Thursday, November 21, 2013

Food and Beverage Trend for 2014: The Rise of Craft Distilleries

Food and Beverage Trend for 2014: The Rise of Craft Distilleries

Food and Beverage Trend for 2014: The Rise of Craft Distilleries
Woody Creek Vodka
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Beverages

When Bill Owens held the inaugural meeting of the American Distilling Institute in 2003, 86 people showed up, most of them old faces from the tiny world of craft distilling. For the organization's 10th annual conference in April, more than 900 folks packed the Sheraton in downtown Denver. "There were kids with tattoos, doctors, lawyers, veterinarians," Owens says. "There were people with master's degrees and Ph.D.s. These are people who know how to make business happen."

Craft distilling, like craft brewing before it, is in the midst of a boom. Less than a decade ago, there were 70 distilleries in the U.S. Now there are 623, producing everything from whiskey, gin, vodka and rum to less-common spirits such as absinthe--and all the schnapps in between. Owens believes the number will rise to 750 by the end of 2014 and that the market will be able to support 1,000 independent booze-makers within a few years. So why such rapid growth? Owens says distilling is the last piece in the artisan renaissance that has reshaped consumerism. "Every town in America has a coffee roaster, little bakeries and a brewery. Look at all the vegetable growers and cheese-makers," he says. "There's a huge amount of pride in physical work. There's no pride in going to an office building and sitting in a cubicle. Distilling is part of that." But people who start distilleries aren't the same as those who make beer in the basement or raise chickens in the backyard. Craft distillers tend to be well-capitalized professionals with strong business plans and patience.
Woody Creek Distillery
Woody Creek Distillery
Image credit: Woody Creek Distillers
After years working in completely different industries, in 2012 Mary and Pat Scanlan and Mark Kleckner started producing vodka from heritage varieties of potatoes in the Woody Creek Valley outside Aspen, Colo. Unlike commercial producers that use commercial ethanol, grain or discarded potatoes, the team behind Woody Creek Distillers picks, cleans, mashes and distills its potatoes within 24 hours for an ultra-premium product made from 100 percent local ingredients. After producing 10,000 cases last year, they hope to scale up to 50,000 or 100,000 cases in the next five years, and they've also started producing brandy and whiskey. "People are getting smart. They're asking how their liquor was made, what it's made of and what's up with the stuff they've been drinking all their life," Kleckner says. "People are starting to look beyond all the marketing and hype. Because of that, craft distilling is going to benefit."
Scott Bush, who has revived Iowa's famed Templeton Rye--a popular whiskey during Prohibition and Al Capone's drink of choice--thinks craft distilling is filling a vacuum that the big distillers failed to capitalize on. "There was a need for innovation in the spirits industry for a long time," he says. "They hadn't done anything new or different for so long that people naturally gravitated to craft brands." But craft distilling isn't just about expanding market share behind the bar. Many distilleries are opening tasting rooms and gift shops, and their impact on local economies can be huge. "The future for these places is in becoming tourist destinations," says Owens, who knows of craft distillers bringing in $30,000 per month from their gift shops alone. "People don't realize how much life they bring to their communities with breweries and distilleries."

