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Molson and Hexo backed cannabis drinks company launches five new brands

Competition in the cannabis beverage market is due to heat up as a company backed by Molson Coors Canada launches a group of pot drinks brands over the next few months.

Truss Beverage Co., a joint venture between the brewer and Ottawa-based cannabis company Hexo Corp., unveiled five brands today that it hopes will conquer the market and appeal to emerging tastes.

Truss chief executive Scott Cooper says his company’s new brands include Little Victory naturally-flavoured sparkling beverages and House of Terpenes sparkling tonics with botanically-sourced terpenes. All the brands will offer beverages infused with either CBD or THC.

Veryvell, an existing Truss brand that currently offers cannabis extract drops, will centre around cannabidiol products and wellness, while XMG and Mollo will focus on drinks that are perfect for special occasions.

Truss entered the pot drink space in December, when it partnered with Flow Alkaline Spring Water to launch goji-grapefruit and raspberry-lemon waters infused with cannabidiol, a cannabis compound.

Other cannabis retailers are already selling infused drinks from Canopy Growth Corp.’s Tweed, Aurora Cannabis Inc., A1 Cannabis Co., actor Seth Rogen’s Houseplant brand and Fluent Beverage Co., a joint venture between Anheuser-Busch InBev and B.C. pot company Tilray Inc.


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Coca-Cola discontinues Odwalla juice brand

Odwalla-Facebook-e1593787412194Coca-Cola is shutting down Odwalla, its juice and smoothie brand, at the end of this month.

In 2001, Coca-Cola acquired U.S.-based Odwalla for $181 million, but, according to reports, had struggled with the business in recent years, due to consumer concerns about sugar content in juices, as well as a waning interest in smoothies.

In addition, the wholly-owned subsidiary of the beverage giant involved logistical challenges, as products had been delivered to retail locations via a fleet of more than 200 refrigerated trucks. The distribution network will also be shuttered.

In all, the closure at the end of July will result in about 300 job losses.


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Nestlé Canada selling bottled water business to local family owned company

Nestlé Canada Inc. says it is selling its Pure Life bottled water business to Ice River Springs as Ontario prepares to give its municipalities veto power over new water bottling permits.

The sale for an undisclosed price is expected to close in the third quarter and is contingent on regulator approval. The sale includes two factories located in Puslinch, Ont., and Hope, B.C., along with a well in Erin, Ont.

Company president Jeff Hamilton says it began to explore the sale of its water business in late 2019 after deciding to focus on its international brands of San Pellegrino, Perrier and Acqua Panna.

Ice River, a Canadian family-owned bottled water producer, says the acquisition fulfils its ambition to expand beyond its private label business for retailers.

Ice River Springs runs a plastics recycling operation, BMP Recycling, that takes bottles and plastic food packaging collected by municipalities and produces food grade recycled PET plastic.

Canada’s most populous province recently announced new rules for taking groundwater, three years after the former Liberal government enacted a moratorium on new and expanded permits to take water for bottling.


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Tilray misses analyst expectations in Q4, following February layoffs

UnknownTilray Inc. has revealed the company hit a rough patch in its latest quarter, just weeks after announcing it was laying off 10% of its staff to help better achieve profitability.

The Nanaimo-based cannabis company said that its revenues had dropped and its net loss increased in its fourth quarter, which ended Dec. 31.

Even its recent acquisition of hemp foodmaker Manitoba Harvest and growth in international medical cannabis markets were not enough to save the company from reporting revenues of US$46.9 million, a roughly 8% drop from the US$51 million it announced the quarter before. Financial markets data firm Refinitiv said analysts had expected Tilray, which keeps its books in U.S. dollars, to report a revenue of $55.4 million.

Meanwhile, the company’s net loss for the quarter was $219.1 million or $2.14 per share compared with a loss of $31 million or $0.33 per share for the same quarter of the year prior.

But on an earnings call with analysts, Tilray chief executive Brendan Kennedy did not appear to be letting such numbers get him down.

“The challenges in the Canadian market have been well-documented over the past few quarters. Primarily, the legal cannabis market has been slower than expected in taking share from the elicit market due to lack of points of distribution and product availability, but we are encouraged by recent announcements and actions taken by provincial governments to increase the pace of retail licensing,” he said.

“The market has been volatile over the last 12 months, but I remain extremely bullish on the long-term opportunity in Canada.”

