Assignment 3 Due 11/23/18 Friday 9pm EST - This is a 2 part assignment!!!
amybeth1976
NABPortfolio.docxNON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
(The NAB Company Portfolio will have lists of things that the BUS599 students would be able to sort
through to conduct a SWOT Analysis and to apply to appropriate sections of the NAB Business Plan. )
Note #1:
This is the compilation of Data, Notes, and Information that have been put together to create a
Business Plan for a start-up company in the non-alcoholic beverage industry.
The goal of my business plan is twofold:
1. To help identify and outline all the issues I will need to address in starting this company.
2. To present to funders to help raise money to finance this company.
NAB Background:
Melinda Cates has been selling her NAB at County Fairs for the past 7 years for $2 a bottle. She
sells an average of 10 Cardboard cartons each weekend a County Fair is open. From her
calculations, it takes $.56 to make a bottle of NAB when she calculates all the NAB ingredients
and the cost of the bottle and cap. Her rich uncle, Bill, just died and left her a small monetary
inheritance. However, since he so enjoyed her home-made NAB, he also left her equipment to
start a small NAB business.
Melinda and I have been close, trusted friends for years. She found out that I just earned my
MBA from Strayer University, and she asked me to help her get her NAB business up and
running.
I have agreed to put together a NAB Business Plan, and I have agreed to be the CEO/President of
the company for at least the next five years.
NAB Today:
Parameters for New Company
Here are the parameters in which I must work.
The business is a start-up: We are not yet in operation. We already have a “recipe” for a
beverage, but we are not yet making sales at any significant level.
Product: the only barrier is that it must be a non-alcoholic beverage (NAB). It is up to me
to decide upon what type of non-alcoholic beverage I intend to make and market. It can
be sold in individual sizes or wholesale.
Market size. I will start marketing and selling the NAB in my geographical area within a
100 mile radius from my home address.
Business size. I can grow the NAB business to any size in excess of one million dollars in
revenue by year two. In other words, this cannot be intended to be a one- or two-person
micro-business.
I intend to raise money. I will be looking for funding, and I have already started with
friends and family money. But at some point I will need funds from outside investors,
either angels or venture capitalists, depending on how much I project I need to raise or
receive from a group of individual investors on kickstarter.
I intend to have employees and develop my own organizational hierarchy.
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
I do not need to raise money for my personal financial support for the first six months. In
other words, I do not need to take a salary/draw for myself for six months of projections.
I am assuming I can live off my personal savings.
Note #2:
included
Some of
Owned Eq
Two (2)
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.
the items we
quipment:
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, imported fr
t can be app
able for norm
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tling machin
o AccuSnap
hicles (used
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ry:
ottles, 16 oz.
ps: 24,000 -
rd Cartons (h
gredients: en
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e currently o
rs (mixes up
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mal temperat
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: 24,000 - $3
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ttles): 500 -
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value of this
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urrent $)
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and inventor
current $)
n 1 monoblo
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ry
oc
les.
lip balm
variety o
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belt optio
The Auto
automate
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Dimensi
Height: 9
Width: 2
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Weight
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Speed
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NON
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f other cap a
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94” (238 cm)
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al:
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uirements:
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N-ALCOHO
aps, “top hat
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st cap with r
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ratcheted rip
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ty of contain
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owl or cap el
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ORTFOLIO
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are continuo
machines th
tedious wor
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prevent cos
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this process
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repetitious m
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force that ca
manually pl
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systems are
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to offer solu
variety of sn
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n EQUIPME
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ous motion
hat replace th
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NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
Note #3
Personnel:
Myself: I have collected $20,000 from friends and relatives who would like to either have their
seed money returned by the end of this calendar year at no interest or by the end of the second
year of operation with 5% interest.
Stephen Job: Part Time (20 hrs/week) Computer Expert/Assistant: $10/hr
Melinda Cates: NAB Creator & Master Mixer (owns the patent on the NAB): has $40,000
inheritance
Other colleagues with specific skills and talents:
Ian Glass: retired PepsiCo plant production line foreman. Ian recently retired with 35 years of
loyal PepsiCo service in every position from janitor to production line foreman, and he and his
wife moved into your neighborhood. He is tickled that you have asked him to help develop a
plan to get the NAB Company’s production line going. He said he can help organize and sit on
the planning committee as a non-paid member until the NAB company can hire its own
Production Line Foreman. He hinted that he retired from PepsiCo with an annual salary of
$55,000, but he says that’s just the starting salary that large companies pay their foremen who
are in an apprenticeship program. He doesn’t think the NAB Company will have to pay top
dollar for someone who has the willingness to join the NAB company as a start up!
Mary Cates, JD: Melinda’s sister who was a senior executive with the Federal Trade
Commission from 2001-2012. She left the FTC after a significant 30 year career with the federal
government in which she lead the research and support of numerous federal court findings
against companies that violated consumer deception and unfair practices laws. She would enjoy
serving on the initial company planning group to make sure her sister’s recipe is successfully
shared within the state!
Note #4:
Company
A. In 20
Green
bever
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volumes
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US soda comp
Snapple Grou
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me interestin
ca-Cola Com
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me with the s
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have a strong
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rporation (M
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ver for the n
ORTFOLIO
tion containe
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ng consumer
non-alcoholic
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manufacturers
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g in
es and
The Cons
soft drink
C. Why
By Sharo
Falling d
The nonfalling,
p
carbonate
demand h
respectiv
Key indi
The per c
2013, fro
and a slo
One of th
is weak c
US and E
NON
sumer Staple
k companies
growth is sl
on Bailey • N
demand
-alcoholic be
primarily in d
ed soft drink
has declined
vely.
icator—per
capita CSD c
om 701 8-oun
wer rate of U
he reasons fo
consumer sp
Europe.
