It's a $6.2 billion industry. But how did Electronic Dance Music get so popular?

via CNN

(CNN) -- There's little question that EDM (electronic dance music) is the fastest-growing musical genre out there. With DJs like Calvin Harris, David Guetta and Tiësto leading the pack, electronic music's popularity has ballooned in the past decade. From festivals to radio airplay, social media and even collaborating with A-list musicians, EDM artists are getting a lot of attention -- and money -- from all over the place.

The numbers don't lie. So far, Forbes' top 10 EDM artists have racked up a combined $268 million this year, an 11% increase from 2013, with top earner Harris bringing in $66 million.

How did this musical genre grow from a small, cult following into this global phenomenon we feel today? How have those who've stuck with it from the beginning grown with it? And where is it going next? To obtain these answers we headed to one of the biggest festivals in the world, TomorrowWorld, to meet up with some of the genre's key players: David Guetta, Tiësto, Steve Aoki, and EDM's newest dynamic duo, Dimitri Vegas and Like Mike.

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The origins of EDM

Electronic dance music is not a new genre. In fact, it's been around for more than three decades. David Guetta, whose DJ days began in Paris in the late 80's, recalls how the house/electronic music movement began when the disco era was ending. "There was a movement called 'disco sucks'," he says. "It was a shame to like disco, but then there was no music to dance to, so some DJs started to use old disco records, but the B-sides and the acapellas, and we began producing beats with drum machines."

Simply put, DJs snuck disco music into people's ears.

"I remember buying those records and the label (vinyl sticker)," says Guetta. "(DJs) would use old records and print on top of it, melt it, and print on the top...very low quality, this was super, super underground." In other words, disco music is EDM's ancestor.

"I started in '88 to play House music, it was a huge revolution for me. I went to London and I saw a DJ on stage and that was crazy at the time. I was one of the really respected and famous DJs in Paris, but they would never show me. I was hidden. A DJ on stage and people dancing and facing the DJ, looking at him? I was like 'wow!'" says Guetta, as if still surprised to this day.

Read: How astonishing visuals are revolutionizing concert experience

A few years later, in the early 90's, in the Netherlands, Tijs Michiel Verwest began his journey to becoming Tiësto. He also started when the genre was completely underground. A trip to Spain, some parties and general love for music got him interested in becoming a DJ. "Back then, first of all, we all played vinyl records, so even when you knew the track, you could not get it. Everything was very exclusive," says Tiësto in his dressing room, 300 meters away from the main stage of TomorrowWorld.

"That's the big difference with nowadays, because when you jam to a track you already know what it is, and then right away you have the song in your phone or your laptop...that was a very magical period because you played a track and people said 'I know this track,' but they still couldn't find it. That was very special," says Tijs, as his staff calls him.

It's hard to pinpoint a date and location to the beginnings of EDM. Some say it began in Germany and London, others make a case that it started in Detroit, in the U.S. For Guetta, both continents played a role, "this is what happened...it was born in the U.S., but the U.K. made it trendy. And it became a massive movement in Europe, but never in the U.S., which is crazy". He later adds, "I think America is always creating the new movement and then the U.K. has this genius of taking this concept and making it accessible to the masses."

From underground to the masses

INEZ TORRE

Recently, Guetta has had mainstream success by collaborating with pop stars like Kelly Rowland, and The Black Eyed Peas, for whom he produced the best-selling single 'I Gotta Feeling' in 2009. Other successful DJs, including likes of Calvin Harris and Avicii, have also found success this way.

"I love collaborating outside of my space," says Steve Aoki, who has worked with artists like will.i.am and Luke Steele. "When I got into the dance culture and started producing the music I kept on thinking how to do something unique or different than what the status quo does."

For EDM, collaborations may have attracted listeners, but the internet and its subsequent components, i.e. social media, apps and music sharing programs, have played essential roles in getting more. Nowadays, in the digital era, success is measured in followers, video hits, downloads, hashtags, tweets, retweets and likes.

