The Lizard King Does Coffee

The Lizard King is back in the arena, but he’s backstage, not front and center. That’s where he says he wants to be, though. He’s through with the song and dance routine, he insists. He’s not a brand manager, and he’s not the entrepreneur either.

The Lizard King – John Bello, in his former role with SoBe, where the rallying cry was “Drain the Lizard” – is an investor now, a power broker, a guy who spots potential, feeds and nurtures it, and then rides it to a payday. Whereas it was once about flipping cases for him, now it’s about flipping companies.

At least, that’s his position, and in some ways, he’s right. After all, it was just two years ago that Bello parlayed a $6 million investment in IZZE sparkling juices into a $75 million sale to PepsiCo, the same company to which he more famously sold his own creation, SoBe Beverages for a cool $337 million back in 2001.

But Bello the salesman is still in full effect, even when he’s selling Bello the investor. There’s been some friction between paydays, and some of it’s still ongoing. He’s seen one product line collapse on him, another one struggle to keep its feet. Even Bello’s admirers – and there are many – might want to see the now 62 year-old kick back, lighten up, recognize that he’s had a nice, dreamy, multi-million dollar run in the beverage business, wake up and smell the coffee.

Only problem is, Bello already did wake up and smell the coffee, and to him, it smelled like more cash.

Bello and his partners at Sherbrooke Capital recently invested $6 million in Adina World Beat Beverages; their aim is to create a set of coffee products that will become the biggest brew in the cooler case since Starbucks’ Frappucino, and they think Adina has the potential to do it.

But while the once-hyperactive Bello said he’ll have a hand in the brand’s development, he won’t be hustling cases out of trucks – or hassling the distributors who own those trucks – like he did during his days as the co-founder of SoBe.

In those days, Bello cut a reputation with his employees by getting his hands dirty and personally dabbling in all the tasks he asked them to do. These days are different, he swears.

“I don’t want to get on the field,” he said. ?But here’s the question: can a guy who made his bones pulling tricks like stealing his competition’s cooler stickers continue to find success when he’s not able to re-shape a brand around his own personality? His two greatest successes, SoBe, and before that, the promotion of NFL Properties, both had attitude, a gutsy feel that was all their own. Even when Bello sold IZZE, the acquisition by PepsiCo was considered by some to be a last-minute bailout for a strapped niche brand that had lost its momentum, the combination of Bello with the brand felt oddly incongruous. For a Yoga-Mom friendly brand with the hip quotient of a Volkswagen Beetle, they were sold by a guy whose approach correlates more directly with a Panzer division.

So what does that mean now that he’s put his money into an exotic-juice-cum-coffee company that plans to save the world? Can the Lizard King really do coffee?
The Bello Method

From the start, Bello has said he wants to build Adina’s globally-inspired coffee line to challenge Starbucks’ domination of the ready to drink coffee category. While he won’t get on the street, he said he will play director for Adina’s next act, and instill the organization with the “Bello Method.”

The Bello method is a blend of football-coach motivational strategy and guerilla – he calls it “go-rilla” – marketing. In his SoBe days, Bello was known to march into convenience stores, rip the Snapple stickers off the coolers and replace them with SoBe stickers. He also motivated his team with “Bello-isms” like “Snapple is crapple” and “put AriZona in a coma,” and made curiously effective use of the company’s voicemail system, according to John Kenneally, who headed up SoBe’s West Coast sales.

“He would encourage everybody in the company to get on that voicemail on a daily basis and talk about positive things in the marketplace,” Kennelly said. “It rea lly fired you up.”

When someone at SoBe failed, Kenneally said, they didn’t have to be chastised. They went home knowing that they let down their coach and their team, and that powerful mix gave the staff a strong dose of motivation.

“I would wake up in the morning and want to run through a burning wall of fire… to make him proud,” Kenneally said.

Kenneally, currently working on Cytosport’s RTD line of Muscle Milk, said Bello’s tactics made SoBe’s staff feel like a tight-knit sports team pursuing a championship.

Of course, every championship coach makes a few mistakes. Just ask Bill Belichik.

