This marks our second annual A-to-Z of Power Listing for the beverage industry, and while we’re excite to make this a regular occurrence, we hate to repeat ourselves. So we haven’t. Not a single letter features a repeat of our original list, and that’s because when it comes to the beverage industry, power is diffuse. Distributors may have more ability to make or break an entrepreneurial brand than they may have over a giant soda company – until that soda company wants to invest in and incubate that entrepreneurial brand. Investors can’t control the winds affecting unique supply chains, while brands can kill a supplier by switching sweeteners or key ingredients. Keeping that in mind, the one thing we’ve repeated from last year is a willingness to consider power from many different angles. After all, while money is important, this industry is also all about delivering taste and satisfaction. That keeps it fresh. After all, if it was just the wealthiest who made all of the decisions, we might just be looking at President Trump. So in keeping with our alphabetical ordination, here’s the A-to-Z’s Beta List. We look forward to the discussions it creates.
A is for “Austin Mafia“
A collection of good ol’ miscreants that wreak havoc on shelves with perfectly honed products like Sweet Leaf tea and now High Brew Coffee. Clayton Christopher, David Smith, Scott Jensen, Brian Goldberg, Perry Abbenante, are drawn and determined to keep Austin on the map as a place where new CPG brands can take root and grow. Austin is a small town with big resources in cash and technology, and the team that grew Sweet Leaf is always on the lookout for a way to pump up its next venture. Add in the spirit of SKU (formerly Incubation Station) and a Brooklyn-sized chip on their shoulder, and this is a new kind of perfect storm of creative capitalization: The Texas Whirlwind.
B is for Bacteria
Live or dead, beneficial or deadly, the presence of these critters is compelling the growth of all manner of beverage categories. Whether it’s killing them through pasteurization – or not killing them for fermented drinks – they’re the key to determining whether a product will be able to get on the market, or stay there. Bacterial growth in a beverage can quickly cause a recall – unless it’s the right kind of live strain, in which case it’s a probiotic. Quixotic, no doubt – but such is the life of the one-celled.
C is for Jeff Church
One of the hottest questions in the beverage business deals with the ultimate fate of next-generation juice category leader SUJA, and the buck stops with co-founder and CEO Jeff Church. Having proven a savvy fundraiser for the infrastructure that supports the pedal-to-the-metal innovation and marketing operation, the veteran dealmaker is going to have to decide when to pull the trigger on an exit. The brand’s Essentials line – the true revenue escalator, as it’s aimed at conventional grocery – is growing exponentially, but it’s still tiny compared to Odwalla, Naked, or (see below) Bolthouse. Does he sell before the strategics make their own move into the category, or does he think there’s enough ammunition for a few more years of growth and a higher sales number? There are other influential members of the SUJA team, of course – investors like ACG and Boulder Brands will have their say – but so far under Church’s leadership there haven’t been many missteps at all, and as long as SUJA’s the Belle of the Ball, he’ll be the one calling the tune.
D is for Jeff Dunn of Bolthouse Farms
Once President of Coca-Cola North America, Dunn is seven years into a run at Bolthouse that has evolved the leadership of an important division of parent company Campbell’s. From his new platform, leading the company’s fresh division, Dunn will be able to leverage Bolthouse’s reputation and quality into new opportunities for Campbell’s. There’s synergy here: Bolthouse is already a huge name brand in supermarkets, as successful a platform as Kashi or Annie’s, and it’s moving to fill adjacent channels like convenience, where Campbell’s has a foothold already. It will be a big step to raise the venerable soup-maker’s profile among new generations, but the ever-energetic Dunn is driven with the conviction that he is making the world healthier on a broad basis. The canvas is there, and he’s raring to fill it up.
