There’s breaking news today concerning the fates of three beverage companies whose financial travails have been touched on frequently on BevNET and in the media at large.
RelaxZen, Adina, and New Leaf are all fairly new, entrepreneurial beverage companies run by executives of varying degrees of industry experience. While RelaxZen CEO Brent Sonnek-Schmelz was a newcomer, New Leaf founder Eric Skae and Adina’s acting CEO Norm Snyder both have long resumes in the beverage world, including time working at SoBe for John Bello, who is often mentioned as a potential buyer for Adina.
Until recently, Bello was CEO of Adina before quitting his post and leaving lead Adina investor Sherbrooke Capital in an effort to try to buy the underperforming beverage company outright.
Here are updates on all three:
New Leaf: Going….
New Leaf’s capital situation has not improved, according to Skae, who nevertheless has a number of potential investors making due diligence calls concerning the company.
The ultimate outcome of the New Leaf brand is dependent on more cash coming in to let the company make its teas and lemonades more freely, he said. Skae insists that the brand sells when it is one the shelves – “last year we sold 100,000 cases in New York City through Manhattan Beer,” he told BevNET, “When Coke invested in Honest Tea – and don’t hold me to this number – they were doing something like 150,000 cases in New York. My belief is that we have proof of concept on this brand, we have the ability to scale it.”
That noted, the capital crunch has been hitting New Leaf hard over the past 18 months, since the news of a lawsuit facing a former employee hit the company as it was struggling to fulfill a national distribution strategy that eventually left it overextended geographically and cash-poor. As of now, Skae is the company’s only employee.
Skae said that a deal late last year that allowed his suppliers to use a shipment of tea and lemonade to distributors as collateral on cash New Leaf owed them had been largely successful, allowing the product to get out to market and fill truckloads. He said that some distributors had been forced to sell existing product to each other in order to meet demand in their areas.
Last night, the Twitter account of incubator and investor First Beverage Group announced that Adina, a new age beverage brand that had passed from the hands of founder Greg Steltenpohl to CEO (and former Steltenpohl partner) Bello to Snyder himself was “finally throwing in the towel” after a very public search for millions of dollars in investment last year.
Several Adina employees checked in with First Beverage sources to explain they had been let go by the company, and Snyder confirmed to Beverage Business Insights that he was effectively the only employee left at the brand. He termed it more of a “layoff” situation than a mass firing, however, telling BBI that he would re-hire the sales staff after cash came in.
Bello had been trying to assemble an investors group to acquire Adina when he left Sherbrooke, and both he and Snyder claim that the brand has survived large scale tinkering to make it ready for acquisition by the right kind of buyer. The brand has gained distribution through Dr Pepper Snapple bottlers in a few regions of the country but, as with New Leaf, a nationwide DSD blitz two years ago had failed to create the hoped-for repeat sales that could have elevated the product. While the brand has gradually reduced its price and worked to add zero-calorie SKUs, the , the future of the Adina “monkey” looked unsure as of today.
Meanwhile, after stirring the pot yesterday, the First Beverage tweet disappeared today.
Also the final employee at his company, RelaxZen CEO Brent Sonnek-Schmelz has taken another job while continuing to try to unload the relaxation shot company. It continues to ship product to consumers and retailers.
Sonnek Schmelz said he spent much of the last year trying to raise money for the brand, which had won awards from BevNET for its technical execution but had been unable to shake cash flow problems stemming from a poorly-executed rollout with drug store chain Rite Aid in 2010. In anticipation of revenue from the new channel, the company had expanded greatly, reaching up to 11 employees at one point, including original company founder Nick West, who later was forced out by investors in favor of Sonnek-Schmelz.
“We overestimated the difficulty of educating consumers in a new category,” Sonnek-Schmelz said. “Unless you’re really well-financed, or have a very long term view of how slowly you are going to start, you’ve got to kind of have the structure of a garage as opposed to creating an organizational entity and structure that has fixed costs. At one point payroll was $50,000 a month – we were unable to handle that.”
“It turns out that raising money is really hard, and even harder in this environment,” he added.
On that point, it appears, Sonnek-Schmelz would find agreement with his more experienced colleagues.