Beverage Spectrum May-June 2007

M AY – J U N E 2 0 0 7

gy r e n re E o c d Har E L ALSO THIS ISSUE: AND H O T HOW WANTED: IMPORTED LIGHT BEER

FMI REVIEW

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MAY – JUNE 2007

vol.

5 // no. 4

32

Cover Story

32 // TOO EXTREME?

Features

It’s hard to handle hardcore energy.

48

48 // WANTED: LIGHT IMPORTS For higher margins, better badge value. But is there enough room in the cooler?

Departments

56 // FMI SHOW 2007 Photos from Sweet Home, Chicago

10 // BEVSCAPE Got Lawsuits?

14 // CHANNEL CHECK Coke grows its diet brands.

Columns

18 // NEW PRODUCTS

6 // THE FIRST DROP The first big deal, or the only one?

Beware the Captain! He’s got a new malternative!

8 // PUBLISHER’S TOAST What Really Counts

52 // PROMOTION PARADE The Return of Frank and Ed!

28 // GERRY’S INSIGHTS Distribution strategies after the Glaceau deal

Cover Photography by Mike Ritter www.ritterbin.com

MAY – JUNE

2007

\\ BEVERAGE SPECTRUM

5

THE FIRST DROP

Big Deals:

Is the First Wave the Only One? beverage executive stopped by our office recently to knock around some ideas and steal free out of our cooler. He couldn’t have been more optimistic about the way the year is going at this, its approximate mid-point.

What had him so fired up? In a word, activity.

Big companies have opened their wallets to recognize innovation in the best way – financially. Smaller companies are starting to find their way up the funding and distribution ladders as decision makers at the higher levels notice that non-carbonated and functional products are continuing to attract new consumers. Independent distributors – some of whom are flush with buyout cash – are going to be looking for a new line to replace the loss of Vitaminwater. All that creates the anticipation of even more activity.

There’s a lot of jostling for position – new brands like FRS are trying to work as hybrids of established categories, water beverages like Function Drinks seem to be the 2.0 version of Vitaminwater, and teas and coffees continue to gain momentum. It’s been at least a week since I was forced to try the hot new flavor “pomegranate.” Once-odd ingredients are becoming mainstream – perhaps a bit too

6

mainstream, as this issue has a New Products listing for an açai-flavored vodka.

Even more interesting, a lot of talent is disseminating to other companies – the inevitable departures that accompany brand purchases result in sales and marketing people moving on to help energize other products.

Yes, an infusion of cash seems to create an air of excitement around an industry. But it’s sometimes hard to tell, once the money starts flowing, whether you’re in a gathering wave or one that’s just peaked.

With Coke’s purchase of Glaceau, there have to be questions about whether there’s going to be room for a continued rush of functional waters, for example. There are still scads of new energy drinks being introduced, but at the same time, there has been a real consolidation of the leadership pack. There haven’t been exciting new CSDs in a long time, although Coke Zero continues to keep people talking. One has to wonder, now that Vitaminwater has a route to ubiquity, how many competing products consumers will want to try, no matter how innovative they might be.

Breakout hits in the new beverage world are hard to come by – for every Glaceau or Arizona or Gatorade, there are plenty of small products

BEVERAGE SPECTRUM // MAY – JUNE

2007

that might be just as tasty or functional but just don’t make it for a variety of reasons. There’s always a pack of beverages chasing consumers, but retailers need to be careful. They need to think about this as they face an onslaught of products that will be the “next Vitaminwater” just as they’re finishing sorting through the “next Red Bulls” of the world.

Now that Glaceau has become part of the establishment, the questions retailers have to ask are these: How many more major game changers are out there? Is this the next link in the chain, or the spike?

©2007 Anheuser-Busch, Inc., Michelob® Lager (Beer in TX) and Michelob Light® Beer, St. Louis, MO

PUBLISHER’S TOAST PUBLISHER Barry J. Nathanson bnathanson@bevnet.com EDITORIAL DIRECTOR John Craven jcraven@bevnet.com EDITOR Jeffrey Klineman jklineman@bevnet.com ASSOCIATE PUBLISHER John McKenna jmckenna@bevnet.com ART DIRECTOR Matthew Kennedy mkennedy@bevnet.com

What Really Counts ew Year’s Day is the traditional start of the year for most people. For beverage folks, it seems to come with the start of the Spring season. Being a parent of two kids and a husband of a teacher, my cycle tends to run with the school year.

September starts a year of promise and expectations, followed by hard work, increasing knowledge and, hopefully, great achievement.

For me, the end of this school year has been an especially poignant one. So allow me to deviate from my usual beverage –centric writing to share some personal thoughts.

Last week I was up in Cambridge to partake in the joy of my daughter’s graduation from Harvard. It will always be one of the highlights of my life. To all of us who use work as the measure of one’s success, keep a proper perspective as to what really counts. If you can incorporate business into the mix, then you are ahead of the game. But make sure you have a proper balance.

The weekend before that, I went to my 40th high school reunion. It was an extraordinary event bringing together over 185 classmates out of a class of 400. Words cannot express the happiness and excitement of seeing so many people who had a major impact in your life. Barriers were broken down and years dissipated right away.

Some had happy tales to tell, and others shared in some hard and unfulfilled lives. Everyone was real. If we could conduct ourselves in business with the openness and honesty displayed with true friends, we’d all be better off.

Within the framework of the reunion weekend, my son and his teammates won the New York City high school tennis championship.

Watching their celebration, and joy made me realize why we all try to achieve success. Risk and reward go hand in hand. You must take a chance to realize your goals.

Last, I was recently diagnosed with prostate cancer. Luckily, it was caught very early and I’m assured that there will be 100 percent success in treatment and recovery. Health is a most precious blessing we are given. Never take it for granted.

The reason I share this is as a precaution to all of you to be proactive in taking care of yourselves. There is no excuse not to be tested for colon, prostate, breast and a myriad of other illnesses that are easily treatable if caught early.

On both personal and organizational levels, make sure you make the time and effort to ensure your health, your family’s health, and the health of your employees. Family, friends and health are all that count, and my recent health troubles have helped me realize that even more.

Count on it.

PRODUCTION MANAGER Adam Stern astern@bevnet.com BUSINESS MANAGER John Schinn jschinn@bevnet.com SUBSCRIPTION INQUIRIES Adam Stern astern@bevnet.com 617-715-9679 ARTICLE REPRINTS (500 copies or more) FosteReprints Kelly Ganz kganz-blieden@fostereprints.com 800-382-0808 x142 BEVERAGE SPECTRUM PUBLISHING INC. CHAIRMAN John F. (Jack) Craven jack@bevnet.com PRESIDENT John Craven jcraven@bevnet.com EDITORIAL 1 Mifflin Place, Suite 300 Cambridge, MA 02138 ph. 617-715-9670 fax 617-715-9671 ADVERTISING 1123 Broadway, Suite 301 New York, NY 10010 ph. 212-647-0501 fax 212-647-0565

Barry J. Nathanson, Publisher BPA Membership Applied for April 2007 Beverage Spectrum is published 8 times a year by Beverage Spectrum Publishing, Inc.

8

BEVERAGE SPECTRUM // MAY – JUNE

2007

Beverage Spectrum Publishing, Inc. is a wholly owned subsidiary of BevNET.com, Inc., 1 Mifflin Place, Suite 300, Cambridge, MA 02138

BEVSCAPE

WHAT’S HAPPENING ACROSS BEVERAGES

COURTROOM SCOREBOARD DEALBOARD The Big One Edition — Coca-Cola Co. Buys Glaceau The Cash: $4.1 billion in cash and Coke stock for a company whose fast-growing Vitaminwater product line is expected to solidify the soda giant’s footing in non-carbs for years to come, as well as millions more to buy out the contracts of many distributors (yes, the ones Glaceau founder J. Darius Bikoff referred to those distributors last year as the – ulp! – ‘Glaceau network’).

The Objective: As noted above, Coke continues to try to get its non-carb offerings in line with its wide-ranging but fading CSD lines.

Glaceau finally stops flirting and cashes in on the brand’s momentum.

The Analysis: Should be a slam-dunk for Coke when it comes to putting an end to chattering about how company is weak in non-carbs, and could be a huge international growth engine, as well, the kind of international brand that Gatorade has become. Buying out distributors is expensive, but should stop Coke bottling network and CCE from continuing to scream for exciting brands. Biggest buyout of individual beverage brand on record, so Coke can’t screw it up – can it? If this thing starts to smell of the Snapple buyout in a few years, heads will roll.

MAYBE THIS EXPLAINS THE STOMACH TROUBLE...

No one knows whether President Bush is a Coke or a Pepsi kind of guy, but we know two things about his visit to Germany for the recent Group of Eight summit.

1. He got sick to his stomach.

2. Neither of those familiar colas were around to soothe his presidential tummy.

What there was instead was Germany’s own Afri Cola, a small (12 million bottles), local CSD that is bottled near the summit’s locale.

According to caterer Jarste Weuffen, the summit wanted a local brand. We hope, for their sake, it wasn’t the cause of the President’s mid-summit retreat from view. We also hope it wasn’t the schnitzel.

10

BEVERAGE SPECTRUM // MAY – JUNE

2007

Moving Forward: a lawsuit that alleges that products including Wild Cherry Diet Pepsi were sold with ingredients that can form benzene – which has been linked to some forms of cancer – has been allowed to progress after a federal judge in Kansas denied a motion to dismiss the suit in late May. The Coca-Cola Co. has already settled the case, but PepsiCo, Sunny Delight and Rockstar are still part of the suit.

Back in Court: the suit between artificial sweetener manufacturers Merisant, which makes Equal and McNeil Nutritionals, which makes and sells Splenda,

was back in court mere days after a settlement had been reached in the case. McNeil was apparently upset that Merisant ran an advertisement in USA Today trumpeting a jury’s finding a guilty verdict on false advertising claims in the case against Splenda. The settlement had been reached before damages were awarded, but according to McNeil, the ads violated the agreement.

GOT COPYRIGHT? The California Milk Processor Board – otherwise known as the friendly folks behind “Got Milk” – is not happy with its hippie brethren.

Recently, the organization’s Executive Director, Steve James, was Web surfing when he saw a photo captioned “The loneliness of the hemp milk seller” featured in a wrap-up of last year’s Natural Foods Expo East.

James did a double-take when he saw that the lonely hemp milk seller in question was wearing a shirt bearing the logo “Got (HEMP) Milk?” – a play on the group’s omnipresent slogan, and began sending out cease-anddesist letters to all the hemp milk companies he could find.

“It’s direct copyright infringement,” James said. “We’re very interested in preventing that.”

Waitaminute. Isn’t the word “Got” followed by some other funny or ironic word (i.e. Got Drugs? Got Beer? Got Sand) pretty much the most widespread joke on the planet? It is, of course, but the company takes exception when another food or beverage company tries to horn in on the action.

“They’re selling hemp milk in this case,” he said of the company, which was later revealed to be Living Harvest. “They would still be trying to produce a beverage.”

That’s not the case with most of the other uses of the phrase, he added.

“I really can’t control many of the other uses,” James said. “It’s the English language, after all. I mean, I’m looking at two requests for ‘Got Milf ’ right now. There’s not a lot we could do about those.”

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EXECUTIVE MOVES

BEVSCAPE

• The Boston Beer Company has announced the promotion of its National Sales Manager, John Geist, to the newly created position of Vice President of Sales.

JONES GAINS GROUND Peter van Stolk grew up in Canada, but apparently the Jones Soda founder has got a big yen for four-down football anyway.

