Avitae would like you to know that the reports of its impending death are greatly exaggerated.
Yesterday, BevNET – citing information from former employees of the company – reported that Avitae might be facing the prospect of a shutdown. Shortly after the article was published, however, the caffeinated water company’s social media operation took to the online world, refuting reports of its demise on both its Twitter and Facebook accounts.
After wishing everyone a happy new year, the company tweeted “We also wanted to let everyone know that despite a recent report, @avitaeusa is doing well and looking forward to a great 2013!”
Avitae’s sole remaining employee surfaced yesterday to back up its (contracted) social media voice. That employee, interim COO Robert Amodie, didn’t deny that Avitae is in the midst of a drastic downsizing, but he said the company is still active and in the process of reshaping its business operations.
Despite the layoffs, he said, “the board and investors are deeply committed to the brand and currently evaluating various operating models and funding needs.”
Amodie confirmed that founder and CEO Brian Pitzer had been officially removed by the board on Oct. 29.
“The board wanted to find a beverage industry professional to help them get to the next level,” Amodie said, adding that Pitzer is no longer on Avitae’s board of directors.
Amodie also confirmed that Avitae laid off its entire staff in November.
As the sole employee, Amodie said he is spearheading the new direction of the company and launching a variety of efforts to bring it to profitability. Amodie said that he has spoken with a number of businesses with ties to the company over the last 4-5 weeks as a way of hitting the reset button.
“We had to have a lot of these same conversations with suppliers and distributors,” Amodie said. “Everyone’s been positive, for the most part.”
As to how the company got to that point, Amodie stated that over the course of 2012, Avitae’s board members had become increasingly concerned about the viability of their investment in the company.
According to a pair of U.S. Securities and Exchange Commission (SEC) Form D filings, Avitae, raised nearly $4.24 million in two rounds of funding that took place in November 2011. The forms reported Avitae’s revenue at between $1 and $1,000,000.
The turnaround specialist said the board had hired him to assess the company’s operating structure in June. Amodie said he began by evaluating all aspects of the company, including sales, marketing, and distribution, and was soon involved in implementing changes.
Despite Amodie’s involvement, Avitae was drastically and consistently missing sales projections by as much as 80 percent, he said. With company expenses far outpacing revenue, Amodie said, the company structure had to be drastically changed.
“Anything else would have been irresponsible,” Amodie said. “We had the expense structure of a much larger company than a typical start-up.”
Amodie said that he is currently working with several other consultants to rebuild Avitae’s management team, and is looking to hire a new CEO and a staff of 8-12 people within the “next few weeks.” Amodie is also working on crafting a proposal for a new grassroots marketing strategy that calls for heavy sampling and guerrilla marketing efforts.
In order to minimize transportation expenses, Amodie said that Avitae moved its co-packing operations from Dallas to Indiana in December. The company is working with Manufacturing Solutions International (MSI), which has created a dedicated filling line for the brand. Amodie noted that the move consolidates bottling and packaging and brings the brand closer to its core consumer base, which is located primarily in the Midwest and Mid-Atlantic.
Although the company had at one time been working with 36 distributors, Avitae has now aligned itself with eight “that specialize in building brands,” including Beverage Network of Maryland and Buckeye Distributing of Ohio, according to Amodie. Amodie stated that he did not know if any of its former distributor partners had broken their contracts with Avitae or vice versa.
Despite a claim by a source close to the company, Amodie said that Avitae is not liquidating any inventory in Mexico. He did note that Avitae is working with Agrup Indutrail Wire, SA DE C.V., a distributor that is Amodie said is doing a “pretty good job” of marketing and selling the brand in that country.
Although Avitae has been operating with only a single employee for nearly two months, Amodie said that, contrary to reports, there have been no supply issues with the brand, and it is continuing to be shipped to retailers. He said that Avitae secured a distribution deal with Walgreens nearly three months ago and will begin shipping eight cases of the water to nearly 2,600 stores across the country sometime next week.
Regarding reports that some former employees were suing the company for back pay, Amodie said he hasn’t heard anything about the lawsuits.