11-oz. water bottle designed specifically for kids. Shaped like a rotund penguin with five little feet, the Aquapods are a decidedly younger, more fun water bottle, even without the fanciful shrink-wrap proclaiming Aquapods are “charged with fun.” They’re also charged with potential profit, as they sit at the intersection of kids’ buying power and the massive growth of bottled water usage overall. Nestle Waters hopes to raise bottled water consumption 40 percent through products like the Aquapod. Already, the company says its surveys indicate 73 percent of children between the ages of 12

and 17 say they have consumed bottled water in the last two weeks, compared with 67 percent in adults ages 35 to 45.

Ain’t She Sweet? Marketing specialist George Carey knows the value in appealing to mom, but he also cautions companies against losing touch with their primary consumer— children. According to Carey, of all the successful products that have been marketed to children as better for you, the majority has come from taking a nutritional anchor and making it more fun. The anchor can be something elaborate like a product, or something as simple as a recognizable brand, but it seems that jazzing things up works better than watering them down. So when companies try to make healthier knock-offs of favorite beverages, they almost always invite negative comparisons. “Kids’ invariable conclusion is it can’t taste as good. As much as they value nutrition, they care twice as much about taste,”

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Carey said. And that’s where artificial sweeteners come in. One company that is trying hard to come up with the right mix is Talking Rain, a new youth oriented flavored juice drink from the TalkingRain Beverage Co. It contains 3 percent fruit juice, sucralose (marketed as Splenda) and Xylitol, a new artificial sweetener that some studies have shown can weaken cavity-causing bacteria. The sweeteners have allowed Talking Rain to reposition its beverage line as low-calorie fruit drinks with only 15 calories for children. “We see a need, especially in schools, to develop a good-for-you beverage that children would enjoy and would also be good for you,” said Michael Fox, vice president of marketing for the Puget Sound beverage maker. While some producers seek to lure children simply through taste or sweetness, many are convinced that younger generations can be wooed by more complex messages, as well. After several years of directing marketing campaigns for juice maker Nantucket Nectars and beverage giant Cadbury-Schweppes, Wild Waters Inc. Chief Executive Chris Testa sought to create a healthy kids beverage that would appeal to and Rudy Beverage promote a more President Drew Carver believes active lifestyle. Wild the Rudy image is Waters, his new a positive one. product, features seven vitamins and nutrients like calcium and Vitamin C with less than 60 percent of the calories of the average 170-calorie fruit juice. But it also features labels inspired by activity, like Groovin’ Grape and Flippin’

hard to find them something nutritious. I don’t usually put my name on anything, but when you go into schools today and see what they drink, it’s scary,” he said.

Gross…and Good for You

Wild Waters are intended to be negotiation-free, according to founder Chris Testa

Fruit Punch. Testa, who oversaw marketing for products like Mott’s fruit juices, YooHoo and Nantucket Nectars, knows a health and activity message can inspire children, while also reassuring parents that a product is good for them as well. And finding a happy medium can be something that is a major selling point for harried parents. “When you have kids you know each day is filled with 200 or so negotiations and sometimes you just don’t want to fight,” Testa explained. “What we wanted to do was create a negotiation-free beverage. It becomes a selling point.” Inspiring children to stay active is partly the mission of Rudy Beverage Inc., a joint venture between the EON Beverage Group and Rudy Ruettiger, the real life Notre Dame football player behind the TriStar Pictures movie Rudy. Ruettiger, now an inspirational speaker and parent, said he wanted to create a sports drink but was aghast at the high sugar and caffeine levels contained in

most energy sports drinks. With EON’s help, Ruettiger set out to create Rudy Flying Colors, a new low-calorie fruit drink with Xylitol, 10 important vitamins and one-quarter the sugar of most pure fruit juices. Besides the Rudy name, each Rudy Flying Colors flavor will carry a different encouraging message, such as courage or commitment. While sports drinks use richly compensated athletes such as LeBron James to represent their products, Rudy Beverage President Drew Carver thinks Ruettiger’s plucky reputation helps fill out the drink’s purpose: to send the right message to children. “We don’t want them to be the next LeBron James, we want them to be the next best them,” Carver said. Ruettiger, who has two children and spends most of his giving motivational speeches to schools businesses across the country, said it was fulfilling to lend his name to a drink that pushes children to succeed. “I have two daughters and it’s really