Jones has signed a deal to be the official soft drink supplier at Seattle’s Qwest Field for the next five years, and will be featured at fountains and in cans and bottles during football games, concerts, and other events at its home city arena.

It’s not known how much Jones paid for the agreement, but a key play in the company’s sponsorship drive was a patent the company has that will allow them to put a Seahawks lineup on the soda bottles, as well as those of fans. Photographers will roam the stadium during the games, and fans will be able to buy customized 12-packs through the company’s Web site.

Jones recently made a commitment to use only pure cane sugar in its beverages, which will extend to the stadium.

• The Penta Water Company announced the appointment of Dennis F. O’Brien to the company’s leadership team as chief executive officer. Mr. O’Brien most recently served as president and chief operating officer with ConAgra Foods. • Function Drinks hired Bob Miller, former executive vice president of sales for Fuze Beverage, as executive vice president of sales and head of strategic planning. • Celsius hired Erin Heit for the position of Marketing Vice President. She had previously been marketing manager at Fuze Beverages. • Welch's appointed Chris Heye as VP of Marketing and David Engelkemeyer as VP of Operations & Technology. • Mix1 announced the hiring of Robert Pinkerton as Chief Financial Officer and Chief Operating Officer. • New Sun Nutrition has promoted Maigread Eichten, the company’s Chief Operating Officer, to President and Chief Executive Officer. Dick Lamb, the company’s founding Chief Executive Officer and a major shareholder in the company, will serve as Non-Executive Chairman of the Board of Directors. • Jones Soda Co. named former Izze Beverage Co. executive Peter Burns as senior executive vice president of sales and marketing.

Peter Van Stolk and some new, burly buddies.

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BEVERAGE BUSINESS INSIGHTS s 0UBLISHED TIMES PER YEAR ABOUT TWICE A WEEK s )NSTANT EXCLUSIVE NEWS AND ANALYSIS ON THE MOST VIBRANT SEGMENTS OF THE BEVERAGE INDUSTRY INCLUDING q %NERGY $RINKS q %NHANCED 7ATERS q 4EAS #OFFEES q &UNCTIONAL $RINKS q (IGH %ND "OTTLED 7ATERS s .O HYPE AND REWRITTEN PRESS RELEASES

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BEVERAGE SPECTRUM // MAY – JUNE

2007

Channel Check

may – june 2007

CSDs

SPOTLIGHT CATEGORY

Diet CSDs 52 Weeks ending 5/19/2007 They’ll always have diets....The KO portfolio of diet drinks might be the strongest advantage it’s got in the Cola Wars, and the addition of Coke Zero seems to have shored that up. With Diet Coke Plus looking good early on, by next year, Coke could be leading even more.

Dollar Sales

Dollar Share

Diet Coke

$1,203,008,922

23.8%

Diet Pepsi

$805,565,035

15.9%

Caffeine Free Diet Coke

$342,263,634

6.8%

Diet Dr. Pepper

$281,307,437

5.6%

Diet Mountain Dew

$259,311,699

5.1%

Caffeine Free Diet Pepsi

$224,475,472

4.4%

Sprite Zero

$150,843,601

3.0%

Coca-Cola Zero

$145,159,410

2.9%

Diet 7-Up

$109,808,868

2.2%

Diet Fresca

$98,942,758

2.0%

Diet A&W

$93,470,828

1.8%

Diet Rite Pure Zero

$76,379,071

1.5%

Diet Coke with Lime

$69,726,641

1.4%

Diet Sunkist

$67,300,018

1.3%

Diet Cherry Coke

$49,531,671

1.0%

Diet Canada Dry

$45,918,221

0.9%

Pepsi One

$40,432,337

0.8%

Diet Cherry Vanilla Dr. Pepper

$34,578,212

0.7%

Diet Sierra Mist

$17,459,582

0.3%

Waist Watcher

$11,017,114

0.2%

52 Weeks through 5/19/07 SOURCE: AC Nielsen/Citigroup Total U.S. food/drug/mass

TOPLINE CATEGORY

VOLUME

52 Weeks ending 5/20/2007

CSD’s

ENERGY DRINKS

$13,584,500,000 -2.0%

$728,022,000 35.6%

BOTTLED WATER

SPORTS DRINKS

$3,849,570,000 16.9%

$1,641,871,000 6.3%

BEER

TEA/COFFEE

$9,167,884,288 2.5%

$1,341,084,000 27.5

BOTTLED JUICES $4,283,626,000 4.3%

14

BEVERAGE SPECTRUM // MAY – JUNE

2007

SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

Channel Check

may – june 2007

REGULAR CSDs

Dollar Sales

Dollar Share

Coca-Cola Classic

1,911,113,967

21.0%

Pepsi

1,527,019,830

16.7%

Mountain Dew

745,997,359

8.2%

Dr. Pepper

598,865,633

6.6%

Sprite

569,758,743

6.2%

7-Up

224,594,414

2.5%

Sunkist

188,574,025

2.1%

Ritz

186,151,229

2.0%

Canada Dry

164,618,649

1.8%

A&W

161,481,510

1.8%

Heading Up: Mountain Dew

52 Weeks through 5/19/07

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

RTD COFFE/CAPPUCCINO

Dollar Sales

Change vs. year earlier

Frappuccino

$183,085,500

6.2%

Doubleshot

$27,340,100

-1.6%

Starbucks

$11,298,480

5,582.5

Bolthouse

$10,340,570

635.1%

Doubleshot Light

$7,060,123

1.444.8%

Godiva Belgian Blends

$493,432

N/A

Cinnabon

$363,612

N/A

Caffe D Vita

$353,279

58.8%

Hillside

$358,157

125.3%

Havana

$276,739

-26.7%

Heading Up: Doubleshot Light

52 Weeks through 5/20/07 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

DOMESTIC BEER

Dollar Sales

Change vs. year earlier

Bud Light

$1,421,916,800

3.1%

Budweiser

$760,953,408

-5.4%

Miller Lite

$727,616,256

-0.1%

Coors Light

$633,033,536

2.6%

Miller Genuine Draft

$170,896,928

-6.9%

Budweiser Select

$118,069,848

-16.0%

Coors

$62,024,256

-8.9%

Icehouse

$58,397,072

-1.6%

Yuengling Lager

$37,809,616

16.6%

Bud Ice

$23,844,368

-4.1%

52 Weeks through 5/20/07 Heading Up:Yuengling Lager SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

16

BEVERAGE SPECTRUM // MAY – JUNE

2007

RTD TEA

Dollar Sales

Change vs. year earlier

AriZona

$282,476,400

15.5%

Lipton

$221,921,600

146.9%

Snapple

$126,145,000

21.2%

Lipton Brisk

$87,889,870

7.6%

Diet Snapple

$85,600,960

-4.8%

Nestea

$61,307,530

275.6%

Lipton Iced Tea

$60,959,570

31.7%

Private Label

$32,653,170

7.9%

Nestea Enviga

$16,657,580

N/A

Nestea Diet

$14,126,890

184,653.6%

Heading Up: Nestea

52 Weeks through 5/20/07 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

SPORTS DRINKS

Dollar Sales

Change vs. year earlier

Gatorade

$684,193,900

-2.6%

Powerade

$211,228,300

7.3%

Gatorade Frost

$144,344,000

1.4%

Gatorade Rain

$137,918,600

249.6%

Gatorade All Stars

$118,951,300

19.8%

Gatorade Fierce

$94,361,780

-11.7%

Gatorade X Factor

$92,338,850

-8.6%

Gatorade A.M.

$21,330,730

N/A

Powerade Option

$17,886,990

62.0%

Gatorade Xtremo

$15,969,610

-28.5%

Heading Up: Gatorade A.M.

52 Weeks through 5/20/07 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

CONVENIENCE/PET STILL WATER

Dollar Sales

Change vs. year earlier

Private Label

$569,050,700

21.0%

Aquafina

$523,757,100

12.7%

Dasani

$458,441,900

19.3%

Poland Spring

$267,001,100

18.3%

Glaceau Vitaminwater

$226,389,400

118.1%

Propel

$194,665,200

-2.4%

Arrowhead

$181,921,700

12.6%

Deer Park

$148,766,700

20.5%

Crystal Geyser

$108,070,300

31.9%

Nestle Pure Life

$103,321,300

55.1%

Heading Up: Glaceau Vitaminwater

52 Weeks through 5/20/07 SOURCE: Information Resources Inc.Total food/drug/mass excluding Wal-Mart

MAY – JUNE

2007

\\ BEVERAGE SPECTRUM

17

NEW PRODUCTS contains 50 percent juice, water, sea salt, and nothing artificial. Available in grape, lemon, tropical, orange and organic lemon, Recharge is updating its packaging and label design this spring. The new packaging includes a shift to #1 recyclable plastic bottles, allowing the product to be more convenient for on-the-go activities. Recharge is also available in 16 oz. recyclable plastic bottles.

The suggested retail price is $1.29 - $1.49 for the 16 oz. size and $1.99 - $2.49 for the 32 oz. bottle. For more information, please call (303) 449-2108.

CSD’s From PepsiCo comes Pepsi Summer Mix, a temporary line extension that mixes the taste of Pepsi with tropical fruit flavor. Pepsi Summer Mix is available now through the end of July in 20 oz. bottles, 2 L bottles and 12-packs of 12 oz. cans. Pepsi Summer Mix is line-priced with other Pepsi CSDs. For more information call (914) 253-2950.

Celsius Holdings, Inc. has unveiled its Celsius 12 oz. can featuring a sleek design with the same eye-catching graphics found on its award-winning bottle. Like its bottle counterpart, Celsius cans will be available individually and also sold in convenient 4-packs. Celsius is available in five flavors, including Orange, Cola, Lemon-Lime, Wild Berry and Ginger Ale. The manufacturer’s suggested retail price for a single 12 oz. bottle or can of Celsius in convenience stores is $1.99, with Celsius 4-packs selling for a suggested price of $6.99 in the grocery channel. For more information about Celsius, call (561) 637-5750.

Functional Waters Dasani is launching Dasani Plus vitaminenhanced flavored water beverages this month. The line, with zero calories per serving, comes in three varieties: Refresh + Revive (Kiwi Strawberry Flavor); Cleanse + Restore (Pomegranate Blackberry) and Defend + Protect (Orange Tangerine) DASANI Plus will be packaged in 20 oz. PET bottles with a clear shrink-wrap label. Available in all retail channels, this product and will be supported throughout 2007 with a fully-integrated marketing program, including consumer sampling programs, Web/interactive communications, radio, point-of-purchase displays and public relations. For more information call Coca-Cola at (919) 277-1191.

From the makers of Red Bull comes Carpe Diem Botanic Water, containing the power of carefully selected plant extracts combined with spring water and the sweetness of fruit with no added sugar, flavors, colorings or preservatives. This product is available in three different varieties: Relaxing, Vitalizing and Harmonizing. For more information call (310) 460-5964.

Clearly Canadian Canadian Beverage Corp. has introduced a new line-up of non-carbonated enhanced waters. Available in dailyENERGY, dailyHYDRATION and dailyVITAMIN, these new premium refreshments span several different functional beverage categories delivering various vitamins, minerals and

Energy Drinks BYB Brands is releasing a line of sensation energy drinks, including Frigid Dog, a throatcooling thirst quencher; Scalded Dog a sizzling sensation beverage; and Strait Dog, a mainstream energy drink with teeth. Each of the Dogs will feature ingredients found in traditional energy drinks – taurine, guarana, ginseng, L-Carnitine, niacin, B-Vitamins and caffeine – but Scalded Dog and Frigid Dog have special sensation elements which create a warming or cooling sensation when consumed. The Dogs will be available in 16 oz. cans in convenience stores in 10 states throughout the Southeast. For more information call BYB Brands at (704) 557-4551.