Tuesday, November 19, 2013

4 Incredibly Successful Companies That Didn't Get A Deal On 'Shark Tank'

4 Incredibly Successful Companies That Didn't Get A Deal On 'Shark Tank'

Screenshot from ABC's "Shark Tank"
It doesn't take getting a deal to make it big on "Shark Tank."
Some of the biggest success stories from ABC's hit pitch show, now in its fifth season, walked away from the tank empty-handed. But it didn't matter. Their companies took off anyway.
"Shark Tank" experts say that, in many cases, the value of getting airtime on the show outweighs the benefits of taking a deal with one or more of the Sharks, which typically requires giving up a precious amount of equity.
"There's been a lot of studies done on how much it's worth to go on 'Shark Tank,' and there's a lot of consensus among veterans that it's worth somewhere between $4 and $5 million dollars in marketing exposure," says TJ Hale, a Phoenix-based entrepreneur and producer of the "Shark Tank Podcast."
That raw marketing value has led to a new class of contestants on the show: people who seem far more interested in filming a segment than haggling for a deal. "I've seen a few entrepreneurs this season where it's pretty evident that they're not interested in doing a deal, but they're extremely interested in the promotion that comes with the show," Hale admits.
For instance, there was Garrett Gee, who came on seeking a $1 million investment in exchange for a 5% stake in his code-scanning mobile app, Scan. After he revealed that the company had already raised $8.7 million, investor Daymond John had to ask: "Why are you exactly here? Is it just for exposure?"
Gee said no at the time, but seemed to suggest otherwise later. He told Business Insider that his decision to go on "Shark Tank" was about 50/50 in terms of seeking exposure vs. the chance for a deal, and he's previously said that some of the startup's investors didn't support Scan appearing on the show in the first place.
Either way, the exposure paid off. After the segment aired, Scan vaulted to the No. 1 spot among paid utilities apps and the No. 20 spot for all paid apps in Apple's App Store, and became the top-selling app in the Windows Phone store.
Scan won't be the last business that profits from "Shark Tank" exposure despite not getting a deal, and it certainly wasn't the first. With the help of Hale and Pierce Marrs, a sales and communications coach who also does a weekly podcast on "Shark Tank," we compiled a list of five companies that succeeded even though the Sharks turned them down.
Founder Shawn Davis didn't get any takers when he appeared in Season 2 asking for a $200,000 investment in Chef Big Shake, a gourmet seafood operation that proudly claims to be the "home of the original shrimp burger." Since the appearance, however, the company's sales have soared from their original $30,000 in 2010 to well over $1 million. What's more, Mark Cuban has called Chef Big Shake the one company he regrets not investing in. "He didn't get an investment, but now he's just killing it," Cuban said.
Derek Pacque, the 20-something founder of CoatChex, a ticket-free coat check system, turned down a $200,000 investment offer from Cuban on the first episode of Season 4. Cuban's offer matched the funding Pacque was seeking, but demanded a 33% stake — more than three times the equity he wanted to forgo. Since the company's appearance, CoatChex has landed contracts for huge events like the 2013 New York Fashion WeekMercedes Benz Fashion Week, and the Super Bowl. The company is projecting to bring in $500,000 over the next six months through a variety of events, contracts, and new leads, VP of Business Development Adam Loos said.
Taylor, Brooks, and Tanner Dame — three brothers from Idaho — pitched their hand-crafted eyewear company to the Sharks in Season 4, but failed to get the deal they wanted. They walked away from two offers of $150,000 that both demanded more equity than they were willing to give up. Since their segment ran, their sales have more than tripled to $1.4 million, and they're projecting $2.5 million in sales in 2014, Tanner Dame said. The company also recently opened a flagship store in Boise, Idaho.
Dave Alwan appeared on Season 4 of "Shark Tank" to pitch his old-fashioned, farm-fresh meat company. He asked for $300,000 in exchange for a 20% stake. Alwan didn't give a great presentation, but the Sharks loved his product. He was doing $1.2 million in sales before the segment aired, and his sales more than doubled in the first six months after his appearance on the show. He's since launched the company on Amazon and QVC, and is projecting sales will reach between $5 million and $10 million in 2014, he told Hale. "He's had the Sharks call him and order from him and give him advice," Hale said. "He feels like he got the best of both worlds."
Despite the tremendous publicity value of appearing on "Shark Tank," sales and communications coach Marrs thinks the payoff ultimately depends on how you come off to the audience. "Just being on the show can be a huge boost for you, but it's only if the Sharks like it," Marrs says. "How much success you have if you do or don't get a deal depends on how much they like the product while you're on there."

Panera Bread Is Making Four Changes To Win Customers Back

Panera Bread Is Making Four Changes To Win Customers Back
Panera Bread has a four-step plan to combat slowing sales and rising competition, according to a recent research report by Goldman Sachs. 
The plan is meant to "improve service and ultimately the overall customer experience," the analysts write.
These four changes will take effect in 2014: 
1. Adding labor. Panera Bread is hiring more employees. It also plans to give current workers more hours. This will ease the burdens on staff and give them more time to assist customers. 
2. New equipment. The company  is spending millions to add new food preparation equipment, which will also reduce wait times, according to the note. 
3. New menu. The brand is eliminating some "hard-to-produce," items, according to Goldman. "Among other benefits, this new menu, which has already been tested, is meant to reduce consumer confusion/indecision that slows down the line at the point of sale during peak periods," the analysts write. 
4. Catering hubs. Instead of running its catering business out of stores, Panera Bread will build hubs that will service three or four locations. This will keep employees focused on customers.  

