Beyond's Beverage Bet and Target's THC Tactics

0:05Monica Watrous:Welcome to the CPG Week podcast by BevNet and Nosh. I'm Monica Watrous here with my co-host Lukas Southard. If you're enjoying the show, please subscribe on your listening platform of choice. Now here is the latest in food and beverage industry news. Bell Group is strengthening its position in the better for you snacking space with the acquisition of Ingenuity Foods Cognitive Health Brands. Brainiac and Little Brainiac. Financial terms of the deal were not disclosed. The transaction adds Brainiac and Little Brainiac into Bell Group's existing lineup of portion controlled snacks, including Baby Bell, Go-Go Squeeze, Borson, and The Laughing Cow.

0:48The result

0:49Monica Watrous:is a broader platform aimed at modern families seeking convenient snacks crafted with recognizable ingredients and added functional benefits. Brainiac was founded in 2019 as Brainiac Kids, and it initially launched with whole milk yogurt products like squeeze pouches and drinks before adding shelf-stable offerings into the mix. It has since shifted its focus entirely to shelf-stable products, including fruit and vegetable pouches, smoothies, and fruit snacks, all of which are packed with brain-building nutrients like omega-3s and choline. Today, Brainiac's products are available in a wide range of retailers, including major chains like Walmart, Target, and Whole Foods Market.

1:32Monica Watrous:The acquisition dovetails with Bell Group's broader U.S. expansion. Following the company's recent investments in manufacturing capacity, including the$200 million expansion of its South Dakota facility, Bell Group is positioning itself to respond quickly to evolving consumer preferences. Those shifts include rising interest in functional nutrition, evolving dietary guidelines, and the ripple effects of GLP-1-influenced eating habits, all of which are reshaping how consumers snack. The deal comes several months after former Impossible Foods CEO Peter McGinnis was appointed to lead U.S. operations at Bell Group.

2:11November might not seem that far away for some, but for one of the largest retailers in the country, it appears to be the distant future. Target does not appear to be deterred by the impending ban of THC drinks that are set to take place in mid-November. The mass retailer stocked its store shelves in Texas, Florida, and Illinois this weekend with THC beverages as it expands its distribution into the intoxicating hemp drink category. The mass retailer started with a 10-store pilot program that it launched last fall in its home region of Minneapolis, Minnesota. The retail giant described the expansion to BevNet as a test in a, quote, limited number of stores as it explores new ways to meet our guests' evolving preferences.

3:04Last month, Target was also granted 72 new one-year licenses to sell lower-potency hemp edibles throughout Minnesota. What does all this mean? Well, from my perspective, it seems Target sees an opportunity to go deeper in the intoxicating hemp beverage set, despite the existential threat that faces the category. Industry sources I talked to said that Target has already set a markdown plan that will be implemented in October if there is no regulatory solution proposed in Congress. In this way, Target can hopefully offload whatever inventory it might be holding onto before the November 13th ban goes into effect.

3:46Yet, I also heard from a separate source that Target had plans to possibly add more brands to its assortments in various locations throughout the summer, depending on sales velocity. While I have heard very little of Target lobbying in Congress to put regulatory guardrails in place, the fact that the retailer is expanding is a positive sign for the category. The category hasn't received a lot of good news since last November when the ban was put in place as part of a spending bill. At the very least, brands can point to Target's role in the category as proof that there is demand and retailer enthusiasm to regulate hemp-derived THC drinks in a similar way to other adult beverages.

4:33Monica Watrous:In the meantime, we've seen at least one THC brand pull out of beverages as this deadline is looming. Just today, before this recording, I saw an Instagram post from Off Field, which makes sports performance positioned THC products, including gummies and beverages. And they announced that they are offloading the beverage business as a result of this regulatory quagmire. Have you seen any other THC brands that are making similar moves just to safeguard themselves against what could be happening come November? Yeah, I've talked to quite a few brands. One that stands out is Hippie. Hippie Drink or Drink Hippie, I think is what they've rebranded as.

5:17They moved into Hippie Energy, a non-THC energy drink, and then they recently launched Hippie Brew at the same time that they discontinued their hemp drive THC. There have been a lot of brands that have told me that they have been working in R &D for solutions. I believe Fabric, a Colorado-based low-dose hemp THC drink brand that makes a hop water, basically. They just released their uninfused hop water. So they're hedging in their own way. They still have their THC drinks, but have this off-ramp if things don't go well come November. But I'll be covering a lot of this at BevNet Live. I'll be hosting a panel with some stakeholders in the category to discuss, you know, how not just brands, but also distributors and retailers are kind of weathering the regulatory unknowns that will exist throughout the summer, most likely.