Sports Drinks The R.W. Knudsen Family has re-launched Recharge. An all-natural beverage, Recharge

18

BEVERAGE SPECTRUM // MAY – JUNE

2007

nutrients. Each 20 oz. bottle contains low- to zero-calorie, health-conscious offerings with no preservatives or artificial sweeteners. For more information call (800) 735-7180.

Kraft Foods is re-launching Fruit2O as a new vitamin-enhanced line of water beverages formulated with a unique bundle of vitamins, zero calories and zero grams of carbohydrates per serving. The four new varieties include Energy, Hydration, Immunity and Relax. New Fruit2O comes in a clear bottle with a silver label and will be available nationwide at select drug, convenience and grocery stores, as well as club and mass merchandise outlets. It is available in 16 oz.

PET singles, 4-packs, and a 24-count variety pack at select club stores. Suggested retail prices are $0.99-$1.29, $2.99, and $12.99, respectively. For more information, call (914) 425-6979.

NEW DRINK REVIEWS Java Monster Sambazon Rio Energy Swing Juice Havoc Energy Drink Guru Energy Drink Impulse Extreme Wired Energy Drink TeaZazz Sparkling Tea Havana Cola Function Drinks Rockstar Juiced Pomegranate Bawls Guarana Cherry Crayons Nui Kid Water

Malt Beverages

Halftime Energy Drink Whey Up Diet Coke Plus Sweetleaf Lemonade Stand Energy 69 Jones Pure Cane Soda Slap Tea Energy Cintron Energy Enhancer Elliot’s Amazing: Reduced Calorie 1 In 3 Energy Drink Frutzzo Ludicrous Energy Drink Lorina E.Q. Thirst Equalizer Powertrip Energy Drink Glaceau Vitaminenergy Blue Jeans Energy Drink Duff Energy Drink Daredevil Energy Drink Sambazon Antioxidant Trinity Bina Iced Tea From April 13 to press time.

To see reviews, visit www.BevNET.com

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BEVERAGE SPECTRUM // MAY – JUNE

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Jack Daniel’s Country Cocktails (JDCC), the line of refreshing ready-to-drink malt beverages from Jack Daniel’s, is moving from a 4-pack to a 6-pack configuration and reformulated product from a sweet taste to a light, refreshing taste. The packaging graphic was redesigned to a premium, refreshing “silver” color package. The product line will focus on its three most popular flavors: Lynchburg Lemonade, Downhome Punch, and Black Jack Cola. Select markets will also carry two additional flavors: Wildberry Jack and Watermelon Spike. The new 6-pack is available in 23 markets with an approximate retail price of $8.49. The launch will be supported by local media, consumer database emails, “Refreshing Taste Guarantee” Money Back promotional program (where legal), and “eye-catching” off-premise merchandising items, including cold box stickers, pennants, case cards, and more. For more information call Jack Daniel’s at (502) 774-7737.

Anheuser-Busch presents the Bacardi Silver Mojito, offering the classic, refreshing, mint-and-lime taste of a muddled Mojito cocktail in a convenient package. Bacardi Silver Mojito is available in five and four per-

be enjoyed straight from the bottle or chilled over ice – are available in 4-packs as singleserve 8 oz. bottles. For more information, call Mike’s at (212) 685-4300.

cent alcohol by volume (ABV) versions. It is packaged in a clear, 12 oz. bottle with an applied plastic label, as well as a 24 oz. bottle and 12 oz. slim cans. This product will be line-priced with other Bacardi malt offerings.

For more information, call Anheuser-Busch at (314) 577-7222.

Brand new Smirnoff Source is the first malt beverage in the U.S. to contain pure spring water and a malt-based alcohol. The beverage is designed to be an alternative to domestic beer. It will be available in a stylish 16 oz. glass bottle and 4-packs, clearly labeled to say ‘Smirnoff Source contains spring water + alcohol.’ This new beer-based alternative is now available in 15 northeastern U.S. states. This product has a suggested retail price of almost $10 for a 4-pack. The launch of Smirnoff Source will be supported by an integrated marketing plan including a new TV and digital advertising campaign in early July and new point-of-sale displays and visuals in stores. For more information call Diageo at (646) 223-2040.

Diageo is also launching Smirnoff Ice Pomegranate Fusion for the Smirnoff Ice line. Blending flavors of pomegranate and other fruits, Pomegranate Fusion is available in 6-packs and variety packs, with a suggested retail price of approximately $7.49.

For more information call Diageo at (646) 223-2040.

Additionally, Diageo is launching Captain Morgan Parrot Bay Pineapple Colada as the latest flavor addition to the Parrot Bay line, which already includes Sunset Surf, Matava Blue, and Wave Runner. The Pineapple Colada flavor is a mix of tangy pineapple and sweet coconut, with a malt base. Six-packs will have a suggested retail price of approximately $7.49, and the product will also be available in variety packs. For more information call Diageo at (646) 223-2040.

Mike’s Hard Lemonade has launched a new line of four ready-to-drink cocktails. Mike’s Premium Cocktails include the lemon drop, crantini, screwdriver and mike-arita. They premiered on Memorial Day 2007 in grocery, convenience and liquor stores. The authentic tasting, hassle-free cocktails – which can

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BEVERAGE SPECTRUM // MAY – JUNE

Beer Shmaltz Brewing Company, handcrafters of HE’BREW – The Chosen Beer, kicks off its second decade of brewing with the special release of Origin Pomegranate Ale. A renewal of their original HE’BREW Beer covenant, brewed once again after 10 years with the juice of over 10,000 luscious pomegranates, ORIGIN is a complex, rich and balanced Imperial Amber Ale. ORIGIN is $5 for a 22 oz. bottle and will be available through at least the Spring of 2008 in most U.S. states. For more information call Shmaltz at (415) 6470660.

Crown Imports is introducing a new design this summer for the Corona Extra 12 oz. can intended to entice consumers to choose this new package for convenience occasions. The new can features the Corona Extra logo emblazoned on a blue metallic background, with a matching blue pull tab.

The new package design for the Corona can began shipping in 6-pack trays in May. For more information, call Crown Imports at (312) 873-9279.

Spirits Fusing the essence of ripe blueberries with its premium vodka, Smirnoff Blueberry flavored vodka is available this summer.

Smirnoff Blueberry is the eleventh addition to its line of flavored vodkas. All are available nationally in 50mL, 200mL, 375 mL, 750 mL, 1 L and 1.75 L sizes. The 750 mL bottle has a suggested retail price of $14.99. For more information call Diageo at (646) 223-2040.

Cruzan Rum introduces Cruzan Black Cherry flavor to spice up a bevy of beverages and help toast to a season of fun in the sun. Cruzan Black Cherry is the ninth variety in the Cruzan flavored rum family, which also includes Raspberry, Mango, Coconut, Vanilla, Pineapple, Banana, Orange and Citrus. Most

2007

and is offered in sleek 16 oz. glass bottles available individually or in 6-packs. Lipton PureLeaf comes in Green, White and Black teas, with 11 sweetened and unsweetened flavors. For more information call (914) 2532964.

This month, New Leaf introduced Blue Tea Peach, an all-natural, organically sweetened zero preservative tea. Blue tea, which is actually oolong tea, has a slew of health benefits according to recent reports. This product is available nationally in health, gourmet, specialty, and fine retail locations. Blue Tea Peach is available in a 16.9 oz. glass bottle, with an MSRP of $1.49-$1.59. For more information call (800) 753-5591.

Sweet Leaf Tea is now offering its homemade teas in recyclable PET bottles. Consumers will be able to enjoy the product in the new 20 oz. plastic bottles available in three of the company’s most popular flavors: Organic Original Sweet Tea, Organic Mint & Honey Green Tea and Organic Half & Half Lemonade Tea. At roll-out, the 20 oz. bottles will be available at HEB stores in Texas, and Sweet Leaf Tea plans a nationwide launch of its new plastic bottles in the second quarter of 2007. For more information on Sweet Leaf Tea and its products, call (512) 328-7775.

ITO EN has introduced Matcha Latte and Tea Latte to its Café Sepia lineup. Matcha Latte is made with Japanese matcha, a stoneground powdered green tea used in the traditional Japanese tea ceremony. Whipped with milk for a sweet cream taste, it is packaged in an 8.1 oz. recyclable steel can and retails for approximately $1.99. Tea Latte is made with black assam tea. Its hearty, malty flavor is complimented with a shot of milk for a classic creamy taste. It is also packaged in an 8.1 oz. recyclable steel can and retails for app. $1.99. For more information, please call Ito En at (518) 272-2400.

flavors are available in 50 mL, 200 mL, 375 mL, 750 mL, 1 L and 1.75 L bottles. For more information call (212)641-8653.

This month will see the launch of saké2me, a lightly sparkling, infused premium sake drink. The first single-serve, naturally flavored, ready-to-drink infused sake beverage, saké2me seamlessly combines the clean taste of junmai sake (pure rice sake) with exotic all-natural Asian flavors: GingerMango, Yuzu Citrus, Asian Pear and Green Tea. saké2me is authentic and natural with no sulfites or glutens. Packaged in sleek, single-serving 6 oz. bottles, saké2me retails for $12.99 a four pack and will be available this month at Bay Area Beverages & More! stores. For more information call (415) 3946500.

The latest star in the Van Gogh Vodka lineup of super premium flavored vodkas is Açai-Blueberry Vodka, which combines an overtone of blueberry with an acai finish to make a true “Martini in a bottle.” The 70-proof vodka retails for about $25 per 750 mL bottle. For more information and thousands of complimentary cocktail recipes, visit www.VanGoghVodka.com or call toll-free 888-539-3361.

Hiram Walker, the classic line of premium liqueurs made with all-natural flavors for real fruit taste, has introduced Pink Grapefruit Schnapps and Pear Schnapps. Like all of the 38 flavors in the family, both Hiram Walker Pink Grapefruit and Pear Schnapps are made with all natural flavors for a fresh and authentic taste experience. Both products will be available in 50 mL, 750 mL and 1 L sizes and will be sold – along with other top Hiram Walker Schnapps flavors – at a suggested retail price of $8.99-11.99 for the 750 mL. Tea The Pepsi-Lipton Tea Partnership has announced that Lipton PureLeaf, has arrived on store shelves with all-natural ingredients, new packaging and updated graphics. This product was formerly known as Lipton Original. Pureleaf packaging sports a new label

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BEVERAGE SPECTRUM // MAY – JUNE

Juice First Blush is the first 100 percent all-natural premium varietal grape juice. Launched in May in the refrigerated section of all Whole Foods Markets in California, Arizona & Ne-

2007

vada, it is anticipated that First Blush will roll out nationwide through Whole Foods Market over the next six months under an exclusive grocer distribution agreement recently forged between the two companies. First Blush juice is made from the world’s finest grapes with no added sugar, no preservatives, no alcohol and no caffeine. Each juice is flash-pasteurized. First Blush is available in four varietal juices: 100 percent Cabernet, Merlot, Rose’ and Chardonnay Juice. First Blush has pledged to donate $.05 of every bottle sold to the World Health Organization.

For more information on First Blush, please visit www.firstblushjuice.com.