Volvo Trucks


Tuesday, November 12, 2013

Target Fills Its Cart With Amazon

Target Fills Its Cart With Amazon Ideas

MINNEAPOLIS— Target Corp. TGT -0.31% has come up with an answer to Amazon.comInc. AMZN -1.36% Copy it.
The discount chain's latest online offerings have a distinct Amazon feel—from recurring deliveries for diapers to on-demand streaming video and free shipping and discounts for its members. All emulate similar offers from the e-commerce company.
Target's headquarters here is also taking on some perks more typical of West Coast technology companies than a Midwestern retailer. That includes vintage arcade games, a boccie ball sand pit and a red basketball court stamped with the retailer's bull's-eye logo. And next year, the company plans to spend more on technology than it does on building and upgrading its stores.
Target says Amazon is just one of many competitors and it isn't mimicking anyone. Still, the moves highlight an important fact of doing business at Target: the customer who visits the discounter's giant stores and the customer who orders online from Amazon are increasingly the same person.
According to consultancy Kantar Retail, 62% of Target's shoppers also visit Amazon within four weeks of their Target trip, up from 33% in 2007. Target shoppers are most likely to also shop at Wal-Mart Stores Inc., WMT -0.20% but soon Kantar expects Amazon to take that distinction.
The deep overlap poses a significant threat to a company that despite the cultural moves and heavy investment continues to struggle with e-commerce, even as customers shift more and more of their shopping online.
Target's Internet sales are puny—less than 2% of its $73 billion in total sales last year. By comparison, Amazon's North America sales rose 30% last year to $35 billion, most of it in categories of goods that Target also sells. Meanwhile, traffic to Target's stores, as evidenced by its overall transaction count, has fallen for three straight quarters.
Last month, the company dialed back its long-term goal of reaching $100 billion in sales by 2017. Executives acknowledge the company's U.S. business isn't going to grow as fast as previously thought. Part of that is the slow economic recovery, but part of it is also a failure to capture online sales.
"We have to double-down, and we are doubling, tripling and quadrupling down," Target's Chief Executive Gregg Steinhafel said in a recent interview about using digital tools like its website and apps to drive sales.
In an effort to catch up, Target this year is spending about as much of its $2.3 billion U.S. capital budget on improving its technology, developing mobile apps and modernizing its supply chain as it is on opening and remodeling stores. Next year, the company will spend more on those investments than on stores, an acknowledgment that future growth will increasingly depend on digital sales.
Target executives blame the drop in U.S. store traffic on the slow economic recovery and higher payroll taxes, saying it isn't only due to a shift online.
"It's not as if just overnight our traffic levels are down because of Amazon," Mr. Steinhafel said. "There might be some correlation."
Amazon has long been intertwined with Target. The discounter outsourced management of its website to Amazon for a decade before pulling the plug on the deal and bringing its e-commerce operations in house in 2011. The following year, Target stopped selling Amazon's Kindle devices, without explanation.
Target's decision to let a rival operate its website for so long is viewed by some inside the company as a mistake, one caused by a failure to recognize the competitive threat Amazon posed to the company's core business, a former Target executive said.
Even when the partnership ended, Target was focused on renovating existing stores by adding more fresh foods, building its store-branded Red Card credit and debit-card business, and exploring an entry into Canada. Those efforts crowded out some of the focus on e-commerce, the former Target executive said.
Adding food helped Target get more everyday trips and better match what Wal-Mart stores offered, and the Red Card, which offers discounts, now accounts for more than 20% of purchases and is growing ahead of expectations.
The Canada push had a rocky start with fewer repeat shoppers than expected, and Target now expects profits will take longer to come.
"It was a very aggressive agenda, and it has stretched us and tested us," Mr. Steinhafel said.
Like other retailers that have confronted the Amazon threat, Target sees its physical stores as an asset that the strictly online retailer doesn't have. For instance, Target is trying to boost sales of baby equipment by adding employees to aid customers, something Target has tested in Chicago and is rolling out to more markets.
The company is also putting in so-called beauty concierges to push cosmetics, and it is expanding these to 300 stores by year's end.
Both moves appear to be aimed at boosting sales for two profitable categories that have migrated to the web, Kantar Retail's Leon Nicholas said.
Some of Target's responses fall short of Amazon, which could make it hard to stem the loss of customers. Its subscription service only covers baby supplies, far fewer than Amazon's Subscribe & Save, which also offers deeper discounts based on how many items are in a scheduled order. Target does plan to expand its subscriptions to offer limited selections of coffee, personal care products, paper towels and toilet paper by the end of the year.
Target also is letting its customers retrieve online orders at any one of its 1,800 U.S. stores starting this holiday season, much like Amazon's package pickup program at lockers in 7-Eleven convenience stores.
But having in-store pickups is something other brick-and-mortar retailers have been doing for years and some, like Wal-Mart and Home Depot Inc., have carved out space in their stores. Target has dedicated space for pickups in only a handful of locations.
Some customers prioritize convenience over all else, a problem that will be hard for Target to remedy. Emily Mohry finds Amazon a welcome alternative to trips to Target. The mother of two from Mertztown, Pa., used to stop by Target every week before she had kids. But since joining Amazon Prime, she now goes to Target less frequently.
"Amazon is an easy way to get stuff delivered to my house and not have to drag my kids out, even if it's a couple dollars more expensive," said Ms. Mohry, who works for a marketing firm.

