After managing to get through a challenging past 12 months, NITRO Beverage Co. is looking to hit the gas in 2021. The Asbury Park, New Jersey-based company, best known for its organic and Fair Trade nitrogen-infused cold brew coffees, has announced the closing of a $1.5 million seed investment round led by VERSO Capital, a capital injection that is set to fuel retail expansion and the launch of a new three-SKU line of oat milk lattes in Q2.
The round was originally scheduled to close in February 2020, according to CEO and co-founder Ali Mohamed, but the outbreak of the COVID-19 coronavirus put the raise temporarily on hold as NITRO looked to ride out the uncertain early days and weeks of the pandemic. Like other cold brew brands supplying kegs to office accounts, the shift to remote work forced the company to pivot its strategy towards preserving cash and activating alternative revenue streams. With no demos or in-store activations to pursue, along with a spike in e-commerce, the brand realigned its strategy to focus on driving sales and supporting its existing retail accounts.
“Instead of retreating, we just made sure we were seeing buyers and keeping the brand top of mind so we were always being reordered and always on the shelf,” he said. “We went out there, following all the guidelines, and did whatever we had to do to support retailers.”
Along with operational changes, the pandemic also required NITRO to temporarily pause its fundraising efforts, as led by co-Founder Mike D’Amico; by the time those resumed in October, travel restrictions and rising infection rates limited the company’s ability to take meetings and develop relationships in person. Instead, D’Amico and the team turned to LinkedIn, where it eventually connected with Verso Fund founding partner Julien Machot, who’s group has previously backed innovative CPG startups including Better Bagel, Impossible Foods and vegan condiment brand JUST. Despite to this day not having met the NITRO team in person, Machot liked what he heard from the brand and eventually agreed to lead the round.
“Once we had him as the lead investor, he was able to make additional intros to people in his network, and from there it was a lot of emails and Zoom pitches,” Mohamed said. Those discussions led to healthy CPG fund Veg Invest — a backer of brands like Lavva and nutpods, among others — joining the round, along with a group of angel investors that includes French soccer international Serge Aurier of Tottenham Hotspur.
In an email, Machot cited NITRO’s “remarkable endurance and resilience during COVID,” but noted that the seed investment was primarily motivated by “the founders’ character and display of humility.”
“In such an early stage,” he wrote, “I look for human qualities that are quite rare; for example, one is a sense of how important execution is: getting things done, never giving up matters most.”
With the new funding comes a new focus for the company: having officially discontinued its keg operations, NITRO is pushing to expand its presence in RTD. This month, the company is introducing its three core SKUs — Espresso in 8 oz. squat cans and Black and Coconut cold brew in 12 oz. cans — at 48 Whole Foods stores in the Mid-Atlantic region. It has also partnered with fulfillment platform Iris Nova for its e-commerce distribution.
Yet the brand’s biggest change will come in Q2 with the scheduled debut of its first extension: a three-SKU line of non-dairy oat milk lattes available in Original, Mocha flavors, plus the tea-based Matcha. Those products are still in the formulation stage, Mohamed said, but will likely come in at around half (100mg) the caffeine content as NITRO’s standard cold brews.
As a signal of its intent to grow in RTD, the company recently secured a two-year supply of 8 oz and 12 oz slim cans to meet demand for the foreseeable future. The new format will be integrated across NITRO’s product portfolio and line priced at $3.99 each.
“It’s something we didn’t want to go into until we secured funds, since we had pivoted to run lean and be more frugal with our spending after the pandemic hit,” he said. “Now that we’ve done that, we are moving full speed ahead on launching new innovation as quickly as possible.”
Despite facing headwinds from the pandemic and subsequent economic slowdown, NITRO still reported overall growth in 2020, raising hopes that 2021 will represent the company getting back on its pre-COIVD growth trajectory. The brand is currently in over 1000 stores nationwide, having partnered with DSD houses in New York (Rainforest) and Los Angeles (LA Distributing), as well as with KeHE in Texas.
“If COVID didn’t happen, we would have raised a larger round and looked to expand more,” he said. “For the sake of the company and the positioning moving forward, we will continue to be lean and run with the team we have now. We have a good strategy around that and it works.”
While some moves — such as shifting from self-production to manufacturing through a co-packer — are business decisions based on metrics and performance, other recent changes represent something more personal to Mohamed and NITRO’s founding team. As of this year, the company has committed to donate at least 1% of profits to environmental causes through charitable organization 1% For the Planet.