No Gloating Over This One

A FEW WEEKS AGO, in my newsletter, I carried a report that a small startup marketer of non-alcoholic beverages in New Jersey called Bombilla & Gourd had that week shut its doors. On the grand scale of things, it wasn’t a very big story, certainly not at a time that my readers have been looking to me more for information on the intricate maneuverings in the emerging-brands space of major companies like Coca-Cola, PepsiCo and Anheuser-Busch. But the closing wasn’t without interest either, because the company had made something of a splash despite having been started just a couple of years ago by three friends in their early 20s who not only couldn’t boast any beverage experience, but who had had little in the way of business experience or even of life experience, for that matter.

The response to the story surprised me. The young bucks – Ariel Nelson, Noah Krinick and Tom Wollman – hadn’t exactly endeared themselves to more seasoned beverage players with their youthful brashness. In-your-face trade ads, confrontational show floor encounters, the sometimes abrupt dismissal of advice from seasoned beverage people seemed to put off some people. Yet in calls and emails spanning the next several weeks I didn’t pick up the least trace of schadenfreude, no gloating, no “it served them right.” Instead, even rivals expressed surprise at the closing, and often disappointment. The consensus seemed to be that the trio had been doing interesting things and it was a shame they wouldn’t be able to stick with it. A couple of callers confided that, given a bad decision or two more, or a cold-footed investor or two more, they might have ended up in the same straits.

The threesome launched their company with a line of ready-to-drink yerba mate drinks (the brand name refers to the metal straw and gourd with which hot mate is consumed in South America). Though Guayaki already had staked out that terrain, Bombilla & Gourd offered a less-mate-intense version in a larger-size bottle – you might call it Guayaki on training wheels. At least in the early stages, the two brands could have coexisted happily, together raising awareness and building the category, with more ardent acolytes able to advance from Bombilla & Gourd to the richer, more authentic – and more expensive – Guayaki experience. What struck me about the Bombilla line was its beautifully stylized label – done by a youthful freelancer after the three founders had rejected the generic proposal of an established design firm – and branding that played off the mystique of a product that in its hot form has developed a following on college campuses and in other cutting-edge environments. In giving it the intentionally redundant descriptor “mate tea” they worked hard to demystify the ingredient. Though it was hard to say why, it just didn’t seem as though Coke or Pepsi could have come up with as fresh an idea as that.

So where did things go wrong? My hunch is the three were in just too much of a rush to really get the brand proposition right. They embarked on a hectic land grab of DSD distribution, draining resources (most of which seemed to come from friends and family, particularly the father of one of the founders). It probably didn’t help that a similarly packaged mate brand came out about the same time under the brand Herbal Mist. But their biggest missteps seemed to come from trying to get into too much, too soon: as the mate line struggled to find its footing, they were already veering off into other lines. First came a superfruit juice line vying in an already cluttered market, next an Asian tea line challenging Ito En’s Teas’ Tea in a market that had yet to prove it could support more than a single purveyor of unsweetened teas. In their core New York market, a seeming distribution upgrade from upstart Exclusive to big-kahuna Big Geyser may have been premature. The use of “tea” in the name made it contractually harder for distributors of Snapple or Honest Tea to pick it up. It was a complicated puzzle that in time might have been sorted out. But the boys seemed to be in a rush to garner visibility, go national and cash out.

In that respect, they may have met the definition of “playaz” as I expressed it in last issue’s column. Recall, I made the case that many of these newcomers to the business, in fostering a bubble mentality and burning through capital, may have hurt the business’ credibility with retailers, distributors and investors. Their likely departure from the scene would be a silver lining to the current period of stress and hardship that we’re all suffering, as I wrote then.

I still believe that. But you know something? It’s hard to be too severe on these three smart, conquer-the-world kids who were so full of ambitious ideas. In offering an easily approachable yerba mate they were anticipating a trend that would subsequently lure brands like Honest Tea. In betting that Americans are ready for unsweetened teas, maybe they weren’t as far ahead of the curve as some of us assume now that we’re seeing unsweetened entries in other categories like Dasani Essence Water. Rather than offer tepid variations on Vitaminwater, Red Bull and other proven winners, the trio was willing to venture further toward the frontiers of established categories. The guys made things interesting. I think, in the end, that’s why even the crowd whose feathers they ruffled thinks it’s a shame to see them go.

Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.