BevNET Live Winter 2023 Recap

The venue may have changed from Santa Monica to Marina Del Rey, but the 2023 edition of BevNET’s annual winter conference in Los Angeles brought the expected high levels of energy and excitement across the two day event in December.

A wide range of topics were discussed but the recurring theme among beverage business entrepreneurs, investors, experts, distributors and retailers presenting on-stage was how to succeed during a difficult environment to raise new investment and how to maintain growth with less.

In a panel discussion that kicked off the first day, a diverse group that included Buster Houston, VP of national merchandising at Albertsons, Vons and Pavilions; Mike Burgmaier, the managing director at Whipstitch Capital; Shannon Deary-Bell, president and CEO of Nor-Cal Beverage Company; and Jessica Pratt, chief sales officer at Pop & Bottle, deliberated over the difficulties emerging brands had in 2023 weathering the “semi-recessionary” climate for raising capital.

Despite the high inflationary environment, the group noted, some of the beverage industry’s recent unicorns – like Essentia and Celsius – emerged after playing the long game and building businesses that endured economic downturns.

All the panelists agreed that pricing will play a key role in determining success as 2022’s runaway inflation continues to dim. Buster Houston, VP of national merchandising at Albertsons, Vons and Pavilions, said that the retailer has identified driving cost savings relative to each category, rather than macroeconomic factors, as key to winning. Successful operators, he added, understand that price decisions should be made both by looking at individual SKUs and also from a distribution standpoint, region-by-region.

Later in day, Nick Giannuzzi, founder and managing partner of CPG focused law firm Giannuzzi Lewendon, and Dr. Andrew Abraham, founder and CEO of Orgain, took the stage to discuss the strategy around Humble Growth, the $312 million fund they co-founded this year.

With Peter Rahal, founder of RxBar, in place as managing partner and the acumen of CPG veterans Mike Repole, Gary Hirshberg and Jared Smith, Humble Growth is targeting opportunities to finance and grow the next generation of early to mid-stage brands.

Abraham highlighted that gross margin, and projections for improvements as the brand scales, remain fundamental to securing investment.

“Unfortunately, I think we need to get to a place where that path [to profitability] becomes tangible earlier,” Giannuzzi said. “We see that a little bit, especially now that investors are hesitant – they’re careful, they’re being very strategic with their money.”

As the team works to build its investment portfolio, Giannuzzi and Abraham emphasized that they are seeking to develop strong relationships with the leaders of those businesses so that they can trust one another’s advice, understand both side’s decision making process, and avoid invoking things like blocking rights down the line.

Closing out Day One, Hella Cocktail Co. co-founder Jomaree Pinkard talked about his work as CEO and managing director of Pronghorn (he left the company later in December) which has invested about $200 million to empower growth among Black spirits brand founders. Pinkard explained how the investment group is building a template for category disruption among underrepresented groups.

For the first time, BevNET Live also built out a space for emerging brands to talk to and pitch their drinks to retailers throughout both days of the event. The Retailer One-On-One Meetings allowed beverage entrepreneurs to talk to executives, buyers and distributors from the Albertsons Company as well as the L.A. Vibrations team and DSD distributor HiTouch Libations.

Day Two got rolling with a presentation from SPINS Markets Insights Director Scott Dicker who explained what the consumer data analytics company has seen over the last year with disruption and how that is building momentum in certain arenas of the beverage industry.

“We’ve been saying this for years that the life cycle of innovation and brands has been speeding up, and it’s really at warp speed now,” Dicker said. “So, brands enter the market and make a big splash, and on the flip side it’s easier to be forgotten if you’re not executing right away.”

As far as more specific, product-level trends go, Dicker pointed to an embrace of “global” flavors helping to drive trial and discovery as American consumers look for more Asian, Mexican and other international cuisines in their food and drinks.

Honest Tea co-founder Seth Goldman, named BevNET’s Person of the Year for 2022 for his work bringing Just Ice Tea to the market, sat down with Editor-in-Chief Jeff Klineman to discuss the lessons he has learned launching a beverage brand for a second time. Although the industry has changed since Goldman launched Honest Tea over 20 years ago, Just Tea has been able to build an early following and is already leaning into the new age of beverage marketing to capitalize on its momentum.

“It’s impressive to see what social media can create,” he said, answering a question about influencer marketing in CPG. “Yet, just as quickly as it can create, it can undo it. What [Just Tea] is about is authenticity. That never goes out of style.”

For those seeking exit opportunities, a panel composed of Caroline Levy, founder of consumer advisory firm CLAS; GroundForce Capital co-founder and managing partner Mark Rampolla; and Nutter partner Jeremy Halpern had some advice for brands looking to stand out as attractive prospects for a sale.

Rampolla suggested that the strategic beverage buyers today need to see at least $250 million in revenue and existing profitability in order to make an acquisition. He said that what has long been missing between the larger players and small startups is a serious “middle market;” yet, that market may be beginning to emerge as multi-brand management groups can successfully house numerous brands in the $50 million to $250 million range. Rampolla pointed to Suja’s acquisition of Vive and how Tropicana now operates multiple brands as examples of how these middle market businesses could serve as buyers for rising startups.

Closing out the event, Los Angeles-based hemp-derived THC company Calexeco took home the New Beverage Showdown trophy in a tight contest that included five other finalists including another hemp-infused option Magic Cactus, “clean caffeine” energy drink Plant Press, Spade sparkling premium soda, Erva Brew Co. yerba mate and Fang recovery tonic.