While taste is important, so is tastelessness. Excuse Me LLC’s Belcher Soda is a lowcalorie carbonated soft drink made with 10 percent fruit juice and 100 percent of children’s recommended daily allowance of Vitamin C, B-6, B-12, Niacin and Pantothenic acid. It comes in a sleek 12 oz. Ball metallic beverage canister and has 125 calories per serving. But you’d never know it from the packaging. With cheeky fruit flavors like Loogie Lime and an interactive Web site where children can log on and record their own belches, Belcher Soda is, well, gross. So when the Grossology Exhibition, a traveling museum exhibit focusing on the science of bodily functions came to town, it seemed like a natural advertising opportunity. Denver-based Excuse Me and Belcher Soda became local sponsors for the traveling exhibit when it was in Denver. “It allows kids to be kids,” said Heather Hill, Belcher’s marketing director. “Kids should be kids and I Heather Hill, think this is somemarketing director for Belcher Soda thing parents will appreciate from a nutritional standpoint,” she added. But are better-for-you children’s beverages healthier than the carbonated soft drinks they are asked to replace? To a large extent, yes, said Kristina Elsaesser, the pediatric dietician. While many products mentioned in

this article are not yet available, and Elsaesser has not verified any claims pertaining to their health benefits, she is encouraged by the growth in low-calorie juice drinks waters as alternatives to carbonated soft drinks. Elsaesser watched the startling increase in childhood obesity while tending to injured military personnel and their families in the Air Force at several medical centers across the country. Carbonated soft drinks and excessive high-calorie juices became a favorite target. “It’s an easy call when I have an obese kid come to me and say they drink juice and soda all day. I tell them to cut out the

soda and it makes a huge difference,” Elsaesser said. Elsaesser, who has three children of her own, sees low-calorie, fortified juices and bottled waters as an occasional treat and part of a balanced diet. If they replace highercalorie fruit drinks or sodas. or parents give

them out because they want to indulge their children, kid’s beverages are fine, she said. “But they should not be used a dietary replacement for fruits or vegetables. Children don’t need it, but if they like it, and if it’s a better option than soda, that’s fine,” Elsaesser said. And that’s something that Kerner is keeping in mind as he focuses on the bottom line. “Would I like to make a million dollars? Sure,” Kerner said. “But at the end of the day I’d rather make something I’m proud of, instead of contributing to the obesity problem of young kids.”

Available Exclusively at

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D R I N K T H I N K

Consumption Junction What’s Your Function? BY

DARRELL

JURSA

he first time someone told me a beverage was good for me, it was Mom, and it was milk. Milk wasn’t as exciting in the 1970’s as it is today. Saying “chugs” at the dinner table back then might get you slapped. I also remember Orange Julius. A quick cruise on the Net reveals that they’re still at it, except Dairy Queen, their new owners, won’t let them put the raw egg into their drinks anymore.

I’m taking a walk down memory lane because the beverage business is full of drinks singing the “better-for-you” song from the shelves. Just like everything else today; there’s too many labels and not enough information. It was a little easier 20 or 30 years ago, when the mere mention of water from a bottle would get you pantsed in a hurry. There was stuff that was bad and stuff that was good. Today, just about everything is good, or masquerading as good. Even CSDs! So how do you decipher everything without going back to school to get a degree? More importantly, how do you then turn a profit with them? Here are some guidelines: 1. Definitions Products that offer benefits beyond basic nutrition are most often referred to as nutraceuticals or functional foods. Consumer awareness of these terms is increasing, because the terms both have some logic that is appealing and makes sense to shoppers. It’s a simple leap for the consumer to think “It helps my body to function better.” “Nutraceutical” hasn’t really caught on as quickly because of the

medicinal quality to the term. 2.What Makes A Drink Functional? Your vendor might once have told you, but many of today’s hot new functional beverages are distributed through third-parties that may not have all of the information. So it’s up to you to ask, and to go to the brand’s web site. This category is relatively propaganda-free because many of these beverages have small followings that will hold them accountable. Because they’re relatively new, many don’t want to risk losing a single drinker. On the other hand, you’ll know slick marketing when you see it. Wild claims are pretty easy to debunk. 3. Is It Right For Your Store? Doesn’t it seem like there’s a new drink for Felicity, the 35 year-old woman who lives in or near a major metropolitan area

every week? The point is, vendors are constantly seeking to uncover the next big thing by focusing on specific needs outside of thirst. You know your customers: what are they looking for besides that bottle of water and sandwich? 4. Can You Help Your Customers Understand? The last thing you want is to not have the right answer when a customer walks up to you to ask you about something they just pulled out of the cooler. Today’s customer expects you to know what’s on your shelf – and I mean really know. If it’s a simple, “Yeah, that Milk Thistle drink – I’ve read that it can help digestion,” then you’ve done your job well. Maybe there’s a story about the drink, like “It was a remedy for Genghis Khan’s troops.” Hey, we all know Genghis Khan needed a remedy for all of that Mongolian Barbecue, so who knows? Either way, if you’re confused, then the consumer’s going to be. All it takes is some filtering. And given the importance of the beverage category to your business, the homework’s worth your time, because the better-for-you beverages are going to keep coming, from companies large and small. And, oh, by the way, Mom’s still right about milk.

