Dr Pepper Snapple Acquires Minority Stake in Bai Brands

Bai ipanema-pomegranateEighteen months after signing a national distribution deal with Dr Pepper Snapple Group (DPS), Bai Brands, which has grown at a torrid pace in the timeframe, has sold an equity stake to the beverage titan. Bai CEO Ben Weiss told BevNET that DPS invested $15 million for a minority stake in the company, though he was unable to discuss further terms of the deal.

Amid a sustained evolution in how Americans eat and drink, Bai has drawn from a deepening well of consumers seeking better-for-you beverage options and functional refreshment. The company markets still and sparkling lines of its coffeefruit-infused Bai5 Antioxidant Infusion drinks, which sweetened with a blend of erythritol and organic stevia, contain 5 calories per 8 oz. serving.

Bolstered by distribution that covered the breadth of the U.S., Weiss said that Bai’s wholesale revenue in 2014 reached $50 million, a number that he equated to well over $100 million in retail sales. Bai is forecasting $125 million in sales to its distributors in 2015, Weiss said, numbers vetted by top DPS executives, including CEO Larry Young, over a recent two-day visit to Bai headquarters in Princeton, N.J. DPS leadership not only completed an “under the hood” analysis (as Weiss put it), they saw an alignment between the two companies that culminated in the investment.

“We realized is there is a unity behind where consumers are headed, what Bai offers, our ability to continue to expand that offering across various channels in the beverage industry,” Weiss said. “And I think that innovation is really the bedrock of the investment.”

Bai CEO Ben Weiss

Bai CEO Ben Weiss

Speaking on a quarterly earnings call last year, Young referred to the potential for an a equity stake in one of its allied brands, which include Bai, Vita Coco, Body Armor and Neuro. However, he demurred on overpaying for investment, saying at time that “some of those multiples out there are ridiculous… we love all these young entrepreneurs, but they want to be the next Glaceau.”

For a company with a market capitalization of $15 billion, it’s a stretch to call DPS’ investment in Bai a capitulation by Young. Rather, Weiss explained, the minority stake represents a willingness by the two companies to take advantage of shared synergies and the potential for a deeper presence in healthier beverages.

“For me, spending two days with him and his senior management team… was really a game-changer,” he said. “Two days of really understanding not where Bai is today, but where it was over the last five years, and, most importantly, where it’s going over the next five years, it just makes sense. We need their services to get there, and they need our services to a brand like Bai that has the ability to reach the millennial mouth.”