Spindrift Soda and Alani Nu Acquisition

0:05Welcome to the CPG Week podcast by BevNet and Nosh, your source for the latest food and beverage industry news. I'm Monica Watrous, Managing Editor of NOSH, here with my co-hosts Brad Avery and Lucas Southard. If you're enjoying the show, please subscribe on your listening platform of choice. On the podcast today, we are discussing Spindrift's Soda Launch and Celsius's Alani New Acquisition. But first, how do we feel about Purphy's new LTO, a pepperoni pizza soda, which is made with tomato juice concentrate and some savory notes, I'm sure. I haven't tried it yet. I actually think that I've got a box on the way to me.

0:49But Colin, our sample captain, gave it a shot. He said it wasn't for him. What do you guys think? Pepperoni pizza soda, sip or spit? Well, I'm gonna have to find Colin after we're done recording and give a taste myself if we have this it is it's calling me it's a siren song and you know and you know what happens when you answer to siren song is they eat you alive oh so that's what's going to happen with this i think so i think the pizza drink is going to drink me lucas what about you i i don't know if i'm as as interested in trying but i do know uh at least one if not both of my children would probably be really interested considering that they would if given the chance they would live off of pepperoni pizza So I'm tempted to just get some to bring it back for them.

1:39But I did see a post from Nate Rosen of Express Checkout trying it. And he said he seemed like he was into it. He said it was very interesting. I don't think he said specifically that he liked it, but he said it was very interesting. And he was surprised at how much it tasted like actual pepperoni pizza. None of that's a quality judgment. Just be clear. But, you know, there's something to be said if you're going to try to do something like that. You better make it taste like a pepperoni pizza. Like if it just tastes like a weird soda, you're going to be like, why would I drink this? Oh, I'm sure it tastes exactly as it's supposed to.

2:19I'm actually I'm a really big fan of Purfi. I'm actually drinking a Dr. Purfi right now, which is the brand's take on Dr. Pepper. And this is my favorite soda. I drink it almost every day. I buy it by subscription. And it tastes a lot like Dr. Pepper. but in a way better. So I don't doubt for a second that the flavor masters at Purfi have nailed the pepperoni pizza flavor. I just don't know if this is something that I would be drinking every day. I think for a brand like Purfi that is trying to distinguish itself in an increasingly competitive set, which is the functional soda space, it's an interesting play for sure.

2:55There we go again using the word interesting. But it is a distinctive play, helps you get attention on the brand. We've seen a lot of the kind of funky, like this is meant to be provocative flavor innovations, but it goes back decades. Jones Turkey and Gravy Soda definitely helped them get a lot of press at the time. And every Thanksgiving they bring it back and people are always like, I'm going to do it. Oh, yeah. It's the morbid curiosity that gets people trying at least once. But I also have to say Vasa Martinez, he's the founder of Purfi and the CEO. So he is a marketing genius. And a lot of the content around this launch is so fun.

3:37And speaking of Soda launches, Spindrift, which notably has its sparkling water line, it launched a spiked line at one point. But now just a month on the heels of its acquisition by private equity firm is launching Soda. Brad, can you tell us more? Absolutely. Spindrift soda is finally here. It's something I think that people have wondered if the brand would do for a long time, but had never heard any word one way or the other. So Spindrift, of course, is a sparkling water brand based in Boston. They make a sparkling water with juice infused in the product so that you get a little bit of sugar and real fruit juice for a fuller flavor.

4:19It's already sort of brought sparkling water a little closer to a soda. Now with a full flavor soda coming out. It comes a month after they were sold to a private investment group and Griffin Investors. And it's a bit of a new direction for the brand as they've been expanding. Monica, you mentioned that they previously did a hard seltzer, a spindrift spiked, and they've also been leaning a bit into the mocktail format with some of their flavor innovations like the Nohito and the Cosnopolitan. This now is a full new product extension. for them and it's not functional. What I like about this launch is that they somewhat bucked the trend on the flavor varieties that they put out.

5:05They had some common ones like Concord Freeze, so your grape soda, an orange cream float like orange soda, ginger ale, a favorite of mine. But then they also had Strawberry Shortcake and Shirley Temple. The Shirley Temple is kind of like a cherry citrus. These are nostalgic flavor profiles and I think that's going to be a really big hit with millennials who are probably a big target of the flagship lineup. So this launch is also coming when they have a new CEO in Dave Berwick, who previously led Boston Beer, a pretty experienced industry veteran. And the founder, Bill Creelman, is moving into a more back-end role after serving as CEO since the brand's founding.