Nestle has introduced Nestle Juicy Juice Harvest Surprise, a 100 percent fruit and vegetable juice made especially for kids.

An 8 oz. glass of Nestle Juicy Juice Harvest Surprise provides two combined servings of fruits and vegetables. The product is available in three kid-friendly flavors – Orange Mango, Grape and Tropical – and is made from vegetables and fruits such as carrots, sweet potatoes, grapes, mangos, pears and apples. Packaged in 46 oz. plastic bottles, this product is available in grocery stores nationwide with an MSRP of $3.29. For more information call (323) 202-1040.

White Hat Brands is introducing a new line of multi-vitamin-fortified, mid-calorie juice beverages specifically formulated to help combat childhood obesity and Type 2 diabetes among pre-teens. The new product line will go to market under the flagship brand Dog On It! and will feature two new fortified juice beverages: Barkin’ Berry and Tail Waggin’ Orange. Both products contain 80 calories per 8 oz. serving and are being sold in 8 oz. single-serve bottles. Dog On It! will be sold at retail in a 6-pack unit for $3.99 $4.49.

From Sweet Leaf comes Original Sweet Leaf Lemonade in a glass jelly jar, as well as 20 oz. PET bottles. This all-natural product has an MSRP of $2.49, while the 20 oz. PET’s MSRP is $1.79. These products are available nationally. For more information call (512) 328-7775.

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BEVERAGE SPECTRUM // MAY – JUNE

Mixers Daily’s, America’s premium brand of nonalcoholic cocktail mixes and premixed cocktails, has launched a premixed Frozen Mojito. This 10 oz. single-serve product is a single-serve premixed cocktail alternative.

Daily’s new ready-to-drink Mojito pouch will be supported by advertising in targeted women’s magazines and an exciting on-line promotion. Daily’s single-serve Mojito readyto-drink cocktail will be available at retail this spring at a suggested MSRP of $6.99/4 count.

For more information call (203) 254-8225.

Daily’s has also launched Daily’s Pomegranate Margarita in a 1.75 L bag-in-box package. This product includes an easy-touse tap and will be available at retail with an MSRP of $13.99. For more information please call (203) 254-8225.

Wine From “accessible wine company” Twin Fin comes the 2006 Sunset Rosé, a 100 percent Sangiovese wine pulled from Monterey County, Calif. Twin Fin 2006 Sunset Rosé will share the same eye-catching retro Twin Fin label that consumers have been drawn to since the brand launch in 2005. The suggested retail price for all Twin Fin wines is $9.99.

For more information call (707) 255-7667.

Arbor Mist, the top-selling wine with fruit brand in the United States, is introducing a rich, red wine flavor featuring Pinot Noir.

Mixed Berry Pinot Noir is a blend of smooth Pinot Noir wine and delicious blueberry, raspberry, and peach flavors. This greattasting flavor is now available throughout the United States. Mixed Berry Pinot Noir is available in 750 mL bottles, with a suggested retail price of $3.99 and 1.5 L bottles, with a suggested retail price of $7.99.

Dairy Vitasoy USA Inc., has launched Vitasoy Summer Seasonals in Chocolate Banana and Strawberry Banana. Both drinks are non-dairy and gluten- and lactose-free. Made

2007

from whole organic soybeans, filtered water and organic cane juice, Vitasoy’s Summer Seasonals are USDA-certified organic and heart healthy, with no cholesterol or trans fats. Each serving offers a full four grams of protein and is low in fat and calories. These products were available in supermarkets and natural food stores nationwide as of late may with an MSRP of $2.49 - $2.99 per 32 oz. container. For more information call (781) 648-7157.

LightFull Foods has re-introduced LightFull Satiety Smoothie in a new 8.25 oz. snack-friendly package. LightFull’s newly reformulated line will be available in five flavors – Chocolate Satisfaction, Strawberry Bliss, Peachy Cream, Café Latte, and just in time for summer, Mango Oasis. Each 90calorie, all-natural smoothie has five grams of fiber and five grams of protein – keeping people full for 2-3 hours on average.

LightFull Satiety Smoothies are an excellent

source of calcium, gluten-free and low-glycemic. LightFull will carry a suggested retail pricing of $1.79 - $2.19. For more information, visit www.LightFullFoods.com or call 415-486-2120.

Coffee Stomping Grounds is an all-natural liquid espresso concentrate, packaged in a 32 oz. vacuum-sealed Tetra Pak box. This product is cold-brewed to maintain the flavor and quality of the espresso until it is consumed.

The product can be stored at room temperature until opened, at which point it stays fresh in the refrigerator for up to a month.

The concentrate comes in four flavors: mocha, espresso, caramel, and vanilla. There are twelve servings per box, which retail for $5.99 at retail and specialty stores throughout the country. For more information call (503) 715-1927.

Distributorships Available Dad’s Root Beer is Celebrating its 70th Birthday!

Dad’s is one of America’s most popular soft drinks. The beverage was developed in Chicago in February of 1937, and its unique and delicious flavor has earned it a loyal following. In 2007, Dad’s was purchased along with the Sun Crest, Dr. Wells, and Bubble Up brands by Hedinger Brands, LLC and licensed to The Dad’s Root Beer Company, LLC. With a new dedication to expanding the distribution network across the country, the brand looks forward to continued growth and customer support.

The Dad’s Root Beer Company is offering exclusive distributorships in select markets. We offer premium brands, competitive pricing, and a great support network.

For more information, contact: 1-866-783-8280

www.dadsrootbeer.com info@dadsrootbeer.com MAY – JUNE

2007

P.O. Box 790 Jasper, IN 47546

\\ BEVERAGE SPECTRUM

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GERRY’S INSIGHTS

coke’s crisis of

opportunity ow that we’ve absorbed the shock of Coca-Cola’s noncarbonated beverage binge – acquiring Fuze and Vitaminwater, reaching a distribution deal for Campbell Soup’s V8 – it’s time to start focusing on how the company will implement these deals. After all, the recent history of beverages is littered with stories of upand-coming brands commanding rich premiums from major players, only to go inert on the shelf once they were integrated into the core operation. Snapple’s near-ruination at the hands of Quaker Oats has already entered business school case histories as a classic example of that, though Snapple’s fate within the Cadbury Schweppes portfolio is also a cautionary tale. And watching once-renegade SoBe enter the Pepsi portfolio was like watching an ingénue get stuck in a dreary character role.

Fuze counts as a relatively modest “tuck-in” acquisition and it seems to be on the way to a fairly quick and decisive cutover to the CocaCola bottling network. Not much downside there. The acquisition of Glaceau is another story. Vitaminwater is a much bigger, more developed brand than Fuze, and the premium paid – the deal was announced at $4.1 billion, not counting distributor buyouts – dwarfs the $250 million or so paid for Fuze (including buyouts).

This creates a real dilemma for Coke. On one hand, the company finally has an explosively growing, high-margin noncarb it can offer to its bottlers, providing another leg of growth while squelching “jailbreaks” in which some bottlers looked beyond Coke for new brands. And the bottlers do want this brand, which is important.

Many beverage observers note that as the biggest difference between Pepsi’s purchase of SoBe and Coke’s pickups, and it could make all the difference in that critical area of post-acquisition execution.

On the other hand, at this price, Muhtar Kent, Sandy Douglas and the rest of the KO brass know they really can’t afford to bungle the

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(Left to Right) Sandy Douglas, president and COO of Coca-Cola North America, Mike Repole, Glacéau President, J. Darius Bikoff, Glacéau founder and CEO, and Muhtar Kent, President and COO of The Coca-Cola Company

acquisition, and one way of assuring that the brand will continue to thrive is to retain at least some of its current distribution matrix. Indeed, in announcing the deal, Coke execs lavished praise on the merchandising savvy displayed by Glaceau and expressed their need to learn from it. That credit, of course, really is shared by the independent distributors who have worked with Glaceau’s field staff to execute those well-crafted programs.

So far, the Coca-Cola people have been careful. Word is that in New York and Los Angeles, incumbent distributors have received some assurances that they’ll hold onto the brand for some time. Clearly there’s a case to be made that, in Vitaminwater’s core Northeast market, Coke should move with deliberation. Coke execs say they see the brand as most underdeveloped in the Southwest, middle states and Southeast, so they may move more quickly to dislodge it from that part of the independent network in those regions.

Could it be that we’re about to see some unexpected, out-of-the-box thinking from Coke, which has increasingly been willing to acknowledge that distribution is moving in unanticipated, hybrid approaches? Coke already tested the waters with warehouse delivery on PowerAde with Wal-Mart (they settled a suit on the matter brought by independent Coke bottlers) only to see McLane drastically raise its fees on beverages. That tilted the economics back to DSD for most brands, even bulky, low-velocity segments like bottled water and sports drinks.

For now, Coke seems at least to be deliberating intriguing schemes like keeping some indies in place for Vitaminwater while shifting some lower-velocity KO brands from the bottlers, who can’t give them the attention they deserve, to those indie distributors. I’ve heard that could go so far as to include Coke-branded items like Coke Blak. In essence, the bottlers would be allowed to stay within their comfort zone of larg-

BEVERAGE SPECTRUM // MAY – JUNE

2007

er-scale, high-velocity brands, while delegating to indies some of the lower-velocity, high-touch brands.

Coke is not the only company thinking along those lines. PepsiCo is showing a similar willingness to rethink the distribution model for its recently acquired Izze sparkling juice brand, vowing to keep an open mind over pulling it from independent distributors. In one case where it did move the brand, in New York, it seems to have done so to measure the performance of a Pepsi bottler against that of the indies.

Whether Coke actually proceeds with such an experiment is, of course, another story. Doing so would bring its own set of complications: contracts, coverage areas and the like. Also, despite the rhetoric, Coke execs do not have a history of acting as though they have anything to learn from anybody else. Then there is this stern reality – Coke bottlers are clamoring for some real winners in the noncarb sector and wouldn’t be happy to have to wait for their crack at Vitaminwater.

How Coke walks this tightrope – rewarding its bottlers with Vitaminwater while not undermining the magic that makes the brand so appealing in the first place – will be fascinating to watch in the coming months.

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

*When combined with increased exercise and the Zero Impact速 Diet. Results are not typical. Use only as a dietary supplement.

These statements have not been evaluated by the FDA. This product is not intended to diagnose, treat, cure or prevent any disease.

It’s Hard To Handle Hardcore Energy By: Jeffrey Klineman n nearly every respect, it was a rosy year for energy drinks. Sales remained high, the category continued to expand, and a parade of new drinks and hybrids found their way to market.

Despite their youth, energy drinks have become as mainstream a part of the beverage economy as any other product. Rockstar sales reps hold tastings in corporate cafeterias; Monster is marketing a coffee/energy hybrid; Pimp Juice is hyping its antioxidant content. Projections show the category could hit $10 billion by 2010.

Things should continue to go well. If, that is, consumers can stay out of the emergency room. Because last year brought some of the worst headlines the category has seen to date. A pair of well-documented health scares – and a product named for an addictive street drug – brought a deeper, panicked level of scrutiny to the manufacture and marketing of energy drinks. At a time when Americans’ concerns about caffeine consumption are growing and functional beverages and foods are under-

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going government review, it may be that the future of the energy drink category is hazier than it appears.

What’s causing the negative attention? In the past year, it’s been a trio of energy drinks whose pumped-up caffeine content (more than 30 mg per fluid ounce – between three and four times that of a typical energy drink) has led some industry members to assess them as a new segment – Extreme. Two of the products, Spike Shooter and Redline, are made by nutritional supplement companies. Both caused national headlines when, after drinking them, consumers were hospitalized with symptoms resembling caffeine overdoses. A third drink, Cocaine, caused a tempest in a slim can due to its inflammatory name.

