Pulse Beverage, which started out as Health Beverage, LLC, did pay for the Pulse Drink Technology and rights to use Baxter name ... But I just can not remember the amount. They also do not owe any royalties going forward. Here is some background about the deal.
Baxter taking partner to rev up its Pulse
March 04, 2004|By BRUCE JAPSEN.
Baxter International Inc. is finalizing a deal to license its nutrient-enriched bottled water Pulse in North America to an upstart Colorado beverage company.
Health Beverage LLC of Evergreen, Colo., hopes to bring more consumer retail sales and marketing expertise to Pulse, which hasn't had much attention given Baxter's restructuring amid concerns about its financial forecasting practices.
Baxter's strengths are in developing and manufacturing drug-delivery devices, blood therapies and biopharmaceuticals, while its sales prowess is largely limited to dealing with governments, hospitalsand large health-care purchasing organizations.
Baxter said Pulse was developed by its non-traditional innovation team, an incubator for ideas that don't fit the company's historical businesses. Pulse was introduced two years ago, but the company said it never intended to market the product nationally on its own.
"It had gotten to the point where the next step was a national rollout, but a national rollout would have required significant retailing and marketing resources," said Baxter spokeswoman Deborah Spak. "Since we are not a consumer marketing company, it doesn't fall within our core competencies."
In working with Health Beverage, Baxter would be licensing its product to a company that would be totally dedicated to the consumer market. Pulse would be Health Beverage's first product, and the company would be able to provide the product with more attention.
Baxter has had to scale back its preliminary marketing of Pulse while evaluating all of its businesses as part of a turnaround plan. Baxter's troubles arose after being unable to get a handle on its financial forecasts as competition in its blood-therapies businessintensified.
"Because of restructuring, Pulse was one of the items that was placed on the back burner," said Ron Kendrick, a consultant with Vancouver-based Catalyst Development Inc., which is working with Health Beverage and has helped other beverage companies with product development. "Pulse hasn't really been in the retail markets. You can get it in some stores, but you would have trouble finding it now."
Pulse comes in three types, with each 500 milliliter bottle containing fewer than 40 calories. Pulse products are sold in Heart Health, Women's Health and Men's Health Formulas.
Even in the hands of a consumer marketing company, Pulse faces stiff competition in the $2 billion bottled-water market. Dozens of competitors, including the likes of PepsiCo Inc., have entered the bottled-water market in recent years.
"This is a very new company, but the people involved in Health Beverage have been in or involved in the health beverage industry for years," Kendrick said.
Terms of the deal are not being released. Baxter would not disclose Pulse revenues, saying they are "not material" to the financial results of the company. Baxter had nearly $9 billion in 2003 revenues.
Health Beverage sees a niche for Pulse that hasn't been addressed by rival bottled water-makers. For example, the Women's Health brand supplies nearly 40 percent of the daily calcium recommendation, Kendrick said.
"There is competition out there, but we feel there is a place for Pulse based on the level of health it actually delivers," Kendrick said. "One of the things we like about Pulse is the efficacious levels of the functional ingredients."
