Coca-Cola, Jack Daniel’s Set to Launch RTD Cocktail

The Coca-Cola Company is accelerating its push into beverage alcohol with the announcement of a new global partnership with Jack Daniel’s Tennessee Whiskey to release a ready-to-drink cocktail.

Jack Daniel’s & Coca-Cola RTD, as the product was dubbed in a press release, will launch initially in Mexico in late 2022 before continuing a global rollout. The product, made with Coca-Cola and Jack Daniel’s Tennessee Whiskey, contains 5% ABV in each 12 oz. can, and will also be available in a zero-sugar version.

“The relationship brings together two classic American icons to deliver consumers a taste experience they love in a way that is consistent, convenient and portable,” said Lawson Whiting, CEO and president of Brown-Forman Corporation, the parent company of Jack Daniel’s. “Brown-Forman has been a leader in the ready- to-drink category since we launched our first Jack Daniel’s RTD offerings, enabling us to accelerate expansion and continue to grow our business around the world.”

“We keep consumers at the center of everything we do as we continue to develop our portfolio as a total beverage company, and that includes new products with our iconic Coca-Cola brand,” said Coca-Cola chairman and CEO James Quincey. “We are excited about our new relationship with Brown-Forman and look forward to the introduction of Jack Daniel’s & Coca-Cola.”

Though the company has dabbled in beverage alcohol in the past, Coca-Cola’s interest in the segment has picked up
momentum in recent years. Within the U.S., the soda giant has licensed its brands to third parties for use in alcoholic drinks;
Topo Chico Hard Seltzer and Simply Spiked Lemonade are produced via partnership with beer giant Molson Coors, while Constellation Brands makes Fresca Mixed. Jack Daniel’s & Coca-Cola RTD will be the first alcoholic drink to carry Coke’s official branding and packaging.

In contrast, Jack Daniel’s has multiple RTD products on the market across a range of ABV levels and formats. Brown Forman
announced a partnership with Pabst Brewing to produce, sell and distribute Jack Daniel’s Country Cocktails, the whiskey brand’s line of flavored malt beverages, beginning in April 2021. While Brown-Forman retained full ownership of Jack Daniel’s
Country Cocktails’ trademarks and other assets, Pabst’s national accounts and field sales teams took over sales to distributors and retailers in the U.S. and domestic military markets.

Via the Pabst partnership, Brown Forman has landed on market research firm IRI’s list of top 25 beer category vendors in off-premise retailers with sales up 20%, to $24.4 million, year-to-date through May 15.

Along with Jack Daniel’s & Coca-Cola RTD, Coke’s products reflect its focus on three segments of RTD flavored beverage alcohol: hard seltzers, hard alternatives and pre-mixed cocktails. In a separate statement, Khalil Younes, who leads Coke’s alcoholic beverage division, said the company was “strategically experimenting and learning in alcohol,” a mission that “will require effort and patience.”

“Our ambition is to grow our brands in a responsible and sustainable way to those who choose to consume and are over the legal purchase and drinking age,” Younes said.

Buoyed by continued growth from its flagship soda — Coca-Cola (+6%), Coca-Cola Zero Sugar (+14%) both expanded in Q1 this year — the Atlanta-based corporation has leaned into its trademark as of late, launching Coca-Cola With Coffee and now-defunct Coca-Cola Energy while unveiling Coca-Cola Creations, a “global innovation platform” that has released several LTO products so far this year. Outside of CSDs, it has recalibrated strategies around key segments like tea, coffee and juice, efforts which have seen brands Odwalla and most recently Honest Tea be discontinued.

In April, Coca-Cola Company announced net revenue was up 16% in Q1, to $10.5 billion, despite seeing its cost of goods rise 17%, to nearly $4 billion.

Chameleon Coffee and REBBL Acquired By SYSTM Foods

SYSTM Foods, the strategic partnership of private equity firm SYSTM Brands and venture capital fund PowerPlant Partners, staked its first claims on the impact-focused food and beverage category by announcing it has acquired Chameleon Coffee from Nestlé USA, along with independent functional beverage brand REBBL.