E is for Emerging Strategic Entities
– like White Wave, Hain, Boulder Brands Investment Group (BIG), General Mills’ 301 Inc., and the other companies that are forming a new wave of corporate venture capital and acquisition for entrepreneurial brands, creating a shift in the power of traditional beverage strategics. White Wave’s Earthbound Farms has invested in Daily Greens, while Hain has several beverage investments, shaking up the progress of categories like kombucha, tea, and juice. Meanwhile, Boulder Brands’ willingness to put its faith in products like Suja and, most recently, Temple Turmeric, validates bleeding-edge functional plays and combines it with the execution skill of its own team as well as close ally Presence Marketing. General Mills is using 301 Inc. like Coke’s VEB group, as a way to buy into entrepreneurial products before they scale up, but in the meantime it has taken its previous investment group, Small Planet Foods, and spread its acquisitions around, creating a new organizing principle among its verticals that is sure to attract growing brands. Interest from large-, mid- and small-cap strategics will be focused on entrepreneurs until they are able to recast themselves as armed for future consumer trends.
F is for First Beverage
– always connected to cash and capabilities under founder Bill Anderson and key executives Tom First and J.B. Shireman, this specialty firm came into its own in a big way last year, both investing in new brands and helping orchestrate the sale of or investment in several others. After a slow period where much of its energy seemed to be devoted to building a consulting practice, the pace finally picked up for this high-powered collective in late 2013. Since then, the firm has been first among dealmakers, with its investment banking operation orchestrating the sales of 10 Barrel Brewing to Anheuser Busch, Xyience to Big Red, and craft operation Boulevard to Duvel Moortgat, and orchestrating capital raises for Argo Tea, and Southern Tier. Meanwhile, after raising a fund – with the Coca-Cola Co. as one of its investors – the company started making a new round of bets on brands, letting First and recent hire Jason Camillos offer hands-on help. With recent investments in growing brands Essentia, Project Juice, Health Ade, and software firm Repsly joining Purity Organic in its stable of properties, First Beverage is red hot.
G is for Gang Funding
– also known as Hat Passing, it’s become a key term in the fundraising process for hot brands. No, we don’t mean CircleUp, although that kind of online crowdfunding certainly invites the kind of $1-$3 million rounds we’re seeing these days. It’s more like an “in-the-know” echo chamber of affiliated funds who band together to help companies raise their first significant round of growth capital. Examples of groups who enjoy this include Finn Capital Partners, the ArcView Group,TheSimplePitch.com, Clover Capital, New Ground, Midori Ventures and many others – part family office, part private equity, part experienced operator, they rarely invest on their own, and they bring different skills to the companies they back.
H is for Judy Hong and Bonnie Herzog
This powerful pair of beverage industry analysts (Hong is a Managing Director at Goldman Sachs, Herzog at Wells Fargo) are key voices when it comes to the fates of both the beverage industry’s titans like Coke, Pepsi, DPSG, and Monster, but also the key convenience retailing channels these brands need to grow. Herzog pays special attention to emerging brands: she’s done interviews with Kevin Klock of Talking Rain, Paddy Spence of Zevia, and many more, and is willing to dive deep into private companies to try to understand what moves the big brands will make. Hong, for her part, gets extra bonus points because Goldman Sachs is also the investment banker for massive energy drinks brand Rockstar, one of the biggest independent prizes available.
I is for Incubators
Drink Tank, SKU, Brand Project, the new Chobani Food Incubator, Accel Foods are just a few examples of these increasingly important stops for brands that are trying to establish themselves and gain experience. While there hasn’t yet been a breakout success from these investor/mentor groups, it’s only a matter of time before someone hits it big. Meanwhile, they continue to attract a stream of small companies looking to learn the ropes.
J is for Jerry Brown
California’s once-and-future Governor Moonbeam. As water shortages continue, Brown’s recent order requiring a 25 percent reduction in water use is the tip of the evaporating iceberg. He left farmers untouched, despite the fact that they use 80 percent of the state’s water. Lots of insurgent and established brands will feel close-in ripples from Brown’s ongoing thoughts on water usage. Almond milk has unfairly been singled out by some as a cause celebre of the greener-than-thou movement, but in both the public eye and in the public process, nearly all California crops are under scrutiny, from artichokes and peaches to rice and other grains. Avocados have been growing as an ingredient in HPP juices: guess where 88 percent of the domestic production lies? Other staples like milk, orange juice, carrot juice and wine are heavily reliant on California’s production – and that production is directly related not just to rain, but farmers’ use of water as a resource that can be sold like pollution credits. Change the water usage habits of California farmers, and the entire agricultural makeup of the U.S. shifts.
