Beverage Industry

Industry Issue

April 1, 2007


Coca-Cola, Nestlé Narrow Joint Venture
The Coca-Cola Co., Atlanta, and Nestlé, Vevey, Switzerland, have further redefined their Beverage Partners Worldwide (BPW) partnership, narrowing the companies’ collaboration to countries outside the United States, and to tea products only.
Under the new agreement, BPW will cease activities in the United States, with the Coca-Cola Co. entering into a Master Sublicense Agreement for the ready-to-drink Nestea and Enviga brands. Both companies will be able to acquire or develop additional tea brands on their own to compete in the United States. All BPW coffee products will revert to Nestlé on a market-by-market basis during a transition period that will end no later than the end of next year. BPW also will not operate in Japan.
In other Coca-Cola news, the company came under fire last month from the Teamsters Union, which called for rallies at NCAA Men’s Basketball Tournament games and held a protest in New York’s Times Square. The union cited job cuts at Coca-Cola Enterprises as one of the reasons behind the protests.
Kraft goes it alone
Kraft Foods, Northfield, Ill., has begun operating as an independent company, following its spin-off from Altria Group late last month. The company will trade on the New York Stock Exchange under the KFT symbol. With the move, Irene Rosenfeld added the title of chairman to her role as chief executive officer. Previous chairman Louis Camilleri will continue to serve on the Kraft Board.
"As a fully independent company, we'll have more opportunity to fulfill the potential of our great brands and great company. We're confident we have the right plans in place to deliver attractive returns to our shareholders,” Rosenfeld said in a statement.
Advertising review published
The Distilled Spirits Council (DISCUS), Washington, D.C., issued its Semi-Annual Report detailing complaints about alcohol advertisements, actions taken by the industry’s internal review board and the response by each advertiser. The report covers Code Review Board actions during the second half of 2006, and indicates complaints were made against 16 advertisements. Nine of the ads were found in violation by the Code Review Board, and of those, only one company failed to take corrective action.  
“While this recent report continued to show 100 percent compliance by Distilled Spirits Council members with Code Review Board decisions, importantly, there also was overwhelming compliance by non-members,” said DISCUS President and Chief Executive Officer Peter Cressy, who noted that of the seven non-DISCUS member ads found in violation, six were pulled. The full report can be found at discus.org.
Natural products reach a tipping point
The Natural Products Expo West, held last month in Anaheim, Calif., drew 47,000 attendees and more than 3,100 exhibits, proving the natural and organic trend is stronger than ever. Eric Schlosser, author of Fast Food Nation, gave the keynote address, telling the audience of natural products manufacturers and retailers they no longer were a fringe movement but a bona fide part of the food and beverage market. “You now have an industry — a big, big industry,” he said.
“The question is: How are you going to use it?” he asked, pointing out that, “If this industry loses sight of what it was based on, it risks becoming what it opposes.”
Americans are at a sort of tipping point, Schlosser says, where environmental issues and health concerns are top of mind, and if the organics industry walks the line, it could pull a large portion of mainstream consumers into the industry. But he warned, “People are very savvy and becoming more savvy.” Organic companies, that put profits above all else are in danger of making the industry appear false and insincere. “Companies that profess one set of values and act on another are going to be outed,” he said.
What’s new
New products packed the show floor in Anaheim, but no overarching theme for beverages emerged this year. Dr. Andrew Weil was on-hand to showcase his new Dr. Andrew Weil for Tea, a line of teas created in conjunction with Ito En North America, Brooklyn, N.Y. The line includes ready-to-drink Gyokuro, Green White blend, Jasmine White, Darjeeling and Tumeric teas packaged in 8-ounce cans, as well as loose tea, tea bag products and a premium Matcha line. Tumeric tea is unfamiliar to most U.S. consumers but Weil says it is one of the best ways to ingest tumeric, which has anti-inflammatory properties, is a powerful antioxidant and supports a healthy heart and nervous system.