N-ALCOHO
es Select Sec
s.
luggish in th
Nov 20, 201
everage indu
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k (or CSD) v
d. Previously
capita cons
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or the contin
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ctor SPDR E
he non-alcoh
4 12:09 pm
ustry is facin
markets. Beve
volumes in th
y, US CSD v
sumption
n in the US f
s in 2012. Re
on growth.
nued decline
sed by adver
ERAGE CO
ETF (XLP) p
holic bevera
EST
ng challenges
erage Digest
he US, maki
volumes decl
fell to about
educed cons
in soft drink
rse macroeco
OMPANY PO
provides an a
age industry
s. Carbonate
t indicates a
ng it the nin
lined by 1.2%
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umption refl
k volumes ov
onomic cond
ORTFOLIO
attractive av
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ed beverage v
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nth straight y
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e servings pe
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ver the past
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year in which
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NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
Note #5
Health concerns
Another major reason is the shift in consumer preferences toward healthier products. Carbonated
soft drink makers have faced severe criticism from health officials, governments, and
communities alike for the ill-effects of high sugar content, artificial sweeteners, and other
harmful ingredients in their products, including those in diet soda variants. Consumers are
also more conscious of the health risks associated with soft drinks such as obesity and nutritional
deficiencies, especially in youth. As a result, they’re opting for other beverages that are noncarbonated
and have fewer calories.
The World Health Organization suggests that sugar should account for only 5% of total energy
intake per day. That’s around 25 grams of sugar per day for an adult of normal body mass index.
Health officials feel that this percentage should be even lower for a better quality of life. A single
soda can contains around 40 grams of sugar.
The soda tax
Mexico, which has the highest rates of obesity in the world, has imposed a 10% tax on sugary
beverages to discourage the consumption of these drinks. There is a strong possibility that many
other countries will introduce a soda tax to reduce sugar consumption through carbonated drinks.
In the next part of this series, we’ll discuss how soft drink makers including The Coca-Cola
Company (KO), PepsiCo, Inc. (PEP), Dr Pepper Snapple Group, Inc. (DPS), and Monster
Beverage Corporation (MNST) are sustaining business under such challenging conditions. CocaCola
and PepsiCo are part of the Consumer Staples Select Sector SPDR ETF (XLP).
D. Key indicators of the non-alcoholic beverage industry
By Sharon Bailey • Nov 20, 2014 12:09 pm EST
Factors influencing sector growth
The non-alcoholic beverage industry falls under the consumer staples category (XLP), which is
non-cyclical in nature compared to the consumer discretionary sector. In this part of the series,
we’ll look at the factors that impact the growth of the non-alcoholic beverage industry.
Consumption expenditure
The Bureau of Economic Analysis (or BEA) releases the personal income and outlays monthly
reports that indicate changes in individuals’ personal incomes, savings, and expenditures.
US consumption spending accounts for over two-thirds of the country’s gross domestic product
(or GDP). The US real personal consumption expenditure for non-durable goods measures
consume
basis.
Disposab
Consump
less perso
Increase
Conferen
confiden
as reflect
Accordin
in emerg
expected
A favora
alcoholic
ETFs) th
(XLP) ha
PepsiCo,
(MNST).
NON
r spending o
ble income a
ption expend
onal current
in consumer
nce Board an
ce index, wh
ted in consum
ng to market
ing markets
d to continue
ble trend in
c beverage in
at invest in t
as holdings i
, Inc. (PEP),
.
N-ALCOHO
on non-durab
and consum
diture depend
taxes. Peopl
r confidence
nd the Unive
hich indicate
mer spendin
-intelligence
has surpasse
doing so.
consumer sp
ndustry. It’s
the consume
in the major
Dr. Pepper
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ble goods, su
mer confiden
ds on dispos
le tend to sp
e also increas
ersity of Mic
es the degree
ng and saving
e firm Eurom
ed that in de
pending on n
also good fo
er staple sect
soft drink co
Snapple Gro
ERAGE CO
uch as food a
nce
sable income
pend more w
ses consump
chigan each p
e of optimism
g activities.
monitor Inter
eveloped mar
non-durable
or the perform
tor. The Con
ompanies lik
oup, Inc. (DP
OMPANY PO
and beverag
e, which is m
with a rise in t
ption expend
provide mon
m about the
rnational, co
rkets every y
goods is a p
rmance of ex
nsumer Stapl
ke The Coca
PS), and Mo
ORTFOLIO
es, on an inf
measured as p
their disposa
diture. In the
nthly reports
state of the e
onsumer-exp
year since 20
positive indic
xchange-trad
les Select Se
a-Cola Comp
onster Bever
O
flation-adjus
personal inc
able income
US, the
on the cons
economy
penditure gro
000, and is
cator for the
ded funds (or
ector SPDR E
pany (KO),
age Corpora
sted
come
.
sumer
owth
nonr
ETF
ation
E. Under
By Sharo
Industry
Soft drin
producer
Bottling
Compani
finished p
Another,
make the
and other
beverage
Also, bot
fountain
beverage
Distribu
The exten
produce o
distribute
Corporat
Unilever
Pricing p
Coca-Co
Carbonat
soft drink
NON
rstanding th
on Bailey • N
y Partners
ks constitute
rs and bottler
and distrib
ies in the sof
products, ma
is by selling
e final produ
r ingredients
es to distribu
th bottling p
retailers. Fo
es for immed
tion: Third
nsive reach o
or distribute
e certain bran
tion (MNST)
and Starbuc
power
la and Pepsi
ted soft drink
k companies
N-ALCOHO
he value cha
Nov 20, 201
e a major par
rs play a vita
bution netwo
ft drink indu
ade at compa
g beverage c
uct by combin
s. The bottler
utors or direc
artners and c
ountain retail
diate consum
-party prod
of The Coca
third-party
nds of Dr Pe
). PepsiCo se
cks, respectiv
iCo’s wide d
ks have simi
s extend low
OLIC BEVE
ain of the so
4 12:08 pm
rt of the US
al role in the
ork
ustry reach th
any-owned b
concentrates
ning the con
rs then pack
ctly to retaile
companies m
lers include r
mption.
