Bevscape: The Latest Beverage Brand News

Poppi Names Chris Hall as CEO

Prebiotic soda brand Poppi announced it has named former Talking Rain chief executive Chris Hall as CEO, effective the first week of May.

Hall comes to the Texas-based startup brand just weeks after concluding a 15-year run across various roles at Talking Rain, the parent company of Sparkling Ice. During his tenure, the company maintained its status as the leading brand in the flavored sparkling water category, with a market share of about 23% according to IRI.

“Poppi is an outstanding product with an authentic story, great founders and a passionate team behind it,” Hall said in a press release. “I’m truly impressed with the explosive growth the brand has had to date and am excited to help take it to the next level. I’m honored and grateful for the opportunity to lead Poppi, a beverage company committed to providing its community with a better, healthier, and happier soda experience.”

Hall assumes the chief executive position from co-founder Stephen Ellsworth, who started the company in 2016 with his wife Allison Ellsworth, who serves as Chief Brand Officer. It was not immediately clear what role Stephen Ellsworth will play in the company going forward.

“We’ve been super impressed with what Chris has accomplished during his time at Sparkling Ice and can’t wait to blend his years of expertise with our disruptive approach to brand building,” the co-founders said in the release. “We’re firm believers that the right team is a critical part of executing on our vision of building a multi generational brand, so we are excited that Chris is joining the Poppi family and bringing his passion, intensity, expertise and leadership to drive growth.”

In 2019, the brand brought on CAVU Venture Partners co-founder and partner Rohan Oza as an investor following an appearance on the reality pitch slam show Shark Tank. Since then the company has expanded its footprint to over 11,000 retailers nationwide including Target, Safeway, Kroger, Publix, Whole Foods and Sprouts.

Last year, Poppi closed a $13.5 million funding round, backed by CAVU as well as a number of celebrity investors such as NBA stars Russell Westbrook and Kevin Love, musicians the Chainsmokers, Halsey and Ellie Goulding, and actress Olivia Munn.

“As we enter our next phase of hyper growth, we’re beyond excited to welcome Chris to the Poppi family,” says Rohan Oza, Partner and Cofounder of CAVU Venture Partners and Executive Chairman of Poppi. “His leadership, ability to scale rapidly and operational excellence will be a fantastic addition to the breakthrough brand Stephen and Allison have built to date.”

A SHOC Closes $29M Series B Funding Round

Performance energy drink brand A SHOC announced in April it has closed a $29 million Series B funding round backed by existing investors and a roster of celebrity athletes.

Founded in 2019 by serial entrepreneur Lance Collins and former Monster Energy VP Scot De Lorme, California-based A SHOC produces a line of better-for-you, functional performance energy drinks. Through a distribution partnership with Keurig Dr Pepper (KDP), the brand is available in over 112,000 retail doors nationwide.

The round includes participation from existing investors, including Collins and KDP, as well as a group of individuals including professional golfers Bryson DeChambeau, Brooks Koepka and Lexi Thompson; MLB players Aaron Judge and Freddie Freeman; NASCAR Cup Champion Chase Elliott; pro skateboarder Paul Rodriguez; NFL defensive end Chase Young; and Good Morning America host Michael Strahan.

The round will help support the brand’s continued growth in the U.S. and comes ahead of additional innovation and marketing campaign launches expected this spring.

Jones Soda Sells to Canadian Portfolio Co. for $99M

Canadian wellness products portfolio company Simply Better Brands Corp. (SBBC) has reached an agreement to acquire Seattle-based craft beverage brand Jones Soda for nearly $99 million.

The two publicly traded companies entered a binding letter of intent, subject to shareholder approval, with a definitive agreement scheduled to be signed by the end of June. According to the announcement, SBBC will purchase 100% of Jones’ issued and outstanding common stock at a value of $0.75 per share based on a price per SBBC share equal to $3.65. Upon completion of the deal, SBBC will change its name to Jones Soda or “some derivation thereof” and may choose a new trading symbol.

“Our growth model remains consistent: acquire and build emerging Gen Z and Millennial brands in the wellness space through category, channel and geographic expansion,” said SBBC CEO Kathy Casey in a press release. “We see joining forces with Jones as an incredible fit due to a common wellness mission, consumer cohort, and leadership approach.”