“I couldn’t think of two better brands to combine,” said Andy Fathollahi, CEO of SYSTM Foods. “We look for great brands, great products and this acquisition was phenomenal.”

Through SYSTM Foods, which is focused on socially conscious food and beverage products, both brands will be operated by SYSTM Brands with PowerPlant serving as lead investor in the partnership. The deals were both closed in May but were officially announced in June.

Although the details of the partnership were undisclosed, the launch of SYSTM Foods allows SYSTM Brands to use its expertise in consumer product acquisitions and move into the food and beverage space where PowerPlant has invested heavily, Julian Cheng, chief strategy and investment officer for SYSTM Brands, told BevNET.

Based in Austin, Chameleon started as an organic cold brew concentrate business in 2010 and was acquired by Nestlé in 2017. Under the leadership of one of the world’s largest coffee companies, Chameleon rounded out Nestlé’s offerings with at-home pod-based products, packaged coffee and single-serve RTD coffee drinks.

Nestlé’s decision comes as oversaturation in the RTD coffee category and increased competition in the market has led to shakeout in the category. There were 326 active coffee brands (excluding private label) in the market in December 2021, down from 350 in 2020 and a peak of 357 in 2019, according to SPINS data for MULO and convenience.

California-based REBBL makes plant-based elixirs and protein beverages and most recently launched its own functional RTD coffee line called Stacked, as well as prebiotic soda REBBL POP. REBBL frames itself with a conscious capitalism business by using recyclable materials and supporting social justice and human rights organizations through a portion of its sales.

REBBL’s acquisition continues the company’s relationship with PowerPlant Partners who invested in the brand in 2018. The venture capital firm has invested extensively in the food and beverage space helping fund companies like Beyond Meat, Thrive Market, Liquid Death, and Vive Organic.

Chameleon and REBBL will continue to be run as two separate businesses with SYSTM operating the finances and sales on the backend. SYSTM Foods reported that the strategies for the new companies would “stay fairly in line with what both brands have been doing with some refinements to growth strategies.”

In establishing a natural beverage portfolio, the company sees these two brands as an opportunity to invest beyond consumer products like mobile phone cases that have populated its portfolio until now, Cheng said.

“From a consumer product standpoint, managing multi brands and delivering really high-quality products is something that we’re very comfortable doing. The only thing that’s really different is ingredient mix and supply chain,” Fathollahi said. “We have the good fortune of having a largely domestic-based supply chain here. We co-man(ufacture) and distribute everything domestically within REBBL and Chameleon.”

At this point, SYSTM Foods is solely focused on the integration of the two new brands and does not have future acquisitions planned, Cheng said.

“We’re obviously gonna leave our options open, but if an opportunity pops up, we’re going to be looking at it closely.”

Super Coffee Tests ‘ENRGY’ Line

Kitu Life Super Coffee pilot-launched its first non-coffee innovation in Texas: a three-SKU, zero-sugar energy drink line enhanced with collagen and probiotics called Super ENRGY.

Much like Super Coffee presenting itself as a better-for-you alternative to Starbucks’ Frappuccino drinks, Super ENRGY is positioned as an extra-functional, all-natural choice within the traditional energy drink space. Boasting the tagline “the healthiest energy on earth,” the product has launched in three initial flavors — Mango Peachpop, Strawberry Lemonspark and Mixed Berryburst — in 12 oz. slim cans containing 200mg of caffeine each.

“Super ENRGY is focused on delivering great tasting, great-for-you, everyday energy that provides consumers with something that is much better for them while being fun, flavorful and relevant,” said Kitu Life founder and COO Jordan DeCicco in
an email. “The brand will speak to the next generation of Energy Drinkers who want something that’s great for them, tastes great and has a clear purpose.”

