In The Headlines
PepsiCo Makes a Big Bet on Craft Soda”
PepsiCo says the emerging “craft” soda industry is a trend that is here to stay. And that is why the company is vowing to make a bolder investment on the category as it aims to convince millennials that soda can be a tasty (and healthier) drink. The food and beverage giant will begin to sell the “craft” line of Stubborn sodas at major national retailers beginning in mid-August. The move to bring the line of five sodas, which includes root beer and vanilla cream flavors, comes after PepsiCo first brought the line to foodservice channels last year.
Stubborn sodas meet a few key trends that PepsiCo is aiming to address. The line of sodas is made with fair trade-certified cane sugar and does not use high fructose syrup. And Stubborn’s calorie count generally ranges between 90 to 100 calories for a 12-ounce glass bottle, far fewer than the 150 calories in a similar sized bottle of Pepsi. For health-conscious millennials monitoring their calorie intake and looking closely at nutritional facts, Stubborn could help lure them back into the soda category. “Consumers are changing,” says Scott Finlow, Vice President of Innovation and Insights for Global Foodservice at PepsiCo. “They want quality products with different, more natural ingredients.”
PepsiCo’s bid to sell consumers on “craft” soda comes at a time when a similar movement is exploding in popularity in the beer segment and increasingly resonating in the coffee category. But for the carbonated soft drink category, “craft” sodas still represent a tiny sliver of sales, so small that major industry trackers do not monitor the subcategory’s sales. It is also tough to define: There is no formal, government-regulated definition as to what a “craft” soda contains. Some may be wary that it is simply a marketing ploy.
Still, a successful launch for Stubborn could help improve soda’s image with consumers, as sales for the category have now declined for 11 consecutive years as bottled water, juices, and other drinks that are deemed “healthier” notch stronger sales. PepsiCo, Coca Cola, and Dr Pepper Snapple have all faced persistent sales challenges as consumers ditch traditional mainstream sodas for other beverages. Craft could improve their dented image. “Craft is not a fad. It is here to stay,” Finlow says. “We think craft is a critical growth space and we hope this is something we will be talking about for years to come.”
PepsiCo has indicated that it would aim to diversify more in “premium” foods and beverages, as executives have acknowledged that consumers are willing to spend more on products they deem healthier or better tasting. Stubborn and the 1893 soda line, which also plays in the craft space, are also part of an innovation pipeline that is critical to the company’s growth. PepsiCo last month said new products comprised about $5 billion, or 9%, of total sales.
The price—$1.99 for a single bottle or $5.39 for a four pack—does not seem too high of a barrier considering so many “healthy” juices can cost more. But because the line still contains calories, some consumers may be hesitant to buy Stubborn regularly. When counting calories, cutting out beverages is often the easiest change to make to a diet.
Still, trimming the calorie count by about 33% is a notable achievement for PepsiCo. And it points to the promise that Pepsi, along with other big soda makers, made to consumers to cut drink calorie consumption by 20% by 2025. “This brand is developed at a calorie level that creates more choices for our consumers,” says Finlow. “That’s part of our commitment to deliver calorie reduction across the portfolio.”
Citations
1. http://for.tn/2aLhjj4 – Fortune
2. http://bit.ly/2aZwDM4 – FoodBev Media
IDI Looks to Remake the Investigation Business with Big Data
Forget telephoto lenses and fake mustaches. The most important tools for America’s 35,000 private investigators (PIs) are database subscription services. For more than a decade, professional detectives have been able to search troves of public and nonpublic records—known addresses, DMV records, photographs of a person’s car, etc.—and condense them into comprehensive reports costing as little as $10. Now they can combine that information with the kinds of things marketers know about you, such as which politicians you donate to, what you spend on groceries, and whether it is odd that you ate in last night, to create a portrait of your life and predict your behavior.
IDI, a year-old company in the so-called data-fusion business, is the first to centralize all that information for its customers. The Boca Raton company’s database service, idiCORE, combines public records with purchasing, demographic, and behavioral data. Chief Executive Officer Derek Dubner says the system is not waiting for requests from clients—it has already built a profile on every American adult, including young people who would not be swept up in conventional databases, which only index transactions. “We have data on that 21-year-old who’s living at home with mom and dad,” he says.