Based in Vancouver, SBBC’s portfolio also includes plant protein bar brand TRUBAR, CBD oil and gummies maker PureKana, and cosmetics line No B.S. The Jones acquisition will give the company an additional play in the cannabis category as the soda maker debuted its Mary Jones line of THC-infused edibles, sodas and syrups in California in March.

“We are very excited to be bringing together the two companies to further accelerate top line growth and bottom line improvements,” said Jones CEO Mark Murray in the release. “For Jones, this combination will deliver diversification to our core business. We are bringing together not only strong consumer brands but also two strong management teams that we believe will deliver growth and operational synergies.”

Upon closing, Murray and Jones Soda chairman Jamie Colbourne will join the combined company’s board of directors and Jones shares will be delisted from the Canadian Securities Exchange.

The acquisition comes amid a period of sustained growth for Jones Soda. According to the company’s 2021 earnings report, net revenue increased 24% to $14.8 million for the full year and gross profit as a percentage of revenue increased 720 basis points to 29.7%.

The long term improvement reflects a revamped strategy under Murray’s leadership; the former JGC Foods president was named CEO in late 2020 and began work on a three-year rebuilding plan that aimed to right the ship after the company faced months of declining sales. During his tenure Jones has rebuilt its sales infrastructure, updated its marketing strategy to focus on Gen Z consumers, built out its cannabis business and relaunched seasonal classic products such as its infamous Turkey & Gravy soda flavor.

In April 2019, cannabis investment firm SOL Global purchased a 9.8% stake in Jones, and in July 2019 its subsidiary, CBD portfolio company HeavenlyRx Ltd., acquired a 25% stake in the company. Earlier this year, Jones completed its acquisition of Canadian reporting issuer Pinestar Gold as part of its cannabis strategy, and as part of the deal raised $11 million in concurrent financing. The company began trading on the Canadian Securities Exchange in February.

Monster, Orange Bang Ask Court to Confirm $175M in Damages Against VPX

Family-owned beverage maker Orange Bang and Monster Energy Company have asked an U.S. District Court in California to confirm an interim award of $175 million in damages and a 5% royalty on all future net sales of Bang-branded products — plus nearly $10 million in attorney’s fees and costs — after an arbitrator found that VPX was liable for breach of contract and trademark infringement by falsely claiming its products contain creatine.

The origins of the case go back over a decade and stem from a 2009 trademark infringement filed by Orange Bang against VPX; according to court documents, pursuant to the settlement agreement in that case, VPX was granted permission to use the Bang trademark on creatine-based products or other beverages that are marketed exclusively in vitamin and supplement channels.

A decade later in 2019, Orange Bang claims to have discovered that Bang had been violating the settlement agreement by marketing beverages that did not contain creatine. That September, after filing a motion to compel arbitration based on a provision in the agreement, Bang agreed to enter binding arbitration proceedings with VPX.

Over the two weeks of hearings, the arbitrator determined that creatyl-l-leucine (CLL), which is advertised by VPX as “Super Creatine” in its products, is not actually creatine and does not provide the benefits of creatine. In its request for confirmation of the interim award, attorneys for the plaintiffs noted that the arbitrator “emphasized that VPX’s own creatine expert made ‘some significant admissions, some of which can only be characterized as stunning and not helpful in advancing VPX’s position in this case,’” including by conceding that “there is no evidence to support the efficacy of CLL.”

Meanwhile, the arbitrator found that VPX “did essentially nothing in order to ensure compliance with the VPX Marketing and Sales Restrictions” requiring its non-creatine-based products to be marketed exclusively in nutrition and supplement channels.

“It is simply not possible for VPX to comply with the VPX Marketing and Sales Restrictions when it never bothered to communicate the existence of the VPX Marketing and Sales Restrictions to its own employees, to its own customers, to its own distributors (such as Pepsi) or to the all-important retailers,” the arbitrator wrote.

According to Hueston Hennigan, which represented the plaintiffs in the suit, Monster agreed to assist Orange Bang in its lawsuit against VPX and was granted partial assignment of Orange Bang’s rights under its agreement with VPX.

