Bossa Nova: Tales From The Squeezing Edge

Most businesses that get their start in colleges these days center on a server and a URL, but not Bossa Nova.

That company was the result of a kitchen collaboration: a few years ago, graduate-level business students and scientists at the University of Southern California gathered to find “the truth” in an array of exotic fruits. That “truth” debuted in 2005 when Bossa Nova’s line of açai juices and juice blends appeared in upscale grocery stores (read: Whole Foods). Three years later, the brand has added two more blends – bringing their core-line total to five – and secured shelf space in some 12,000 stores, along with an investment from Coca-Cola.

During the company’s impressive three-year run – fueled by its high antioxidant value and exotic Brazilian sourcing – the açai berry has risen to the tip of hip. Today, Bossa Nova competes for shelf space with Zola, Frutzzo and Sambazon, just to name a few – and the açai berry has crept out of its subcategory and started to infiltrate more mainstream brands.

But just as the açai berry has crept away from the fringe, Bossa Nova has grown away from the açai berry back toward the bleeding – make that squeezing – edge. In July, the company introduced five new “superfruit” juices which include acerola, goji berry and mangosteen, but, in a sop to their supermarket audience, they mixed them with fruits familiar to the American palate.

That may appear to be a big shift on the part of the once strictly-açai company, but Bossa Nova founder Alton Johnson says the transition was all part of the plan.That plan grew out of a 1999 business trip to Brazil when Johnson, then an international salesman of luxury goods, first tried açai berries. The locals touted the fruit as a miracle food that would make you strong, and Johnson left possessed with the idea of building a business that would bring superfruits to the American public.

While that may sound like the classic archetype of a beverage startup, Bossa Nova’s story zigs where others zag. Johnson never hauled product to stores in the back of his own car, and the company never formed its roots through up-and-down-the-street-distribution. Instead, his business idea took shape when a collection of graduate students at the University of Southern California got together to study the exotic fruits Johnson brought back.“We were able to do a couple years of pretty high level research on these fruits,” Johnson said. “We were doing it on the cheap, so to speak. Student to student.”

The group aimed to formulate finished products that captured “the truth” of the fruits, Johnson said, and developed a number of product sketches before he secured funding from Greenmont Capital – or “the elders,” as Johnson calls them. Greenmont’s resume boasts involvement with Celestial Seasonings, Izze and White Wave Foods, and the capital group advised Johnson to enter the market by doing one thing, and doing it well.

So, Johnson picked açai juice, shelved his other ideas, and started talking with natural foods retailers. He conducted the business more like a produce company than a beverage company, he said, and convinced Whole Foods to give the product a try. “The product totally blew off the shelves,” Johnson said. “We went from zero stores to 5,000 stores in a matter of just some weeks.”

More success followed. The company entered into a distribution agreement with Odwalla and earned a $7.5 million investment from what would become Coke’s emerging brands group. Now the product resides in roughly 95 percent of Whole Foods on the east coast, according to Doug Taylor, a broker who covers the region for Natural Specialties. Taylor said he expects the brand to continue to surge 30 to 40 percent per year.“The appeal of the brand is the fact that it’s natural. It doesn’t compromise ingredients, [and] the high antioxidant value,” Taylor said.

Nevertheless, now that Bossa Nova is moving away from its core product, it might have to put in some effort to keep up its momentum. The founder of competing brand Sambazon, Jeremy Black, said Bossa Nova could face challenges trying to extend their success to other superfruits. Black should know: he’s been there before. His company imports açai berries in a variety of forms, including frozen smoothie packs, sorbets, and juices that sit on the same shelf as Bossa Nova, but Sambazon’s products were once even more agriculturally diverse. Black said his company once imported seven different exotic fruits, but trimmed its catalogue in the face of an unreceptive market.“We were having some success with selling them to chefs,” Black said, “(but) in the end, the public had no idea what the stuff was.”He ultimately decided Sambazon’s resources would be best used by building public awareness for açai, which has risen dramatically.

Still, things have changed a bit since then; the public has also wised up to superfuits. Consumers have read articles about goji, acerola and mangosteen, and many have tasted the fruits – or approximations of their flavors – in products ranging from Naked Juices to Snapple Antioxidant Water. So, what may have been too early for Black may be just in time for Johnson.But even with new exposure, açai is still to the superfruit lineup what David Beckham is to Major League Soccer.

Sambazon continues to sell acerola juice and frozen smoothie packs, Black said by way of example, but its sales volumes don’t compete with açai. The market is clearly ready for superfruit products – they’re already there – but their marketers might not yet reap windfall profits.? Still, Black said he could see logic in Bossa Nova’s move. With açai growing crowded, the brand can step away from the increasingly-competitive arena while maintaining the “halo of superfruits.”

“I guess it’s just a question of how well the public receives the flavor profiles and the perceived nutritional benefits of those products,” Black said.?While the new line might face an uncertain market, Bossa Nova’s core line is currently rushing into new stores. Johnson called his outlook for 2009 and the second half of 2008 “exciting,” as the company plans to roll out in another 20,000 stores. That roll-out will include what Johnson calls “top tier,” grocery stores like Stop & Shop and Wegmans. “The brand Bossa Nova isn’t available in what we could call second tier grocery stores,” Johnson said.

“The downside is we’re not at 7-Eleven, but the upside is that we’re not at 7-Eleven.” Even without a relationship with the country’s largest convenience store chain, Bossa Nova is moving into the quasi-convenience channels of airports and colleges – with a little help from Odwalla.”

In their 20-year history, they’ve never distributed another product,” Johnson said.?In exchange for the distribution boost, Bossa Nova will help Odwalla develop Bossa Nova ingredients for Odwalla applications.?“It was sort of a tit for tat exchange,” Johnson said.

That arrangement and Johnson’s bag of beverage formulas leaves a clear path forward for Bossa Nova. The company will leverage its relationships to expand distribution and make small adjustments to its business model as needed. The brand intends to add multi-serve packs to their line-up in the near future, and plans to add targeted consumer advertising to its arsenal – new territory for a company that previously relied on word-of-mouth. Additionally, Johnson said the company can introduce new lines to grocery chains whenever the market is ready.

“There’s easily another ten [product ideas] that are primed, we’re just waiting for the right time to bring them to light,” Johnson said.?