Celestial Seasonings, Boulder, Colo., rolled out new Saphara full-leaf teas made from organic and Fair Trade ingredients. The teas are packaged in biodegradable pyramid bags and pouches. The company also introduced Go Stix Kids’ Drink Mixes with 50 percent less sugar than traditional juice drinks.
The Healthy Beverage Co., Newtown, Pa., showed off its Steaz Energy organic energy drink made from Fair Trade certified green tea, Guayaki yerba mate, acai and guarana.
The Republic of Tea, Novato, Calif., introduced new Ginger Peach Green Tea to its Daily Green Tea line, which features a variety for each day of the week. The company also rolled out a new Double Green Matcha Tea, and Superfruit Teas in Palmberry Green Tea and Pomegranate Full-Leaf Green Tea varieties.
In addition, Republic of Tea has teamed with Luna to create organic bottled Luna Nutritional Iced Teas for Women. The group from Luna was on-hand at the show to sample the other end of the partnership, Luna Tea Cakes made with Republic of Tea teas and herbs.
Clif Bar & Co., Berkeley, Calif., has moved into the beverage arena with powdered drinks for kids. Splashers are part of Clif’s new children’s line and contain vitamins C and B, as well as calcium and electrolytes.
PepsiCo’s newly acquired Izze Beverage Co., Boulder, Colo., launched its first line extenstion, Izze Esque. The product is a lower-calorie version of Izze, containing half the calories with no sweeteners. The company’s Tropicana division debuted Tropicana Organic Orange Juice and Orchard Medley pear and apple juice.
Frutzzo Natural Juice LLC, Minneapolis, showed off the new Pomegranate Passion Fruit addition to the organic pomegranate juice line.
Coca-Cola’s Odwalla sampled flavors of its new Soy Smart soymilk drinks in Chocolate, Chai and Vanilla flavors. The company also has entered into a distribution agreement for Bossa Nova acai juices, and showcased those as well.
Taking coffee into the soft drink arena, Java Pop Inc., Woodstock, Vt., introduced its Java Pop Coffee Soda to attendees. The product is available in Vanilla, Espresso, Mocha, Hazelnut and Caramel flavors. And Apple & Eve, Port Washington, N.Y., gave attendees a chance to try its Organic Pome-granate juice, packaged in 48-ounce PET bottles.
On-premise show ranks spirits high
The 2007 Bar & Nightclub Show held last month at the Las Vegas Convention Center featured several keynote speakers and an exhibit hall full of new spirits, beers, energy drinks, waters and mixers for the more than 30,000 professionals who attended the show.
The State of the Industry Keynote Address was given by Peter Cressy, chief executive officer and president of the Distilled Spirits Council of the United States, who said on-premise spirits sales are up 58 percent from $21 billion in 2000 to more than $33 billion at the beginning of this year. The extraordinary growth isn’t replicated by many other U.S. industries, he said. Spirits industry sales are expected to continue to grow at a slower pace to $35 billion for 2007, the speaker said.  
Cressy attributed the growth to more consumers drinking, but drinking in moderation; good work from all three tiers; the move from premium to super-premium brands; the popularity of cocktails; clever on-premise marketing programs and sharp national advertising.
Pernod Ricard USA’s Chief Executive Officer and President Alain Barbet also gave a keynote address that attributed Pernod Ricard’s success to premiumization and innovation. Included in Pernod Ricard’s innovation plans are the new product launches of Malibu Tropical Banana, Kahlúa French Vanilla, Kahlúa Hazelnut and Hiram Walker Pink Grapefruit and Hiram Walker Pear Schnapps.
Master Mixologists Tony Abou-Ganim and Dale DeGroff both spoke about the “craft of the profession,” and urged the move back to fresh juices and ingredients, and the importance of professionals creating their own drink menus.
Andy Thomas, Heineken USA’s chief executive officer and president, closed out the keynote speakers by focusing on how Heineken is finding opportunity in the consumer trends of trading up, health and wellness, ethnic diversity, connection and socialization, individuality and variety, and the need for stress relief. Broadening Heineken USA’s “luxury light” portfolio, the company launched Tecate Light in Texas in March and will release Heineken Premium Light in cans in May.