In June 2020, both companies initiated arbitration against VPX with the American Arbitration Association.

The arbitrator found that VPX had violated the two basic tenants of the settlement agreement: that Bang’s products contain creatine and that they are sold exclusively in the nutrition and supplement channel. In issuing the award, Orange Bang and Monster chose to recover $175 million in lost profits. In lieu of a permanent injunction from using Orange Bang’s trademarks, VPX selected the option of paying a 5% royalty fee from net sales for as long as the mark is used.

After subsequent hearings and briefings from both sides, the arbitrator included over $9.2 million in attorney’s fees and costs in the Final Award.

The interim award must be confirmed by a court within one year of the award. Orange Bang and Monster are also asking for prejudgment and postjudgment interest on the Final Award.

Keurig Dr Pepper Announces CEO Transition Plan

Beverage maker Keurig Dr Pepper (KDP) announced a management transition plan that will see CFO Ozan Dokmecioglu take over as CEO from Bob Gamgort, who is set to move into the role of Executive Chairman for two years. The change will become effective July 29, 2022.

According to his company biography, Dokmecioglu served as CFO at Keurig Green Mountain beginning in 2016, before the company’s 2018 merger with Snapple Dr Pepper. He has previously served as Vice President Finance, CFO North America at The Kellogg Company.

“I am honored to assume the role of KDP CEO at this important time for our Company and look to the future excited by the enormous potential that lies ahead,” said Dokmecioglu in a statement. “I am grateful for the ongoing partnership with Bob and the support of our Board of Directors and leadership team, as we continue to work together to drive outsized value creation.”

As CEO, Dokmecioglu will “lead the execution of the Company’s strategy and ensure continued operational excellence.” Meanwhile, Gamgort, as Executive Chairman, will “lead the Board of Directors and oversee the deployment of KDP’s significant discretionary cash flow.” The process for recruiting a new CFO is underway, the company added.

As CEO, Gamgort guided the company in its three-year period after beverage maker Dr Pepper Snapple Group and Vermont-based Keurig Green Mountain, best known for its pod-based coffee machines, announced their merger in 2018. During that time, KDP continued to expand its beverage interests outside of soda, teas and coffee through M&A — including its $525 million acquisition of water brand CORE in 2018 — and securing a long-term manufacturing and distribution agreement with Massachusetts-based Polar Beverages. According to the release, Gamgort will remain “a significant investor in KDP, maintaining at least half of his KDP shareholdings during his tenure as Executive Chairman.”

Morgan Stanley analyst Dara Mohsenian noted that investors could view the departure negatively because it was “sooner than the market expected” and “given how highly regarded he is with investors, although his agreement to stay on as Executive Chairman should help partially allay concerns.”

“I am excited to partner with Ozan, our leadership team and the KDP Board of Directors to drive continued growth and value creation. As we move into the next chapter for our modern beverage company, we’re establishing a leadership team that can guide the success of KDP well into the future,” said Gamgort in a statement.

A report from Goldman Sach Equity Research acknowledged the concerns from investors, but the analysts predict a “seamless transition” as Dokmecioglu assumes the new role. In particular, the report highlighted his close working relationship with Gamgort through “critical phases of KDP’s private/public existence,” including the take-private transaction of Keurig Green Mountain in 2016 and the company’s merger with Dr Pepper Snapple Group.

“While the announcement may come as a disappointment to some (given how well-regarded Gamgort is), we note that this transition is occurring 3-years after the combination & integration of Keurig and Dr Pepper and the successful deleveraging of the company,” the report stated. “We’re optimistic that Dokemcioglu is taking over the reigns at a point when KDP is entering its next phase of growth with a stronger foundation.”

In its most recent earnings report, KDP reported an 8.7% net sales increase for Q4 2021 and 9.2% growth to $12.6 billion for the full year.

Paul Michaels, KDP Lead Independent Director, added: “We are pleased to appoint Ozan as our next CEO after a thorough succession planning process, including the consideration of internal and external candidates. Ozan is an exceptionally strong leader with the skills, experience, values and perspective to lead KDP into the future. We are also fortunate to have Bob in a position to continue working closely with Ozan and the leadership team over the next few years.