ducts
a-Cola Comp
brands. For
epper Snapp
ells Lipton a
vely.
distribution n
ilar prices du
er prices und
ERAGE CO
oft drink ind
EST
food and be
e value chain
he end marke
bottling facil
and syrups t
ncentrates wi
kage the prod
ers.
manufacture
restaurants a
pany (KO) an
instance, Co
le Group, In
and Starbuck
network give
ue to the inte
der promotio
OMPANY PO
dustry
everage indu
n of the soft d
et in two wa
lities, to dist
to authorized
ith still or ca
duct in conta
fountain syr
and convenie
and PepsiCo,
oca-Cola is l
nc. (DPS) an
ks brands un
es them sign
ense compet
onal offers. I
ORTFOLIO
ustry. Syrup o
drink industr
ays. One way
tributors and
d bottling pa
arbonated wa
ainers and se
rups and sell
ence stores,
, Inc. (PEP)
licensed to p
d Monster B
nder partners
nificant pricin
tition in the i
In recent tim
O
or concentra
ry.
y is by sellin
d retailers.
artners, who
ater, sweeten
ell these
l them to
which produ
allows them
produce and
Beverage
hips with
ng power.
industry. Oft
mes, such
ate
ng
then
ners,
uce
m to
ften,
promotio
because t
substitute
The nonsector
thr
holdings
F. A guid
By Sharo
Industry
The noncontain
c
coffee an
bottled w
sometime
beverage
Dominan
The glob
of $337.8
size of $1
NON
onal offers ha
they’re unde
es such as te
-alcoholic be
rough the Co
in Coca-Co
de to the non
on Bailey • N
y overview
-alcoholic be
carbonated o
nd tea. The s
water, readyes
referred to
e retail sales.
nt carbonat
bal soft drink
8 billion in 2
189.1 billion
N-ALCOHO
ave been use
er pressure d
ea, energy dr
everage indu
onsumer Sta
la and Pepsi
n-alcoholic b
Nov 20, 201
everage indu
r non-carbon
oft drink cat
to-drink tea
o as liquid re
In this serie
tes category
k market is le
2013. In the
n, and juice,
OLIC BEVE
ed to boost v
due to rising
rinks, and wa
ustry is part o
aples Select S
iCo.
beverage ind
4 12:08 pm
ustry broadly
nated water,
tegory domin
and coffee,
efreshment b
es, we’ll focu
y
ed by carbon
same year, C
with a mark
ERAGE CO
volumes of th
health conce
ater.
of the consum
Sector SPDR
dustry
EST
y includes so
a sweetener
nates the ind
and sports a
beverages (o
us on the sof
nated soft dri
CSDs were f
ket size of $1
OMPANY PO
he carbonate
erns and com
mer staples
R ETF (XLP
oft drinks and
r, and a flavo
dustry and in
and energy d
or LRBs). In
ft drink or L
inks (or CSD
followed by
146.2 billion
ORTFOLIO
ed soft drink
mpetition fro
sector. You
P), which has
d hot drinks
or, and hot d
ncludes carb
drinks. Soft d
the US, LR
LRB market.
Ds), which h
bottled wate
n. In a later p
O
ks. That’s
om healthy
can invest in
s notable
. Soft drinks
drinks includ
onates, juice
drinks are
RBs lead food
had a market
er, with a ma
part of this se
n this
s
de
e,
d and
t size
arket
eries,
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
we’ll discuss why CSDs have been losing popularity, and why sales of other
beverages, including juices and ready-to-drink tea, are increasing.
Major companies
The non-alcoholic beverage market is a highly competitive industry that includes two behemoths
—The Coca-Cola Company (KO) and PepsiCo, Inc. (PEP). Collectively, these companies hold
about 70% of the US CSD market. Dr Pepper Snapple Group, Inc. (DPS), Monster Beverage
Corporation (MNST), and Cott Corporation (COT) are some other key players in the CSD
market.
Many international markets are also dominated by Coca-Cola and PepsiCo, but include other
companies such as Groupe Danone, Nestle SA, and Suntory Holdings Limited.
Non-alcoholic beverage manufacturers, like Coca-Cola and PepsiCo, are part of the consumer
staple sector. You can invest in these companies through the Consumer Staples Select Sector
SPDR ETF (XLP).
G. Statistics and facts on non-alcoholic beverages and soft drinks
The non-alcoholic beverages industry encompasses liquid refreshment beverages (LRB) such as
bottled water, carbonated soft drinks, energy drinks, fruit beverages, ready-to-drink coffee and
tea, sports beverages and value-added water.
This is a great site to find statistics:
http://www.statista.com/topics/1662/non-alcoholic-beverages-and-soft-drinks-in-the-us/
H. NY Times Article, February 2015
BEVERAGES - NON-ALCOHOLIC TODAY 5 DAY 1 MONTH 1 YEAR MKT CAP
+0.16% –0.37% +0.67% +20.48% 136.1B
The Beverages - Non-Alcoholic industry group consists of companies engaged in manufacturing
non-alcoholic beverages, such as water, fruit drinks, soft drinks, iced coffee and tea, as well as
other flavored beverages. The Beverages - Non-Alcoholic industry excludes tea bags and instant
coffee manufacturing, fruit juices and concentrates, classified in Food Processing.
Beverages - Non-Alcoholic
Defined by Thomson Reuters
Market
cap.
1-day
%
change
1-month
%
change
YTD
%
change
Low High 52-
week
Page: 1 | 2 | Next »
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
Defined by Thomson Reuters
Market
cap.
