Just like you, we thought things were going to be pretty quiet during the Dog Days. But as one of our columnists said, “summer isn’t supposed to be this busy.”
We guess we should have thought about it in late spring, which brought the surprise sale of Whey Up and the early buyout of Sweet Leaf Tea by Nestle. But things really heated up just in time for this issue, with the purchase of Function Drinks by Sunsweet Growers Inc. and a major investment in Purity Organic by First Beverage Group. Additionally, Icelandic Glacial pulled in major investment capital.
It’s all detailed below in our super-handy Deal Profiles.
Sunsweet adds Function Drinks
Function Drinks, once seen as a potential heir to the grow-fast-and-flip national DSD model exemplified by Glaceau, was sold by its founders and investors to produce and beverage manufacturer Sunsweet Growers Inc.
Deal terms weren’t disclosed in terms of dollar value, but the company made offers to retain all of its employees and both parties emphasized that it would continue to operate as a largely independent entity.
In an equally relevant development, the deal introduced Sunsweet’s new incubator program for beverages: a subsidiary called Disruptive Beverages Inc.
Function is a line of health and performance new age beverages with names like Urban Detox, Light Weight, and Alternative Energy. Originally rolled out nationally with multi-million dollar investment from the likes of Wall Street investor Bruce Wasserstein — as well as many of the distributors who initially brought it to market — Function was started by three friends in Los Angeles, including an orthopedist, Dr. Alex Hughes. With a big wallet and a strong Los Angeles following, the brand attracted top-flight sales talent, including SoBe veteran Bob Miller to run its sales operation.
After quickly gaining store shelves nationwide, however, the economy fell into deep recession — hurting the company’s initial model of spending heavily to juice revenues, and leaving Function something of a cautionary tale. Miller and much of his high-powered sales team eventually left, and the company was forced to work from a much smaller retail footprint.
The brand fought back, however, eventually cutting down a myriad of SKUs to just three varieties, and dedicating itself to key channels and tight focus. Since 2009, the company has reversed its course, demonstrating discipline and staying largely under the radar. The brand began looking for investors or acquirers early this year, according to a person with knowledge of the deal.
Sunsweet, best known as a collective selling prunes and prune juices, has become increasingly active in the beverage industry in recent years due to its large-scale co-packing capabilities and its strong, steady hold on its own agricultural category. The facility has bottled products for PepsiCo and Adina, among others. Meanwhile, the company has also recently made small investments in a pair of entrepreneurial beverage companies, including Ayala’s Herbal Water and C2O, a coconut water company.
Purity Organic Pulls in First Bev Bucks
In its first major investment since selling off most of its holdings in Activate Drinks, LA-based First Beverage Group picked up a stake in San Francisco-based Purity Organic Juices. While details regarding the exact size and amount of the investment have not been disclosed, Tom First, a co-managing director at First Beverage Group, described the deal as being a “significant investment for a significant part of the company.”
First, a co-founder of Nantucket Nectars, will play a strategic role in shaping the next stages of development for Purity and said that the company will continue to focus on growth in the existing core markets of Northern and Southern California and New York. Based on the availability of distribution and retail partners, it will also look to enter three to four new markets in the coming year.
Purity Organic Juices was founded in 2006 as an offshoot of Purity Organic Produce, the largest supplier of tree picked fruit in the world. Through its investment in the company, First Beverage will look to continue and expand upon the growth of Purity, which, according to First, has achieved a 30 percent growth in revenues in each of the last three years.
“Like Nantucket Nectars, Purity has proven traction in the marketplace, a basic foundation for a great brand, opportunity for capital investment, and a product that can fit into the portfolio of distributors, retailers and consumers,” First said. “Additionally, Purity’s quality is second to none. The company has the opportunity to redefine what quality juice is in the same the way that Nantucket Nectars did back in the 1990s.”
As part of First Beverage’s investment, Purity’s juice and produce units will become two separate entities, though the juice unit will retain the ability to use the Purity trademark for its current and future offerings. In doing so, First noted the strength of brand name to potentially develop new product lines and stated that, “With a name like Purity Organic, the field is pretty wide open for other things that we can do in organic beverages, and we’ll certainly consider them.”