Dubner says these personal profiles include all known addresses, phone numbers, and e-mail addresses, every piece of property ever bought or sold plus related mortgages, past and present vehicles owned and any criminal citations from speeding tickets on up, voter registration, hunting permits, and names and phone numbers of neighbors. The reports also include photos of cars taken by private companies using automated license plate readers—billions of snapshots tagged with GPS coordinates and time stamps to help PIs surveil people or break alibis. IDI also runs two coupon websites—allamericansavings.com and samplesandsavings.com—that collect purchasing and behavioral data. When users sign up for the latter, they are asked for their e-mail address, birthday, and home address, information that could easily link them with their idiCORE profile. The site also asks if the user suffers from arthritis, asthma, diabetes, or depression, ostensibly to help tailor its discounts.
Users and industry analysts say the addition of purchasing and behavioral data to conventional data fusion outmatches rival systems in terms of capabilities—and creepiness. “The cloud never forgets, and imperfect pictures of you composed from your data profile are carefully filled in over time,” says Roger Kay, President of Endpoint Technologies Associates, a consulting firm. “We’re like bugs in amber, completely trapped in the web of our own data.” When logging in to IDI and similar databases, a PI must select a permissible use for a search under U.S. privacy laws. The Federal Trade Commission oversees the industry, but PI companies are largely expected to police themselves, because a midsize outfit may run thousands of searches a month. Dubner says most Americans have little to fear. As examples, he cites idiCORE uses such as locating a missing person and nabbing a fraud or terrorism suspect.
IDI, like much of the data-fusion industry, traces its lineage to Hank Asher, a former cocaine smuggler and self-taught programmer who began fusing sets of public data from state and federal governments in the early 1990s. After Sept. 11th, law enforcement’s interest in commercial databases grew, and more money and data began raining down, says Julia Angwin, a reporter who wrote about the industry in her 2014 book, Dragnet Nation. Asher died suddenly in 2013, leaving behind his company, the Last One (TLO), which credit bureau TransUnion bought in bankruptcy for $154 million. Asher’s disciples, including Dubner, left TLO and eventually teamed up with Michael Brauser, a former business partner of Asher’s, and billionaire health-care investor Phillip Frost. In May 2015, after a flurry of purchases and mergers, the group rebranded its database venture as IDI.
Besides pitching its databases to big-name PIs (Kroll, Control Risks), law firms, debt collectors, and government agencies, IDI says it is also targeting consumer marketers. The 200-employee company had revenue of about $40 million in its most recent quarter and says 2,800 users signed up for idiCORE in the first month after its May 2016 release. It declined to provide more recent figures. The company’s data sets are growing, too. In December, Frost helped underwrite IDI’s $100 million acquisition of marketing profiler Fluent, which says it has 120 million profiles of U.S. consumers. In June, IDI bought ad platform Q Interactive for a reported $21 million in stock.
IDI may need Frost’s deep pockets for a while. The PI industry’s three favorite databases are owned by TransUnion and media giants Reed Elsevier and Thomson Reuters. “There’s no shortage,” says Chuck McLaughlin, Chairman of the Board of the World Association of Detectives, which has about 1,000 members. “The longer you’re in business, the more data you have, the better results.” He uses TLO and Tracers Information Specialists. Steve Rambam, a PI who hosts Nowhere to Hide on the Investigation Discovery channel, says marketing data remains a niche monitoring tool compared with social media, but its power can be unparalleled. “You may not know what you do on a regular basis, but I know,” Rambam says. “I know it’s Thursday, you haven’t eaten Chinese food in two weeks, and I know you’re due.”
Citations
1. http://bloom.bg/2aJTnMV – Bloomberg
2. http://mklnd.com/1MxE6Ms – MarketingLand
The Good News Is . . .
• Job creation far exceeded analysts’ estimates in July as the economy added 255,000 positions, according to the Labor Department. The unemployment rate held steady at 4.9%. The labor force participation rate moved up one-tenth to 62.8% as those counted as not in the labor force decreased 184,000 to 94.3 million. Hourly wages also moved higher, increasing by $0.08 or an annualized pace of 2.6%, while the average work week edged up to 34.5 hours. The largest gains in employment were in professional and business services, and in healthcare.