5:51It will be interesting to see the new direction that the company goes in, a different category and one that has a lot of competition. We've seen a lot of brands try to make extensions into this soda space, this Better For You Soda set. Suja Life rolled out with the Slice relaunch. HealthAid has its SunSip. A lot of brands have tried to go to Better For You Soda as their core line extension. Spindrift being a sparkling water may have some more room to play there, some more legitimacy in the set. It's always been a little adjacent as a result. And this is not that much more sugar from what I can see.

6:29Eight grams of sugar per 12-ounce can, you know, some Spindrift flavors go up to four grams. So it's not a big leap for at least the core Spindrift consumer. So we know Spindrift is launching this new offering direct to consumer as well as on Amazon and will roll out to brick and mortar retail later this year. But one thing about Spindrift is it has a really impressive footprint in food service. You see cans of their sparkling water in a lot of fast casual chains and fast food restaurants. So I wonder to what extent they'll leverage those relationships to introduce this new line in restaurants.

7:08And I wonder if this could even be a dispensed option in fountain drinks for places that do focus on better for you offerings. I'd be curious to see that. Certainly, we've seen Tractor Beverage make a lot of headway there with a sort of better-for-you organic option on the fountain side. Fountains, of course, are a very competitive set. That might be a ways off. I think they'll want to see if they can compete in retail first. From soda to energy drinks, last week we reported on Celsius Holdings' acquisition of competitor Alani Nu for$1.8 billion. What do we know about this deal, Brad? These two brands have been big pioneers in opening up the category that used to be incredibly male-dominated.

7:54And Celsius, as the number three player, is now bringing in a brand with a run rate of over$800 million in retail sales. This is a pretty sizable deal and gives them a much bigger share of the entire shelf. I do wonder, though, if there's potential for cannibalization, because I do tend to think of Alani New and Celsius as pretty similar whenever I see them on shelf. What incrementality could Alani New bring to the Celsius lineup? It's not just energy drinks that Celsius is getting with this deal. So Alani has a lot of different product lines and protein and bars and supplements. And not all of those are spaces where Celsius plays or where they do play.

8:35They're not nearly as strong. So it brings in that element as well. But on the energy drink front, Alani new drinks grew 63.1 % last year, according to Sarkana. And the only other brand in the space still growing at that level was bucked up at 63.2%. But that's a fraction,$50.6 million in sales versus Alani's$830 million. This is a huge get. It's the number four brand getting folded into the number three brand. Alani New has really kind of cornered that pre-workout energy space more than really any of the other top four brands. I think one of the big questions that we're all waiting to see is what does this mean for distribution?

9:20because Celsius has aligned with PepsiCo as their distributor. But, you know, with KDP acquiring Ghost and then also doing distribution for C4 and having stake in C4, there's a lot of unknowns that could happen with what this means for distribution for both Celsius and Alani Nu. Another big unknown is where does this leave Congo Brands, which was the manufacturer of Alani? Congo also makes Prime, and we know that Prime has been struggling in sales lately. Its energy drink and its core sports drink are both down double digits in sales. It's been fighting to turn things around after its explosive year a couple years ago, and Alani was their big grower.

10:09So I'm curious what this does for Congo now. Obviously, it's got a big windfall from the sale. I'm not sure exactly who gets paid what, but certainly Congo is getting some payment from this acquisition. So whether they'll be investing that into new brands, into growing Prime, into other parts of the business, we'll have to wait and see. They've got a pretty strong system over there that's been able to rapidly grow two major brands that were unheard of just a few years ago. So we will be watching to see what they do next. Yes, we will be watching. And insiders who want to read more about this deal can go to bevnet.com.

10:49Story is analysis, Alani New and Celsius deal sparks distro realignment, possible KDP rethink. And here are some other notable bits of news from the week. Why protein bar brand David is adding more artificial ingredients to its formulation. What actual veggies plans to do with its new $7 million Series A funding and inside Half Day's refreshed brand identity. 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.

11:31If you enjoyed the podcast, please subscribe on your listening platform of choice. And we will see you next time. Thank you.