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September 11-15, 2017

Blog Entries in Category: General Blogs

Will Amazon do it?

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Category: General Blogs  |  Tags: distribution

What Amazon does sometimes sends ripples throughout the business world, even the beverage world.

Gary Thompson thinks Amazon is having more than a ripple effect on beverage distributors. Thompson, the COO of Michigan-based beer distributor Powers Distributing (and Beverage World’s 2014 Beer Wholesaler of the Year), spoke at Beverage World’s BevOps supply chain conference in April on the challenge of managing the growing number of SKU’s coming into a beverage distributor’s operation. 

He opened his talk with a short video clip of the recent 60 Minutes interview of Amazon’s Jeff  Bezos, the one during which Bezos broke the news that the online retailer was testing drones for delivery. It was also the interview in which Bezos proclaimed that it was Amazon’s strategy to figure out how to “sell everything to everyone.”

For Thompson, Amazon’s impact is undeniable. “The changing consumer expectations about how they search out and purchase products are having a profound impact on beverage distribution,” he told his fellow beverage distributors in attendance. “Amazon sets expectations among consumers that beverage distributors have to realize and compete against.”

Last month reports broke out of California that fed directly into Thompson’s point.  The reports said Amazon is on the verge of testing a new concept: a drive-thru grocer that will allow consumers to order grocery items online, then schedule a pickup at a dedicated facility, the first of which seems to be under construction in Silicon Valley. Amazon didn’t confirm the reports, but it didn’t deny them either. To many observers, the idea seems more plausible and immediate than delivery drones do. “We are seeing the emergence of the next generation of the food distribution system,” Bill Bishop, a retail and e-commerce consultant told CNBC.

Few experts doubt that Amazon can pull off the drive-thru concept. Amazon already is distributing groceries, including beverages, and even perishables through its limited AmazonFresh service in major cities, and the drive-thru concept would seem to ramp up its ambitions.

Amazon of course is an expert in logistics and order selection, using robots in distribution centers to fill orders in minutes. Experts also say that Amazon has been experimenting with physical pickup spots, such as the Amazon Locker program where goods can be delivered to unmanned drop boxes at retail partners like 7-Eleven.

The drive-thru grocer concept also plays directly into Amazon’s strategy of getting goods into consumer’s hands through any means possible—including aerial drones, which leads us back to Thompson’s comments on Amazon’s disruptive effect on beverage distributors.

Even the potential of the Amazon drive-thru concept should put traditional brick-and-mortar grocers and the companies that supply them on notice because the potential disruption would be formidable. Disrupting traditional business models also is what Amazon does best.  And, as Jeff Bezos said to 60 Minutes, “Complaining about it isn’t a strategy.”  

A new high for beverages

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Category: General Blogs  |  Tags: cannabis-based drink

There’s been a lot of coverage as of late about the legalization of marijuana in different states. Most of the news has been about the traditional smoking variety, and also about edibles. But one area that hasn’t gotten too much coverage is marijuana-infused beverages. But that might be about to change.

The second half of 2015 into 2016 could see several brands introduce cannabis-based drinks, and, over time, these could carve out a substantial new beverage category. 

As of now, of course, with legal adult use of marijuana limited to just four states (Alaska, Colorado, Oregon and Washington) and the District of Columbia, the cannabis beverage industry is also quite limited in its distribution. “The way that the market is right now every state has a different regulatory framework which means every state has a different set of licensees and there’s no interstate commerce allowed,” says Leslie Bocskor, managing partner at the marijuana industry consulting firm Electrum Partners. “So each state is like its own market and has its own leader.”

But most experts believe legal usage will spread to many more states in the very near future, providing the potential for strong growth of this category. And meanwhile, in the states where it is already legal, the demand is there, and potentially great, for this new category of drinks. “We’re seeing more cannabis-infused beverages on the market than there used to be,” says Kris Krane, managing partner at 4Front Ventures, which is working to professionalize the marijuana industry. He says they range from everything from coffees and teas to fruit punch. One of the most popular is Dixie Elixirs, which markets a THC-infused bottled drink that comes in lemonade and iced tea.

For this column I did a lot of research (not of the kind you’re probably thinking). Nevertheless, I did learn from Michael Christopher, founder of Loft Tea, a marketer of cannabis-infused drinks, that cannabis has over 108 active compounds that have been found to be beneficial to the human body.  THC is the most popular, more common compound that gives many users that “high,” euphoric sensation upon consumption. That’s the one only legal in select states through dispensary operations and retail sales. 

But there are other equally as important compounds, like CBD, or cannabidiol, found in cannabis that has no psychoactive qualities, Christopher explained to me, and has been used to potentially treat a varying list of ailments from anxiety reduction to epilepsy in children. “While we cannot speak directly to medical implications, we find that this compound is perfect for a health focused, non-euphoric tea beverage,” says Christopher, who is launching this fall a line of CBD hemp infusion drinks to be sold in all 50 states, and then plans to follow them by the winter with THC/cannabis formulation versions to be sold in select legal dispensaries in Colorado, California and Nevada.

As you would imagine, Christopher is very optimistic about the category’s potential. “As far as user adoption, I think within the next decade, cannabis beverages will be the catalyst to mass appeal for cannabis products and the industry as a whole,” he says. “The delivery method of cannabis infused beverages and edibles is odor-free, portable and discreet; and its dosing is easier to standardize, which increases product efficacy and improves the user experience.”  