Looking forward, Kennedy said Tilray would be focusing on investing in its facilities that manufacture products linked to Cannabis 2.0- a term used to describe a second wave of products like edibles, extracts and topicals that hit the market earlier this year.

Tilray has partnered with Anheuser-Busch InBev, the world’s largest brewer, to introduce cannabis-infused drinks to the Canadian market.

Its subsidiary High Park Holdings Ltd. runs confectionery brand Chowie Wowie, which makes cannabis-infused chocolates and gummies, and has beverages brand Rmdy, which makes non-alcoholic, ready-to-brew teas and sparkling beverages with all natural flavours.

The company is making a lot of new items for the first time and that is never done efficiently the first time, said Kennedy.

“The first time you make a chocolate bar, the first time we made a beverage and canned it, it’s not as efficient as the 10th time or the 100th time you operate that particular facility, so we’ll optimize our footprint, optimize our yield, optimize our unit costs throughout the course of this year.”

While many companies announced edibles they were researching and developing long ago, many have yet to launch in stores. Those that have hit the market have sold out quickly as consumer demand outweighs supply.

Kennedy said Tilray was “surprised” by the demand, but also by the lack of “competition” generated by licensed producers.

“We’re racing at this point to increase our supply of vape, edibles and beverage products and so we’re expanding our manufacturing lines and increasing our shifts, so that we can get more of those products to market,” he said.

Kennedy’s remarks came as Tilray said the company’s average net selling price per gram increased to $8.78 from $7.52 in the prior year and as it recorded non-cash charges of $112.1 million related to a revenue-sharing agreement it signed with Authentic Brands Group LLC, which is behind the Juicy Couture, Frye and Aeropostale brands.

 

 


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Consumers thirsty for better-for-you beverages 

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In 1886, Atlanta pharmacist John S. Pemberton came up with the most consequential new consumer packaged good product idea in recorded human history—Coca-Cola. The key to this innovation was the mixing of uniquely flavoured syrup with carbonated water, creating the first Carbonated Soft Drink (CSD).

A single serving of Coca-Cola in 1886 sold for 5 cents per glass and daily consumption was approximately nine glasses per day, making for an annual revenue of less than $200. From this humble start, the Coca-Cola Company has grown during its 100-plus years to a market cap of roughly US$230-billion. Current global consumption of all types of Coca-Cola beverages is close to 2-billion servings per day.

 Trend is your friend, until it ends

Despite its market dominance, there are storm clouds gathering on the horizon for traditional Coca-Cola. 

 According to Euromonitor International, a leading independent provider of strategic market research, North American sales by volume of CSDs have shrunk by approximately 1% per year since 2014. In contrast, during the same period, sales of better-for-you health and wellness beverages have increased nearly 30%.

In a recent presentation, Beverage Marketing Corporation noted: “Carbonated soft drinks… declined slightly for the 14th consecutive year, and declines have continued into 2019… more declines are likely to come in the years ahead (as) consumers are migrating to healthier options and want more variety.”

CSDs, while still a significant slice of the beverage pie, are trending down in mature Western markets.

 The rise of functional beverages

Technomic’s 2018 Canadian Beverage Consumer Trend Report details important shifts in the beverage market:

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Functional beverages defined

 There are many terms that can be applied to beverages under the umbrella of better for you (BFY) or health and wellness .

 Broadly speaking, they cover naturally occurring or essential additives that offer the potential of enhanced health and/or reduced risk of disease. So-called healthy beverages generally tend to:

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What’s new in functional beverages?

The Innova New Product Database is the world’s largest database tracking new food and beverage product launches. The top ranked beverage health claims as a percentage of total new launches (2018) include:

  1.   Antioxidant
  2.   Energy / alertness
  3.   Digestive / gut health
  4.   High source of protein
  5.   Probiotic

Claims of digestive/gut health, high protein and probiotics are all trending up. Significantly, the global trend on new soft drinks launches with a kombucha claim tracked 68% growth. (See below for examples of new products.)

Be thirsty for change

Screen Shot 2020-02-14 at 9.23.04 AMTechnomic’s 2018 Canadian Convenience Store Consumer Trend Report states: “Healthy eating trends are creating opportunities for c-stores. Increasingly, consumers are seeking not just healthy options, but foods and beverages that provide meaningful benefits.” Global consumer demand for functional beverages is expected to expand at a compound annual growth rate (CAGR) of 11% from 2019-2023, with 36% of the growth coming from North America (Exhibit 1).