1-day
%
change
1-month
%
change
YTD
%
change
Low High 52-
week
Coca-Cola Enterpri... CCE: NYSE 10.5B +0.54 +3.14 +1.11
Coca-Cola FEMSA, S... KOF: NYSE 6.0B +2.42 +1.91 +0.90
Dr Pepper Snapple ... DPS: NYSE 15.2B +0.77 +0.39 +9.96
Embotelladora Andi... AKO.B: NYSE 2.5B –0.97 +3.04 +1.82
Fomento Economico ... FMX: NYSE 31.0B +2.01 +2.06 +1.70
Monster Beverage C... MNST:
NASDAQ
20.3B +0.11 +1.63 +11.92
PepsiCo, Inc. PEP: NYSE 146.8B +0.34 +0.54 +4.76
Sodastream Interna... SODA:
NASDAQ
393.3M –0.37 –2.75 –6.91
The Coca-Cola Co KO: NYSE 183.8B –0.33 –3.09 –0.59
Coca-Cola Bottling... COKE:
NASDAQ
947.9M +0.44 –1.70 +16.14
National Beverage ... FIZZ: NASDAQ 1.0B –1.53 –2.77 –0.53
Youngevity Interna... YGYI: OTHER
OTC
94.5M +3.15 +1.00 +1.00
Alkaline Water Com... WTER:
OTHER OTC
14.4M +23.33 +78.31 +50.00
Cott Corporation (... COT: NYSE 748.2M +1.14 +0.88 +16.13
DNA Brands, Inc. DNAX: OTHER
OTC
24.0K 0.00 –50.00 0.00
Hangover Joe's Hol... HJOE: OTCBB 778.0K –21.67 +11.90 –12.96
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
Defined by Thomson Reuters
Market
cap.
1-day
%
change
1-month
%
change
YTD
%
change
Low High 52-
week
Jones Soda Co. ( U... JSDA: OTHER
OTC
17.0M –0.36 +18.89 +18.86
Konared Corp KRED: OTHER OTC 8.0M +16.28 –6.54 –29.08
NOHO Inc DRNK: OTCBB 275.0K +13.60 –38.26 –71.60
Pulse Beverage Cor... PLSB: OTHER
OTC
8.4M –7.99 –13.46 –46.63
Beverages - Non-Alcoholic
Defined by Thomson Reuters Market cap.
1-day
% change
1-month
% change
YTD
% change Low High 52-week
Puresafe Water Sys... PSWS: OTHER OTC 383.3K 0.00 0.00 0.00
Reed's, Inc. REED: AMEX 71.1M 0.00 +0.37 –7.95
Uplift Nutrition I... UPNT: OTCBB 555.7K 0.00 –50.00 +28.62
Crystal Rock Holdi... CRVP: AMEX 15.8M 0.00 +1.37 –2.95
Global Future City... FTCY: OTHER OTC 19.1M 0.00 +131.82 +100.00
MOJO Organics Inc MOJO: OTHER OTC 3.4M 0.00 –4.81 0.00
New Leaf Brands In... NLEF: OTHER OTC 505.6K 0.00 –16.67 +36.36
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NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
Oceans Omega closely follows studies related to adolescents and brain health. For example, to
determine the effects of algal DHA supplementation on reading and behavior in healthy schoolaged
children, researchers conducted the Docosahexaenoic Acid Oxford Learning and Behavior
(DOLAB) Trial and reported that supplementation with 600 mg each day with algal DHA for 16
weeks improved reading and behavior in healthy school-aged children, aged 7 to 9 years old,
with low reading scores.
“We work on educating the end producer,” says Karen Todd, director of global brand marketing
at New York City-based Kyowa Hakko U.S.A. Inc. The company’s Cognizin product features
citicoline, which increases cellular synthesis and energy, she says. Ingredients such as Cognizin
are associated with boosting brain energy, supporting mitochondrial health, and boosting levels
of ATP, according to the company’s research. This ingredient also is associated with increased
focus and concentration as well as memory storage and recall.
“We do clinical studies on raw materials [with healthy subjects], and results of that help us
identify what levels are appropriate to make claims,” Todd says. “The producer and finished
product company do their pre-market test, but they’re looking at the science behind it to support
their claims from the start.”
Kyowa Hakko is replicating clinical trials done with millennials, pre-menopausal women and
baby boomers with more targeted groups including adolescents and athletes.
Futureceuticals, Momence, Ill., also sees the value of clinical trials and is in the midst of several
that involve its ingredients including CoffeeBerry coffee fruit, a line of powders and concentrates
of the fruit of the coffee plant, including the bean.
“We consider demographics when we’re choosing outcomes to focus on for our claims,” says
Brad Evers, vice president of business development. “In the case of CoffeeBerry coffee fruit
extract, we discovered that it has a unique capacity to increase serum levels of brain-derived
neurotropic factor (BDNF), which is a key neuro-protein involved in cognition, mood and other
key neuro-processes. We chose to focus on cognition and mood, given the enormous public
interest in cognitive and mental health at all age levels. Baby boomers frequently cite cognitive
health as their No. 1 concern, and younger people are motivated to take action now to help
ensure a higher quality of life as they age.”
Major research facilities around the globe are focusing on BDNF, and Futureceuticals has two
studies that indicate that coffee fruit stimulates the body to produce BDNF, which is something
brewed coffee does not do, according to the company.
“Our research on our coffee fruit products is at the forefront of new discoveries for cognitive
health,” Evers says. “CoffeeBerry meets the demand for functional beverage ingredients that are
natural and offer a value proposition.”
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
Focus on claims
Regulations as well as the flavor of the ingredients in their natural state can have an impact on
beverages designed to improve memory and focus or reduce the impact of aging on the brain.
“The biggest trend with cognitive ingredients is really attention given to caffeine and energy
drinks by the Food and Drug Administration (FDA) and [the decision to] crack down on
amounts,” Kyowa Hakko’s Todd says. “Cognizin is a non-stimulant without negative side
effects. Energy drinks use Cognizin [as a replacement for caffeine], and many companies are
looking to reformulate and include it at the efficacious dose.”
But special treatment is required for cognitive ingredients to be beverage compatible, shelf
stable, soluble and taste free. “Antioxidant beverages, focus beverages, and general brain-health
and protein beverage ingredients are bitter, and [beverage-makers] have to figure out a way to
mask [them],” Nutegrity’s Phillips says. “Another big challenge is solubility, and we’re finding
ways through agglomeration or other techniques to make them suspend in a liquid.”