Darrell Jursa is the founder of Liquid Intelligence, an influencer/word-of-mouth marketing agency for the beverage business. The company specializes in helping beverage companies grow profitably through new product and service development, branding, and effective marketing strategies.

March 06 | Beverage Spectrum

BY JEFFREY KLINEMAN

t’s not like it was a big secret. It was already headed for test markets. Nevertheless, last year, while Beverage Spectrum was pulling together a story on imported light beer, the folks over at Heineken USA, who were just about to test-launch Heineken Premium Light, wouldn’t have any part of it.

Now, it might seem like we’d mention something like that because we’re bitter, but we’re not. Really.

The reason we mention it is because it reflects the gravity with which Heineken USA and its newly-minted president,

Beverage Spectrum | March 06

Andy Thomas, is taking the national launch of this product. “Heineken is a brand that really has a great, rich history,” Thomas says. “It’s something we’ve done a lot to preserve and protect over the years. We bring a lot to the party, and we’re very serious about bringing it to an entirely new part of the category.” It’s hard to imagine why they’d sweat it. It’s only the first Heineken line brand extension ever (not counting Heineken Dark, which was simply added from the offerings of its Dutch parent company). It only comes at a time when the collective backs of the beer companies are already up against the wall, after two years of declining industry sales and the infamous Gallup poll that showed Americans will choose wine more often than beer as their beverage of choice. It only comes at a time when Heineken has languished for nearly a decade as the runner-up to Corona as the country’s topselling import. And there’s only a $50 million marketing campaign set to back the launch. So it’s not like there’s any pressure. Still, Thomas hopes Heineken Premium Light will grow in the market created by the steady growth of imports and the long-term maturation of the light beer segment, now the main lifeline for domestic premiums. For the 38-year-old New Bedford, Mass. native, the question of whether Heineken Premium Light will succeed isn’t one that depends on a brand extension getting market share through the strength of a well-known predecessor, but it’s one of whether the overall trend toward high-end beers – one that can benefit retailers through highermargin “trade-up” purchases – can continue by spreading into the light segment. There are some indications it can, given the fact that the leading import, Corona, has been able to turn Corona light into the

third-most popular off-premise import in just a few short years, according to IRI. If that can happen, Heineken Premium Light may have a good chance of becoming the standard-bearer for what Thomas calls the “Luxury Light” subcategory. He believes his new beer could sell up to 5 million cases in that subcategory, quickly becoming its standard bearer. If not, Heineken Premium Light could wither in the shadow of its older brother, Amstel Light, and eventually go the way of C2 –- a secondary, and ultimately insignificant, low-cal version of a product that already had a successful diet stepchild. Thomas is convinced that’s not going to happen. “There’s nothing that suggests to us that this will be a fad,” he says. “Light beer is not a fad. It’s an established category. And trade-up is real. So if you look at consumers today, what you’ve got here is the convergence of two real trends.” This month, Beverage Spectrum spoke with Thomas about factors that will affect the launch of Heineken Premium Light. Beverage Spectrum: Why is now the time for Heineken Light, and other light imports? Andy Thomas: Imports are growing and lights are really an emerging category. In the growth of lights is a little bit of a lesson in how categories mature, and start to segment. What you’re going to start to see is more imports, more brand development activity. Hopefully, we won’t be the only luxury light to be introduced, because we think it’s an idea whose time has come. It’s one that resonates across the value chain. BS: What’s the size of the potential market for the “luxury light” category? AT: That’s the $25,000 question. If you believe there’s a segmentation going on as a whole, you’ll see the pre-

Andy Thomas rests his arm on a 12-pack of Heineken Premium Light. Does Heineken’s future rest on the brand, as well?

mium segment take about 8 to 12 percent of the base. But who knows how long that will take. BS: Doesn’t launching a light version of Heineken run counter to its strength as part of the “better beer” group? AT:That skepticism you’re talking about with regard to light beers has been dogma for the beer industry for a long time. But customers aren’t dogmatic. Just because a consumer is looking to drink something lighter, that doesn’t mean they’ve decided they’re looking for something that isn’t as good. When half the market is voting with their wallet and choosing light beer, you can’t simply say that that half the market is looking for an inferior product. As manufacturers, we’ve simply got to shed the image of light beer being something less. That goes for craft brewers, as well. For a craft brewer to be able to bring their expertise forward to a light beer, I don’t think it’s necessarily a paradox.

