Keto & Co, which has marketed Sated keto shake mixes for past 5 years, is ready to enter RTD realm with aseptically produced single-serve entries thanks to $200K in Kickstarter commitments, claimed to be 4th-largest food launch on crowdfunding platform. Co founded by former McKinsey consultant Ted Tieken originally launched powders under Ketolent brand, but pivoted to Sated name last year, by now extending it to include naturally sweetened Chocolate, Vanilla and Strawberry flavors. It’s sold online in 30-meal kits.

After plying DTC channel for its first 2 years and generating repeat order rates as high as 40%, Apres brand of plant-based bevs is ready to head to retail on heels of successful retail test around LA and influx of new capital. New round of unspecified magnitude included seed round participant Rocana Ventures alongside Stray Dog Capital, Semillero Ventures, and Black Jays Investments. The money will go toward brand and pkg refresh that will better attune Apres to retail dynamics, using gleanings from pilot earlier this year. “Our packaging communicated a feeling, but didn’t articulate the value proposition of our product without additional support from our website or digital ads,” said ceo and former Boston Consulting Group exec Sonny McCracken, who created brand with his wife Darby Jackson, a health coach and former water polo player, in SF before relocating to LA a year ago (BBI, Jan 12 2018). “We started this company to make protein more approachable and inclusive, and we feel that this updated packaging really helps us achieve this goal while continuing to broaden our reach.” Co also has taken steps to take out sugar and improve flavor of shelf-stable line, which is available in Mint Chocolate, Sea Salt Chocolate, Vanilla Bean and Cold Brew Coffee flavors.

Giant Eagle grocery chain has committed to eliminating all single-use plastics in its stores by 2025, starting with plastic bags and moving on to straws, food containers, bottled bevs and other items, Specialty Food News reported. Initiative will commence in Jan with phase-out of plastic bags in Pittsburgh, Cuyahoga County, and Bexley, Ohio, with shoppers given option to bring in their own reusable bags or purchase ones from the store. “Consumers have power, and this move invites every shopper to have a positive impact,” said Joylette Portlock, exec dir of Sustainable Pittsburgh, non-profit partnering with grocer on test in Pittsburgh.

Fiji Water’s controversial move to exit DSD has drawn at least one lawsuit that’s about to head to trial.  Trio of southeastern wholesalers who filed suit in LA Superior Court in Sep vs The Wonderful Co unit for allegedly reneging on assurances it made that exit from KDP system wouldn’t affect indie distribs will go to trial on Jan 21, 2021 LA Superior Court has indicated.  The distributors – Carolina Beverage, Dixie Riverside and Alligator Beverage – have charged Fiji with breach of contract, breach of covenant of good faith and fair dealing, concealment, false promise and unfair trade practices.  Fiji and its parent The Wonderful Co operate out of LA.

Recall that Fiji Water roiled bottled water biz in Jul 2018 when it announced it would be exiting its longstanding distribution partnership with Keurig Dr Pepper effective Oct 1 that year in order to self-distribute.  Fiji had long enjoyed fruitful partnership as allied brand within Dr Pepper Snapple Group and some ascribed departure to private personal enmity between Wonderful Co owners Lynda and Stewart Resnick and JAB Holding, whose Keurig Green Mountain holding had just acquired DPS to form KDP.  Fiji prexy Elizabeth Stephenson, who recently left co, had defended move on grounds of greater efficiency deriving from cutting out middleman.  Whatever the cause of move, basis of distribs’ suit is their contention that while still locked into distribution agreements, Fiji forced retail customers away from DSD system to take direct delivery of the bottled waters.  The concealment and false promise claims stem from distributors’ assertion that Fiji reps had repeatedly assured them it would be business as usual despite co’s decision to terminate the KDP-owned bottling system, which accounts for about 70% of that co’s volume. 

