From Beverage World
“Keurig Green Mountain, Inc. and The Coca‑Cola Company have expanded the companies’ innovative partnership to offer select beverages from the portfolio of The Coca‑Cola Company’s still brands in the Keurig hot brewing system in the United States and Canada. Honest Tea, the nation’s #1 organic bottled iced tea, will be the first brand from The Coca‑Cola Company available in K-Cup packs.”
“Available to consumers in the U.S. tomorrow on Keurig.com, the new Honest Tea® K-Cup® packs feature two products initially, unsweetened Just Green and Just Black iced teas”
"A cannabis-infused fizzy drink is now on sale in the state of Washington as part of the ever-expanding US market for legal pot products.
Less than two months after recreational cannabis became legal in the west coast state, Washingtonians can now get their highs out of a soda bottle.
The drinks, called Legal, come in cherry, lemon and pomegranate flavors but are all infused with 10mg of liquid cannabis. The drinks cost around $10."
From Advertising Age Magazine:
Consumers will begin spotting Coca-Cola Life, which features a distinctive green label, on U.S. store shelves the week of Aug. 25, Coca-Cola said.
The reduced-calorie cola, sweetened with cane sugar and stevia, has already rolled out in Argentina, Chile and Great Britain. In the United States, it will initially be available in Fresh Market locations across Georgia, North Carolina, South Carolina and parts of Florida. Life will be available nationwide by October, the company said.
Coke plans to do heavy sampling of the new product, with more than 4,000 sampling events planned across the country. Life will also be promoted on Coca-Cola's digital network of electronic billboards.
"We ultimately want to be leaders in this emerging segment, and Life is our first effort to make this a reality," said Andy McMillin, VP-Coke trademark in North America, referring to consumers' desire for lower-calorie soft drinks.
I don't think that "replacement" is the right word...more accurately the deal to invest in Monster is a strong compliment to KO's beverage portfolio.
Keep in mind that while CSD's are declining low single-digits and energy drinks are showing nice growth that CSD's accounted for 42.7% of all Liquid Refreshment Beverage (LRB) sales in 2013 while Energy drinks accounted for 1.8% of LRB sales in 2013.
Even after a decade of declining sales CSD's are still the largest LRB sub-category by far... and account for 23 times more sales volume than Energy Drinks.
...is the cover story in Beverage World's August edition.
The article is primarily about KO's Freestyle and PEP's Spire machines but SodaStream is mentioned, there is a picture of a SodaStream machine, and Scott Guthrie, SODA's US General Manager, is quoted.
Interesting read. I'm not sure if you can access it online without a subscription.
KO didn't buy Monster. They bought 16.7%, swapped some brands, and entered into a distribution agreement.
Details of the Transactions from the Press Release:
Equity Investment: In an effort to align long-term interests, The Coca-Cola Company will acquire an approximately 16.7% ownership interest in Monster (post issuance) and will have two directors on Monster’s Board of Directors. The Coca-Cola Company expects to account for its investment in Monster under the equity accounting method.
Business Transfers: To optimally align product portfolios and enable those portfolios to benefit from each company’s respective brand marketing, production and distribution strengths and optimize the parties’ capital and resource allocation, The Coca-Cola Company will transfer ownership of its worldwide energy business, including NOS, Full Throttle, Burn, Mother, Play and Power Play, and Relentless, to Monster; and Monster will transfer its non-energy business, including Hansen’s Natural Sodas, Peace Tea, Hubert’s Lemonade and Hansen’s Juice Products, to The Coca-Cola Company.
Distribution: The Coca-Cola Company and Monster will amend their current distribution agreement in the U.S. and Canada by expanding into additional territories and entering into long-term agreements. The Coca-Cola Company will become Monster’s preferred distribution partner globally and Monster will become The Coca-Cola Company’s exclusive energy play. These agreements will deliver sustainable value to The Coca-Cola Company’s global system and accelerate Monster’s opportunity to grow internationally.
Pursuant to the terms of the transaction agreements, at the closing, The Coca-Cola Company will make a net cash payment of $2.15 billion and transfer its worldwide energy business to Monster. In exchange, Monster will issue to The Coca-Cola Company the shares of Monster common stock, transfer its non-energy business to The Coca-Cola Company, and enter into expanded distribution arrangements.
It's not often I find myself on the same side of the argument as Seth but he is correct.
CSD pricing has increased steadily over the past 10 years and continues to do so. That's not an opinion...it's a fact.
Nielsen scan data for all channels indicates that CSD prices were up 3% in 2011, 3% in 2012, 2% in 2013, and are up in the 2-3% range in 2014. If I dig deeper in my files I'm certain I'll find that pricing increased by similar percentages in the preceding 5 years. Do the math and compound annual 3% increases over a period of 8-10 years and it adds up to a significant % increase.