K is for Mike Kirban
Back in the saddle again. Vita Coco’s co-founder and CEO, Kirban dipped back down into the president’s seat in the U.S. after spending the past couple of years building out the brand’s Asia operations and securing a $165 million investment from China’s leading Red Bull distributor. An entrepreneur who has started his own software company as well as Vita Coco, Kirban has proven restless and willing to take the tough steps by parting ways with veteran personnel. Now that he’s spreading the wealth around to new investments like WTRMLN WTR, along with rye whiskey play Whistle Pig, it’ll be interesting to see how much Kirban decides to play kingmaker.
L is for Labeling Lawyers
like Justin Prochnow, Rakesh Amin, and Steven Shapiro, who are constantly on the circuit as leading voices for brands to steer clear of regulatory authorities. At a time when class-action suits are becoming ever-more-common, having knowledge of controversial trade language and safe harbors for functional claims is the rule, and a careful, ongoing process of label review can save millions.
M is for Musicians
– from dance queens like Madonna and Rihanna (Vita Coco) to psychedelic warriors like Phish’s Jon Fishman (Runa) and the Grateful Dead’s Bob Weir (DripDrop); from hip hop celebs like Snoop Dogg (Arriba!), Juicy J. (CORE), or 50 Cent (Vitaminwater, SK) all the way to transcendent supernovas with musical ties like P. Diddy and Mark Wahlberg (both Aquahydrate), fast-growing beverage companies can’t stay away from the people who write the songs. Here’s a theory: songs are the only products that are “used” more frequently than beverages on a daily or weekly repeat basis. Here’s another theory: some musicians are rich and popular.
N is for North Carolina
– a state that is making itself the East Coast power center for the craft brewing movement. With Asheville and environs soaking up production breweries for Oscar Blues, New Belgium, Sierra Nevada and others, and locals like Wicked Weed attracting attention as independent breweries in their own right, the state is both economically and geographically positioned to foster the growth of national craft brands
O is for Rohan Oza
It’s surprising for someone who came out of marketing, to be sure, but Oza has been a relatively quiet investor behind Vita Coco and Bai, as well as equally trendy food brands Sir Kensington’s, Chef’s Cut and Popchips. Now championing WTRMLN WTR –where former team member Jeff Rubenstein is running marketing, as he had at Vita Coco – Oza’s influence can be seen in the staffing of many of the companies where he has invested. One of the best in the business at figuring out which celebrity can help develop a brand, Oza’s sense of positioning and trend awareness is without peer.
P is for the Pressure Peddlers
Avure and Hyperbaric, who are ensuring that there’s nowhere in the country a consumer can go without being chased by a $9 juice with a 30-day shelf life. Their HPP machines come with a low enough price ceiling that both individual manufacturers and co-packers are comfortable entering their mildly warmed waters. They’ve given rise to dozens of local and regional juice brands, but also churned confusion around the true definition of fresh.
Q is for Questionable Strategies
– the kinds of wholesale “we went in the wrong direction” mistakes that can crush a brand. We aren’t going to call anyone out, but these mistakes give off a powerful stink indeed.
R is for Christopher Reyes and Jude Reyes, the founders of Reyes Holdings
– the owners of Reyes Beverage Group. Reyes would have been on this list even before its recent deal to take over Coke’s Chicago DSD operation. With a catalog that matches nearly every growing craft beer brand and a group of distributors covering half the country, the Reyes network combines the size of an old-school trucking firm with an entirely on-trend breadth of offerings, making them the most important independent beer distributor in the country.
S is for Cyrus Schwartz, the CEO of Dora’s.