As a result, the image of energy drinks – always more motocross than merry-go-round – has sustained some damage. And the possibility of another acute reaction – or another wave of bad press – is causing some industry observers to look with concern at the extreme end of the energy spectrum.

“We talk about it a lot,” said James Foster, who runs the Web site EnergyFiend.com, which tracks caffeine in beverages and has become a resource for consumers and the media. “All there needs is one bad accident to happen, just one event where someone gets damaged, and the whole category is going to come under scrutiny in a negative way.”

Regulation, Inside and Out This spring, a group of beverage marketing executives gathered in the offices of the American Beverage Association (ABA), the first members of a new committee on energy drinks. Caffeine concerns were of paramount importance, according to Kevin Keane, the ABA’s Vice President of Communications.

“It’s a growing category, and we need to be smarter with those issues,” Keane said, adding that caffeine “was the big thing we were dealing with.”

The end result of the meeting was a recommendation that ABA members begin disclosing caffeine content voluntarily, which echoed choices by the Coca-Cola Co. and PepsiCo to start divulging the caffeine content of their products.

The recommendation wasn’t made with any of the extreme products in mind – none of their manufacturers are ABA members. But the ABA has a long history of fighting back against regulation, taking on criticism of the use of High-Fructose Corn Syrup and sodas in schools with equal aplomb. That the group recommended caffeine disclosure for its energy drink making members so quickly indicates its awareness of the potential for a public relations debacle.

“Our industry sent a message, in the way they approved this voluntary labeling and put the issue front and center,” Keane said.

As for extreme products, he added, the jury is still out.

“It’s something that people are aware of, but concern hasn’t reached a high level yet,” he said. “The consumers are making their judgment with regard to them. It’s such a new category, it’s still growing, and everyone’s seeing how things are going to progress. And you don’t want to overreact to things, either. I mean, it’s an energy drink.”

Spiking the Headlines Keane’s right: Most energy drink consumers are aware that caffeine (and analogous products like guarana and yerba mate) is their “energy source.”

It’s also quite likely that a group of Doherty High School students in Colorado Springs, Colo. were aware of the high levels of caffeine in Spike Shooter when they started buying it at a nearby 7-Eleven, particularly since there’s a pretty big warning label across the top along with (just like Redline) a recommendation that first-time consumers try a half-can to start.

Nevertheless, after drinking Spike Shooter, a pair of the students were taken to the hospital – one, infamously, left school in a wheelchair. Many more complained of alarming reactions like vomiting and heart palpitations. The fallout for the company was immediate, as the media, including CNN, descended on the school and began looking at energy drinks with a more jaundiced eye.

Surprisingly, since the story broke, rather than scaring consumers off, Spike Shooter’s sales seem to have increased.

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2007

“We’ve had some pretty unbelievable experiences already with the media, and we know any little thing can become a major ordeal,” said Greg Guss, Spike Shooter’s Vice President of Marketing. “We’re doing whatever we can to avoid that. When we do sampling, we card anyone who isn’t 18.

Beyond that, we can’t prevent people from abusing the product.”

Spike Shooter is manufactured by Biotest, a nutritional supplement manufacturer whose products typically sell in GNC or Vitamin Shoppe. The RTD product was introduced in those channels, but last year began a period of rapid growth through convenience stores. Recently, Spike Shooter was approved by Haralambos Beverage Co., a major Southern California distributor, and, despite the incident in Colorado Springs, it is apparently on track to wrangle more shelf space in 7-Eleven, as well. Not that there aren’t concerns.

“We’re going very, very slowly,” said Raj Singh, the beverage buyer for 7-Eleven’s 840-store Central Region. “In Colorado, there are some stores selling $40 or $50 worth of products a day. We’re not going to be very aggressive, but we don’t want to miss that opportunity.”

Singh confirmed that the product is spreading in his Colorado stores, and that, starting in Las Vegas, 7-Eleven is looking into the possibility of carrying Spike Shooter on an even wider basis. But he is still leery.

“We have a little bit of concern,” he said. “There are the stories that all of the caffeine seems to make the kids hyper.”

Hyper is one thing. But emergency room visits are a bigger problem, according to Foster. He believes that most consumers – and media – won’t make the distinction between hardcore products and regular energy drinks if another incident takes place.

“If they’re marketed the same way, they’ll all be tarred with the same brush,” Parker said. “It’ll affect the whole category, surely. You don’t want hysterical media coming out.”

Playing to Hysterics Hysteria was certainly on software developer Jamey Kirby’s mind when he decided to make an extreme energy drink of his own.

His tech background made him want to name his product “Download Energy,” but when that was already registered elsewhere, he decided to go for broke.

He called it “Cocaine.”

“The more you think about it, it’s the ultimate name for an energy drink,” Kirby said. “Because it’s rebellious and irreverent, the core market for energy drinks would go crazy about it.

We figured it would be a great name, and a lot of people would buy the drink. It was a limited demographic, but we figured the market would make up its mind.”

Kirby said the market response was huge – he estimates he shipped 200,000 cases and had 50,000 more ordered in the first weeks that the product received publicity. But the tide of public opinion quickly turned.

“We were prepared to get beat up,” he said. “And we got free publicity – I don’t think we spent more than $15,000 on advertising. But we never, ever expected the backlash.”

Politicians and parents demanded Cocaine be removed from shelves, and the company recalled its remaining cans,

twice re-labeling them. Now, Kirby is selling “No Name Energy” (write in your own name!) domestically while he markets Cocaine in Europe.

The backlash over Cocaine was a much bigger concern than caffeine to mainstream beverage marketers, according to Keane.

“We don’t hear from members about the risks of caffeine so much as some of the marketing practices,” he said. “People know what they’re buying when they buy energy drinks. But it’s some of the names that seem to cross the line of acceptability with the consumer. Cocaine obviously didn’t work.”

Still, it’s not as if mainstream energy drinks don’t already push the edge of taste as it is. Most energy drinks, in fact, carry tough-sounding or obscene names, and many also carry hyperbolic warnings of their own.

The image that helped the category grow, Keane admits, might have created a situation where it is hard to separate the areas of real concern from the hype.

“As with all of the products, a lot of it is marketing,” he said.

According to Foster, problems arise when, in a forest of extremesounding drinks, the ones that actually have extra potency don’t seem to be any different from those that don’t. While Cocaine challenged people with its name, there wasn’t much discussion of its potency as compared to other drinks – even though it was one of the strongest around. Similarly, Spike Shooter and Redline are expected by their manufacturers to be merchandised in the energy drink cooler, right next to Red Bull, despite the difference in kick.

Redline, for example, has chemicals added that add a fat-burning, “thermogenic shiver” effect to its potent level of caffeine. With its rounded top and an appearance that makes it look a little less like a traditional energy drink, it might seem geared to a different niche.

But not according to Redline’s CEO, Jack Owoc, who noted, when interviewed by electronic mail, that the best place for mainstream retailers to sell his products is “in coolers and on shelves (end caps would be better!) next to other energy drinks.”

Spike Shooter also attempts to identify itself as both a product that is specifically designed to help athletes work out better, and as a mainstream energy drink, as well.

“We design a lot of products for elite level athletes,” Guss said. “No one wants to drink 24 ounces of something before an elite level workout. (Ultimate Fighting Champion) Randy Couture wouldn’t do that before he works out.”

“But,” Guss added, “It’s also a great mixer. The reason we created Spike is that we believe traditional energy drinks didn’t deliver on their promise.

If you want to call Spike ‘hardcore,’ we’ll call it hardcore, but this is what energy drinks should have been all along.”

It’s that split personality – how many elite level athletes prep for their workouts at 7-Eleven? – that might undermine the entire category.

“You can provide all the warnings you want, but it comes down again to a marketing issue,” Foster said. “If these things are marketed as a standard energy drink, they’re going to have a problem. 14-year-olds, they’ll just scarf them down.”

Over-Caffeinated Complaining?

Given caffeine’s established place in American culture, concerns about excessive caffeine in any drink can sound overblown. It’s not as if consumers are strangers to the product: worldwide, there are more than 13,000 Starbuck’s franchises doling out their own, particularly high-test brand of coffee. Starbucks can reach 23 mg per fluid ounce.

As one mainstream energy drink executive puts it, he’s sick of “the mother who’s saying that she’d never let her son or daughter drink something like [an extreme energy drink] when she’s on her third latte.”

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BEVERAGE SPECTRUM // MAY – JUNE

2007

And despite publicity surrounding bad reactions to the high levels of caffeine in energy drinks, it takes a near-undrinkable amount to cause a fatality. In the vast majority of well-publicized but non-fatal caffeine overdoses nationwide (six incidents in California related directly to Redline’s RTD product notwithstanding), the culprits were caffeine pills, rather than beverages.

But extreme products are influential, and there’s something of an arms race going on. One mainstream brand, Wired Energy aims its X344 and X505, with 178 mg of caffeine per 8 oz. serving, at serious caffeine junkies.

Meanwhile, BooKoo, a fast-growing brand, has a line of 5.75 oz. “energy shots” with about 120 mg of concentrated caffeine. Even Coke now owns NOS, which packs 173 mg of caffeine into an 11 oz. bottle.

It has the potential to become a larger issue because, prior to the more extreme products, energy drinks’ caffeine content never really matched their sales rhetoric. Until now.

For a long time, even if they aren’t particularly “amped” with extra caffeine, the vast majority of energy drink brands tried to appear that way, in name and image, almost universally daring their consumers to “slam” them. That attitude helped the category growth.

But in a marketing environment like that, with a Monster or a Kronik or a Full Throttle in your sights, it’s easy to see why going hardcore, regardless of the potential pitfalls is tempting for manufacturers.

“We were following the trend in the energy drink business,” says Kirby, from the offices of Cocaine energy. “There were edgy drinks, there were already drug names, so we said, ‘Hey, let’s take it all the way to the top.’”

Energy Drink

Dollar Sales

Total Energy

$1,870,207,525

38.0%

Red Bull

$568,358,324

26.1%

Monster

$398,460,831

75.3%

SoBe

$147,792,335

11.5%

Diet Red Bull

$121,116,969

31.5%

Rockstar

$120,968,758

18.8%

Full Throttle

$116,567,298

50.1%

Amp

$107,706,378

79.5%

Diet Rockstar

$53,386,691

56.2%

Monster Assault

$32,862,576

33.5%

Diet SoBe

$29,037,740

19.4%

Diet Full Throttle

$15,639,637

83.6%

NOS

$15,113,300

242.2%

BooKoo

$14,828,188

98.4%

Tab Energy

$11,992,555

670.5%

Lost

$11,376,697

-19.5%

Private Label

$8,000,401

30.2%

Elements

$6,645,160

-42.6%

Rip It

$5,899,451

126.3%

$5,791,858

66.6%

180

Change vs. year earlier

52 Weeks through 4/21/07 SOURCE: AC Nielsen/Citigroup Total U.S. food/drug/mass

BRAND NEWS

Glaceau – Glaceau has entered the energy drink category with Vitaminenergy, a set of three energy drinks “built around a nutrient platform providing natural energy,” which includes Vitamins B and C , ribose, and caffeine. Available in Dragonfruit, Fruit Punch and Tropical Citrus flavors, the product comes in 16 oz. cans and is on sale nationwide.