Read: 15 super-hot DJs who deserve to be stars

"For us it (social media) has played a very big role," says Michael Thivaios of the duo Dimitri Vegas and Like Mike. "We can make a new track and with one click, it'll be spread all over the world. Twenty years ago you had a vinyl, and that vinyl had to go to a distributor, and six months later maybe another country would have the vinyl," adds the other half of the duo, Dimitri Thivaios. "All we did for one year is talk to DJs by Facebook and somehow that got us our first gig. Social media has been the biggest factor in our career."

In Europe and the Americas, mainly, there are an increasing number of electronic music festivals; events that gather people from all over the world and celebrate in unison. The TomorrowWorld festival celebrated outside of Atlanta, Georgia, gathered 160,000 people from 75 countries this year, according to the organizers.

"It's like a theme park for adults," says Thivaios.

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Not all genres can brag about selling out festivals with over 150,000 attendees, and do it in a matter of minutes. Sure, some could mention the Bonnaroos and the Coachellas of the world, but they offer musical variety. From pop to rock, rap to indie and even country. EDM festivals offer only EDM.

"When I'm on stage I'm looking out and seeing everyone putting up their flags from hundreds of different countries, representing hundreds of different cultural lifestyles. They're all jumping in unison forming almost like one entity, one spiritual being," adds Aoki, who, besides his music, is known for his selfies with the crowds, riding inflatable rafts, and caking one lucky fan per show.

If you're confused about the latter, it's a Steve Aoki trademark, where he throws a whole cake to someone in the audience. Based on reactions seen from the fans, they love it. "When they get caked in the face, the first thing they do is immediately turn around to make sure that everyone else saw that they got caked, it's a very bizarre thing. People don't get it," says Aoki, full of enthusiasm.

Naturally, EDM was unlikely to become this popular without generating incredible amounts of money. A recent report stated that EDM is a $6.2 billion global industry. Most of the money comes from festivals, Las Vegas club dates and other global club gigs. All this peaked the interest of ad men and the big brands they represent. In fact, some have already made moves and are sponsoring festivals, events, and others have DJs featured in commercials.

Live events represent the largest part of the $6.2 billion global EDM industry.

INEZ TORRE

Business is good, but is the music getting better?

EDM has been highly criticized. Many see EDM as an art that lost its purity. "It's an evolution. The thing is that, every musical genre starts from the underground, gets trendy, then it becomes popular, and then it dies or it is reinvented in a different way," says Guetta.

Many wonder if EDM is at his highest point. Is this its climax? Or will it end soon, just like Disco did? "They've been asking me that since 1994, 'is it going to end?' I always say I don't know. It keeps evolving, every year something new comes up, and now it's at the highest it ever has been, so now I don't know how much higher and how much better it'll get," says Tiësto.

"It has been more than 20-25 years that this music is existing, so it's already amazing."

Researcher: Coca-Cola Life is a hit

via USA Today

               

 There may be some serious life in Coca-Cola Life.

Even as Coca-Cola on Tuesday announced that it was nationally rolling out the long-anticipated, 60-calorie, 8-ounce cola with no artificial sweeteners, Haynes & Co., a market research specialist with no ties to Coca-Cola, has shared proprietary research data with USA TODAY that indicates Coca-Cola Life has been an enormous hit in its very limited distribution.

In the key findings, consumers say:

- They like the taste. Some 70% of purchasers contacted rated the taste four or five stars (out of five stars). In fact, for 45% of the respondents, Coca-Cola Life already has replaced 75% or more of their normal soda purchases.

- They like the look. The green labeling on bottles and cans is appealing to consumers. Some one-third of people who saw a Coca-Cola Life display say they purchased it — a very high trial rate.

- They would buy it again. Some 80% of Coca-Cola Life recent purchasers, when surveyed online, said they would buy it again. Half of the respondents said they are now buying more soda as a result of having Coca-Cola Life as an option.