BS: So who is this product’s audience? AT: In some ways, I’d imagine Heineken Premium Light will appeal to a Bud Light or a Miller Lite drinker, someone who might want something better in a taste profile. You know, you just don’t know what you’re missing until something better comes along. If all you’re going to do is make people who drink Heineken drink Heineken light, you wouldn’t even bother – we want to – to use a big word – revolutionize the approach to the light beer market. We think they’ll want to trade up. BS: What suggestions do you have for helping them present a light import category? AT: We’d love to see luxury lights grow into a segment in and of themselves – but now we’d like to see family blocking of the brands. It depends from channel to channel – but we want it placed with the imports. BS: How do you avoid stepping on the toes of Amstel Light with this brand? AT: I think you approach it from different perspectives. Amstel, it’s a classic European Lager which happens to have a lower calorie count. Heineken Light approaches it with a lighter, smoother flavor profile. When you drink Heineken light, you say, hey, this is a great light beer. It will appeal much more to the domestic light beer drinker – they’re looking for some cachet, but they’re also looking for drinkability. BS: How do you avoid becoming, say, C2, a line extension that just doesn’t resonate with consumers? AT: We’re not looking to be today’s success story and tomorrow’s footnote. We’re a patient company. We really believe in equity of our brands – this having been the first line extension of Heineken, you can be sure we’ll be patient, we’ll be nurturing.

March 06 | Beverage Spectrum

G E R R Y ’ S

I N S I G H T S

Looking for something revolutionary? You’re getting hotter.

It Ain’t Good for You (Unless Drunk is Good) BY

GERRY

s anyone in food or beverage marketing can attest, American consumers in quest of good health and long life don't seem to have much of a stomach for complexity. Never mind the subtleties of a balanced diet and exercise regimen. Instead, the perennial – or should we say chronic? – quest is for the magical silver bullet. In recent years, for many consumers, that magic bullet has been antioxidants, which have the ability to protect the body against free radicals and may ward off cancer, heart disease and other ailments that come with aging.

No sooner does word get out that pomegranates contain high levels of antioxidants than pomegranate juice sales take off. (OK, some very adept marketing from the POM Wonderful folks gave that a big push.) Green teas? White teas? Bang! Sales take off. Blueberries? Bring ‘em on! For some consumers, no formulation is too arcane, or price point too high, if the resulting product provides a nice zap of antioxidants. Some even make these products a daily regimen, which is great for repeat business. Of course, such consumer crazes create an equal degree of hysteria on the supply side, as manufacturers race to provide products that will meet this suddenly seemingly insatiable demand. So maybe, then, we shouldn't be too surprised to see these high-antioxidant fruits and herbs turning up as the ingredients du jour in new alcoholic beverages. Have you noticed? Over the past few months we've seen green tea pop up in libations such as Suntory’s Zen green tea liqueur (a Japanese import distributed in this country by Skyy Spirits) and Charbay green tea vodka (from Northern California). Pomegranates? The

NEW

KHERMOUCH

rush is on. From Heaven Hill Distilleries, we've got Pama pomegranate liqueur, while David Sherman is bringing us 70proof Pearl Persephone pomegranate-flavored vodka. Meanwhile, on the beer side Anheuser-Busch has essayed a Pomegranate Raspberry flavor under its 9th Street Market moniker, as well as Blue Horizon and Wild Blue blueberry-flavored lagers. Don't know about pomegranates in malt beverages, but blueberry beers certainly are a tried-and-true tradition among the country's craft brewers, though the timing of the entry from A-B would not seem to be coincidental to the antioxidant craze. The sweet-tasting beers are definitely not for me, but I have tried a few of the other products and, I’ve got to admit, they're delicious. Pama, which is a 34proof blend of pom juice, tequila and

Beverage Spectrum | March 06

vodka, has got such a rich, complex taste that it works great just with a splash of club soda. Zen, an infusion of MarukyuKoyama green tea, lemongrass and other herbs, offers a subtle, floral taste that's set off with a bit of tonic water. But what's the message here? Are the beer and booze companies hoping consumers will believe that these products are a health elixir that will help drive away cancer and heart attacks? Though I've been involved in the beverage business long enough, even I'm not so cynical as to think that's what they've got in mind – nor that consumers could be dumb enough to purchase these brands on that basis. Certainly, the producers are not making even the merest hint of a health claim in any of their marketing materials. The pomegranate-liqueur folks at David Sherman, for example, prefer to cite the tale of Persephone, while the Pama folks talk of “mythology, seduction and one forbidden fruit.” Still, it's an intriguing example of how these days – fueled by the constant quest of cocktail mixologists for the next novelty – even the rarified precincts of health foods are providing the news that keeps alcoholic beverages motoring. But that's enough from me. I've got to get back to my Pama-and-soda regimen.