Oceans Omega is able to counteract the instability and protect them from oxidizing with new
technologies, but aftertaste still is a challenge.
“Polyunsaturated fatty acids have the propensity to oxidize quickly and develop very repugnant
odor and taste offnotes,” Berl says. “Many [omega-3] products still have a fishy or marine
aftertaste, and their manufacturing requires an increased complexity in processing and handling
these sensitive ingredients in the production processes.”
Certain nutrients also just don’t mix well, according to Russ Hazen, North American premix
innovation manager for Fortitech Inc., Schenectady, N.Y.
“Certain iron compounds can have unfavorable effects on product quality and consumer
acceptance by increasing the oxidation of polyunsaturated fatty acids,” Hazen says. “On the
other hand, inclusion of suitable amounts of antioxidants, like vitamin E, is important to protect
polyunsaturated fatty acids from oxidation. In liquid beverages, adverse interactions between
calcium and phosphorus can be tricky and can result in unsightly mineral precipitation products
under certain conditions”
When bitterness is a factor, masking agents can address this issue as well, according to Kyowa
Hakko’s Todd. Futureceuticals, however, will provide its bitter CoffeeBerry products and
extracts as-is because the more natural state is preferred by its customers, Evers says.
2.) 2
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NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
The right flavor mix
With all of the flavors that are out there, beverage-makers are not at a loss for options from
which to choose. According to Beverage Industry’s survey, each respondent reported using on
average 11.5 flavors in 2014.
When selecting which flavors they wanted to utilize, survey-takers opted for more traditional
options in 2014, with orange, vanilla, lemon, strawberry and peach rounding out the Top 5. This
is slightly different from last year’s survey in which the top flavors were vanilla, lemon,
strawberry, mango and peach. Orange’s usage jumped up eight percentage points this year to 49
percent, compared with last year’s 41 percent. Tied with orange at 49 percent, vanilla’s usage
remains fairly consistent with last year’s survey, seeing an increase of one percentage point.
Other flavors that also saw modest growth were lemon (up one percentage point), strawberry (up
two percentage points), peach (up one percentage point) and chocolate (up four percentage
points). Flavors from last year’s Top 10 that saw contractions in 2014 were mango (down three
percentage points), raspberry (down eight percentage points), apple (down four percentage
points) and fruit punch (down 17 percentage points).
Making up for some of these drop offs were lime (up seven percentage points), berry (up eight
percentage points) and coffee (up six percentage points).
Although orange was the most-used flavor in 2014, it did not come in as the top-selling flavor for
the year. Taking the top spot was chocolate at 29 percent. Although chocolate moved up only
one spot from No. 2 to No. 1 compared with last year’s survey, its percentage point increase was
15. Taking a hit, however, was strawberry. Last year’s No. 1 top-selling flavor dropped out of
the Top 10 as the percentage of respondents listing it as a top-selling flavor dropped from 25
percent to 7 percent.
However, not all flavors saw such a strong drop off in 2014. Vanilla moved up one spot to the
No. 2 top-selling flavor after seeing its percent usage increase from 14 percent to 24 percent.
Mango also had a positive year, jumping from No. 10 to No. 3. The tropical flavor saw its
reported sales status increase from 10 percent to 22 percent.
This year’s survey also saw a handful of new flavors make the Top 10 list. Raspberry, coffee,
black tea, orange and peach all made the top-selling flavors in 2014 list, knocking out apple,
berry, fruit punch, lime and, as previously mentioned, strawberry.
As beverage-makers prepare for 2015, the top sellers for 2014 are expected to carry over into the
next calendar year. Chocolate is listed as the No. 1 anticipated top-selling flavor for 2015, with
29 percent of respondents naming the indulgent variety. This is a strong increase from last year’s
survey results in which only 17 percent of respondents listed it as a top-selling flavor. Also
making significant gains is coffee, which entered the Top 10 in the No. 2 spot after being left off
last year’s list. Making a more modest increase, vanilla’s anticipated selling performance
increased one percentage point from 19 to 20 percent to round out the Top 3.
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NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
For instance, the mean and median of the number of employees for this year’s survey are 201
and 63 employees, respectively. However, last year’s survey-takers reported a mean 1,278
employees and a median of 180 employees.
This team size also affected the number of employees who are working on developing new
products. Last year, the survey found a mean of 60 employees and a median of eight employees
working on new product development. This year, the teams are much smaller, with the mean and
median at 10 and four employees, respectively.
Although the company sizes and new product development teams of respondents are from a
smaller base than last year, their outsourcing portions did not differ too much. Twenty-nine
percent stated they outsource a portion of their new product development versus the 35 percent
that said the same last year. However, the main difference was the areas of new product
development that they outsourced.
Sixty-two percent of respondents reported outsourcing prototype development, followed by 46
percent for concept and product testing, and 38 percent for market research. Last year, market
research and prototype development tied for first with
46 percent naming those as areas
of outsourcing. Concept and product testing rounded out last year’s Top 3, with 42 percent
naming this as an area of new product development.
Holding steady with last year’s numbers, though, was the amount of respondents stating that a
team approach is utilized in new product development. Ninety-three percent (the same number as
last year) indicated using a team environment. Among those who use a team approach, 81
percent said sales and marketing are involved, while 79 percent listed R&D. This is slight flip
from last year’s survey in which 80 percent of respondents named R&D, and 77 percent reported
sales and marketing.
Upper management also remains a constant for survey-takers, with 62 percent listing their
involvement compared with last year’s 61 percent.
Slightly higher than last year’s survey results, nearly nine out of 10 respondents whose upper
management is regularly included on new product development projects have involvement from
their chief executive officers. This is up from last year’s more than three-quarters of respondents.
This variation could be reflective of the significant difference in the company size mean and
medians between the two years.
Fifty-eight percent of survey-takers also indicated supplier involvement in new product
development, compared with last year’s 61 percent.