Schwartz serves as an interesting counterpoint to the Reyes Group, as he’s built his empire on the back of the dairy industry. No less influential that the Reyes brothers, although perhaps with more limited reach, the Long Island native has turned his family’s milk business into one of the key gatekeepers in Manhattan for beverage brands that need to maintain a refrigerated supply chain from manufacturer to consumer. That used to be a small part of the industry, but now it’s everyone from Suja and Blueprint to Chameleon Cold Brew, Sambazon and GT’s Kombucha. With regular stops at almost every key account in Manhattan, Schwartz has access to manufacturing facilities on his dairy farms and an ironclad contract that offers great exposure for those willing to meet the requirements. With that kind of ability to execute and influence, you can call Schwartz the King of Cold.
T is for Tell No One
It appears on the back of the card of “Beverage Whisperer” Ken Sadowsky, but it’s the worst-kept secret in the business: a visit with Sadowsky has become a rite of passage for just about every new liquid on the market. A current Vita Coco and former Glaceau board member, Sadowsky also has the ear of some of the most powerful wholesalers in the Northeast as the executive director of NIDA, which reviews most up-and-coming brands for potential distribution. As the beverage advisor for family fund Verlinvest – and a pretty active investor in his own right – Sadowsky has managed to create relationships that allow him to influence companies both through funding, board seats, team building, and occasionally stern no-nonsense advice. A former distributor, he’ll hit the streets with companies he’s advising to look for possible influencer accounts, and even a knee injury couldn’t keep him from hitting every booth at the National Association of Convenience Stores. Tell No One, because chances are Sadowsky, who knows practically everyone, has probably heard it already.
U is for UNFI
Brands love UNFI when they get started, because they’ve cracked Whole Foods and know that this broadline distributor is the easiest way to get coverage. Then they get hit with chargebacks, tabletop show fees, and the other aggravations that come with a company that offers volume for compressed margins, and they start to hate it. But for those companies that can then bust into mainstream accounts, the love affair renews – because UNFI offers a steady, reliable way to keep a strong hand in original channels while you continue your day-to-day battles with the independent DSD houses.
V is for VINEGAR
– and Vinegar-y tasting fermented drinks like Kombucha, Switchel and more. The tang and pucker isn’t for salad dressing anymore, and it’s making millionaires out of the makers of everything from Pok Pok Drinking Vinegar to Kevita to Synergy Kombucha. With bar menus and cold boxes making room for drinkable ferments, the taste for the funk is also reflected in sour beers.
W is for Chris White
– the founder, president, and CEO of White Labs. White is the pioneering scientist who supplies the various yeast strains that have powered the growth of the funky side of the craft beer movement. With five offices in key spots throughout the U.S. and another facility in Copenhagen, White Labs is constantly breeding and growing new strains of this key ingredient for craft beer.
– is an opportunity to point out the recent success of 2X Consumer Partners, which is in the midst of several exits and has a new fund on the way. Founder Andy Whitman is making a bet on flaxseed as the next big alt-dairy play by investing in Good Karma Foods. Whitman has proven a master at finding the next trending component of established categories, with Tasty Bite in ethnic foods and Beanitos in snacks. If he thinks there’s running room behind the tiny flaxseed, his record says it’s there.
Y is for Larry Young
Despite the prominence VEB and Naked Emerging Brands, who is the only traditional beverage strategic to invest in an emerging brand the past two years? That would be DPSG, whose CEO, Larry Young, finally proved that the vaunted White system is going to be more than a trucking company for its affiliated brands by investing in fast-ramping BAI.
Z is for ZYMERGY
– the official publication of the Brewers Association, which gives us a chance to talk about this power center in our final letter. So let’s talk about the BA (especially since, between Papazian, Gatza, and Herz, its staff features a surprising number of names that feature the letter “Z.”) Is it becoming more controversial? Sure – it keeps moving definitional goal posts. Ineffectual? At times. But the Brewers Association, like the Lorax, is what speaks for the craft brewers, and with a couple thousand of them floating around, they comprise quite a group. Having the BA as the loudest voice at the table gives this ever-growing constituency someone to make sure their interests are represented. Or at least most of them, most of the time.