What's Behind the Green Juice

What's Behind the Green Juice Fad?

Carrying a bottle of vegetable juice has become a status symbol

Nov. 11, 2013 7:23 p.m. ET
The price of vegetable, fruit and superfood juice is beginning to approach that of expensive liquor. Katie Rosman joins Lunch Break with a look at the growing market for premium juice, and whether the health claims hold up. Photo: BluePrint.
How much will consumers pay for healthy-in-a-bottle?
As much as $10 and sometimes more. At least that's the belief of high-end grocers likeWhole Foods Market WFM +1.25% and a spurt of small juice companies trying to move the cold-pressed-juice craze from small-batch to mass-produced.
A 16-ounce bottle of BluePrint Red, containing beets, carrots and ginger, among other ingredients, goes for $10 at some retailers. And Whole Foods customers are paying $9 for a bottle of celery-based Twelve Essentials vegetable juice, one of the top-sellers from Suja, an 18-month-old juice brand based in San Diego. Suja co-founder Annie Lawless says customers understand the high cost of what goes into the bottle, including organic produce that is cold pressed and then preserved using a process that leaves most of the nutrients intact. "When you buy a bottle, you're getting all the goodness without any of the effort," says Ms. Lawless, a 26-year-old former law student and yoga instructor. The company says it generated $20 million in revenue in its first year.
Just as carrying a Starbucks SBUX -0.72% coffee cup has become a celebrity fashion accessory and a slung-over-the-shoulder yoga mat can signify a certain devotion to spiritual fitness, porting a clear bottle of green vegetable juice has evolved into a status symbol. Initially, the juicing market was supported mostly by people doing liquid-only cleanses, marketed as a way to rid the body of toxins and bloat. Now, more consumers are drinking juice as a meal replacement, a quick infusion of vegetables or to convey the impression of superior health and discipline.
Suja's product line is a slate of fruit-and-vegetable juices meant to dose the body with a palatable concentration of nutrients from organic produce. For people doing a liquid-only cleanse, Suja sells packages on its website. A three-day supply costs $225, including shipping on ice outside of California. It has flavors such as Glow, which contains apples, cucumbers, mint, kale and other ingredients, and Green Supreme, with apples, kale and lemon.
Health experts say the vegetable drinks have many beneficial nutrients, although some ingredients, like apples and carrots, can add a lot of sugar. Consumers should be careful to get enough fiber in their diets, since the process of cold-pressed juicing extracts the juice from the fiber-rich leaves and stems. Good sources of fiber can include whole grains and nuts, which aid digestive health.
A simpler route to a well-rounded diet might be to eat the vegetables themselves, rather than as juice, suggests Marion Nestle, a professor of nutrition, food studies and public health at New York University. "It's a lot of money, why not have a salad?"
Juice companies say the high cost of the organic produce, and the expense of processing, prevent them from selling their product for less. Consumers making their own juice at home with similar ingredients would pay about the same or more, not counting the cost of equipment, they say. "We wish we could bring the cost down," says Zoƫ Sakoutis, co-founder of BluePrint.
Suja's Annie Lawless, co-founder, and Jeff Church, CEO, at the cold-pressed juice company's San Diego operation Sandy Huffaker for The Wall Street Journal
Sarah Andersen, 31, drinks about five bottles of Suja juice a week and says it leaves her feeling healthy and confident. A health-and-wellness trainer for teenage girls in Madison, N.J., Ms. Andersen says she used to make her own juice. But the time, effort and mess became onerous. Now she buys Suja, even if it means cutting back elsewhere. "I know it's expensive but I would rather have a juice than get my nails done."