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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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order to design secondary placements and add sales. “If they look to see what people are drinking on-premise, retailers can take that back and make in-store ‘cocktail centers,’” Grindrod says. “If they look at top cocktails, you see the flavors people are drinking now – appletinis, cosmopolitans with cranberry and lime, and then you pull together endof-aisle displays that feature those flavors.” Fruit trends are fairly obvious in the CSD world, where last year both cola flavors and lemon-lime have shown declines, according to figures from Beverage Digest, which also indicated that sales of citrusflavored CSDs have increased slightly. That increase was largely driven by Mountain BY JEFFREY KLINEMAN Dew, and may be further augmented this f you’re a pomegranate, look out. The flavor industry wants year by the rollout of Coke’s Vault. Datamonitor has also fingered one of to squeeze you for taste, and consumers are falling in love the hottest flavor trends – blending – which with your perceived health benefits. is becoming more prominent across nearly Last year, Productscan Online noted fruitiness is next to Godliness. all drink categories. The combination of fruit 190 new food and beverage launches of “People are looking at what the bar- and vanilla or crème flavors remains a pomegranate flavored items; a look at Bev- tender’s doing on premise, and what’s strong current within CSD development, erage Spectrum’s new products offerings happening with juice flaas is demonstrated by finds that a new pomegranate-flavored vors off premise,” says new Dr Pepper and Dr launch came out nearly every month. Jeff Grindrod of Nova Pepper imitators. From teas to carbonated juices to straight Marketing Services, Also coming on strong juice and juice drinks, pomegranate was which recently conducted is coffee and a world of everywhere last year. coffee-flavored drinks, from a poll that measured con“Pomegranate seems to find its way sumer flavor preferences. the much-vaunted Cocainto everything,” said Joe Moran, the vice “Manufacturers are also Cola Blak to the ongoing president of sales for New Jersey-based doing research,” into tinkering of the StarAllen Flavors. “It would be safe to say we ways to adapt popular bucks/PepsiCo partnership. had a dozen new products with pome- fruit flavors. Strawberr y is also granate last year.” showing strength as a For retailers, flavor Retailers can do wonders with That’s not to say that the seedy globe is trends are pretty straight- secondary placements based flavoring. In addition to its the only flavor to start inspiring flavor cen- forward when it comes around popular flavors, featured position as the ters. Green and white tea are also huge, to primary placements, according to Jeff Grindrod of first non-coffee flavor in Nova Marketing Services. Moran said, “and in the coming year, as as they are largely going that partnership with a well, everything’s going to base itself around to be able to determine Strawberries and crème, health and perceived health benefits.” what’s hot through distributor and manu- Frappaccino. Strawberr y was also Another set of Productscan Online fig- facturer offerings. increasingly popular last year, becoming ures showed a 45 percent increase in fruit But Grindrod points out that retailers the fourth most frequent flavor style in and fruit-flavored products in the last three should watch what’s happening on beverages and beverage mixes, accordmonths of 2005; both off-premise and on, premise, and in the world of flavors, in ing to Datamonitor.

The seedy globe leads a charge of new flavors

Beverage Spectrum | March 06

3. What is your primary business type?

(check only one) A—❍ Convenience Store B—❍ Supermarket/Grocery C—❍ Club/Warehouse Store D—❍ Mass Merchandiser/Dollar E—❍ Drug Store F—❍ Liquor Store G—❍ Wine Store H—❍ Wholesaler/Distributor/Broker I —❍ Beverage Only/Beverage Specialty Store X—❍ Other (please describe):

4. What is your title? (check only one) A—❍ B—❍ C—❍ D—❍ E—❍ X—❍

Owner/President/CEO/COO/VP/Director Buyer Merchandising Manager Regional/District Manager Store Manager/Supervisor Other (please describe):

5. Do the locations that you are responsible for sell: (check all that apply) A—❍ Carbonated soft drinks B—❍ Non-carbonated soft drinks C—❍ Bottled water D—❍ Beer E—❍ Wine F—❍ Liquor

BS03O6

P R O M O T I O N

P A R A D E

An al dente Promo Luna di Luna’s award-winning blends and vibrantly colored bottles combine with Classico’s stylish pasta sauces for this second quarter “Spring Into Great Taste” promotion. Showcasing the cobalt-blue bottled Chardonnay/Pinot Grigio and Ferrari-red bottled Merlot/Cabernet featuring contemporary new label designs and Classico Tomato and Alfredo sauces, the POS highlights the key ingredients of this campaign. Visually appealing and developed to maximize consumer attention, the case card and bottle necker present the products with a delectable image of a pasta dish and a wine pour to whet the appetite. Along with a recipe for Shrimp Tomato Alfredo pasta, the promotion also offers a coupon and, in select markets, a mail-in rebate on the bottle necker. Consumers can save $1.50 on a purchase of Luna di Luna wines through the mail-in rebate and save an additional $1.00 with a coupon on the purchase of any two Classico pasta sauces. The promotion begins April 1, 2006 and runs through the spring.

