Coke in Talks with Glaceau, Metal Bats Ban, Jarden Acquiring K2 & More
CNBC Sports Business Reporter
Coke in Talks with Glaceau
Many of you know that I labored for a couple years to write the book, "First in Thirst: How Gatorade Turned the Science of Sweat into a Cultural Phenomenon," so I'm quite informed about the beverage industry.
Yesterday, trade publication "Beverage Digest" reported that Coke was in serious talks to buy Glaceau, maker of Vitaminwater. The report isn't surprising. Coke finally knows, after being arrogant for too many years, that no matter how many Diet Cokes with vitamins they make (OK, maybe Coke Zero is a small exception), it's really all about the non-carbonated business if they care at all about growth.
The question is, by the time they buy Glaceau, if they do -- is it too late?
The data suggests that is not the case. "Beverage Digest" has Glaceau growing by more than 100 percent a year and Morgan Stanley's Bill Pecoriello says that the enhanced flavored water category that Glaceau popularized is expected to make up a ridiculous 22 percent of all North American beverage sales over the next five years. That's the fastest growing category behind straight up bottled water. Better than sports drinks. Better than energy drinks -- a space that Vitaminwater, I believe, stupidly entered recently.
I talked with Darrell Jursa of Liquid Intelligence about the possible deal.
Me: What has Glaceau done well and what are their challenges?
Jursa: They've been really good at taking a category that didn't have a lot of news or excitement to it and doing some interesting things to it. But they did it at a time that it was okay -- put a little additive here, put a little vitamin in there. At this point, you're in an environment in the beverage business where you've got to really back up what you're saying or what you're doing to a liquid. People now want to know exactly what you're doing with those vitamins and what those vitamins are going to do to you.
Me: Why would this be good for Coke right now?
Jursa: Well, it complements what their bottling system is looking for because up until this point -- with the exception of Enviga -- and some other new brands that are coming out of Dasani and some new stuff coming out of POWERade there hasn't been a whole heck of a lot of innovation. So by acquiring Glaceau they're taking care of the bottling system while at the same time taking care of their customers.
Me: If this deal gets done, how should Coca-Cola handle it?
Jursa: When Pepsi picked up SoBe, they said we're going to leave these guys alone and they did for the most part. They innovated; they brought in new products and really went the distance. Coca-Cola needs to do the same thing. Coke just needs to leave these guys alone.
Me: What does this deal say about Coke?
Jursa: It really is about the company being a beverage company and identifying all the things out there that people want to drink. If they can't produce it internally, then let's get it externally and see if we can do something with it. That's not a bad thing -- that shows a good deal of humility on Coke's part and I think it's about time we saw some of that.
New York City Metal Bat Ban is a Bad Move
You might have heard by now -- New York City is banning metal bats for high schools starting in September and it's probably one of the ridiculous things I've ever seen. It's true that when a young player has been hit by a batted ball, it more often than not is hit by an aluminum bat, but it's also true that more young players are using aluminum/composite bats than metal bats. I spoke to Councilman Jim Oddo, who was pushing the ban and he had two points.
"These companies make money on the high-end (aluminum) bats," he said. "This is what this is about. I don't begrudge them for that. That's capitalism. But when that clouds your vision and elevates the risk for kids, that's when the government steps in."
Oddo also said that the reason why there's no conclusive data on whether aluminum bats are more unsafe than the wooden variety because "there are virtually no academics that could be self-funded and would be completely independent from the bat cartel."
I side more with the bat makers -- people like Easton's Jim Darby, who I also had a chance to speak to. Darby's best point? "When a kid gets hit by a ball off an aluminum bat -- as rare as that is -- people tend to point to the bat," Darby said. "But if a major league player or a player in a summer collegiate league where they use wood gets hit by a ball off the bat, nobody -- excuse the pun -- here bats an eye."
A newly formed group called "Don't Take My Bat Away," which includes the bat manufacturers says it intends to file a lawsuit to put a stop to the ban.
Jarden Acquires K2Jarden Corp. announced today that it will acquire sporting goods manufacturer K2 for $1.2 billion. Just as K2's strongest brand Rawlings was finally gaining some traction, the brand now could be compromised once again by being thrown into the mix with Jarden brands -- even though Rawlings is a stronger brand than anything Jarden has.
Promotion of the WeekI get a lot of bad promotions in my email box -- you know, companies who think they have something unique. Well, this is not one of them. This guy named Dennis Whitford of Elmira, NY, a Buffalo Bills fan, recently won Prilosec OTC's "NFL Season of a Lifetime."
Dennis gets to go to Bills Training Camp, two Bills home preseason games, all 16 Bills' regular season games, up to three playoff games, Super Bowl XLII in Arizona and the Pro Bowl in Hawaii. He also gets first-class travel and accommodations to all these events. It's actually quite appropriate that Whitford is a Bills fan because he'll need to use that Prilosec for heartburn relief.
John Daly Ad Causes Stir:
Don't know if you've seen it yet, but as soon as one of my favorite blogs SportsByBrooks mentioned it, I had to check out the new Maxfli John Daly ad. The ad -- in which the once-alcoholic Daly is in a bar and is surrounded by beer -- was turned down by CBS . And that's just the marketing coup that Maxfli needed. Of course, the people at Maxfli have made it easy for you to find the spot on their Web site. I'm still waiting for Daly to do a Diet Coke ad. He admits to drinking 15 cans of it a day.
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