Kabbalah – Kabbalah Energy Drink is alive and well and being distributed in Regular and Sugar Free varieties in markets such as Northern California, Reno/Lake Tahoe, Las Vegas, San Diego, Mexico, South Africa, New York, Wisconsin and Michigan. All dealer and consumer inquiries are welcome. Contact information is at www.kabbalahenergydrink. com.

Bliss – Bliss Beverage has announced a major agreement with the nation’s largest retail chain, Wal-Mart, to stock Hulk Hogan’s energy drink, Hogan Energy Powered by Socko. Developed and produced by Bliss Beverage, the speciallydesigned Hogan Energy 4-packs will be available at nearly all Wal-Mart stores nationwide.

Spike Shooter – Spike Shooter has moved out of Colorado, its first market, and into the California cities of San Diego, San Francisco, and Los Angeles, with Haralambos Distributing.

Spike Shooter is also available in Las Vegas via Core-Mark.

Mad Croc – Mad Croc has introduced new packaging in both its regular and sugar-free versions, as well as on its 4-packs. The company also kicked off a major partnership with National Lampoon in March, giving away more than 100,000 samples to students on spring break in Cabo San Lucas, Mexico, Florida and Texas. In August and September, Mad Croc plans a major sampling effort on campus via Barnes & Noble and E.H. Follett. The company is largely sold through Miller and Coors distributors in 22 states.

Jetset Beverages – Jetset Beverages launched a full line of Energy Mixers in May, including Tonic Water, Club Soda, Ginger Ale, and Jetset Original. These products, which combine the

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BEVERAGE SPECTRUM // MAY – JUNE

2007

flavors of drink mixers with energy elements like caffeine and guarana, will be available nationally at many grocery chains, including Safeway, Dominick’s, Von’s, Pavilions, Tom Thumb, Randall’s, Carr’s and Genuardi’s.

Dark Dog – Austrian brand Dark Dog, a leading alternative energy drink in Europe, is making a push for substantial growth this year in the U.S., where it is broadening its distributor network of 25. Dark Dog claims the number 1 position in France, Chile and Paraguay, and believes this status gives it a cult following.

Cult – Cult Energy Activator, a natural energy drink that is currently sold in more then 20 different countries world wide, became available in U.S. markets this January. The product bases its energy boost solely on guarana and other natural ingredients, according to the manufacturer.

Inko’s – Inko’s has signed an exclusive contract for Boylan’s Soda to distribute White Tea Energy throughout New Jersey. The company has also been approved for Whole Foods stores in its Florida, California and Texas regions.

SmartPower – SmartPower “smart” energy drinks launched in January with two brands, SmartPower and Nuclear Waste Antidote. Both are sugar free, with what the manufacturer claims is a formula that provides energy without jitters or a “crash.” The company also launched a social networking site at RaiseYourAwareness. com on Earth Day to combine social activism with consumer awareness, focusing on Nuclear Issues and supported by profits from Nuclear Waste Antidote.

Inov8 Beverage Co., Inc. – Inov8’s HYDRIVE recently added a fourth flavor, Pomegranate. HYDRIVE has now expanded into 25 percent of the U.S. with distributors in all of New England, New York, New Jersey, Pennsylvania, and most of the Midwest.

HYDRIVE is now available in an estimated 10,000 accounts including WaWa, Casey’s General Stores, Kum ‘N Go, Cumberland Farms, Jewel Stores, and SuperTarget. HYDRIVE is being expanded into the rest of the country

in 2007, as the brand tries to position itself in the category as “The Healthier Way to Reenergize.”

Brain Twist – Brain Twist has launched Slap Tea Energy, a tea-based energy drink in three flavors: Green Tea with apples and mint, Red Tea with blood tangerine, and White Tea with lemonade flavor. The product has no artificial colors or flavors, and no high-fructose corn syrup. It is sweetened with Crystalline Fructose and Isomaltulose, which, according to the manufacturer, is a slowly-digestible sweetener that contains a low glycemic response.

Guru – This Canadian company has released three new versions of its energy drink: Guru Sports, Guru Iced Tea and Guru Juicy. All are certified organic.

Kronik – Kronik Energy drink has launched Kronik Energy Low-Carb Big Shot, a 24 oz. version of the company’s flagship Low-Carb formulation. The Big Shot line-extension marks Kronik Energy’s second move into the emerging 24 oz. energy drink segment. Big Shot’s launch includes point of sale support, promotions and profit programs and is backed by an aggressive

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BEVERAGE SPECTRUM // MAY – JUNE

2007

marketing campaign that targets the action sports community.

Fluid Motion Beverage Inc. – Talon Energy now includes four SKUs, including new Talon Original 24 oz. and new Talon Blood Punch in a 16 oz. can. Talon Blood Punch starts with a familiar fruit punch flavor base, but is spiked with natural blood orange flavor. The can features a “novel dripping blood design.”

Del Monte – Longtime juice maker Del Monte has launched Bloom Energy in four cities, Chicago, Dallas, Houston and Phoenix. The product contains 100 percent of the RDA of vitamin C, as well as a full serving of real fruit. Its three flavors, cran-raspberry, mango passionfruit and wild berry each contain 74 mg of caffeine, to provide a gentle boost of energy.

Hobarama, LLC – The makers of BAWLS recently launched BAWLS Guarana Cherry, the company’s first beverage flavor addition to the BAWLS Guarana product line in nearly three years. Created in response to a flood of fan requests for a cherry-flavored offering, BAWLS Guarana Cherry has a refreshing cherry flavor,

blended with a kick of guarana-based caffeine.

This product will be available in 16 oz. cans that are designed to change color once the beverage is cold enough to enjoy.

Bazza – BAZZA High-Energy Tea is expanding its reach through a newly signed distributor, Kehe Foods. Bazza has added HEB grocery stores in Texas to its national 7-Eleven distribution.

Havoc – Havoc’s controlling company, the American Enterprise Development Corporation, has acquired a 35 percent ownership interest in the beverage distributor Dynamic Distribution, Inc. Dynamic Distribution is a new beverage distributor which will focus on the distribution of the Havoc energy drink to convenience stores, clubs and grocery outlets in markets where Havoc has licensed sponsorship agreements.

00000 BEV-NET’s Highest Rating!!!

Kaboom Tropicool review, May 23, 2006

“the best tasting juice-energy hybrid on the market today”

Krank’d – Krank’d Body Fuel is now available In Giant Food Stores in eastern and central Pennsylvania. Krank’d Body Fuel is also available in an increasing number of convenience stores chains in the Northeast. Most retailers carry a variety of flavors sold individually, but a few of the c-store chains will be offering Krank’d packaged as 12-pack units.

Cintron – Cintron energy launched last year in two flavors, Citrus Mango and Tropical Azul, an exotic blue fruit punch. The Latin accent of the drink flavors, trademark logo and can design is intended to appeal to the fast-growing Hispanic demographic. Cintron is now in distribution in New Jersey, Pennsylvania, Delaware, Maryland and Virginia.

Kaboom – Arizona-based Kaboom Energy Juice has added its third low-calorie, no-added-sugar flavor, Pomegrante-Berry. All of KABOOM’s flavors are USDA certified organic and kosher.

They are available in Whole Foods and other natural grocery retailers throughout the U.S. SkylarHaley – SkylarHaley has launched Essn Energy, the first USDA- and Mission Organic-certified energy drink on the planet.

The sparkling energy drink is infused with pomegranate limeflower and contains over 360 mg of organic Brazilian yerba mate, organic Kenyan green tea, and 240 mg of organic guarana. Essn is sweetened with only organic cane juice, contains zero preservatives, and provides a ‘gentle lift’ without the jitters. Their ‘Drink to Unity’ campaign is expected to begin mid June, featuring the brand’s tag line, ‘Energize Your Spirit.’

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MAY – JUNE

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41

Experience Group has announced the first drink to debut from its Jimi Hendrix-branded line.

Voodoo Vibe is an effervescent drink, labeled with the charge of peace, love, purpose. The mixed-berry flavored energy drink is infused with the Co-Q10 enzyme and is available in a commemorative limited-edition aluminum bottle with a twist-off cap, as well as a regular can. Voodoo Vibe will be promoted within various concert tours throughout the next 12 months.

CRUNK !!! – Solvi Brands LLC, a privately held company has purchased the CRUNK!!! Energy Drink brand. Lil’ Jon remains onboard with CRUNK!!! as Chief Brand Advisor. Under new CEO Thomas Mahlke, the company has moved to Roswell, Ga. As part of the company’s growth strategy, it has launched a new 16 oz. package along with its 8.3 oz. and 16 oz. sugarfree versions.

Rockstar – Rockstar launched a new energy drink/juice blend, Rockstar Juiced Pomegranate in May. The product is available nationally.

Wired – Wired recently welcomed two new family members, 23.5 oz. X505 with 505 mg of caffeine per can, and a XBerry Rush 23.5 oz. can. Both have a Microsoft Crackdown promotion on the shoulder of the can, and are in a Crackdown/Xbox 360 promotional tray.

Additionally, the company’s first venture into 8.4 oz. cans was recently released with Wired X3000 and X344.

Guayaki Yerba Mate – Guayakí has launched three new Organic Yerba Mate Fusions: Pure Endurance, Pure Passion, and Pure Mind.

These functional drinks celebrate the South American rainforest tradition of handcrafting health-enhancing infusions of yerba mate and medicinal herbs. Organic Yerba Mate Fusions offer a boost of nutrition and sustained energy from the yerba mate, and well-being benefits from several powerful herbs that have been revered for centuries by ancient cultures.

Each yerba mate and herb infusion is blended with organic fruit juices and other organic ingredients.

Double D Beverage Co. – The makers of Beaver Buzz recently launched Premium Buzz Green Tea in order to reach the non-carbonated market. The product has an authentic taste of Green Tea and comes in a 355 ml sleek package.

Additionally, Double D is marketing Big BUZZ Green Machine, a 16 oz. product that combines the flavors of green apple with Saskatoon berry.

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BEVERAGE SPECTRUM // MAY – JUNE

2007

The company is considering expanding south into the U.S. Jones Soda – Jones released a new energy package in Wal-Mart stores in May, including a new Energy 4-Pack. According to Jones, it has the same formula, just more availability.

Xcite – Xcite, the “Ultimate Erotic Energizer Energy Drink” is currently available in nightclubs, bars and liquor stores and is expected to expand throughout New Jersey and parts of New York this summer, including on the New Jersey shore scene, according to the manufacturer.

Boink Energy – Boink, a zero-sugar, zero-calorie energy drink, relies on the lasting power from nature’s herbs and cayenne pepper, according to its manufacturer. Cayenne immediately increases blood flow, providing clarity of thought, heightened senses, and energy to spare. Boink is lightly carbonated with a refined citrus/berry flavor.

NOS – NOS Energy Drink has joined forces with Hot Import Nights (HIN), the largest touring car show of its kind. NOS is will be the official energy drink of HIN and Nightshift, and has agreed to a sponsorship package making them the exclusive beverage sponsor at all 12 Hot Import Nights events and 8 Nightshift events.

BooKoo – BooKoo recently signed a distribution agreement with Charlotte, N.C.-based CocaCola Bottling Co. Consolidated to sell its energy drink portfolio. Coca-Cola Consolidated’s nearly 20 million consumers can now enjoy BooKoo Wild Berry, Wild Berry Zero Carb, Citrus, Bite and Jugo flavors in 16 oz. cans and Wild Berry and Citrus in 5.75-ounce cans.