Fiji reps “verbally assured Plaintiffs that Fiji would continue to use Plaintiffs and would not displace them in their respective Sales Territories. . . . In reality, however, at the time Fiji was making these representations, it was secretly negotiating with Plaintiffs’ customers to take over their customer relationships and force those customers to take delivery of product directly from Fiji.  Fiji was intentionally deceiving and misleading Plaintiffs by advising them that no changes will take place, but at the same time advising Plaintiffs’ customers of the changes to delivery that will take place,” suit filed by Womble Bond Dickinson firm states.  In all 3 cases, Fiji unilaterally changed vendor code at retailer so that distributor arriving to make drop discovered that it was no longer recognized as approved at chain, suit charges.  The 3 houses had distributed Fiji for roughly a decade each, thru several renewals, suit indicates.

According to suit, after distribs demanded that Fiji remedy breach of contract or pay them $5 per case termination fee, Fiji sent each of them letter on Oct 16, 2018, claiming that retail chains “have recently taken the position that they will no longer accept [DSD] from third party distributors,” statements that were clearly “false and misleading” because those retailers “were all receiving, and continue to receive, direct store delivery from Plaintiffs of other third-party products,” from Canada Dry and Core Water to Bai and Peet’s Coffee.  Many of those customers “denied that they requested to Fiji to initiate the new delivery model.  Many customers also requested that Plaintiffs appeal to Fiji to reverse its decision.”

Biggest unaligned house in NY, Big Geyser, has picked up distribution of Vybes CBD brand, augmenting segment it entered earlier this year with addition of Recess brand. More may be on way as co follows strategy of offering varied portfolio in growth categories like energy and bottled water. Tho local regulators have put up some hurdles to broad availability of CBD entries, Recess brand labeled as hemp has become a fixture at local chains like Fairway and Fresh & Co thanks to BG’s efforts . .

They’ve already been battered by long decline in milk consumption, advent of plant-based alternatives and lately the trade war vs China. Now many American dairy farmers are dreading the prospect that Dairy Farmers of America co-op will succeed in its efforts to buy dairy giant Dean Foods out of bankruptcy, development that would exacerbate squeeze stemming from DFA’s dual role as dairy co-op and processing giant that benefits from lower milk prices. NY Times last week offered detailed probe of issue, citing lawyer for indie farmers who’re suing DFA in Vermont, who argues, “DFA’s acquisition of Dean’s processing plants would be the crown jewel of its empire-building, the death knell for independent farmers struggling to find a place to sell their milk.” As article notes, in recent years DFA has continued to accumulate scale thru acquisitions of milk processors like Guida’s, Cumberland Dairy, Oakhurst and Stremicks. Last year it paid $50 mil to settle suit accusing it of colluding on pricing with Dean. Story can be accessed here.. . . Struggling to get a handle on emerging categories of adaptogens and nootropics? MediaPost q&a with CB Insights sr intelligence analyst can shed some light. It’s available here. . . . North Korea is breaking new ground in non-alc bevs, moving beyond partnerships with overseas firms to build domestic base for fruit-flavored carbonated bevs, per story in Daily NK, independent outlet based in Seoul, South Korea that’s highly critical of repressive regime. Entering scene in Pyongyang as innovation hubs are cos with less than aspirational names along lines of Air Koryo Beverage Factory, 5.1 Food Factory and Munsu Foodstuff Factory. They’re striking a chord with Coca-Cola knockoffs, broad range of fruit-flavored sodas and vinegar-based entries that serve as summer refreshers. About 9 different kinds of soda still emerge from venture in Japan that’s run by North Koreans called Kyongryon Patriotic Soda Factory, reports story (it’s not clear to us from translation whether it’s the sodas or factory that are patriotic).