All three flavors debuted in June at “roughly 200” Texas locations of grocery chain H-E-B, where they are being sold in single cans from the cooler.

According to DeCicco, Super ENRGY is off to a fast start, scanning 20,000 in the first two days, “an early sign that the brand and product is resonating.”

Super Coffee has emerged as one of the major entrepreneurial success stories in beverage over the past half-decade: since Jordan and brothers Jimmy and Jake DeCicco launched the protein-boosted RTD coffee brand in 2015, it has rapidly expanded across channels and product formats, including multi-serve coffee, creamers and K-Cups. A landmark investment and distribution deal with beer giant Anheuser-Busch InBev in 2020 marked a further turning point, allowing it to build awareness (see its Super Bowl ad with ’90’s rapper Vanilla Ice) and adjusting the company sales targets to over $100 million annually.

But with “positive energy” already one of its core principles, why jump into the fraught energy drink market? According to Jordan DeCicco, the category allows Super Coffee to extend its zero-sugar brand platform to reach more consumers with a value-added product that meets a different use occasion and day part.

“Based on the consumer and category data it will absolutely be incremental to Super Coffee,” said DeCicco. “We know we have a lot of our current consumers who will drink their Super Coffee in the morning and Super ENRGY in the afternoon and evenings instead of trading to another energy drink which is happening very often today. It’s also going to introduce our brand to Non-Coffee drinkers for the first time which is an exciting opportunity that we’ve looked forward to for several years.”

Kitu Life is entering energy drinks at a precipitous time, with major operators like Molson Coors (ZOA), Vita Coco (Runa), PepsiCo (Starbucks BAYA) and others showing increasing potential for disrupting the category with zero-sugar, naturally caffeinated energy drinks. On the independent side, brands with differentiated products for specific demographics, such as CLEAN Cause, Alani Nu, C4 and Celsius, have enjoyed the growth wave. According to Nielsen data for the two-week period ended on June 4, the category has grown upwards of 30% on a three-year stacked basis.

In terms of how the product may potentially fit within ABInBev’s current network — which includes energy drinks from GHOST and Hiball, Super ENRGY’s role is not yet clear.

“We love our wholesaler partners and hope they will all be as excited as we are for Super ENRGY once we prove the product and brand positioning the same way we did with Super Coffee,” DeCicco said. “We won’t ask them to carry it until it’s performing well and we are confident about its future and committed to supporting it with the necessary resources it will need to scale. We are starting with a very disciplined launch at HEB in Texas and then based on performance will start exploring new opportunities with wholesalers and retailers who believe in the brand and want to get behind it through a meaningful partnership and launch plan.”

But for the next three to six months, DeCicco emphasized that Kitu Life plans to be “hyper critical” in analyzing Super ENRGY’s performance at H-E-B, measuring weekly velocities and dollar growth against the category’s top 10 brands — without leaning on promotional pricing.

“We want to ensure we focus on a healthy gross profit for the wholesalers and retailers as we do not want to inflate sales out of the gate with heavy promotions but focus on full price velocities which is a true sign of product and brand strength.”

Bang Announces Split from PepsiCo

After a year-and-a-half of high tension and muted sales, Bang Energy said it had officially ended its distribution partnership with PepsiCo.

The Florida-based brand, a subsidiary of VPX Pharmaceuticals, announced in a brief press release in late June that “all disputes with PepsiCo have been fully settled and resolved” effective immediately and that the brand will return to DSD distribution through a number of new partnerships.

“Our primary objective is to effectuate a smooth transition that best serves both Bang Energy’s and PepsiCo’s highly valued retail customers,” Bang Energy CEO Jack Owoc said in the release.

PepsiCo has not yet confirmed the termination of the agreement.

PepsiCo first announced its exclusive distribution partnership with Bang in April 2020 at a time when the brand was reporting triple-digit year-over-year growth and had recently surpassed $1 billion in annual retail sales. The deal was contracted to last through October 2023; however, the relationship soon went sour as Bang’s transition from DSD (including within Anheuser-Busch InBev’s network) to Pepsi’s blue trucks when sales fell off and in October 2020 Owoc began attempting to exit the agreement prematurely.