• Discovery Communications, Inc., a global entertainment firm providing content for pay TV, free-to-air TV, direct-to-consumer, and digital platforms, reported earnings of $0.66 per share, an increase of 50.0% over year-earlier earnings of $0.44 per share. The firm’s earnings topped the consensus estimate of analysts by $0.12. The company reported revenues of $1.7 billion, an increase of 3.3%. Management attributed the results to distribution and advertising revenue growth in its U.S. Networks and Education business segments.
• Oracle agreed to acquire NetSuite for $9.3 billion to beef up its cloud offerings. Oracle will pay $109 per NetSuite share in cash. The NetSuite deal is Oracle’s largest acquisition since it bought PeopleSoft for $10.3 billion in 2004. The NetSuite purchase is at the heart of Oracle’s fight to remake itself for the modern world of cloud computing—providing access to vast computational resources over the internet. This transition has shaken up the software business for the last several years. Companies like Google, Microsoft, and Amazon have created markets worth billions, and older companies like IBM, Hewlett-Packard, and Oracle have struggled to change the way they make and sell their products. In the last fiscal year, the company had $12.2 billion in core cloud software sales, an increase of 49% from fiscal 2014. That is enough to make Oracle one of the largest cloud companies, but it was still just 8 percent of the company’s revenue. Overall revenue shrank 3% last year, as demand for older products fell.
Citations
1. http://bit.ly/1gck641 – Bureau of Labor Statistics
2. http://cnb.cx/1gct3xa – CNBC
3. http://bit.ly/2aKzPbb – Discovery Communications Inc..
4. http://nyti.ms/2aU3QZ0 – NY Times Dealbook
Planning Tips
Tips for Selecting a Health Savings Account
The federal government has designated the health savings account (HSA) as a tax-advantaged account set up to cover future healthcare costs. An HSA is available to any individual who is covered under a medical plan that qualifies under federal rules for an HSA. If you are eligible for an HSA and your employer offers one, you do not have to use the company it recommends. You can use a company of your own choosing. As is true with investment accounts, HSAs offered through different financial institutions are not all created equal. Below are some tips to help you in selecting an HSA. Be sure to consult with your financial advisor to determine if an HSA is appropriate for your situation.
Low costs – As with any investments that are managed by a financial institution, there is a charge involved. Look for the smallest monthly maintenance fees relative to what you get for the cost. Some HSAs have annual account fees of $50 or more. If you are only putting in $3,000, $50 is roughly a 1.6% annual fee. But if the annual fee is $100, you are paying over 3% of your balance each year to that fee.
Best possible interest rate – For the savings portion of your account, look for companies offering interest rates consistent with current rates. Although you are not going to make much in interest in the current low-rate environment, every little bit helps.
Investment options – Most accounts offer investment options that could substantially increase the value of your deposits over time. Evaluate the investment options just as you would a 401(k). You are looking for well-performing funds offered at a low cost. Some HSAs have very limited or no self-directed investment options. Look for HSAs with a wide range of mutual funds.
Easy ways to contribute and use funds – If you use your workplace option, your employer will likely help you set up an automatic deposit feature, but look for the same thing in every company you consider. You should have a debit card to pay your medical bills as well as other payment options, like an Automated Clearinghouse (ACH) for example.
Online account management – Determine whether the company website is easy to understand and navigate, and that all of the information about your account is easy to find. You will want complete access to all activity including alerts, reports, downloads, online statements, and online funds transfer. These are must-haves.
Educational tools – Very few people know the ins and outs of an HSA, and they certainly do not know how to maximize its value. Additional tools and resources the financial institution provides should include a contribution calculator, HSA educational videos, tax savings calculators, and FAQs.
Citations
1. http://bit.ly/RR8Lwu – Bankrate.com
2. http://nyti.ms/2azTk4W – New York Times
3. http://bit.ly/2aJxa5X – Investopedia
4. http://cbsn.ws/2aAU2SM – CBS News
5. http://bit.ly/2aA36Gf – Forbes