"We haven't seen a product in the beverage space hitting on all cycles like this for years," says Elizabeth Haynes, president of Haynes & Co, which has done market research for major retailers and large hedge funds. Thefirm reached out to several hundred consumers who remembered seeing Coca-Cola Life, then surveyed 72 were who had actually purchased it. The results are significant, says Haynes, because so many of the respondents rated Coca-Cola Life at such a high level.

What's more, she notes, store managers confirmed what consumers said. The research firm contacted store managers at 22 of The Fresh Market locations that initially sold Coca-Cola Life. Some 50% of the store managers said they had completely sold out at least once. One Florida location said it was selling 50 cases per week. And several store managers said customers were calling the store, asking managers to put some aside for them.

"I've done thousands of store interviews in my career and it's very uncommon for consumers to call a store and request that a product be put aside," says Haynes.

Coca-Cola officials declined to comment on the research. But in a statement Tuesday about the national rollout of the beverage, sweetened with cane sugar and stevia leaf extra, Andrew McMillin, vice president of Coca-Cola Brands, North America, said, "We are working, ultimately, to become a leader in this interesting and emerging category."

Coke needs a lift. Its stock is flat for the year and third-quarter net income fell almost 14%. Meanwhile, sales of the iconic Coke and Diet Coke brands have both been heading south domestically.

Pepsi True, a competing brand, initially sold only on Amazon.com, is now also available on Walmart.com in some markets and on track to roll out to brick and mortar retail in 2015, says Pepsi spokeswoman Andrea Foote. "We are encouraged by early sales and consumer response."

AB InBev Deal Thirst Can Be Sated With Pepsi: Real M&A

via Bloomberg

If Anheuser-Busch InBev NV (ABI) can’t grab the beer of its choice, it could settle for a Pepsi.

With almost $90 billion in deals over the last 10 years, including the 2008 acquisition of the maker of Budweiser, no other beverage company spends like AB InBev does. Most of the speculation on the $170 billion beer behemoth’s next move has focused on the industry’s No. 2 brewer, SABMiller Plc. (SAB) A company of AB InBev’s size and ambitions has other options though, including PepsiCo Inc. (PEP)

AB InBev and its advisers have long studied whether a merger with the $142 billion soda and snacks company makes strategic and financial sense, said people familiar with the matter. However, no talks are happening now, no deal is imminent, and the scenario is among many it has looked at, one of the people added, asking not to be identified because the information is private. AB InBev should think beyond the beer market, said Albert Fried & Co. That could put Monster Beverage Corp. (MNST) or Keurig Green Mountain Inc. (GMCR), even further away from the brewer’s core, on its radar. Either way, AB InBev probably won’t walk away empty-handed.

The culture of AB InBev is “really based on doing large deals, making big steps forward,”Richard Withagen, an Amsterdam-based analyst at Kepler Cheuvreux, said in a phone interview. “It’s all speculation what the next step will be. That there will be a next step seems pretty sure, given that I don’t think this company wants to only manage the business and not expand it any further.”

Photographer: Jock Fistick/Bloomberg

A bartender carries a tray of Jupiler, Leffe Blond and Stella Artois beer, brewed by... Read More

Too ‘Boring’

Representatives for Leuven, Belgium-based AB InBev, Purchase, New York-based PepsiCo and London-based SABMiller declined to comment. Representatives for Corona, California-based Monster Beverage and Waterbury, Vermont-based Keurig didn’t respond to requests for comment.

A takeover of SABMiller would be “boring,” said Sachin Shah, a special-situations and merger-arbitrage strategist at Albert Fried. Regulators would likely force divestitures, and the cost savings from a combination wouldn’t necessarily translate to increased value forshareholders, he said.

“Why am I going to pay a higher multiple for more of a business that you’re already in that’s not necessarily growing?” Shah said by phone. “Anheuser-Busch should become a drinks business, rather than just alcohol and beer.”

AB InBev and PepsiCo do know each other well, one of the people familiar with the matter said, citing the companies’ bottling arrangement in Latin America. PepsiCo’s soda and snacks businesses both hold appeal amid slowing profits in the beer space, the people said. Any deal between the two would have to be friendly.