6:26And we'll talk about kind of all the different solutions that could come out of what is to come in November.

6:34Monica Watrous:Of course, if you have not yet registered for BevNet Live, you have less than a month to do so. It is taking place June 10th and 11th in New York City. And we released our schedule recently. It's going to be a pretty rocking agenda with lots of bright and brilliant minds across the beverage industry. So sign up at BevNetLive.com. From weed to waffles. The nation's largest egg producer, Cal Maine Foods, will acquire certain assets of the Vans Foods business from Sarah Lee Frozen Bakery, a portfolio company of private equity firm Kohlberg. Financial terms of the transaction were not disclosed. Vans markets a line of frozen waffles and pancakes, including gluten-free, high-protein, and whole-grain varieties.

7:21Monica Watrous:Following the acquisition, the company will continue to operate under its existing brand identity while benefiting from CalMain's scale and resources to broaden its reach and improve cost efficiency and product quality. The addition of Vans is expected to increase CalMain's prepared foods annual sales by approximately 10 % while strengthening its presence across grocery and direct-to-consumer channels. Mississippi-based CalMain's prepared food business, which generated$219.2 million in sales in the latest nine-month period, includes pre-cooked egg patties, omelets, folded and scrambled egg formats, hard-cooked eggs, pancakes, waffles, and specialty wraps under brands such as Eggland's Best and Creapini.

8:08Monica Watrous:Vans has changed hands several times over the past decade. In 2014, Hillshire Brands acquired the business from Catterton Partners for$165 million. Later that year, it was announced Tyson Foods would merge with Hillshire Brands. And four years later, Tyson sold the Sarah Lee Frozen Bakery and Vans businesses to Kohlberg for an undisclosed sum. Sarah Lee Frozen Bakery said it decided to divest the Vans business to sharpen its focus on its core brands. one of the most well-known plant-based brands is going beyond meat as it launches into beverages our colleague brad avery dove into the strategy behind beyond the plant-based protein company's new clear protein drink immerse first announced in january beyond immerse is a 12 ounce canned protein beverage available in a 10 or 20 gram protein format.

9:09It also contains electrolytes, seven grams of fiber, and various vitamins. While it's tapping into a variety of trends in food and beverage, Beyond CEO Ethan Brown sees the expansion into beverages as the company quote broadens its aperture to deliver the rest of the superpowers of plants. Brown has spoken for years since he launched Beyond Meat in 2009 about the headwinds the brand has faced from not just the meat industry, but the broader infrastructure surrounding the industry, which includes pharmaceutical companies and feed manufacturers and even the politicians who represent those constituencies.

9:50brown is using beverage industry experts like seth goldman founder of honest tea and just ice tea former coca-cola cfo kathy waller and boston beer company founder jim kotch to help guide beyond strategy for immerse and its larger aspirations in the drink category immerse is launching into new york city using distributor big geyser to help shape its footprint in the immense market. All of this comes as Beyond's core line of plant-based meat products continue to struggle in sales. In its most recent Q1 earnings report last week, net revenues decreased 15.3 % year over year. Now, that being said, the brand did tally improvements across its gross margin and its net loss.

10:41So we'll see how Beyond really moves into beverages and how much of now called Beyond the Plant-Based Protein Company, will lean on beverages as a core part of what they provide to consumers along with their plant-based meat options.

11:02Monica Watrous:And insiders can read Brad's interview with Ethan Brown at BevNet.com. Here are some other notable bits of news from the week. Award-winning musical artist Carrie Underwood is expanding her health and wellness app business Fit 52 into a consumer goods platform with the launch of High Note, a nutrition brand aimed primarily at female consumers. Jesse and Benz has raised a$10 million Series A round led by venture capital firm Graycroft to fuel retail expansion and continue expanding the company's supply chain. And finally, Mosh, the brain health nutrition brand founded by celebrity mother and son duo Maria Shriver and Patrick Schwarzenegger has raised$13 million in Series A funding led by Main Street advisors.

11:50Monica Watrous:For these stories and more, become an insider at BevNet and Nosh. That wraps up this edition of CPG Week by BevNet and Nosh. Thank you to our audio engineer, Joshua Pratt. Our director is Mike Schneider and our designer is Aaron Willett. If you enjoyed the podcast, please subscribe on your listening platform of choice and we will see you next time.