Late last year, sparkling beverage maker Sound was facing an existential crisis. Social media had gone quiet and consumers seeking out its canned botanical and tea drinks online and in stores were met with months-long out of stocks. From an outsider’s perspective, one could be forgiven for believing that the brand had played its last song.
But this month Sound walked back on stage – not just for an encore, but for a whole second set – under the ownership of CPG private equity firm Next In Natural (NeNa). Now, the drinks are back on sale and the company is moving full steam ahead under the leadership of original founder Tommy Kelly and its new chairman of the board, NeNa CEO Jeff Lichtenstein.
Founded in 2015 by Kelly and his business partner Salim Najjar, Sound originally produced bottled carbonated teas, before pivoting in 2021 to its current portfolio of canned sparkling waters infused with tea and botanicals.
Speaking to BevNET, Kelly said the brand had been working towards a goal of profitability last year, but couldn’t cross that finish line before it ran out of inventory and working capital, leaving the business in temporary limbo as it wound down marketing and sales while meeting with potential investors and acquirers to help finance a new production run and work towards profitability.
Throwing in the towel was increasingly looking like a real possibility for the company, but despite run rate woes, Kelly said the brand had been performing well in retail and the prior rebranding efforts had resonated with a deeply loyal consumer base.
“We knew that we needed to give the brand the opportunity to see the other side of it,” he said.
Sound found the other side in NeNa, a New York-based, boutique PE firm and brand studio specializing in better-for-you and organic CPG products. Kelly had known Lichtenstein from working with him on his previous venture, distribution business Gourmet Guru, which carried Sound in the first years after its launch. The teams formalized their strategic partnership earlier this year.
“The thing that was so key to Salim and I is just how much we trust Jeff’s moral compass,” Kelly said. “As a brand founder, you want to make sure that your brand, however much you’re involved in it, lands in the hands of someone who you trust, who has the same values as you – from a product perspective and a personal perspective.”
According to Lichtenstein, Sound met NeNa’s standards for investment – in addition to producing organic, on-trend products, the firm claims it has a roadmap to get the brand profitable within its first 100 days after the deal through a restructured strategy and use of shared resources that can rapidly get the business back online. Lichtenstein said the companies are now “reverse engineering” Sound’s strategy, with the support of NeNa ideally positioning the brand to make good on its promise.
“When we did our analysis, the love was there, in kind of a really visceral way,” Lichtenstein said. “The biggest customers were like ‘This is definitely a brand that should not just survive, but thrive.’ And it very much should be a two plus two equals seven equation with the two organizations together.”
Kelly will continue to lead Sound as CEO. Najjar, however, has stepped away from day-to-day operations for personal reasons, but he remains with the business as an advisor and board member.
Although Kelly is technically Sound’s only full-time employee, Lichtenstein said that NeNa’s team is working on the brand daily, including sales and marketing, branding and design, R&D and operations.
“You’ve got to be pretty lean and mean to get to profitability,” Lichtenstein said. “Sound has our full 35 person team, it just comes via this shared service model, so it’s efficient and we can get the company profitable.”
In a follow up message, Lichtenstein said profitability would require “a mosaic of activities and actions from top to bottom line, not one magic button.”
“It comes down to their objective analysis of our learnings after years in market and leaning into only the most impactful and efficient customers, channels, messaging and operational practices,” Kelly added.
For now, Kelly said Sound has come back with its previous botanical-infused sparkling water line at $2.29 per 12 oz. can and is focusing on supporting its most profitable customers, relaunching brick-and-mortar sales in New York and Southern California, along with online sales via direct-to-consumer, Amazon and Thrive Market. As well, the company is aiming to reopen its foodservice business, which Kelly said had been a “huge channel” for the brand in the past.
NeNa is also helping to develop an innovation pipeline for Sound. While Kelly and Lichtenstein weren’t ready to share details on potential products, they said they don’t intend to stray far from Sound’s platform of healthy beverages when it comes to future launches.
“It’s about always keeping your eye on what the future is going to look like,” Lichtenstein said.