At last week’s BevNet Live conference in Santa Monica, Calif, Brew Dr founder Matt Thomas took audience on absorbing tour of the 3 distinctive growth stages his RTD kombucha has navigated from spinoff of 2-teahouse retail operation to national brand heading toward $50 mil revenue level.  His account offered portrait of untutored college grad who groped his way toward success via blend of credit-card debt, self-distribution and rigorous focus on profitable operation in early days.  When opportunities appeared, he didn’t hesitate to take them.  “You miss 100% of the shots you don't take,” he offered, quoting hockey great Wayne Gretzky.  “I’ve taken a lot of shots and missed plenty of them, but our growth mindset is the reason we’ve found success,” he told crowd heavily seeded with youthful entrepreneurs.

Matt broke Townshend history into 3 eras spanning co’s 14-year history and offered rundown on each.  First 5 comprised “startup years,” seeing revenues edge up to $1 mil.  Then came “hustle years” from 2011-15 when revenue grew to $10 mil.  Now we’re in “development years” when revenues are heading toward $50 mil, by Matt’s definition.

Startup Years: ‘Who Needs Working Capital?’   We’ve told much of story before in BBI but it’s an absorbing one.  As Univ of Ore student, Thomas devised biz plan to reach what he felt were underserved tea drinkers (in coffee-crazy Portland, it should be noted).  Idea was to present everything that tea could be under single roof via teahouse.  After string of “really bad jobs out of college,” he figured, why not go ahead and put idea to test?  So he raised $45K in startup money figuring it should cost $40K to start a teahouse.  “Who needs working capital?”  Ground zero was 900-sq-ft unit stocked with used furniture that was adequate to showcase “everything you could do with tea,” including herbal teas, chai and bubble teas made from scratch.  Thomas spent most of his time behind the counter for first two and a half years, until 2008, when he signed up for five credit cards with $7K limit to fund his 2d teahouse, similarly furnished with thrift store couches.  It turned out Townshend’s tea blends translated well to a tea-centric style of kombucha, and consumers responded well enough to prompt move outside stores under Brew Dr name, at time Thomas was realizing that continuing to simply add more teahouses was going to be tough battle.  So RTD kombucha biz got going in basement, which was maxed out by end of 2009.  Whole Foods local-producer loan helped fund 4K-sq-ft above-ground brewery and needed equipment.  Thomas didn’t disguise before budding entrepreneurs in BevNet audience that effort had its demoralizing moments.  “Many times, I thought about hanging it up,” he acknowledged, but he was daunted by notion of calling family members who’d invested in venture.  (Moral: “Take money from friends and family because you won’t want to fail them.”)

Townshend’s chain benefited from enthusiastic customers but was run like homespun operation under direction of founder who came to realize he wasn’t very good at planning or tracking activity.  He had “zero advisors – I didn’t know other entrepreneurs, had no concept of a board of directors except for maybe watching The Apprentice.”  So his startup-y culture “felt like an extension of hanging out in college.”  He couldn’t pay well, so his staff were folks in their early 20s staff getting minimum wage and tips but no health care.  Between working counter and cleaning toilets, Thomas learned “something resembling accounting,” began to master labeling issues, where to source and buy bottles.  “I was the delivery guy for the first months,” he said.   

Hustle Years: Kombucha Category Recall Prompted Innovation Leap    The so-called “hustle years” didn’t start out so different, with founder doing many jobs while straining to keep up with volume.  “I would run instead of walk across the brewery to save a little time,” but the new street-level site was exciting to staffers and it was stocked with $200K bottling line, custom box and CO2 tanks bought with help from that Whole Foods loan.  Idea of garnering investment to support negative cash flow operation was alien to Thomas, so he did whatever it took to operate profitably.  That dictated self-distribution, so as not to cede any margin to a wholesaler.  The fleet comprised a pair of vans each boasting over 100K miles. 