New releases
The packed show floor surged with new beverage products for the on-premise scene. The overriding theme of product launches included new flavor additions, sugar-free extensions, licensed products and Asian-themed beverages (see Beverage Industry’s March article “Asia Invasion in Vegas” at bevindustry.com).
In the flavor arena, Future Brands LLC, Deerfield, Ill., launched two new additions: Absolut Pears and DeKuyper Pomegranate Liqueur. In licensed agreements, Sidney Frank Importing Co., New Rochelle, N.Y., displayed its new Tommy Bahama Golden Sun and Tommy Bahama White Sand Rums, which will launch this spring.  
New York City-based G Pure Energy, from the makers of Voss water, added a light version of the original lime and lulo flavor as well as an Orange Blossom variety in light and regular versions. Anheuser-Busch, St. Louis, expanded its line of 180 Energy Drinks with 180 Red with Goji Energy Drink, a cherry-flavored energy drink with tartness added by the goji berry.  
Additionally, Rockstar Inc., Las Vegas, displayed its new flavor addition Rockstar Juiced Energy + Guava, with tropical guava puree and other fruit juices. The company also debuted Rockstar Zero Carb Energy Drink, a lightly carbonated, wild berry-flavored, no-carbohydrate version of Rockstar. BI
Get your product noticed
Beverage Industry sister publication Stagnito’s New Products Magazine recently teamed up with Schneider & Associates and Information Resources Inc. to determine what makes products memorable and what kind of marketing entices consumers to purchase a new product. They presented the results at the IRI Summit in Las Vegas.
“What we wanted to do was find out which were the most memorable new products of 2006, measure awareness of products and how consumers got information — the trends that might influence purchasing behavior,” says Joan Holleran, editor of Stagnito’s New Products Magazine.
Using IRI sales data to determine the most financially successful products of the year — and thus, the products that should be the easiest to recall — the companies created a consumer survey on new product awareness. According to the results, 81 percent of consumers could not recall one of the Top 50 new products launched during 2006.
The food and beverage products that scored highest in awareness were Wish-Bone Salad Spritzers (with 46 percent awareness), V8 V.Fusion (43 percent), Dr Pepper Berries & Cream (39 percent), Coca-Cola Blak (33 percent); Campbell’s 25% Less Sodium Soup (30 percent), Hamburger Helper Microwave Singles (29 percent), Folgers Simply Smooth (28 percent), 7 UP 100% Natural (28 percent), and Birds Eye Steamfresh Fresh Frozen Vegetables (28 percent).
According to Holleran, some of the concepts that helped make a new product stand out include:
• Demystifying taboos — creating solutions to problems consumers previously have not wanted to talk about
• Life enhancing messages
• Consumer control
• Multiple problem solvers
• Ethics
• Superfoods
• Easy virtue
• Single-serve/portion control products
• Do-it-yourself products
• Just-for-me/customizable products
Despite fears that the popularity of TiVo and cable TV’s digital recording services would make television commercials obsolete, 73 percent of survey respondents said they learned about new products last year from TV commercials and infomercials. In-store displays and signage were the second most successful form of marketing.
Ninety-six percent of respondents indicated they are “very likely” or “somewhat likely” to buy new products they have tried through free sampling. More than half say they often recommend products to family and friends, and nearly as many said they usually try a product recommended by a friend or family member.
Cutting through the clutter is the most important goal for marketers, the group said. The research team coined the term “Immersion Marketing” to encompass everything from traditional advertising, public relations, word-of-mouth advertising, digital marketing, sampling, coupons, retail partnerships, and any other way of surrounding the consumer with a consistent message about a brand. The all-encompassing approach to a new product launch allows companies to create “multiple touch points” over time that will motivate consumers to try new products, and creates more targeted messages so the right consumers are hearing about the right products.