Ready-to-drink coffee brand FORTO has restructured its sales team and eliminated 10 regional management positions within its direct store delivery (DSD) division, BevNET learned this week.
FORTO founder and CEO Neel Premkumar noted that the economic conditions created by the pandemic have had a negative effect on energy shot sales and impulse purchasing at the register, where FORTO’s 2 oz. organic cold brew shots are frequently merchandised. According to IRI, shelf-stable energy drink sales were down 12.1% for the week ending March 29 compared to the same period last year.
“We’ve had some challenges with the system recently just being on-shelf,” he said. “We don’t really expect the impact of COVID to change anytime soon. Unfortunately, we financially just had to restructure our team.”
Introduced as a 2 oz. cold brew coffee shot, FORTO has quickly grown into one of the best-selling organic coffee products in the U.S., where it is sold at national retailers like Target, Walmart, CVS, Walgreens and Dollar General. According to IRI data through February 23, sales of FORTO’s 11 oz. ready-to-drink coffees are up 82.5% ($14.8 million) year-over-year. In October, the brand brought on NBA legend Shaquille O’Neal as an investor and spokesperson.
FORTO’s parent company Dyla Brands, which also owns Stur liquid mixes, brought on former CORE SVP of sales Jon Crecy to build its national DSD infrastructure in March 2019 as part of a $20 million investment from Keurig Dr Pepper (KDP); he departed the company in January, according to LinkedIn. KDP is FORTO’s primary distributor in a portfolio that also includes shelf-stable coffee drinks from Peet’s and High Brew, as well as caffeinated beverages like A-Shoc and Limitless.
Premkumar said he did not anticipate any future staffing cuts related to the virus. The company will continue to provide coverage to all regional accounts affected by the shift in personnel, and will overlay that with a broker network.
“I think we have the right portfolio to weather the storm but financially we had to make a change,” he said.
Gregg Shore’s role as a district sales manager for Florida and parts of Alabama was one of those affected by the cuts. Along with concerns over FORTO’s ability to stay viable on a state level, he voiced worry that, while essential for small brands, DSD’s value perception may be shifting during the crisis.
“From a DSD standpoint, I think this could be a game changer,” he said. “A lot of brands took their folks off the street, and maybe if a brand is strong enough they can get by with less DSD folks. It lets brands know they could do this with less people.”
To that effect, Shore, who has previously held sales management roles at Coca-Cola’s Venturing and Emerging Brands (VEB) division, Jones Soda and other beverage brands, is factoring broader concerns about the industry into his own decision making.
“If something like [the pandemic] was to happen again, the front lines sales teams are going to be the most vulnerable,” he said. “It changes my thinking going forward from a career path if I want to be associated with sales.”