“Really big bump in the road” occurred in 2010 when Whole Foods pulled kombucha category out of alcohol concerns.  That proved galvanizing moment for Brew Dr, as co set about finding a solution and not building “a house of cards that could be knocked down by regulators.”  Thomas and his colleagues learned that a spinning cone column allowed them to remove alcohol without heat, leaving the kombucha in a live and active state.  The machinery was made in Australia, cost over $1 mil and took a year to install, but co finally was able to afford significant bank debt to fund purchase, along with a handful of bigger tanks.  As a side note, Thomas noted that “if you start a brand in Portland, chances are that everyone is in a band,” and staffers on their own devised catchy jingle, “Make it tasty,” that helped create buzz.  (It’s still played on office phone’s hold message.) 

This era concluded with mid-2016 move from Portland space that had grown to 10K-sq-ft to 50K-sq-ft brewery in suburban Tualatin equipped with 13-foot-wide fermentation tanks, still the production base for now-sizable brand.  Even as Thomas scaled up, he still had no advisors, as “I didn’t see a need, I had a clear vision.”  The move was funded by $2 mil bank loan, but co was growing and profitable.  By then, Matt was spending most of his time on strategy and fundraising, but still headed 2-person marketing team and helped out as he could in routine operations. 

Development Years: Missteps on New Label, Distillery, but Ample Growth Headroom   Things accelerated from there, what Thomas styles “development years,” as co doubled its sales in 2017 and grew nearly as fast in 2018.  That vindicated gamble on big new space, and founder had confidence to pursue maximum amount of bank debt, now that co was operating profitably off $10 mil revenue base.  He pulled $7 mil more in bank debt as well as first PE round, $1 mil, from acquaintance at small local shop.  Plant was upgraded with bigger, faster bottling line that could manage variety packs for Costco and he found way to stack 4K-gal tanks on top of his 9K-gal tanks to put vertical space to fullest use.

“When I signed the bank loan, I knew I needed as much help as I could get,” Thomas recalled, so he recruited a board of directors – “people with experience who saved me from making a few really bad decisions.  I wish they would have stopped me on some others.”  One of those was outgrowth of move last year to simplify branding, dropping Townshend’s Tea name in favor of Brew Dr for both the stores and RTDs.  That move included a national rollout of new kombucha label that failed to offer sufficient real estate to convey info on the company, its values and what its top-selling Clear Mind sku is.  The mistake was quickly undone, and revamped label in market several months ago brought quick improvement, Matt reported.  A further wave of expertise arrived with bigger PE round from Castanea Partners, via its partners Tom First (cofounder of Nantucket Nectars) and Juan Marcos Hill.  “I’ve heard horror stories about mismatches with private-equity firms,” Thomas said, but happily Castanea has proved good fit.   

Among other key developments, last year Brew Dr was certified as a B Corp, which raised its cred with consumers while helping with staff recruitment, and committed to 1% for the Planet program. 

Another setback occurred earlier this month when co reluctantly mothballed Portland distillery that had proved popular way of using byproducts from de-alcoholization process (BBI, Dec 3).  Tea-based distillery broke new ground, “but all along it’s been a very small team and I learned this industry is very hard, you’ve got to have focus” and deep pockets.  “With a team focused on selling a non-alcoholic product, to ask them to play in the spirits world would be a shiny object problem.”  As reported, Thomas is hoping to find a way to reactivate effort in hands of outside entrepreneurs. 

Building on success in Walmart of unsweetened cranberry entry, Ocean Spray growers co-op is broadening its Pure multiserve line into several non-cranberry juices, including Tart Cherry item priced above rest of line. The line will roll out from its current base of 1,400 Walmart stores into general retail availability in Jan. Striking at marketing vulnerability of cranberry juice, whose tart nature has long required addition of sugar for palatability, Ocean Spray in 2017 offered Walmart customer an initial Pure Cranberry entry that’s positioned as containing no added sugars, artificial flavors or preservatives and is non-GMO-verified. Everyday price at Walmart is $2.98 per 32-oz bottle. Now co-op is adding Pure White Grapefruit and Pure Concord Grape at same price, as well as Pure Tart Cherry at $4.78.