WEIZEN UP!

P R O M O T I O N

Milwaukee’s Best Light Goes All In

Coke suggests you Live It!

Beginning in January, Milwaukee’s Best Light began offering legal drinking age consumers the chance to be a part of the 2006 World Series of Poker through the “Best Me” promotion. Consumers taking part in the Milwaukee’s Best Light promotion will be directed to the brand’s website (www.milbestlight.com) to participate in an online Texas Hold ‘em tournament and compete for seats at the World Series of Poker. Ultimately, six grand prize winners will win trips to the 2006 World Series of Poker. Through March 30, 2006

health and fitness initiative designed to help students build healthy lifestyles by encouraging

Starting this April, Paulaner takes the German term for wheat, “Weizen,” and challenges American consumers to “Weizen-Up!” when it comes to a selecting a worldly alternative

Smirnoff Goes Recruiting

brew. “How much malt can 2 soccer fields produce?” is just

The makers of Smirnoff Vodka have come up

one of the many entertaining “Weizen-Up!” trivia questions that

with the perfect position for the enthusiastic

can be asked when using a Paulaner Weizensphere. A

drinks guru – the Smirnoff Cocktail

Weizensphere is a promotional piece; a small, stainless steel

Consultant, the definitive expert on all things

tag about the size of a quarter, affixed to a piece of memory wire

vodka drinks-related.

that easily snaps onto custom designed Paulaner glassware

Smirnoff officially kicked off its nationwide

imported from Europe. Every Weizensphere has a Paulaner logo

search for the position in February. The newly

on the front and one of 3 different “Words of Weizdom” phrases

hired Cocktail Consultant will spend their time

on the back. Three different Weizensphere coasters can be

researching cocktail culture across the

used as trivia boards; with the flick of a finger, the Weizensphere lands on a variety of

country and providing twice-yearly Smirnoff

interactive questions or interesting facts – facilitating social conversation. They will also be

Cocktail Trend Reports. They will receive a

available as danglers on-premise.

salary and expense budget of $100,000 to

Miller Cinco de Mayo “Live for More Taste! Live for the Fiesta!” That’s the enthusiastic call to action of Cinco de Mayo 2006, a promotion that invites your customers to embrace Hispanic heritage across America, regardless of their nationality. POS material and innovative display enhancers featuring Hispanic culture cues will connect the spirit of Cinco de Mayo with the great taste and flavor of Miller Lite and Miller Genuine Draft. Cinco de Mayo is a time to celebrate and this promotion shows your customers that no celebration is complete without great-tasting Miller Lite and Miller Genuine Draft! April 1, 2006 to May 31, 2006

Beverage Spectrum | March 06

identify the latest and greatest in the world of drinks for a one-year term. Criteria for the Smirnoff Cocktail Consultant includes knowledge of mixology and the culinary arts and a general passion for entertaining and all things epicurean. Duties for the position will include travel to major cities to identify new trends in cocktail making and consumption, in addition to the creation of two Smirnoff Cocktail Trend Reports. Applicants must be 25 years or older.

Applications will be accepted through April 1, 2006.

P A R A D E

The Coca-Cola Company and its major bottlers are sponsoring the 2006 version of Live It!, a physical activity as part of their daily lives and providing nutrition information in schools. Developed in collaboration with The President’s Challenge, a program of The President’s Council on Physical Fitness and Sports, the School Nutrition Association and the National Association for Sport & Physical Education, the Live It! campaign features inspirational figures, including five-time Olympic gold medalist speedskater, Bonnie Blair, to promote healthy eating and physical activity. Schools will be given “Live It!” posters for the cafeteria and school, featuring inspirational figures endorsing proper nutrition, physical activity and balanced lifestyles. Students will receive a personal Stepometer, a student activity guide to log their steps, and activity cards that suggest fun ways to achieve 10,000 steps daily. Students will also receive activity cards

Beer and Flicks!

that provide food tips for each day, helping them choose their meals and snacks according to

St. Pauli Girl Beer is partnering with Netflix, the world’s largest online movie rental service, to offer consumers the opportunity to “Enjoy a Movie With Your Favorite Girl” during the key Spring selling season. During March and April consumers can enter to win Netflix and St. Pauli Girl prizes by visiting www.stpauligirl.com (No purchase necessary. Void where prohibited). Grand prize is a home theater system and 1-year Netflix membership. Complete sweepstakes details will also be provided on tear pads at St. Pauli Girl displays. St. Pauli Girl will run a coupon program promoting a $2.00 IRC or $5.00 MIR off the combined purchase of any in-store popcorn brand ($5.00 min. popcorn purchase) AND one St. Pauli Girl 12-pack or two St. Pauli Girl 6-packs. In California, all St. Pauli Girl Beer displays will promote a special Netflix membership consumer purchase offer.

the new Dietary Guidelines.