Bob Miller, one-time SoBe executive Vice President of Sales and Marketing and now executive vice president of sales and head of strategic planning for Function Drinks, said he disliked Bello the first time they met. The two crossed paths at a 1994 trade show when Miller worked for Mistic and Bello worked for AriZona.

“At first, I couldn’t stand the guy,” Miller said. “(He was) just like real arrogant and cocky.”

Bello framed conflicts in terms of war, Miller said, and was unwilling to lose a battle. Miller recalled one instance where a distributor said he wasn’t interested in carrying SoBe. Bello yelled his way up the company’s chain of command until the last person he reached declared that the distributor would never carry SoBe, unless Bello left.

Miller later developed respect for Bello, he said, and he saw at SoBe how that cockiness played out in a business environment. That all-or-nothing attitude could have had a lot to do with what was at stake for Bello, Miller said. He said The Lizard King built his kingdom by leveraging his castle, offering his house to the bank as collateral so that the company could get a line of credit. And while Bello’s bluster may have cost SoBe one distributor, he eventually sold the company to Pepsi for a cool $337 million.

But that 2001 sale still stands as Bello’s crowning achievement. Before starting the company, he achieved notable successes at NFL Properties; after leaving SoBe, he and Sherbrooke facilitated the estimated $75 million sale of IZZE sparkling juice drinks to Pepsi. In between, however, he’s had a hand in a couple of ventures that have limped into transition. Or failure.Firefighter Fizzles

In 2004 Bello invested in Firefighter Brands, launching a line of snacks and drinks to capitalize on the popularity of the firefighter image following the September 11 terrorist attacks. That brand’s products included Hydrant Water and Courageous Cola, and the company promised to donate 25 percent of its profits to firefighter-related causes. But you won’t find the brand on shelves today, and the company’s website has gone dark.

Bello called Firefighter Brands an instance of “no good deed goes unpunished.” The brand idea worked, he said, but the company was beset by a number of problems. His departure from Pepsi barred him from working in the beverage side of the business, he said, which is where the focus of the brand fell, and he had a hard time corralling the divergent interests of full-time and volunteer firefighters.

But he also had a hard time pulling the whole idea together. While the brand started with a rollout of everything from potato chips and chili to bottled water and sports drinks, by the end it was apparent that the throw everything and see what sticks approach hadn’t worked. If the public had as much respect for firefighters in terms of potential brand equity as Bello says it did, then Firefighter’s execution was a colossal failure. If that potential was never there in the first place, it calls into question Bello’s ability to still pick a winner.

And another of Bello’s recent ventures – a line of soups and soup restaurants based on the inspiration for Seinfeld’s “Soup Nazi,” a real life soup maker named Al Yeganeh – decided it would just plain be better off without him. Bello lost his post as CEO of The Original Soup Man World Renowned Soup last year. But Bello said he never wanted to be the company’s CEO. He said he took the post to drum up funding and publicity, and doesn’t have the time or will to be involved with Soup Man’s – or any other company’s – day to day operations. He already sits on several other boards and serves Sherbrooke by searching for the next big brand. But he still owns ten percent of Soup Man, sits on the company’s board and represents a large group of investors – which affords ?him a measure of influence.

But this raises another question about the Lizard King: Does the Bello Method work from a distance? He crafted SoBe in his own image by stationing himself on the front lines of the company’s store-to-store battles. Even at IZZE, he packaged the company for sale by sitting as the board’s chairman. But the battlefield looks different the farther you get away from it, and at Adina, Bello plans to send dispatches from the general’s bunker.

As for Soup Man, Bello said the company is in a period of adjustment, not unlike SoBe’s South Beach days. SoBe originally sold iced teas to an unreceptive marketplace before Bello rebranded the company as SoBe and introduced a new line of fruit and vegetable juice blends with splashes of herbs – many of the elements that would later surface in the emerging functional drink category. Similarly, The Original Soup Man is bending away from the franchise track and specializing in grocery-ready soups.Stirring the Coffee

And, just as he made those adjustments at SoBe and Soup Man, therein might be the best of what Bello can bring to Adina.