The length of time to develop a new product also saw an uptick in this year’s survey, with mean
time from inception to launch equating to 11 months. This is up from last year’s nine months;
however, one-third of this year’s respondents noted that this is faster for them than in previous
years.
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
Perhaps reflective of the company size decrease from last year’s survey-takers, the mean number
of products developed in 2014 was 24, compared with 40 in 2013. Following suit, the mean
number of those released decreased from 17 in 2013 to nine in 2014. The number of successful
new product launches also experienced contraction, with the mean equating to five in 2014
versus 11 in 2013.
What the future holds
Looking ahead to 2015, respondents remained optimistic about their new product releases, with
more than half indicating that they plan to launch more new products in the market in 2015
versus 2014.
Planning and assessments also will be staples with survey-takers, as 60 percent said they have a
defin-itive new product development plan. Post-launch assessment was even higher, with 76
percent having that in place. This is an increase from last year’s results in which 62 percent
indicated they had a definitive new product development plan, and 65 percent reported having a
post-launch assessment.
Total cost to new product development also experienced some fluctuations between the two
surveys. This year’s had a mean and median of $209,080 and $37,500, respectively. Last year’s
respondents had a mean of $348,717 and a median of $20,000.
However, when it came to R&D budget comparisons, the numbers were fairly similar, with 44
percent listing an increase in their budget versus 41 percent last year.
Beverage Industry’s New Product Development Outlook survey was conducted by BNP Media’s
Market Research Division. The online survey was conducted between Sept. 29 and Oct. 13,
2014, and included a systematic random sample of the domestic circulation of Beverage Industry
and its sister publications Dairy Foods and Prepared Foods.
Of the respondents, 44 percent process juice and juice drinks, 40 percent process coffee and tea,
33 percent process dairy-based drinks, 29 percent process sports drinks, 24 percent process
water, 22 percent process energy drinks, 18 percent process spirits, 13 percent process
carbonated soft drinks, 13 percent process wine, and 9 percent process beer.
Thirty-one percent of respondents were from companies with less than $10 million in annual
revenue. Another 31 percent of respondents were from companies with revenue between $10
million and $50 million. A total of 9 percent were from companies in the mid-size range of $50
million to less than $100 million. Thirteen percent were from companies with revenue between
$100 million to less than $500 million. In the $500 million to less than $1 billion range were 9
percent of respondents. Representing the large-size range of more than $1 billion in company
revenue were 9 percent of respondents.
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
Males accounted for 67 percent of the respondents, and the average age equated to 43. For
industry experience, 20 percent indicated one to three years; 18 percent reported four to 10 years;
33 percent said 11-20 years; 20 percent listed 21-30 years; and 9 percent had 31-40 years of
experience.
Regionally, 33 percent said they currently live in the South, 27 percent indicated the Northeast,
24 percent listed the Midwest, and 16 percent reported living in the Western portion of the
United States.
K. Nielsen identifies consumer health concerns
ABA, brand owners proactive in offering solutions
By Jessica Jacobsen
February 16, 2015
Aside from the Valentine’s Day candy and treats on the store shelves, the first quarter of a new
year tends to be filled with diet- and exercise-related products to appeal to those consumers who
resolved to lose weight or eat healthier in the new year.
For myself, my resolution to lose weight will likely come around mid- to late summer when I get
the OK from the doctor to lose my baby weight. However, many other consumers have
expressed the need to address their health and weight issues, which could become an opportunity
for food and beverage manufacturers.
According to Nielsen’s Global Health & Wellness Survey, nearly half (49 percent) of the global
respondents consider themselves overweight. Citing the 2013 Global Burden of Disease Study,
the New York-based market research firm says that an estimated 2.1 billion people, or nearly 30
percent of the global population, are overweight or obese. However, Nielsen’s study shows that
consumers are willing to take charge of their health and are willing to pay a premium to do so.
Because of the vast number of consumers who are concerned about obesity and other healthrelated
issues, Nielsen suggests that brand owners should better align their offerings with these
consumer need states in order to see growth benefits.
“There is a tremendous opportunity for food manufacturers and retailers to lead a healthy
movement by providing the products and services that consumers want and need,” said Susan
Dunn, executive vice president of global professional services with Nielsen, in a statement.
“While diet fads come and go over time, innovative, back-to-basics foods that taste good, are
easy to prepare, and provide healthful benefits will have staying power. The first step is knowing
where to put your product development efforts.”
In the beverage space, we already are seeing brands and associations addressing this trend. This
month’s Special Report article on health and wellness (page 18) details how leading advocacy
groups including the American Beverage Association and brand owners such as The Coca-Cola
Co., PepsiCo Inc. and Dr Pepper Snapple Group (DPS) have pledged to reduce the number of
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
calories that each American consumes on a national level by
20 percent by 2025.
Beyond this pledge from non-alcohol industry leaders, the beverage marketplace is seeing more
low-calorie brands find a home with consumers as their products expand distribution. In this
month’s cover story on Bai Brands LLC (page 24), Chief Executive Officer Ben Weiss details
how the company’s national distribution agreement with DPS has allowed the enhanced-water
brand to share its Bai5 and newest innovation, Bai Bubbles, with a broader audience that was
looking for a healthy beverage solution.
As some consumers search for solutions to their health and wellness needs, it’s great to see so
many in the beverage space being proactive in delivering products that address them.
http://www.bevindustry.com/articles/88194-nielsen-identifies-consumer-health-concerns
L. Other ways to bottle our beverage. (NVE perhaps?)
http://www.bevindustry.com/videos?bctid=946203236001
M. Zico to send fan to Sochi 2014 Winter Olympic Games
Winner will meet gold medal skier Julia Mancuso
November 5, 2013
El Segundo, Calif.-based Zico Beverages LLC’s same-named coconut water brand announced a
sweepstakes through which fans can enter to win a trip for them and a friend to attend the Sochi
2014 Winter Olympic Games and meet 2006 Olympic champion Julia Mancuso.
The winner will receive round-trip tickets to Russia, a four-night stay in a hotel overlooking the
Black Sea, and tickets to some of the most popular Olympic events including snowboarding,
speedskating and alpine skiing. The sweepstakes runs through Nov. 21, and fans can enter at
zico.com/sochi2014.