Pepsi gives away cars! Consumers who twist the cap off a Pepsi product may be unlocking the door to a brand new fully-loaded celebrity edition 2007 Chevy Tahoe customized by DUB Magazine. Pepsi is giving away one vehicle each day during the ten-week Free Ride sweepstakes. Plus, Pepsi will help consumers at the gas pump, awarding $20 cash for gas prizes, one for every minute of the sweepstakes. That’s 70 cars in 70 days and millions in cash for gas. Free Ride is a unique promotion that brings together the biggest celebrities in racing and car culture with the hottest trend on the road – car customization. Four-time Nextel Cup Champion and Pepsi driver Jeff Gordon, new Mountain Dew driver Brian Vickers, and Xzibit, host of MTV’s Pimp My Ride, have each tricked out their own version of the all-new 2007 Chevy Tahoe. Each Pepsi Free Ride Tahoe winner will have the opportunity to choose from among the three customized Tahoes.

Cook with the Beer Association The National Beer Wholesalers Association (NBWA) continues to fight for its share of the consumer’s stomach by highlighting beer’s role as a recipe ingredient. For years NBWA has distributed recipes featuring beer with suggested pairings to food editors and the general public. Now the Association is turning the tables and asking consumers for their favorite beer recipes. NBWA has launched its inaugural “Cooking with Beer Challenge” to find the best recipe in the country featuring brew. The lucky winner will receive a seven day trip to Cancun, Mexico to

soak up the sun and enjoy America’s beverage! Recipes entered by July 31, 2006 will be judged by a panel of food experts to determine which top ten recipe creators will receive an expense-paid trip to participate in the final cook-off in New York City this fall. Beer is the only required ingredient in the recipes, which may be for any type of dish: appetizers, soups, entrees or baked goods. The more creative use of beer as an ingredient the better. Complete rules may be found on the NBWA Web site, www.nbwa.org. March 06 | Beverage Spectrum

DRINKING IN DIXIE BIRMINGHAM IS REBUILDING ITS DOWNTOWN…CAN BAILEY’S CORNER KEEP UP?

It’s hard to find Steve Bailey’s c-store in downtown Birmingham, Ala. unless you know to look for the Conoco selling the pigs’ lips. But that’s where Bailey’s been making a stand of it for 30 years, in a small c-store with gas in a slowly rebounding urban neighborhood. Birmingham’s a city slightly smaller than Atlanta, but it hasn’t been energized by the bubble economy that hit its neighbor to the east a decade ago. “We had a lot of flight from downtown, which left a lot of empty buildings,” he says. “However, our city leaders have

finally decided to revitalize the city.” Surveying the encroaching loft developments, downtown workers and students from the University of Alabama-Birmingham, Bailey says of his clientele, “Our customer mix is widely ranged. Some are filthy rich and some are just filthy.” It’s a tiny store, but one Bailey’s filled with his own uniquely Southern character. Bailey’s place is tiny, and he’s looking for an outside opinion on maximizing the space; he’s only able to show seven cooler doors, and his warm selection is also very small. Since it’s the South, CSDs and beer – particularly premium and sub-premium

brands – are big-time in his store, with about 35–40 percent of his total revenues coming from beverages, and an even split between sodas and beer. “We carry as complete a line of products as possible to satisfy our customer mix,” Bailey says. “I would just like an outside opinion concerning my mix. Sometimes you see something so much that you either don’t see it or you just get stale.” One thing that Bailey never lets get stale is his sense of humor – he’s got pig’s lips and Tabasco sauce available at the counter, Fix my Mix guys, and he’s promised us a pack as soon as we get to work. “See,” he said. “We aren’t as backward in Alabama as you thought.”

Are your shelf sets giving you headaches? Are your shelf sets giving you headaches? Are you having trouble deciding to stock your cooler with Red Bull or Rolling Rock, Honest Tea or Tequiza, Snapple or Sprite? Just drop us a line and you could have the next store featured in Fix My Mix! Just call (617) 715-9678 or email jklineman@bevnet.com and explain what part of your mix could use some fixin’! We’ll come take photos of your store, look at the demographics, and talk about your goals. Then, Beverage Spectrum’s hand-picked industry experts will go to work, offering you and your store the best kind of makeover there is: a free one!

