Distributor takes the Hint - Westfair Communications

After a magistrate delivered a hint that its lawsuit may not be airtight, B&E Juices Inc. has elected to start delivering Hint Water in Fairfield County.

An attorney for Bridgeport-based B&E indicated the company is evaluating its legal options after losing a motion for a preliminary injunction against a subsidiary of Coca-Cola Co.

In a $4 billion deal in August, its largest ever, the Atlanta beverage company acquired Energy Brands Inc. and its Glaceau unit that distributes Vitaminwater.

Coke promptly moved the vast majority of Glaceau distribution to its subsidiary Coca-Cola Enterprises, offering B&E a $2.6 million buyout for the 435,000 cases it had purchased over the previous 12 months.

That sparked an immediate lawsuit by B&E, which claimed Coke violated an exclusivity agreement B&E had with Energy Brands to market the product in Fairfield County.

The change threatens the toehold B&E has jammed in the cooler door at 34 CVS stores in Fairfield County, which only purchase Glaceau products from B&E.

It is the poison pill feared by independent beverage distributors: the possibility that after building up sales through years of sweat equity, an acquirer will strip distribution rights in one fell swoop.

B&E purchases drinks from manufacturers and resells them to sub-distributors who “own” routes to various supermarkets and retailers. The company had $14 million in revenue last year, and today employs 20 people operating out of a 40,000-square-foot warehouse in Bridgeport.

In late October, a federal magistrate judge in Bridgeport rejected B&E”™s request for a preliminary injunction that would maintain its Glaceau distribution arrangement, disagreeing with B&E”™s contention that the distribution change was a violation of the Connecticut Franchise Act.

B&E is owned by Robert and son Mitchell Clyne, who are president and vice-president respectively. Robert Clyne purchased the company in 1988, when the company was primarily a Snapple distributor.

In 2006, the company hired Rene Ferellec as “director of hydrology” in charge of Glaceau distribution. Ferellec previously worked for Cadbury Schweppes Americas Beverages, which has an office in Rye Brook, N.Y. Cadbury Schweppes”™ British parent is in the process of spinning its U.S. operation off as an independent company.

Despite B&E”™s success with Glaceau, as of 2006 the company still generated more than half its business from Snapple, which is made by Cadbury Schweppes. Glaceau products made up between 30 percent and 40 percent of B&E sales last year. The company also distributes drinks from Greenwich-based Nestle Waters such as Poland Spring water; as well as Gatorade, which is owned by Coca-Cola.

The Coca-Cola decision is all the more galling to B&E in that it declined an opportunity to distribute Snapple”™s new Functional Water product while carrying the Glaceau lines.

While it sorts out its legal options, B&E hopes San Francisco-based Hint Inc. could prove to be the next Vitaminwater, inking a distribution agreement recently with the West Coast-based flavored water maker.

“These guys are experts at building brands,” said Theo Goldin, a Scarsdale, N.Y., native and former Netscape legal counsel who runs Hint with his wife Kara Goldin. “They did it for Vitaminwater; and that”™s not the first time they have done it; they did it for Snapple ”¦ It”™s hard for them to lose such an incredible home run such as Vitaminwater, but they will recover.”