However, Martin made the most relevant point..."what difference does it make?" Good post Martin!
CSD dollar sales were up .7%. However, unit volume was down slightly (.4%) for the month of July as measured by Nielsen.
The dollar sales increase was driven by average unit price increase of 1.1% that offset the unit volume decrease.
Correction...the article actually appears on Bloomberg BusinessWeek but my daily Beverage World email linked me to the article.
“SodaStream hasn’t compelled mainstream consumers to buy many do-it-yourself soda machines recently. Despite lowered prices, new product launches, and efforts to put the devices on more shelves, SodaStream sold less than half as many soda makers in the U.S. last quarter as a year ago. Sales in the Americas region slid 14 percent year on year after already falling 28 percent the quarter before that.
SodaStream’s recent focus on value “has clearly not resonated with consumers,” said Scott Guthrie, the company’s general manager for the Americas, during an earnings call last month. “We have not provided a compelling reason to buy a SodaStream machine.”
But SodaStream believes it has identified that reason, at least for Americans: health. The company previously marketed the at-home soda machine through a mix of environmental messages (less plastic waste) and convenience (no need to carry back heavy bottles from the supermarket), alongside claims of healthier living without sugary store-bought soda. “We believe at this point in our lifecycle that we must home in on the most compelling consumer benefit,” said Guthrie.
That means marketing SodaStream differently around the world. In identifying what’s most relevant in different markets, the company found wide variety. “In Germany, it’s about schlepping,” SodaStream’s chief executive, Daniel Birnbaum, told analysts last month, ”and in Finland, it’s about environment, and in France, it’s about fun and enjoyment. In the U.S., it is about health and wellness.”
For the rest of the year, SodaStream will focus its North America marketing on its healthier, more natural, and less-caloric flavors. It is also developing new flavors with natural sweeteners, such as stevia and monk fruit.”
Groupon price for the SodaStream bundle is $79.99…or a net cost of $59.99 after the $20 mail-in rebate.
• Genesis home soda maker
• Two 1-liter carbonating bottles
• 3oz. starter carbonator
• Certificate for carbonator exchange
• Four standard syrups: cola, diet cola, ginger ale, and orange soda
A $20 mail-in rebate will be included in kit box. Instructions on the rebate are included in the package.
I would say that GMCR is firmly in the KO family.
GMCR's CEO is an ex-KO executive, KO owns 16% of GMCR's stock, and GMCR will sell KO products for the Cold system.
RL...the full transcript of the CC is available on Seeking Alpha if you want to read it.
They are still planning a fiscal 2015 launch of the COld platform. They've made an initial investment in a Cold dedicated production facility in Vermont and an initial investment in a Cold pod production facility in Georgia. They plan to invest over $300 million in the GA facility over the next five years. They're planning to spend $350-400 million in Capital Investment this fiscal year on Cold and other initiatives.
They also said "Meanwhile, we are on track and working closely with Coca-Cola Company to develop and perfect some of their brands for our system. We are also developing and perfecting a variety of our own new brands to be launched in our cold system we are working other potential copartners."
The difference is that the buyout article never named a source for the rumor while the Soros article is backed-up with a direct quote from a spokesman at Soros Fund Management.
The article says:
"“Soros Fund Management does not own shares of SodaStream,” Michael Vachon, a spokesman for the fund, told The National, declining to comment further on when and why it sold the shares."
If you Google "Michael Vachon" you'll learn that he is the Director of Public Affairs at Soros Fund Management.
DrJ... Capital Expenditures like the plant expansion aren't expensed so don't show up on the Income Statement and have no impact on their Net Income performance.
That was my point DrJ...2014 will be the second consecutive year of negative income growth for SODA and they have no competition. How do they grow profitably with a major new competitor in the category in 2015?
The more SODA sells…the less they make.
2012 Revenue = $436.3 million
2012 Net Income = $43.9 million
2014 Revenue guidance = $590.8 million
2014 Net Income guidance = $39.9 million
SODA will increase Revenue over the two years by $154.5 million while Net Income over the same period will decline by $4.0 million.
You could say that they “gave away” the $154.5 million in growth but it’s actually worse than that…they sold that $154.5 million in revenue growth at a loss of $4.0 million.
SODA's Net Margin % shrink from 9.5% in 2012 to 6.7% in 2014 (per guidance) in an environment where they had no competition.
DrJ...If they made $25 profit per user for 10 million users wouldn't their profit be $250 million?
Their actual profit for last year was $42 million...or $4.20 per user.
How does going private give SODA any cash? The $828 million (at $40/share) goes to the shareholders not the company.