And there’s even more on the line when it comes to owning the beverage space. For instance, using beverage offerings to achieve broader consumer reach is exactly what McDonald’s did a decade ago when it set out to target Starbucks and Tim Hortons with a fully revamped coffee program.

McDonald’s recognized that breakfast was the fastest growing part of the day for foodservice. According to research company NPD Group, breakfast sandwiches make up a third of all orders placed during that time of day. Combine that with the interest of GenZ consumers in premium coffee offerings, and McDonalds strategic path was clear—grow coffee consumption as a means to win the breakfast wars.

In 10 years, McDonald’s has tripled its drip coffee sales and more than doubled its market share to north of 13%. Its newest streetfront McCafés outlets extend the café experience with an eye towards capturing even more away-from-home food dollars.

The bottom line for your bottom line

Screen Shot 2020-02-14 at 9.32.59 AMAfter a century of unparalleled growth, shifts in consumer tastes away from CSDs have primed a reorientation in the beverage space. Fortunately, convenience stores can leverage competitive advantages to profit from this change. The opportunity is at hand to translate c-store strengths—diverse channel affiliations, large refrigerated and ambient shelf-space, and deep category knowledge—into the taking of a bigger slice of the pie. 

Increasingly fragmented consumer demand for better-for-you beverages should be seen as a welcome challenge, an opportunity to leverage a c-store point of difference, and grow your bottom line.

 

Darren Climans is a foodservice insights professional with close to 20 years’ experience partnering with broadline distributors, CPG suppliers, and foodservice operators. His practice is to understand issue-based decisions by taking a data-driven approach to strategic decision making

Originally published in the January/February issue of Convenience Store News Canada. 


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Canopy says new generation of cannabis products won’t be on shelves until January

Canopy Growth Corp. says its new generation of cannabis-infused food and beverage products won’t be on store shelves until January in most markets.

The Ontario-based company says it was not allowed to sell its new product formats into distribution channels until Dec. 16 and it is rolling out products in a staged fashion from then to ensure a smooth rollout.

Canopy has been describing this phase of Canada’s legalization of marijuana products as Cannabis 2.0.

It has previously warned that it was unlikely to deliver on its previously announced sales targets for its financial fourth quarter due to difficulties with distribution in Ontario, the country’s biggest provincial market.

It now says that its Cannabis 2.0 products, beginning with its first chocolate bars and beverages, should be in stores in early January. It says its new line vape pens and cartridges should launch in late January.

Based in Smiths Falls, Ont., Canopy has been a pioneer of Canada’s commercial cannabis industry but has seen its stock price decline from a peak in April due to difficulties in the first year of legal non-medical product sales.

In October, Canopy purchased a majority stake in BioSteel Sports Nutrition Inc.


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7-Eleven Canada promo offers free hot beverages on the 7th and 11th of the month

Screen Shot 2019-09-11 at 1.21.23 PM7-Eleven Canada is running a new promotion designed to make it a go-to destination for hot beverage drinker: Registered 7Rewards members can get a free small hot beverages on the 7th and 11th of every month until the end of the year.

The promotion encourages consumers to sign up for the rewards app and visit their neighbourhood store to claim a free, fully customizable hot beverage ranging from Pumpkin Spice Latte to Hershey’s SKOR Hot Chocolate and Mexican Hacienda Miravalles Organic Coffee, as well as the popular Rainforest Alliance Certified 100% Caldas Colombian Coffee, and come November, the Peppermint Mocha.

With no extra charge for endless customizations at the 7-Eleven coffee bar, customers can make their beverage exactly how they like. 7-Eleven is emphasizing that its premium 100% Arabica beans that are hand-picked, ethically sourced, and small-batch roasted locally to ensure a more consistent and fresher cup of coffee.

The convenience retailer is looking to compete in the coffee wars and attract busy consumers. In a release the company said: “With the added benefit of no lineups, customers can quickly grab a hot beverage while on the go.”


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Younger consumers prefer c-stores to quench thirst

beverages-cold-colorful-1154756_1Younger consumers are feeding their beverage cravings at gas stations rather than supermarkets and drugstores, according to Boston-based GasBuddy’s 2019 C-Store Beverage Study.