Shares of Pepsi were little changed at $94.67 at 11:55 a.m. New York time today.

Cost Benefits

One driver for a takeover would be the potential cost and revenue benefits of selling beer and soft drinks through the same distribution system. AB InBev and its Brazilian backers including 3G Capital billionaire Jorge Paulo Lemann could also improve profitability at PepsiCo like they did after purchasing Anheuser-Busch. Lemann and his two longtime business partners are holders of AB InBev.

“From a strategic perspective, it doesn’t strike me as too, too crazy,” Ali Dibadj, a New York-based analyst at Sanford C. Bernstein & Co., said by phone. “If you look at the strengths of ABI, they’re very clearly around cost-cutting and distribution, particularly in a difficult volume environment like beer. I think those could be translated pretty directly to the Pepsi business in the North American marketplace.”

Snacks Sale

Should AB InBev decide it doesn’t want PepsiCo’s snack business, it could sell it to one of the many buyers who would be interested in the maker of Lays potato chips and Quaker oatmeal, Dibadj said. The brewer hasn’t shied away in the past from complex deals that involved divestitures.

A takeover of PepsiCo may have a better chance of adding to AB InBev’s earnings than a purchase of SABMiller, said Withagen at Kepler Cheuvreux. SABMiller has a higher valuation than PepsiCo and less room for margin improvement.

“If you look at their history, those Brazilians have always liked self-help stories,” Ian Shackleton, a London-based analyst at Nomura Holdings Inc., said in a phone interview. “SABMiller does not tick that box.”

One option that might is Coca-Cola Co., (KO) he said. There are potentially more “levers to pull in terms of cost-cutting” than at PepsiCo, which has already been trimming expenses amid pressure from activist investor Nelson Peltz, according to the analyst.

Deal Scenario

Shackleton said the more likely scenario would be that 3G Capital buys Coca-Cola in conjunction with billionaire Warren Buffett, the soft-drink maker’s largest shareholder and 3G Capital’s partner on the more than $20 billion buyout of H.J. Heinz Co. last year. Then 3G Capital could sell the U.S. distribution business to AB InBev.

“When you look at the Coke distribution system, arguably this is probably the best distribution system of any fast-moving consumer goods company in the world,” the analyst said. “You’re in every country in the world apart from North Korea and Cuba. Couldn’t you actually use that system to distribute other stuff? Beer is a very obvious starting point.”

Buffett said in June there was no chance of a buyout of Coca-Cola after David Winters, an investor in the $195 billion soft-drink maker, suggested he might be plotting one.

A deal for either Coca-Cola or PepsiCo would be a big bet on a soda industry that has growth challenges of its own. Buying a smaller player instead such as Dr Pepper Snapple Group Inc. (DPS), with a market value of $13 billion, would represent less of an all-in wager, said Shah of Albert Fried.

Monster, Keurig

The brewer could look at the faster-growing markets for energy drinks and single-serve coffee. Coca-Cola announced investments in both Monster, a $16 billion company, and $23 billion Keurig this year. “Why couldn’t Anheuser-Busch do the same thing?” Shah said.

A deal for either could be structured as some sort of joint venture with Coca-Cola, he suggested. Representatives for Atlanta-based Coca-Cola and Plano, Texas-based Dr Pepper declined to comment.

Coca-Cola’s recent agreement to buy 17 percent of Monster will shift distribution away from AB InBev in the U.S. and Canada. The companies split the job now. Coca-Cola also has an option to boost its stake to 25 percent.

The biggest hurdle to targets outside of the brewery world may be that AB InBev is simply more comfortable sticking with beer.

“The opportunity is still large enough in brewing to continue consolidation there,” Philip Gorham, an analyst at Morningstar Inc., said by phone. “It’s with other brewers that they’ll get the most cost savings, that they’ll be able to more closely integrate operations, distribution.”

Beer Options

While a Heineken NV (HEIA) takeover would add another strong brand to AB InBev’s beer line-up, it seems unlikely the company’s founding family would be willing to sell after it rejected an offer from SABMiller and said it wants to keep the brewer independent, Gorham said.