Bang publicly announced its intention to terminate the agreement in November 2020, citing “multiple issues and concerns regarding PepsiCo’s performance since the parties’ distribution partnership began.” However, PepsiCo sued Bang that month and an arbitrator later ruled that Bang must honor the contract.

Since then, Bang has continued to face slow and, at times, declining sales growth within the PepsiCo system. According to NielsenIQ, the brand’s sales fell 20.5% in the two-week period ending June 4, 2022 and were down 19.5% in the 52-week period on a two-year stack basis. Volume sales in that time fell 23.5% for the two-weeks and were down 24% for the 52-weeks on a two-year stack basis.

Speaking at BevNET Live Summer 2022 in New York City in June, Owoc declined to say that he regretted taking the deal with PepsiCo calling it a “learning experience” and suggesting that he had distributors lined up for when Bang eventually departed.

Bolthouse Farms To Acquire Juice Brand Evolution Fresh From Starbucks

Starbucks Coffee has agreed terms with Bolthouse Farms for the sale of its cold-pressed juice brand and business Evolution Fresh, the two companies announced. Financial details of the transaction, expected to close later this year, were not released.

By joining Bolthouse Farms, itself owned by private equity group Butterfly, Evolution Fresh “will have the opportunity to accelerate its growth trajectory” while Starbucks “focuses its efforts on the growth of the core Starbucks business and its partner and customer experience,” read a press release.

“Evolution Fresh is a natural extension of the Bolthouse Farms portfolio and we look forward to welcoming the team,” said Jeff Dunn, chairman and chief executive officer of Bolthouse Farms.

“At Bolthouse Farms, with the support of Butterfly, we strive to ensure that the acres we grow and beverages we make have a positive impact on the land, on the people who make up our company, and on all people. By bringing Evolution Fresh into our portfolio, we will extend our spirit of ingenuity and innovation, sharing resources and passion for high-quality, nutrient-dense juices to pioneer solutions for today’s food system.”

“Evolution Fresh has grown steadily over the last several years as a result of our partners’ hard work and commitment to the brand. We feel there is a great runway and opportunity to take Evolution Fresh to the next level, and Bolthouse Farms’ considerable experience and success in the premium beverage category will allow the brand to continue growing,” said Hans Melotte, Starbucks executive vice president Global Channel Development. “Bolthouse Farms shares the same values and commitment to putting people first in everything they do, which affirms for us that we have found the right opportunity for Evolution Fresh.”

Based in California, Bolthouse Farms produces plant-based milks, juices, protein drinks, salad dressings, and baby carrots. The company was acquired by Butterfly from The Campbell Soup Company in a $510 million transaction in 2019. The group’s portfolio also includes Chosen Foods, MaryRuth Organics, Orgain, and Pete and Gerry’s Organics.

Starbucks announced its $30 million purchase of Evolution Juice in November 2011, with former chairman Howard Schultz framing the brand as a way into the “$50 billion health and wellness sector.” Founded by Jimmy Rosenberg, the California-based brand was an early adopter of high-pressure processing (HPP) technology to preserve freshness and extend shelf-life for
its juices and smoothies.

“We have long admired the Evolution Fresh brand and see tremendous untapped potential in the premium beverage category. By bringing these powerhouse brands together — Bolthouse Farms and Evolution Fresh — we will deliver a robust, high-
growth, and consumer-preferred portfolio of juices to market,”said Bill Levisay, president, Consumer Brands, Bolthouse Farms.

The sale marks another shakeup in the premium juice category, which has seen market momentum slow over the past decade. Over the past two years, major brands including Naked, Tropicana, Odwalla and Suja have all either been discontinued or sold to private equity groups, similar to Bolthouse’s current setup.