Mancuso, who will compete in alpine skiing at the Winter Olympics, will represent Zico as a
brand ambassador.
“Zico has already been an amazing partner hydrating me on and off the slopes," Mancuso said in
a statement. "Now, they're giving two winners a chance to come to Sochi. How cool is that?"
Chief Executive Officer and Founder of Zico Beverages LLC Mark Rampolla added in a
statement: “Zico has always supported athletes at every level by providing them with the
naturally replenishing powers of coconut water. We're honored to be part of the world's most
prestigious sporting event and to be hydrating the top athletes in the world.”
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NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
Bai has been disrupting the marketplace since August 2009 when it launched its Bai and Bai5
beverage lines. Since then, the company has seen its enhanced-water brand post strong yearover-year
sales numbers, expanded its product lineups, and taken its distribution to a national
level.
Delivering solutions
Emphasizing the widespread concerns related to obesity, diabetes and artificial ingredients,
Weiss notes that the ideation behind Bai was to offer a healthy solution to these problems.
“For us, health and wellness is about delivering a truly flavorful experience but doing it in a very
responsible way with ingredients that are pure and not artificial, delivering antioxidants as a
functionality, and doing without the use of calories and sugar,” he says. “I think we’re doing our
part to address an epidemic. The industry overall is looking for that solution.”
With 5 calories in each serving, Bai5 features a sweetener blend of what Weiss calls “smart
sweeteners,” namely organic stevia and erythritol, but also offers fresh fruit flavor that is infused
with antioxidant-rich coffee fruit.
Coffee fruit, the fruit that grows on the coffee plant and contains the coffee bean, is an attribute
that helps Bai5 deliver on its health and wellness promises. The all-natural ingredient had not
been widely used in beverages until recently, and the coffee fruit that Bai uses is rich in
antioxidants, Weiss notes.
Until recently, this fruit commonly was discarded during the coffee-farming process, he adds.
Understanding the antioxidant power within the fruit, Bai saw an opportunity to harness this into
an edible commodity.
“Personal health benefits are only part of the mission,” Weiss says. “Eliminating waste wherever
possible is the duty of every person on this planet; as is helping your neighbors achieve a better
life. When traditional — wasteful — coffee-harvesting methods are used, the discarded fruit
ends up in waterways by the coffee plantation. Massive amounts of rotting coffee fruit pollute
surrounding streams with a buildup of ochratoxins, aflatoxins and caffeine. By turning this
composted material into a consumable product, Bai is keeping the waterways clean and the
ecosystem in balance, generating a new revenue stream for local farmers, and blazing the trail for
a healthier environment.”
In finding what Weiss calls its “holy grail” with Bai5, the company also made a strategic
decision in 2012 when it discontinued production of its mid-calorie product, Bai. Although the
mid-calorie product contained some of the company’s strongest-performing flavors, Weiss
decided to discontinue the line in order to avoid consumer confusion. “It was really an intent to
not confuse our consumer, and it was a belief that what we had at that time [in Bai5] was
becoming a bigger part of our portfolio,” he says.
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
Even though it was a difficult decision to discontinue the mid-calorie offering, the company has
not looked back and has posted approximately 300 percent growth each year dating back to
2011, Weiss says.
The Bai5 lineup now features 10 SKUs: Brasilia Blueberry, Malawi Mango, Ipanema
Pomegranate, Molokai Coconut, Costa Rica Clementine, Tanzania Lemonade Tea, Sumatra
Dragonfruit, Congo Pear, Panama Peach and Limu Lemon. Molokai Coconut and Brasilia
Blueberry are the brand’s Top 2 performers, followed by Tanzania Lemonade Tea, which has a
more limited distribution model than the other SKUs, Weiss notes. However, the top performers
are not runaway leaders, as the difference between the 10 SKUs is in the single digits.
“When you have a portfolio of 10 drinks that has single-digit variance, that says something,”
Weiss adds. “Our shopper shops across the lineup.”
Although Weiss believes Bai5 offers the perfect balance between low calories, full flavor and
all-natural ingredients in the still beverage market, the company took those same principles and
applied them to the sparkling beverage segment.
In late 2014, the company put an effervescent spin on its Bai5 beverages with its new Bai
Bubbles line. Originally available in the New York City metropolitan area, Bai Bubbles blends
antioxidants from coffee fruit with exotic fruit flavors and natural sweeteners and contains 5
calories and 1 gram of sugar in each 11.5-ounce can. With nationwide distribution planned for
early 2015, the new lineup is set to consist of seven flavors — Bolivia Black Cherry, Peru
Pineapple, Gimbi Pink Grapefruit, Waikiki Coconut, Jamaica Blood Orange, Indonesia Nashi
Pear and Guatemala Guava — each of which pays homage to popular coffee-growing regions.
Weiss notes that the inspiration for launching Bai Bubbles stemmed from his time exploring the
market and looking at what consumer need states needed addressing. “I spend a lot of time in the
market, and I tend to think like a consumer,” he says. “I just saw a marketplace that was moving
away from artificial ingredients, and I knew that we were addressing that market with Bai5, but I
didn’t see that solution out there in carbonated.”
Adding that the company is filled with innovators and disruptors to the marketplace, Weiss
explains that the idea-to-shelf process for Bai Bubbles took only three months. “When we focus
on what we want to do, and it’s the right time to do it, we can get it done pretty quickly,” he says.
Although it still is too early to call out any variety leaders for the sparkling line, Weiss says
because of its planned national launch through its distribution network and an agreement with
national retailers including Target Corp., Minneapolis, the company is anticipating Bai Bubbles
to be a $25 million business in its first year.