Industry experts say overall sales of cold-pressed juice aren't tracked separately. But the segment is a bright spot in an otherwise stagnant juice market, they say. National retailers like Whole Foods are devoting increased shelf space to the products, more companies are launching, and acquisitions and expansion in the industry have been robust, says Jonas Feliciano, a beverages analyst for Euromonitor International, a market-research company. "Americans are drinking less juice," he says. "So what manufacturers are going for is attracting the health-conscious consumer who will pay higher costs for smaller volumes."
Errol Schweizer, executive global grocery coordinator for Whole Foods, says the company was skeptical at first that consumers would be willing to pay such high prices for juice. But, he says, "I have been surprised by the cleansing products and what people are willing to spend."
Still, Whole Foods is hedging its bets. Mr. Schweizer says he called on Suja to work with Whole Foods' product team to create a secondary line of less expensive juices and smoothies. The line, called Suja Elements, was launched in Whole Foods stores around the country this fall and retails for $5. The bottles are smaller—12 ounces versus the usual 16 ounces—and the recipes tend to use lower-cost ingredients like apples and carrots.
BluePrint was founded six years ago to sell a six-bottle-a-day-cleanse product that costs $75 a day. It includes a lemon, cayenne and agave concoction meant to "hydrate, refresh, curb that 4 p.m. snack craving and stay focused," the company website says. BluePrint now also sells individual bottles of juice at high-end grocers around the country. Another cleanse product: BluePrintBride, for women wanting to lose weight and detoxify before their wedding, starts at $350. BluePrint, which was acquired last year by Hain Celestial Group Inc., in Melville, N.Y., says it had $20 million in sales last year.
Another cold-pressed juice company, Evolution Fresh, was purchased by Seattle-based Starbucks Coffee Co. two years ago for $30 million. The company recently invested $70 million to open a factory in Southern California to produce 140,000 gallons of juice a week, says Chris Bruzzo, general manager of Evolution Fresh. Mr. Bruzzo says the juices are now carried in 5,000 Starbucks locations and 3,000 grocery outlets. The best sellers are two varieties of green juice, he says.
Getting pricey cold-pressed juice on the shelves of national supermarkets and specialty stores has been a challenge. Stores like Whole Foods typically require a shelf-life of about 30 days for packaged juices. But traditional methods of preserving foods use heat, which destroys some nutrients. Cold-pressed juice companies didn't want that.
To extend shelf life, some companies, including Suja, BluePrint and Evolution Fresh, have turned to a process often called high-pressure processing (HPP), which inactivates most microorganisms while retaining natural freshness. HPP, also used to preserve guacamole and ready-to-eat meats, subjects the food to intense pressure of thousands of pounds a square inch.
High-pressure processing, however, is the subject of a lawsuit filed against Hain Celestial in U.S. District Court for the Southern District of New York last month. The suit says that HPP destroys some probiotics and enzymes and that BluePrint labels falsely advertise its products as "raw." A BluePrint spokeswoman declined to comment on the suit.
Ms. Lawless, the Suja co-founder, has long made juice at home because she has celiac disease. She and a partner, Eric Ethans, in 2011 began selling juice to her yoga students who would ask about her juicing.
The small operation attracted two investors, including Jeff Church, 52, a bottled-water entrepreneur. He approached Whole Foods, which began offering Suja products in its stores in fall of 2012. Suja—a word the company founders made up that signifies to them "long and beautiful life," a spokeswoman says—now produces on average 10,000 bottles a week of each of its 19 flavors at its Southern California plant. It acquired an organic-produce distributor to ease supply issues. And it plans to open a plant in the Philadelphia area next year to have quicker access to more markets. "It's about getting the kale picked and on the shelf at Whole Foods as fast as we possibly can," says Mr. Church, Suja's chief executive.