Oxenuk Impex Corp. – The maker of functional and energy drinks Aphrodite Love Drink, Peep One Erotic Drink and Blue Jeans Energy Drink has been signing exclusive contracts with regional distributors in the following states: California, Tennessee, Texas, Wisconsin, Georgia, Maryland and Minnesota. Additionally, the official Aphrodite Love Drink spokesperson, Miss Nevada Helen Salas, was the 4th runner up in the 2007 Miss USA pageant on March 23.

Wet Planet Beverages – Wet Planet Beverages of Rochester, N.Y., recently signed a distribution deal with Cadbury Schweppes’ Snapple Distributors Inc. for its Jolt Energy brand. The agreement includes representing and distributing Jolt Energy in the New York Metropolitan and surrounding areas.

Who’s Your Daddy – Who’s Your Daddy, Inc. has announce that its latest Southern San Diego County distributor opened over 400 new accounts during its first four weeks of distributing the company’s Who’s Your Daddy Energy Drink. This market penetration was accomplished with eight sales representatives dedicated exclusively to promoting and distributing the product.

found in chocolate). At 90 calories per bottle, it is over 33 percent lower in carbohydrates and sugar than regular sodas. It is certified organic by Quality Assurance International and is craft-brewed using a patent-pending process.

Currently available in Original and Lemon Lime flavors, Sol Maté is sold in natural and specialty food markets nationwide and distributed by United Natural Foods Inc.

Red Devil USA – Now entering the U.S. market, Red Devil marketing strategists say they are excited to face the challenge. Red Devil’s United States launch is planned for mid-summer.

Source Drinks – Source is launching an all-new BURN Sugar-Free 16 oz., built from the ground up to boost energy levels and the metabolism by combining EGCG, Caffeine and Calcium with antioxidants, B-vitamins, ginseng and guarana.

With zero sugar, extremely low sodium and a citrus/tropical flavor, the new Sugar-Free 16 oz. will be available July 1.

DC Brands International – To capitalize on NASCAR’s enormous fan base DC Brands, the makers of Turn Left Energy, enacted a promotion consisting of a monthly contest to win two tickets to high profile NASCAR races around the country in such places as Daytona and Talladega. In order to win, consumers register at www.turnleftenergy.com and enter a serial/verification number and poker hand found on entry tickets enclosed with a four-pack of the product.

Caballo Negro – In March 2007, Caballo Negro expanded their aggressive sample marketing program in South Padre Island for Spring Break. Partnering with The Passion Group, Caballo Negro attacked the beaches for seven days, where college students lined up to get their daily dose of energy. Caballo Negro is now being sold in 29 states by 44 distributors.

National Beverage – National’s Rip It Energy Fuel has added two new flavors to its line of flavorful energy. GIN-ZING-R takes the exotic mojito flavor and adds a twist of ginger and ginseng, while STING-ER MO provides a pure energy tropical fruit flavor. Aditionally, National’s Freek Energy recently launched two new flavors, Screem and Sugar Free Thrill-Her. Screem takes cranberry, orange, and lime, and gives it a kick by adding a full energy component, while Sugar Free Thrill-Her is flavored with Raspberry and Lemonade.

Sambazon – Sambazon, the global leader in Amazon superfood açaí, launched a new organic açai energy juice in March. Rio Energy is Sambazon’s traditional blend of organic açaí juice and guaraná with an added boost from Guayakí Yerba Mate.

Sol Mate – Sol Maté recently captured “Best New Carbonated for 2006” from BevNET. Sol Maté’s functionality comes from naturally occurring caffeine plus theobromine (the euphoriant

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BEVERAGE SPECTRUM // MAY – JUNE

2007

Go Fast – Go Fast Sports & Beverage Company recently launched a co-branded package for Go Fast Energy Drink with Orange County Choppers. A dramatic unveiling of the Go Fast Chopper was featured on the OCC program American Chopper on TLC in April 2007, where the chopper was flown in by helicopter and lowered onto pallets of Go Fast Energy Drink at the VooDoo Lounge atop the Rio Hotel & Casino. The Go Fast/OCC energy drink has launched initially through select distribution in Wal-Mart stores, and will soon be available in additional retail channels and online via OrangeCountyChoppers.com and GoFastSports.com.

Radioactive Energy – Glow Ditribution LLC has signed a contract to put Radioactive Energy on the map using the tagline “The Glow is Here.”

The company’s marketing plan includes a blimp, race car, tour bus, and female models. It will be taking place over the summer, according to the manufacturer.

Fillmore Street Brewery – The Fillmore Street Brewery is preparing to launch a new flavor of Pimp Juice this summer. The new can will be a purple rendition of the original design, and will feature a prickly pear/grape flavor.

The new Pimp Juice Energy Drink will have premium antioxidant/ energy drink ingredients, including acai, ascorbic acid, grape extract, green tea extract, pear extract, pomegranate juice, and yerba mate, in addition to its energy components of Caffeine, Taurine, and Guarana.

Fillmore Street Brewery expects the new flavor to hit the shelves sometime in July.

Syzmo – Syzmo Energy Drink, the first organic energy drink, is now the first carbonated energy

beverage to be certified “Glycemic Index Tested.” The Glycemic Index Laboratories, Inc. of Toronto, Canada in conjunction with Glycemic Index Ltd. of Sydney, Australia, awarded Syzmo a Low GI ranking of 30. This new certification gives consumers the ability to choose healthier beverages based upon GI ratings. This product is also now packaged in a new 12 oz. Rexam sleek can with a bi-lingual translation.

Liquid Management Partners – Liquid Management Partners will be launching its new Liquid Ice 12 oz. cans cans in select markets beginning in July. The new 12 oz. cans will feature the same high quality ingredients and will be targeted toward off-premise markets to increase visibility and provide value to the end user.

Daredevil – Daredevil Energy Drink has cleaned up the Daredevil can and added an edgy new logo - The Daredevil “Double D.” Along with the logo, the company has added a new campaign with the 2007 Daredevil Girl, as well as placement at events like the MTV Music Awards.

46

BEVERAGE SPECTRUM // MAY – JUNE

2007

VegasFuel – VegasFuel recently signed a threeyear contract to promote the IFO Steele Cage, a Mixed Martial Arts organization headed by Hall of Fame Boxing Official Richard Steele. The fights will are all slated to occur monthly in Las Vegas venues and will be broadcast on television nationwide. VegasFuel Launched in early 2007 and is still actively seeking new distributors.

New distributors can expect manufacturers pricing, very aggressive introductory promos, and a dedicated POP and marketing program, according to the company.

XS Energy – XS Energy is sponsoring a new documentary series Eco-Warriors: Guardians of Surf to raise awareness about the environmental, social, and economic issues surrounding the destruction of world-class surf spots. David Vanderveen, XS Energy’s cofounder and a lifetime surfer, believes that if a company is going to promote an energetic, fit, lifestyle, then its business principles should say the same.

48

BEVERAGE SPECTRUM // MAY – JUNE

PHOTO: ONE RED EYE/PHILIP MEECH

2007

F

or beer importers, it should be the perfect storm: consumers are still trading up for quality products, but at the same time, they’re trying to drop unnecessary calories.

So why are imported light beers still struggling?

According to Global Information, Inc., imported beer sales increased 58 percent between 2001 and 2006. Consumers, the market research firm reports, are shifting from the purchase of domestic to imported beer, favoring its quality and branding appeal.

“The trade-up factor that is everywhere in consumer goods these days is definitely a part of the beer phenomenon,” says Maryanne Origlio, director of corporate communications at Origlio Beverage, a distribution company in Philadelphia, Pennsylvania. The onslaught of specialty brands in almost every product category is also coming into play. “Because specialty brands are growing, I think people are more aware of quality these days. Quality and authenticity have become more important to people.”

As consumers seek products perceived as more sophisticated and of higher quality, imports have gained ground. The beer category has been no exception to this trend, demonstrating that more and more, shoppers are turning to products that aren’t produced on their own turf.

Still, statistics gathered by Nielsen show that imported beer sales in supermarkets are slowing. From March 21 to April 21, imports gained a tenth of a point in case share, with Corona Extra losing three tenths of a point of case and dollar share, and Heineken losing one tenth. Heineken Premium Light did gain twotenths of a point of case share, but it’s hardly the massive growth the product took on last year, when it stormed onto the market to gain nearly 3 percent of the category share. And a lot of imports’ thunder has been stolen by the craft segment, which has seen fast continued growth.

The light import segment has come to encompass about 15 percent of the category’s dollar share, but very little of that extends beyond three brands: Corona Light, Heineken Premium Light, and Amstel Light.

Nevertheless, beer industry insiders remain confident that the trade-ups that have fueled

import growth will continue to result in more consumer uptake of light import brands.

“What is happening in the imported light beer segment of the marketplace is very similar to what is occurring with imports in general,” says Don Blaustein, senior vice president of sales at Heineken USA in Atlanta, Georgia.

“It’s no different from why people are interested in imports,” he states. “People are interested in imports because they are more full flavored, they have a better image, and they have more character. There is a trade-up going on in society across a number of categories. The same thing is happening with light beer.”

In fact, with the demonstrated success of those three top import light brands, brewers seem steadfast in their focus on this market.

Beck’s continues to sell its own light product, while Heineken recently renewed its agreement with FEMSA, resulting in its continued status as importer of Dos Esquis, Tecate, Tecate Light, Sol, Bohemia and Carta Blanca in the United States.

That begs the question, however: With the increase in imported light beers being introduced into the marketplace, is there room for all of these brands?

Industry insiders answer with a resounding “yes,” citing consumer demand as the driving force. “When Miller Lite started this whole thing, people laughed at them, but the category has been growing, and as long as the consumer is obsessed with healthy living and how to become better at eating and drinking, they will look for alternatives – whether it’s low-carb or lowcalorie,” says Tim Jacobi, former senior brand manager at the Pabst Brewing Company, who is currently working in procurement at a U.S.based grocery chain. “I believe that the light beer category will continue to grow, and that growth can be fuelled by imports.”

The growth of micro- and craft brews should actually help light import growth, adds Origlio.

“I think by people being exposed to [craft beer],” she says, “When they want to drink a light beer, they will look for something that not only represents not only more quality, but a little bit more sophistication.”

So what’s holding light imports back from a sustained take-off? A great deal of the problem is

MAY – JUNE

with execution, according to Jacobi.

Jacobi notes that most brewers – save for Budweiser and Miller – treat their light beer brands as extensions of their core brands, which can pose a challenge to retailers. “A lot of these brewers do not treat their light brand as an independent brand with an independent advertising campaign,” he says. “The packaging is always linked. However, they attract very different consumers. Not funding their campaigns sufficiently to make that distinction is causing a lot of problems.”

In stocking products according to sales, brands like Bud Light, for example, usually receive most shelf space in prime, eye-level real estate.

“I would be interested to see if you put Bud Light elsewhere, and put the smaller brands, like Tecate Light, if that becomes a focus for the retailer, smack in front of the consumer,” Jacobi challenges. “Bud Light has a very loyal following.

The consumer will find that beer. They will look for it, whether it is in the middle shelf, top shelf, or lower right hand corner. At this point in time, few consumers will seek out a Tecate Light or a Heineken Light.”

But that might change, he says, with better placement for light imports. It may be starting to happen, but more slowly than is perceptible, according to other experts.

“To their credit, more and more retailers are increasing sales and profits by fully leveraging the imported light beer category,” notes Bill Hackett, president of Crown Imports. But, he adds, more help needs to come from manufacturers, as Jacobi argued.