According to the study, 51% surveyed said they purchase a beverage at a gas station C-store at least once a week, 20% of which do so daily. Convenience stores are the destination of choice for 165 million U.S. customers each day, resulting in $242 billion of in-store sales in 2018. The GasBuddy study confirmed that packaged beverages — which includes carbonated soft drinks, energy drinks, water, sports drinks, juices and teas — are impulse buys: 65% said their beverage purchases are typically unplanned before getting to the store.

“Today’s consumers—especially millennials—are buying more food on-the-go, including snacks, drinks and prepared meals,” said Frank Beard, convenience retail analyst at GasBuddy. “Efficiency is paramount in today’s society, and convenience stores are providing the desired ease and choice of options for an evolving customer. C-stores are also responding to a growing desire for healthier options.”

Additionally, the study revealed that younger consumers, aged 18-29, prefer C-stores over drug and grocery stores, are the least brand loyal, and most easily influenced by coupons/discounts. The survey also revealed how greatly product preferences vary between generations. Water is the No. 1 beverage product purchased at a gas station C-store by 18-29 year-olds, while carbonated soft drinks topped the list for the 30-44 and 45-60 age group.

To read the GasBuddy survey, click here.

 Originally published at Store Brands. 

Packaged beverage options are exploding: 4 tips for boosting offerings and efficiencies in-store

From new ready-to-drink (RTD) coffees to infused teas to sparkling waters, packaged beverage options are at an all-time high, driven by innovation and consumer demand for variety.

BeverageBuyer-teaserBeverage manufacturers recognize that having diversity in their offering is critical and the same is true for convenience store operators, who want to keep customers coming back for more.

“Culturally, we’ve become so accustomed to having more choices than ever and from a consumer’s standpoint, beverages are low investment, low commitment,” explained Satoru Wakeshima, chief engagement officer at New York-based branding agency CBX. “It’s not a major decision and people like to try new things.”

Wakeshima predicts 2019 will see more of the rising beverage trends and new product explosion seen in 2017 and 2018, but with greater blurring of product types — more hybrids.

“Our expectations are higher than ever, and the bar continues to rise,” he said.

How can convenience store operators manage the packaged beverages category in a way that capitalizes on new and emerging opportunities, but maintains efficiency?

Beverage experts, offer the following tips:

1. Allocate intelligently

Because the category cannot expand infinitely, especially within the limited confines of the convenience store format, space needs to be allocated intelligently, which includes scaling back in some areas. It’s a simple concept that is not always executed.

“Reducing space for declining or slow-moving segments to make room for innovative or higher-velocity segments that attract shoppers to the store is the key to success,” says Peter Keaney, business analyst at Cadent Consulting Group. An example would be to reduce space for milk, where sales have been declining, to make space for more sparkling waters.

2. Rotate offerings with marketing support

“People want to discover new beverages, but they also want to be reassured that they’re making a good choice,” said Wakeshima. “Educating customers at retail, mobile or online to aid the deselection process becomes the expectation.”

3. Think like consumers

Thinking like consumers means in terms of “need states” rather than subcategories, as this is how consumers shop, according to Keaney. Moving forward, the plethora of packaged beverage options could be rearranged in the cooler by needs.

The NPD Group has identified four macro consumer needs: fueling, wellness, connecting and gratifying.

The NPD Group has identified four macro consumer needs: fueling, wellness, connecting and gratifying. These fundamental needs can then be broken down into more specific behaviors, known as need states. Examples of need states under fueling include “easy on-the-go” and “staying awake.” Meanwhile, need states under gratifying include “nostalgic drinks” and “morning drink favorites.”

4. Keep abreast of beverage trends

In addition to staying on top of the latest packaged beverage trends, retailers also should watch what’s trending outside the category, since trends often spill from one category into another eventually.

The fastest-growing packaged beverage segments currently are sparkling water, energy drinks and RTD coffee, all which are up by double-digits recently, according to Keaney.

Still and sparkling water continue to be big as consumers seek alternatives to carbonated soft drinks, he added. “In addition, plant-based and probiotic beverages are driving sales, as well as functional beverages and innovations like nitro cold brewed coffee. We’ll have to see how high CBD-infused beverages can fly.”

Originally published at Convenience Store News. 


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Beverages: Fizzy and extreme

A look at what's quenching thirst in the c-store beverage aisle Read more