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Press Clips: Muscle Milk Makers Up for Auction, Big CSD Companies Battle, Little CSD Company Grows, Kingmakers Recognized

By Max Rothman

The owners of CytoSport, Inc., which produces Muscle Milk, are planning to sell their company in an unparalleled fashion: by auction.

Reporters Dana Mattioli and Ryan Dezember of The Wall Street Journal wrote on Friday that Cytosport has brought on bankers from Credit Suisse Group AG, a global financial services company, to find a buyer for the company.

The owners, along with investors like private equity firm TSG Consumer Partners, LLC, are hoping to draw $500 million from the sale. According to the article, Cytosport’s annual sales sit at about $300 million.

“Possible buyers include big pharmaceutical firms, food makers and other consumer product companies,” Mattioli and Dezember write.

Speaking of big bucks, a number of Mexican billionaires are grousing over a proposed tax on carbonated soft drinks and junk food, according to an article by Dolia Estevez of Forbes. On Friday, Mexico’s lower House passed a tax of 1 peso (nearly 8 cents) per liter and a 5 percent excise tax on high-calorie packaged foods like potato chips and sweetened breakfast cereals. The Mexican Senate is expected to pass both taxes soon.

Estevez writes that Hector Treviño, the chief financial officer of Coca-Cola FEMSA, approximates a 5 percent decrease in sales volume and pricing increases if the tax passes. However, Enrique Galván Ochoa, a Mexican business analyst, doesn’t believe that the taxes would heavily cut into the wealth of the moguls.

The companies “will most likely transfer the tax cost to consumers, and since consumers are addicted to sweet drinks and comida chatarras (junk food), they will give up other things [besides sweet drinks],” Ochoa said in the article.

Even if Ochoa’s statement is true, Mexican bottlers and food companies are still doing their part to fight the tax. Full-page advertisements in Mexican newspapers, funded by the carbonated soft drink industry and its allies read: “You don’t fight obesity with taxes.” These contingents blame “foreign influences,” or, in other words, New York City’s soda-hunting Mayor Michael Bloomberg.

Meanwhile, north of the border, the carbonated soft drink industry is fighting another sticky piece of legislation, dealing with genetically modified organisms (GMOs).

Bill Tomson of Politico writes that The Coca-Cola Co., Inc., and PepsiCo are on a list of 34 companies that have contributed to an $11 million donation to fight ballot initiative 522. The initiative would require products in Washington state to be labeled when they contain GMOs. Coke and Pepsi have given $1.52 million and $1.35 million respectively, according to the article.

Ballots are being collected through Nov. 5 and, if passed, the law would go into effect on July 1, 2015.

“Experts believe the vote ultimately could force companies to begin labeling for GMOs nationwide rather than create separate labels for one state,” Tomson writes.

Brian Kennedy, spokesman of the Grocery Manufacturers Association, wrote in an e-mail to Politico that the initiative would raise grocery costs at an inopportune time for the state’s consumers.

“I-522 would falsely mislead consumers to consider products labeled as ‘genetically engineered’ as somehow different, unsafe or unhealthy — in clear contradiction of scientific facts,” Kennedy wrote. “It would require tens of thousands of common food and beverage products to be relabeled exclusively for Washington State unless they are remade with higher-priced, specially developed ingredients.”

Not all carbonated soft drink news is politically charged. Jen Wilson of The Charlotte Business Journal writes that Cheerwine, the 96-year-old cherry soda company from Salisbury, N.C., has hired BooneOakley as its advertising agency and plans to secure national distribution within four years. The company has a strong footprint in the South, but the beverage can be found in about 20 states.

Cheerwine’s work with BooneOakley, which already advertises for the NBA’s Charlotte Bobcats and Bojangles’ restaurants, will include traditional and social media, events and local market engagement.

“As Cheerwine shifts from a beloved regional favorite to a national ‘new kid on the block,’ we felt we needed three things from our agency: A deep understanding of the ‘brand soul,’ experience in taking brands from regional to nationwide, and a resident competency in the strategic and creative skills necessary to tell great stories that will resonate deeply with our target audience,” Tom Barbitta, Cheerwine’s senior vice president of marketing and sales, said in a release.

Many of the names on the Forbes “25 Most Influential Kingmakers” list, compiled by CircleUp founder and CEO Ryan Caldebeck, also have experience in bringing brands from a regional to a national scale. Yes, it’s true that BevNET editor-in-chief Jeffrey Klineman is named for his ability to identify beverage trends, but the list features several other beverage industry players and veterans.

On the finance side, Partnership Capital Growth investment banker Janica Lane is joined by Josh Goldin, a managing director with Alliance Consumer Growth (ACG) Fund and Ken Sadowsky, the senior beverages advisor in the U.S. for Verlinvest. Also noted are Brad Barnhorn, an industry advisor with Silverwood Partners, Bill Weiland, the president and CEO of Presence Marketing, Andy Whitman, a managing partner with 2x Consumer Product Growth Partners, Kara Cissell-Roell, managing director at VMG Partners, Kevin Murphy, director of Encore Capital Partners, Shari Wynne with Anaheim’s Incubation Station, Liz Myslik, CEO of Fresca Brands, lawyer Nick Giannuzzi, and Alissa Sears, senior strategist at Christie Communications.

Source: Beverages