Off-premise retailers recognize the importance of carrying a wide variety of brands, but Hackett believes that importers – and other channels – can help stores sell the entire category, by recognizing the brands that are driving sales, and assigning space and promotion to them. “In the off-premise, retailers who want to commit to the category and its strong sales and profits should consider offering a wider selection of brands to the consumer. It’s not just about one brand, but about offering a variety of brands to the consumer.”

Aside from the attraction to drinking beer comprised of fewer calories, a large portion of

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the consumer appeal behind imported light beers is driven by image: driving a Porsche versus a Mustang produces very different feelings, and the same concept can be applied to beer. “People are branded by what they drink, and besides the taste, they like to stand and hold a product that is perceived as higher quality,” Origlio says.

When brewers succeed in communicating why their beer is special, different and of better quality, Jacobi adds, people will pay for it. “That means more margins for the brewer, more margins for the distributor and more margins for the retailer. People equate price with quality: if it’s expensive, it must be good.”

The investment that both brewers and retailers are making in the imported light beer category will continue to drive its growth in the coming years, Hackett believes. “There’s only one place this category is going, and that’s up,” he declares.

Maryanne Origlio, director of corporate communications at Origlio Beverage

“As retailers continue to focus on the imported light beer segment, and consumers continue to trade up to imported light beers, the category is poised for great things in the short and long term. The consumer is clearly embracing these brands, and we expect that to continue, especially as investment in the segment continues.”

50

Tsingtao – This summer, Tsingtao Beer has invited consumers to “Enjoy It All Together” with a new off-premise promotion that features a food pairing theme designed to leverage cross-merchandising display opportunities in the fresh vegetable or seafood department in chain grocery stores. The program supports Tsingtao Lager (nationwide) and Tsingtao Pure Draft (select markets) in June and July.

Spaten – Spaten, one of the leading imported German beers, has a new 12 oz. bottle.

The new bottle design is now available across the U.S. on the entire line of Spaten beers: Spaten Premium, Spaten Optimator and Spaten Oktoberfest. Subtle changes have also been made to the label, 6-pack and 12-pack to fit the new bottle. Spaten is widely known as one of the oldest breweries in Germany with a 600-year brewing tradition. All Spaten beers are brewed in strict accordance with the Bavarian Purity Law of 1516. Spaten has also packaged three great German beers, Spaten Premium, Spaten Optimator and Franziskaner Weissbier in an easy-to-carry 12-pack.

Corona – Corona and Corona Light offer listeners a “getaway” during commercial breaks with a new, unconventional radio campaign. The new campaign’s 60-second ads deliberately sound like a musical interlude rather than a typical talk-driven commercial, thanks to more than 50 seconds of music-only listening time. Created with a predominantly African-American audience in mind, the new radio spots present music tracks from today’s hottest urban adult contemporary recording artists. Corona Extra hopes the ads’ relaxed vibe and smooth sounds will bring to life the laid-back Corona lifestyle.

A brief tag line at the beginning of each ad will identify it as a Corona Commercial Getaway before launching into songs performed by artists, including Brian McKnight,

BEVERAGE SPECTRUM // MAY – JUNE

2007

Ne-Yo, Ruben Studdard, Joe, Musiq Soulchild and a Tony Bennett/Stevie Wonder duet. The campaign will run this summer in 25 markets nationwide.

Fuller’s – Two of Britain’s best-loved icons of taste and privilege are joining forces.

Fuller, Smith & Turner, the brewery behind highly acclaimed London Pride and Fuller’s ESB, has won the exclusive rights to use the name “Real British Open” and is launching a series of marketing efforts promoting Britain’s venerable golf tournament.

To promote the partnership, Fuller’s “Real British Open” claret jug tap markers are joining the line-up at upscale country clubs and sports venues. Fuller’s is also offering a trip for two to be the VIP guests of Fuller, Smith & Turner’s at the 2008 British Open.

The consumer sweepstakes is being promoted with display cards and on-premise posters and entry forms. Consumers of legal age can also enter the contest at www.greatbeersweepstakes.com. The contest runs from June 1 – July 19, 2007, the final round of the British Open. Fuller’s was also chosen as the best regional brewer at the Oscars of the flourishing British pub industry, the Publican Newspaper Awards.

Hacker-Pschorr – Deeply tied to Oktoberfest, Hacker-Pschorr has a new promotion identifying it as part of Oktoberfest since the first celebration in 1810, when the first celebration took place. Hacker-Pschorr’s ‘The Difference is Inside’ tagline will be branded on all paper POS, including pennant strings, window posters, table tents, temporary tattoos, menu cards, coasters and case/price/easel cards. Additionally, authentic Oktoberfest banners, flags and 1 L glass mugs from Munich, Germany, will be available, where legal. Hacker-Pschorr is also offering consumer mail-in rebates at off-premise accounts, where legal, for $8 off a case (or equivalent) and $4 off every 12-pack (or equivalent).

©2007 Anheuser-Busch, Inc., St. Louis, MO ©2007 Import Brands Alliance, St. Louis, MO

PROMO PARADE

Frank & Ed Rise Again!

They're back and they're looking for your support!

America's most beloved "on the porch" icons, Frank & Ed of cooler brand Bartles & Jaymes, have returned. To kick off the brand's two-year re-launch plan, classic TV ads showing the original spokesmen sitting on their porch will be re-released.

The multifaceted plan will also include a "Get off the Porch" launch event in L.A. next month to take Frank & Ed off the porch to promote their message of "good-time" summer moments. They will also begin to appear at media-centric red carpet happenings such as movie premieres and sporting

events in an effort to thank the public "for their support."

The original cooler brand, introduced in 1981, has been reformulated and relaunched after a 16-year hiatus. Frank & Ed, who starred in Bartles & Jaymes ads from 1985-1991, became beloved idols of American television, representing a simple, salt of the earth lifestyle that contrasted drastically with the pop culture climate of the era. This modern return of Frank & Ed represents a similar cultural desire to return to familiar, established characters as brand icons.

Mountain Dew Transforms Your Summer Mountain Dew is partnering with DreamWorks Pictures and Paramount Pictures for a unique promotion in conjunction with the July 4 release of the highly-anticipated live-action film TRANSFORMERS. The "Transform Your Summer" online promotion will award more than 150,000 prizes, which have a total value of more than $7 million, over a 12-week period.

Consumers will be able to enter the "Transform Your Summer" sweepstakes online at www. transformyoursummer.com. Thousands of prizes

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will be given away each day and consumers will be able to choose the prize they would like the chance to win by entering the daily drawing of their choice.

In addition, a limited-edition Pepsi Optimus Prime collectible truck figure will be available as part of the promotion.

A new "Transform Your Summer" Mountain Dew commercial will debut in early June. The spot is set in an apartment kitchen where a young man tries to get the last Mountain Dew away from a toaster that "transforms" into a toaster- bot.

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PROMO PARADE Pepsi Asks for Volunteers PepsiCo’s “Design our Pepsi Can” promotion will allow a consumer to design the look of one of its cans for the first time in history. The person who comes up with the winning design will have their artwork featured on 500 million Pepsi cans across the country and take home a $10,000 prize. During the promotion, consumers may enter by going to www. designourpepsican.com. Once registered, participants will have the option of using their own design programs or the tools available on the site to bring their ideas to life. The top designs, as determined by a panel at Pepsi, will be posted on designourpepsican.com where consumers will vote for the winner.

Some of the world's top musicians are also showcasing their artistic talent on the Pepsi can. The All-American Rejects, Big & Rich and Pharrell Williams have each created unique designs for the Pepsi can that will be in market in the upcoming months. The three special cans will feature a Web site address that will take fans to exclusive footage of the artists and will offer information on their new projects.

These designs are a part of Pepsi's global brand restyle.

The iconic Pepsi globe logo and name lettering remain the same – just like Pepsi's great taste – but the background graphics change every few weeks. In its 109-year existence, Pepsi-Cola's look has changed just 10 times, but this year alone, it will change more than 35 times.

LIV Natural Starts Sponsorships LIV Natural, the innovative all-natural sports drink designed for athletes and active adults and kids, announced today that they will sponsor an assortment of teams and events during the remaining months of 2007.

The following teams will be racing on behalf of LIV Natural, Inc.: • The WBI Investments powered by LIV Natural Cycling Team, based in NJ (www. wbiinvestments.org) • EMC2 Triathlon Club, based in NJ (www.emc2multisport.com) • Triple Fitness Training, Inc., based in Longwood, FL (www.jeffcuddeback.com) • Team Adoptex Adventure Racing Team, based in CO (www.adoptex.org) LIV Natural will also be sponsoring the following sporting events: • Hope and Possibility 5 mile run in Central Park, NYC June 24 (www.shoe4africa.org) • Running For Cover (Noreen O’Neill) Foundation for Melanoma Research in Philadelphia, PA June 24 (www. foundationformelanomaresearch.org/runwalk) • Chilmark Road Race in Martha’s Vineyard August 11 (www.chilmarkroadrace.org) • Run the Chop Challenge in Martha’s Vineyard June 30 (www.runthechop.murdicks.com)

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FRS Supports Armstrong Foundation New Sun Nutrition, manufacturers of FRS Healthy Energy Drink, has joined forces with the Lance Armstrong Foundation (LAF). The company will help raise funds to support the LAF’s programs by providing ten cents for every case sold of its FRS healthy energy drink in ready to drink cans. In addition, similar payments will also be made on sales of all other FRS product formats including concentrate, chews and drink powder.

FRS product packaging will feature the LIVESTRONG logo, and FRS print advertising, web site and other marketing materials will include the LIVESTRONG yellow wristband to help raise awareness of the LAF and its ongoing fight against cancer.

Ironman and Ardea Ardea Beverage Company, makers of airforce Nutrisoda, has announced that triathlete and Ironman competitor Jay Hewitt will be their national spokesman for diabetes awareness. Ardea has taken a proactive stance on diabetes initiatives nationwide, and Jay Hewitt is an integral part of these efforts. Since 1991 Hewitt has been living with Type 1 diabetes, which was his motivation to begin racing, thereby becoming an inspiration to people with diabetes around the world. Hewitt has posted health and wellness tips on the airforce Nutrisoda Web site (www.nutrisoda.com).

The last FMI in Chicago for the next few years brought out some old faces and some new ones, but they all decided to pose for the roving eye of the Beverage Spectrum cameras. The show showcased over 70 beverage companies and their brands. Beverage exhibits could be found on the FMI show floor, as well as at the adjoining Fancy Foods and All Things Organic shows, which were co-located with FMI at McCormick Place.

CONVENTION SCRAPBOOK

FMI

Jonesing for sales are Mike Spear and Chad Kennedy.

Karsten Robbin

Cindy Lane and Maura Mottoles Lisa Nelson smiles for Steaz.

Yeah, Jimi would think this is cool.

Right? Wouldn't he?

s and a Luvli c

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looks for Hint Three differeg ntKara's hoodie! includin

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e Switch things up.

BEVERAGE SPECTRUM // MAY – JUNE

Still no Coke labels on Fuze bottles.

Hey, the Honest Tea crew never misses a show.

2007

Who needs to stir when there are 4-packs of Stirrings?

CONVENTION SCRAPBOOK

FMI

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Laura Ly has Vitamins and Fiber

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Shaggy and shiny in the Adina booth are Roland Smart and Steve Maremont.

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BEVERAGE SPECTRUM // MAY – JUNE

2007

Geoff McPartlin shows off some packaging genius.