Worry over water

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Category: General Blogs  |  Tags: water, drought

As California craft beer makers convened for their annual convention in Mission Valley last month, they tipped a glass or two to the frenetic growth of their industry—3.4 million barrels produced, contributing $6.5 billion to the local economy in 2014, the California Craft Brewers Association reported. 

Then talk turned to water. Not the quality of the water, but rather the lack thereof. California craft brewers sit at the epicenter of a historic drought that is deepening past four years now. As one report put it, the good news is that despite the drought no brewery has been forced to cut back on production.

But the bad news can be right around the corner, the San Diego Times Union reported: “Do I believe that is going to happen? Absolutely,” said John Stier, a water management consultant with the Antea Group. “It’s just a matter of time.”

MillerCoors operates a brewery in the San Gabriel Valley. It’s operated there for 50 years, 35 years at the current location. Operations people there have seen droughts before, but none like the current one. MillerCoors produces about 6 million barrels of beer from that brewery, and so an historic drought carries its share of risk.

The thing is, MillerCoors has long considered how it uses water and how much it uses. MillerCoors water-to-beer ratio is among the best in the business: the company uses 3.36 barrels of water to make one barrel of beer, reported Jonah Smith, MillerCoors’ sustainability policy and reporting manager, at Beverage World’s BevOps conference in Las Vegas last month. The industry average is about 6 to 8 barrels of water per one barrel of beer.

Water usage amongst craft brewers may be much higher than the industry average. Antea’s Stier said at the California craft brewer meeting that amongst smaller brewers the median operation requires 26.2 barrels of water to make one barrel of beer.

The irony, as MillerCoors’ Smith pointed out at BevOps [page 54], is that because craft brewers are “local” the perception is they’re more environmentally friendly than the big brewers.

But the worries over water amongst beverage makers big and small go way beyond perception, as Managing Editor Andrew Kaplan uncovered for this month’s cover story [page 32]. In California alone, Governor Jerry Brown on April 1 directed the State Water Resources Control Board to implement mandatory water reductions by 25 percent, the first time such an action was taken in the state’s history.

How will the directive affect beverage operations in the state? It’s too soon to tell since local governments and water boards are determining how they will enact the mandate.

The bigger beverage companies like MillerCoors may be well-positioned to manage the worst of what may be to come. As for the smaller producers, Stier advises companies to seek out secondary sources in case primary sources run dry; to take steps to limit water use through better production practices and equipment; and to recycle or reuse wastewater.

One other thing, he offered: “Get used to more expensive water. Cheap water may be going away.”  

A source of happiness

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Category: General Blogs  |  Tags: mood-lifting drinks

By now many consumers the world over have been energized by their beverages, or been vitamin-fortified by them, or maybe even lost some weight. But what about drinks that make you feel, well, happier? As it turns out, happiness beverages just might be the next big thing for the beverage industry. And I’m not referring to a jingle telling us to “Have a Coke and a smile,” either.

When a new beverage called HappyWater recently contacted me, I admit I was rather skeptical at first. “Frankly right now if I was to tell you with no back up what this product would do, you wouldn’t believe me,” said Ralph McRae, chairman and CEO of the brand’s owner, Leading Brands. And he was quite right. But then he started delving into the story behind the brand, and I soon learned that mood-lifting drinks actually have a rich history in the beverage industry that stretches back a hundred years or longer. And, what’s more, some medical experts today have gone on record saying that everyone can benefit from them. 

HappyWater, launched in 2013, is sourced from two ancient Canadian mountain springs. Its blend of spring and mineral water contains naturally occurring lithia—that’s right, the same mineral the antidepressant lithium is made from—along with calcium, magnesium, potassium and fluoride. But it is by no means the first drink to ever contain lithia. In fact, one we’re all quite familiar with, 7 Up, was actually originally a drink named Bib-Label Lithiated Lemon-Lime Soda. It touted the benefits of its lithia ingredient to consumers (some think that’s what the ‘Up’ in the name is all about). In fact, back in those years, even beer with lithia was available.

Research has shown that lithia, given in very small doses, has a number of properties that could be enormously beneficial for the general population. A New York Times article in 2014 by Anna Fels, a psychiatrist and faculty member at Weill Cornell Medical College, details this and other facts about lithia. She explains how it has been shown to reduce suicide rates in the general population, also writing that in tiny amounts, it “might actually be neuroprotective or even enhance the growth of neurons” in the brain. In other words, it has been shown to stimulate the production of brain cells to counteract the affects of Alzheimer’s, alcoholism and aging. “Lithium has been known for its curative powers for centuries, if not millenniua,” Fels writes. “Lithia Springs, Ga., for example, with its natural lithium-enriched water, appears to have been an ancient Native American sacred site. By the late 19th century Lithia Springs was a famous health destination visited by Mark Twain and Presidents Grover Cleveland, William Howard Taft, William McKinley and Theodore Roosevelt.”

For those reading this who are still turned off by the idea of consuming lithia in any form, McRae explains that the amount in HappyWater is minute compared to what a dose of medical Lithium would contain. The actual amount of lithia in HappyWater is 0.1 part per million, McRae says. “And you might think that’s infinitesimal, and you’re right. But apparently all the studies have shown that as being an effective amount if consumed regularly. And that’s what was so amazing about it. It’s really one of the wonderful things that people have kind of forgotten about,” he says. “It improves mood, increases the sense of well-being and those sorts of things.”

And, he adds, “you don’t have to binge on the water,” to experience HappyWater’s effects. “Just go and drink it the same way you’d consume any other water.”