Diageo Plc (DGE)’s Guinness brand provides another possibility that would move AB InBev into the African beer market, where it currently has little presence. That deal may be too small to have a meaningful impact on AB InBev’s profit, though, and Diageo would also likely demand a hefty premium for that business, should it be willing to sell it at all. The $70 billion company generates about 20 percent of its revenue from beer.

SABMiller

That leaves SABMiller. Andrew Holland of Societe Generale SA says it is “by far the most attractive target” for AB InBev given its size, position in Africa and the potential cost savings of a deal. Gorham of Morningstar says a deal may cost too much and not be in the best interests of shareholders.

The difference of opinion adds weight to the argument for at least considering some of the other big-deal options AB InBev has.

“The bottom line is you’re always going to see these guys be extremely entrepreneurial,” Shackleton of Nomura said. “Do they have a case book on Pepsi? I’m sure. Do they have one on Coke? Absolutely. Do they have one on SABMiller? Yeah, of course they do. At the right price, with the right opportunity, everything is of interest.”

Coke and Pepsi Sign up For New Calorie-Reduction Pledge

via AdAge

The nation's largest soda marketers -- which have been feeling the heat from health advocates -- on Tuesday pledged to reduce beverage calories consumed per person nationally by 20% by 2025.

Executives from PepsiCo, Coca-Cola Co. and Dr Pepper Snapple group announced the goal in New York City at the annual meeting of the Clinton Global Initiative. The effort includes involvement from the Alliance for a Healthier Generation, which was founded by the American Heart Association and the Clinton Foundation.

"I am excited about the potential of this voluntary commitment by the beverage industry. It can be a critical step in our ongoing fight against obesity," former President Bill Clinton said, according to a statement.

Marketing could play a key role in the effort, with the beverage companies saying in a statement that they will "engage in consumer education and outreach efforts to increase consumer awareness of and interest in the wide array of no- and lower-calorie beverages and smaller portion sizes available."

Also, the beverage companies stated they would put special emphasis on communities where access to lower-calorie beverages is lacking. Moves could include only featuring reduced-calorie beverages at highly trafficked store sections, such as checkout displays. Communities in Los Angeles and Little Rock, Ark., are expected to be the first places where these targeted efforts will occur.

Also, the companies pledged to provide calorie counts and "promote calorie awareness" on all "beverage company-controlled point-of-sale equipment nationwide, including more than 3 million vending machines, self-serve fountain dispensers, and retail coolers in convenience stores, restaurants and other locations."

The announcement comes as soda marketers battle declining consumption that is due in part to health concerns. As a result, calories consumed in beverages are already falling. Beverage Digest estimated in a report today that total beverage calories consumed was down by about 12.4% between 2000 and 2013, and down by about 23% for carbonated soft drinks.

"If declines were to continue over the next 10 years, those declines, themselves, would bring the consumed-from-beverage calorie level down," Beverage Digest stated in a report today. But the publication noted that beverage executives expect "modest" future growth. "So paradoxically, if volume and consumption of the industry's beverages grow -- if consumers are drinking more of the industry's products -- achieving the calorie reductions would be harder and would require more intense focus on the initiatives," Beverage Digest stated.

Risa Lavizzo-Mourey, CEO of the Robert Wood Johnson Foundation, a health advocacy group, praised the effort, saying in a statement that "we are especially pleased that this commitment will target communities with disproportionately high consumption rates of sugar-sweetened beverages."

But the Center for Science in the Public Interest called for more action. "The industry could accelerate progress by dropping its opposition to taxes and warning labels on sugar drinks," CSPI said in a statement. "Those taxes could further reduce calories in America's beverage mix even more quickly, and would raise needed revenue for the prevention and treatment of soda-related diseases."

The beverage companies pledged to "retain an independent, third-party evaluator … to track progress and interim benchmarks" of their commitments.