Beverage Spectrum | March 06

18 % LARGER BASKETS

Steve: It sounds like you are already making good decisions both from a real estate and store mix perspective. Despite the upturn in your local economy, it appears that you still have a fair share of lower income customers. To address some of their needs, you may want to offer single serve beers, either 16-oz. or 24-oz., at a hot price point. Those single serves should be on ice in a barrel cooler by the register or front door. And it will also appeal to the 21+ college crowd frequenting your store. My biggest concern is that I did not notice any advertising or promotions outside your store to increase traffic. It seems like you rely either on gasoline-buying customers to come in, or your im Jacobi is a Senior Brand regulars, but you might be missManager in charge of five key brands at the Pabst Brewing out on the impulse shoppers ing Company. He has worked in walking or driving by if you don’t the beverage industry for 12 give them the chance to know years, starting as a sales route you’re there. driver. Tim was also a critical You may also want to think member of the team that manabout a shelf reset and group like aged the integration of Seagram’s into Diageo as well as items together, maybe even do it the subsequent distributor based on occasion or day part. For alignment process. example, based on your store data, place the sandwiches next to whatever beverages your customers should buy with them, increasing your ring. Walk through your store like a consumer, not an owner, you’ll see what placements and locations make sense. I also can’t imagine that Michelob Ultra is a big seller for you, given your shopper profiles. With the ever-growing Hispanic population in your market, you may also want to add elements that this consumer group craves and cherishes, such as Coca-Cola in a glass bottle (330ml), cream soda, and more fruit flavors. One facing each should be sufficient initially. On a non-beverage related note, have you thought about selling phone cards, money orders and/or lottery tickets? Regardless, hold on to that real estate, fix your mix, send me some pig lips and watch your profits fly.

Beverage Spectrum | March 06

Steve, with a store catering to both African Americans and Caucasians, white collar and blue collar, college students and downtown workers, you have to offer an assortment that takes advantage of the needs of all these people. That’s a challenging proposition, but one that could offer tremendous opportunities. So let’s talk about beer. Currently, you don’t offer any assortment in the Import / Specialty segment, which contributes roughly 10 percent of total sales in convenience stores and close to 15 percent of category profitability – and it’s the fastest growing homas L. Fox is a nationally recognized leader in Catesegment. Even if your store doesn’t offer the potential of an “average” gory Management and National outlet, you can certainly net five per- Accounts within the beverage industry. As a Partner with CM cent of your sales in this important Profit Group, Tom works with segment. By just carrying Corona suppliers and distributors to and Heineken you’ll be able to trade increase their market share via up more shoppers than you think. Category Management techEvery unit you sell will contribute 30 niques to create “win-win” to 40 percent more profit than a relationships with their key account customers. domestic. That’s worth the space investment. Start small: every cooler has a few items that are not producing many sales. Steve, the average c-store nets in the vicinity of 20 percent of it beer category revenue from large single serve cans and bottles. In your store, I didn’t notice any shelves, and only saw one ice bin, dedicated to singles. You can benefit from selling singles because of their high margin: normally, it’s over 30 percent gross profit margin – much higher profit than 12 or 18 packs. My recommendations won’t be difficult to execute, either. Similar to the Import recommendation, which won’t even require one shelf change, start by dedicating one shelf to singles. Carry the top 5 or 6 items in the segment, and offer at least one Import single. One of your beer distributors can help you by analyzing your data and identifying which items are your slowest movers. That way we keep all of your productive multi-packs and add items that should have a significant impact on the bottom line. Don’t thank me, Steve, it’s my job! But I COULD be in Alabama in the fall, if you scarf up a couple of tickets to the Alabama vs. Auburn football game. No, I won’t make you tell which side you’re on – I’d hate to see you lose half your customers!

WITH SAMUEL ADAMS.

Mass Domestic basket 18% smaller

Import basket 15% smaller

YOUR SHOPPING CARTS ARE ABOUT TO GROW. Facts prove customers with Samuel Adams® in their carts spend more in your store1. Make sure you are getting these customers to your store by focusing on ad mix, shelf sets, in and out of section displays and cross-promotions with other high-quality and high-margin items. Call 1-800-330-4112 to speak with a Samuel Adams® representative and see how we can grow your profits.

Take pride in your beer.

™

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Creating Brands People Love For hundreds of years,

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Cadbury Schweppes has delivered refreshing fun to people around the world. We are one of the largest producers of flavors,

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The Introduction of Dr Pepper

juices and teas including Dr Pepper, Snapple, 7 UP, Mottâ&#x20AC;&#x2122;s Apple Juice and other well-known beverages. From our home in Dallas to our operations throughout

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the

Canada and Mexico, we are creating the brands people love.

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U.S.,

The Introduction of Schweppes