Founded in 2006, Adina, despite a reputation for selling good, if expensive, beverages, has been organized more around an idea than a product, according to company co-founder Magette Wade-Marchand.

That’s even why the company chose the name Adina World Beat Beverages, she said, so they wouldn’t be locked down to a single kind of drink. But co-founder and CEO Greg Steltenpohl said that approach left the company without focus. Adina experimented with multiple products that “were not fully executed,” he said, and pushed three divergent beverage lines including Miracle Fruits and Juice Coolers.

Now, under Bello’s advice, the company is rallying its sales and development resources behind the company’s coffee line. The coffee category is ripe for a strong contender, Bello believes.

To that end, Steltenpohl said Adina plans to roll out six new coffee SKUs in the coming year and bring the line to DSD markets on both the East and West coasts.

“The ready to drink category is pretty much dominated right now by Frappucino,” Bello said. “While it tastes great, we think there’s room for something lighter.”

Adina’s coffee drinks weigh in between 90 and 110 calories per bottle, which is about half that of a Starbucks bottled Frappucino – the creamy concoction which Bello credits for blazing the path for other RTD coffees to follow. The RTD coffee category was worth more than a quarter billion in sales in the last year, with Frappuccino alone accounting for $191 million and non-Starbucks brands accounting for around $25 million – about the same as Starbucks Doubleshot. Taken as a whole, Starbucks owns the RTD coffee segment much like Gatorade owns sports drinks, but Bello said he thinks that their presence created a space where another brand can move in.

“(Coffee) has been reinvented and reinvigorated with what Starbucks has done,” Bello said. “(Frappucino) made a place for ready to drink coffees in the cooler set, so we’ll move in alongside it.”

Bello’s bet comes with more than Sherbrooke’s check. He said his experience in coffee stretches back beyond his SoBe days to when he cut his teeth in the beverage market by working on Sanka for Maxwell House. Additionally, the team brought in Bruce Schroder, who ran the Pepsi/Starbucks Frappucino partnership, and Adina has its own dose of in-house expertise. Steltenpohl, you may remember, helped launch Odwalla – now owned by Coca-Cola.

But Adina isn’t the only beverage firm trying to cut their own piece of territory out of Starbucks’ kingdom. Coca-Cola tried to replicate Starbucks’ formula by partnering with Caribou Coffee and releasing metal-bottled versions of that chain’s brew. SkylarHaley took a nutritious tack on coffee drinks by fortifying AchievONE with vitamins and nutrients. Muud Coffee plans to try the reverse of Starbucks’ model: the brand recently launched 15 oz. RTD cans composed mostly of espresso, and co-founder Matt Marini said long term plans for the brand include opening coffee bars called “Muud Rooms.” Shock coffee continues to have cachet among caffeine junkies. And don’t forget about the Monster in the room – JavaMonster – which might very well have the growing distribution and fan base to trump them all, Frappucino included.

Even with brands clamoring to get into the coffee sector, Bello still thinks Adina has an edge. The company’s coffee is both organic and fair trade – a great pair of marketing buzz-words – and its ethnically-inspired flavors give the brand a strong point of difference. Bello said he thinks that combination could help the brand carve out its own subcategory.

But again, there’s that cultural issue. Bello’s style is in your face, while Adina has long been about laid back San Francisco hippie multiculturalism. How will that jibe with a guy who screams about draining the lizard?

According to Bello, it won’t be a problem. “I’m just there to provide experience and reflection,” he said.

But while the company’s founders share that vision, not everyone does. Miller, for one, has his doubts. He said the beverage market has gotten tougher since his and Bello’s SoBe days.

“Distributors do less and less,” he said. “Slotting fees are higher… It’s really become a much more difficult process now.”

Additionally, he said he’s not sure that Adina and Sherbrooke will have the capital to take on a monster like Starbucks. Companies with much deeper pockets have tried to and failed to take a piece of Starbucks’ action proving, he said, that RTD coffee might be a one-brand category.

But, he added, “If anybody can do it, (Bello) will do it.”