When David Klavsons took over as CEO of Calypso in 2017, he understood the challenge of reviving the lemonade company after seeing the business decline 6% in his first year. Before tackling some of the larger issues — such as addressing consumers’ shift away from high-sugar beverages and building a sales team — his first task was to stabilize the brand and put it back on track towards growth.
Yet over the last three years, Calypso has more than stabilized: According to multi-outlet (including c-store) retail sales data for 52 weeks through June 14 from IRI, Calypso was the third best-selling lemonade behind Minute Maid and Lipton Brisk. The brand, now sold in over 30,000 retail outlets, brought in around $48 million in sales over the period, up 12.8%.
Even with the COVID-19 pandemic still roiling, Calypso is coasting along behind strong tailwinds; as of mid-July, the company is up by 50% for this year, according to Klavsons.
“One of the big questions was is this just a COVID rebound?,” he said. “Every single distributor that I’ve talked to has said no — this brand is taking off.”
Calypso’s potential as a national brand seemed unlikely at the beginning. Created in 1985 as single SKU by Milwaukee-based co-packer King Juice, the lemonade built a following over the years and was eventually branded as Calypso in 2000, after which it expanded with more flavors, plus limeade and tea-lemonade blends, all in 20 oz. glass bottles. Private equity firm Mason Wells acquired the brand in 2017, appointing Klavsons to run the company.
With strong product fundamentals already in place, Calypso only needed small tweaks to its brand and packaging, according to Klavsons. On shelf, the visual identity on the label was refreshed and the bottle was slimmed down to 16 oz.; online, Klavsons said the brand “spent a ton” on digital marketing and social media advertising and has seen healthy returns, adding almost 66,000 followers on Instagram.
With 19 SKUs total between its lemonades, limeades and tea-lemonades, flavor variety wasn’t an issue; Rather, the most significant change came in formulation. This spring saw the launch of Calypso’s reduced sugar Light line, available in four flavors: Original Lemonade, Ocean Blue Lemonade, Strawberry Lemonade and Southern Peach Lemonade. The segment has seen flashes of innovation over recent years, both from startup brands like Poppilu, Moti and Shade Tree Lemonade to major corporations like Coca-Cola with Simply Light and Hubert’s. But based on internal company research and studies, Klavsons believes the demand remains underserved, citing low/no sugar products as representing just around 10% of the total lemonade category.
The challenge of formulation could be one reason why the segment isn’t bigger. Klavsons said the brand worked with King Juice owner and original Calypso brand founder Tim Kezman and flavor house Beverage Flavors International to create the drink, which contains lemon juice concentrate and uses sucralose as a sweetener.
The line launched in April at Kroger, where it has received placement in pallets on the floor at select stores, a move “unheard of for a brand at this stage,” Klavsons said. While ticking the box of adding incremental sales, Klavsons said Light has also helped introduce new consumers to the brand, which is sold in individual bottles for $1.79 and in 4-packs for $5.99.
Despite releasing a new product in the midst of a pandemic, David said the brand fared well through the initial phase of the outbreak by forecasting ahead. While the company does not source any ingredients directly from China, it recognized that parts of its supply chain did rely on inputs from the country; seeking to avoid potential logjams, the brand worked with its suppliers in February to secure three months worth of inventory. At retail, he said on-shelf promotions and digital coupon activity remained largely intact in recent months, with strong sales at independent urban and suburban grocery stores helping offset dips in convenience and on-premise retail.
Operationally, the company has added a second shift to its production line and has capacity for a third, while it is also exploring working with a co-packer. Behind the scenes, Calypso has gone from a two-man operation to a professional team. The last several years have seen the addition of Matt Andersen as chief innovation and brand officer, Bridget McCarthy Lasda as chief customer officer, John Jares as chief operating officer and Rick Weina as chief financial officer, among others.
As it scales, the brand is likely to continue walking the line between consistency and innovation; that means more Light flavors and a move into bigger multi-pack sizes, but also resisting the temptation to move outside of the glass bottle format.
“We’re making as much as we can right now,” he said. “We know we have some work to do on our supply chain, all of it very workable, but a lot of work to do. We expect to build inventory next year, which we’ve never had to do — we’ve always been made to order.”