Coca-Cola and Monster Tie Up, Creating New Dynamics for Soda, Energy Drinks

Via BrandChannel 

Coca-Cola and Monster Beverage seems to be a match made in beverage heaven—or is it? Taking a 17-percent stake in America's fastest-growing energy drink brand for $2.1 billon may prove far from a panacea for troubled Coke in part because energy drink sales are decelerating too.

For now, everyone from Coke CEO Muhtar Kent and Monster CEO Rodney Sacks to industry analysts seem giddy about the tie-up. Coca-Cola will give Monster its tired energy brands in the deal, including NOS, Full Throttle, Burn, Mother, Play and Power Play and Relentless, while Monster will turn over its non-energy brand products—Hansen’s Natural Sodas, Peace Tea, Hubert’s Lemonade and Hansen’s Juice Products—to Coke, which will help accelerate distribution of Monster brands in the US and abroad, especially China. Coke has carried Monster in North America for six years already.

Monster's sales increased by 9 percent last year, and 80 percent of its volume is in the US. Overall energy-drink sales increased by more than 4 percent for the industry last year, Beverage Digest said. Meanwhile, Coke's overall soft-drink sales fell 3 percent last year, and Diet Coke especially has gone into an unexpected swoon on the heels of growing consumer concern over health factors like the use of aspartame.

The deal "aligns us with a leading energy player globally, brings financial benefit to our company and our bottling partners, and supports broader commercial strategies," Kent said in a statement. On a conference call, he added, "We're impressed with Monster's performance today and are confident in Monster's ability to perform over the long term."

Meanwhile, Sacks told analysts he's excited about the possibilities for Monster finally to challenge Red Bull outside the United states. "China is a very long-term strategic goal for us—we want to be there, we want to get there as quickly as we can," Sacks said. With Coca-Cola, "We'll get something like China going pretty quickly, though it will take time because of regulatory issues there. These are the kinds of things we were struggling with on our own."

The agreement includes a clause stopping Coke from acquiring any more than 25 percent of Monster for four years unless both boards approve such a move. The CEOs declined to address possibilities such as Coca-Cola swallowing Monster whole.

At this point, Beverage Digest Editor in Chief John Sicher believes both CEOs have reason to be pleased with the deal. "It's a positive and smart move by both companies," he told the New York Times. "It will strengthen Coke and the Coke system, and the Coke system will strengthen Monster."

There might be one bee in the soda can, however: a deceleration of growth in energy-drink sales. While they're still actually growing, compared with carbonated soft-drink sales that are declining, they've been slowing. Global energy-drink sales grew by just 6.8 percent last year in dollar terms, down from 11 percent in 2012 and 20 percent in 2011, according to Euromonitor.

To an extent, this is not a surprising development—it may even be overdue. Much as Coca-Cola and PepsiCo had the marketing resources and wherewithal to keep soda sales going even in the United States long after their role in weight gain became suspect, the savvy of Red Bull and Monster in attracting the core market for energy drinks—male teenagers and twenty-somethings—has retained momentum for the segment despite growing warning signs.

Simply put, while energy drinks are the emblematic "functional" beverage because they're an effective delivery system for caffeine, they're hardly what could be called "better-for-you" beverages in the vein of bottled water, enhanced water, juices and other healthful segments that have attracted Coca-Cola lately. But they've maintained their mojo until very recently.

It may be that energy drinks finally are suffering a sales drag from the growing concerns of regulators and nutritionists about their possible role in caffeine poisoning and even the deaths of young energy-drink over-indulgers. Monster and Red Bull have been fighting back by pointing out the warning labels on their products and with other measures. Some analysts speculated that Coca-Cola's experiences with being vilified might help Monster's management handle the recent critiques of energy drinks in a more effective way.

Besides battling back, Monster is introducing a non-caffeinated energy drink called Monster Unleaded to appeal to caffeine-sensitive consumers. The company last year introduced Muscle Monster protein drinks to broaden into the recovery-beverage segment.

No telling whether their new parternship will fully solve the problems and challenges of both Coca-Cola or Monster Beverage, but it'll be interesting to watch them try.