With 17 total SKUs between its two lines, Weiss adds that the company still is no stranger to
flavor innovations. Although he can’t share any specifics, Weiss notes that the company always
is developing new flavors and new innovations.
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
National news
The announcement of Bai Bubbles wasn’t the only big news Bai was able to share in 2014. The
company also signed a distribution agreement with Plano, Texas-based Dr Pepper Snapple
Group (DPS). The companies had previously worked together in the two years prior to the
agreement, but the new agreement allowed Bai Brands to further capitalize on DPS’ direct-tostore
and warehouse delivery capabilities on a national level. New retailers that were added
following the agreement included Kroger, Target, Sam’s Club, Walmart, Publix, Stop & Shop,
Duane Reade and Safeway, plus more than 100 additional Costco stores throughout the country.
“We have tested the Bai brand in select markets with great success over the last several
quarters,” said Jeff Conrad, vice president of market development for DPS, in a statement at the
time of its announcement. “There is no question that Bai fits exceedingly well with our portfolio
of leading brands, and we expect this new choice to be very well received by consumers from
coast to coast.”
Weiss notes that the deal signed with DPS was finalized in late January/early February of 2014,
which resulted in Bai Brands missing out on the 2014 planning meetings. However, that aspect
didn’t hamper the expanded relationship with the companies.
“We still had this amazing year of growth; still very disciplined,” Weiss says. “It was highlighted
by our emerging relationship at the time with Target, which was the first national retailer to
really go aggressive with the brand. They’re coming off a great year with Bai, and we started
2015 in a very aggressive way with them as well. But this is where we’re taking all of our
learnings, we’re in true scale-up mode, and we’re going to build out our [all-commodity volume]
(ACV) across all channels. It’s an exciting year for Bai.”
He adds that to be able to have full national distribution is every beverage company’s goal, and
to have that by year five is a feat he is very proud of. “Not many brands can say that,” Weiss
says. “I’m very proud of the pace at which we did that now that it’s up and running. DPS will
cover close to 70 percent of the country, so there are still distributors that we have engaged to
provide full national distribution.
“When you are looking to activate chains, you’re going to need to prove to that chain that you
have the ability to get to every one of their stores,” he continues. “If you can’t do that, you’re not
going to get much support from that chain. To be able to check that box and say, ‘Yes, we have a
route to market [and] we can deliver to every one of your locations, whether you’re Sam’s Club,
Costco, Target [or] whomever,’ is critical.”
Because DPS does not cover all regions across the United States, Bai also has agreements with
many other distribution networks including Hensley Beverage Co. for Arizona, John Lenore &
Co. for the San Diego market, Polar Beverages for the New England area, The Honickman
Group in the mid-Atlantic, and Admiral Beverage Corp. for the mountain regions.
Through this expanded distribution network, Bai has learned that the key to reaching this success
is all about winning at retail.
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
“It’s all about developing a relationship with a consumer that’s stronger than any other
relationship,” Weiss says. “If you and your consumer are aligned, then everybody else will fall
into place, whether it is the retailer and ultimately the distributor.”
Weiss adds that in the competitive beverage market, Bai is able to stand out because of the
promises it delivers on health and wellness. “The beverage category is extremely competitive
with new brands emerging almost routinely,” he says. “However no one has delivered on
consumers’ needs like Bai. In a world increasingly seeking healthier options, Bai provides
consumers a variety of beverage options that not only have great flavor but [make] people feel
good about drinking. Bai’s ability to uniquely satisfy customer’s desires is reaffirmed in its
strong sales growth across all retail channels. Bai’s performance paints a compelling story that
has enabled solid increases in distribution.”
Additionally, if a brand is able to be data driven and show through sales reports how it’s
performing in the market, the distribution will follow, Weiss explains. Those on-paper numbers
were crucial to Bai Brands achieving its distribution success.
“When you look at the numbers, you’d have to be foolish to not stand strong behind the brand,
and that’s what’s happening,” he says. “The retailers see Bai’s strong momentum and say, ‘Wow
I get it. You’re my salvation to enhanced water, and I’m going to now give you this,’ and then
you take that to a distributor and say, ‘We’ve got to deliver,’ [and] it becomes a lot easier.”
The support tool
With so much in place for 2015, the company is expecting more great things to come this year,
Weiss says. “You’re going to see the product become ubiquitous in all channels. I truly believe
that this is the next iconic beverage in the making, and everyone else is going to get to hopefully
share in that opinion this year.”
Beyond the expanded lineup, the increased distribution network and the industry accolades, Bai
aspires to have a voice: a voice that addresses the dilemma.
“I founded Bai because I believed that building a great beverage experience would improve
people’s lives,” Weiss says. “Over the past five years, I have marveled at the serendipitous
timing of this idea and the way our customers have accepted what Bai stands for and responded
to the way we go about bringing it into their lives. As a team, we have pushed hard to increase
our sales velocity and improve our retail execution while focusing on the ‘big bets’ that will
make a difference within the lives of our consumers.”
When it comes to innovation and Bai’s future, Weiss remains optimistic about what is to come.
“Bai Bubbles is an example of how our continued innovation can play a very relevant role in
providing a breadth of health and wellness with great flavor and unmatched purity to a beverage
experience,” he says. “There is no doubt that a cultural shift is happening within the beverage
industry. This shift is unprecedented in magnitude and will change the course of beverage for
generations to come.
NON-ALCOHOLIC BEVERAGE COMPANY PORTFOLIO
“Bai is at the precipice of this change and, in many ways, is defining the ‘smart-age’ of
beverage,” Weiss continues. “What will we make of this moment? How will we engage with an
emerging beverage culture, defined not by age or income but by the people determined to change
the practices of the businesses that bring beverages into their lives? The answer is simple: We
will disrupt. Today the opportunities are greater than ever, and Bai is innovating in an attempt to
capture the potential of this moment. By doing so, we are reshaping our company, reshaping our
industry, and along the way, finding our voice.”
