Bevscape: The Latest Beverage Brand News

Ohza Closes $4M Round Led by CircleUp

Ready-to-drink cocktail maker Ohza announced in June the closing of a $4 million funding round led by CircleUp Growth Partners. The financing is expected to help the brand scale nationwide as it partners with distributors such as Southern Glazer’s Wine & Spirits and Breakthru Beverage group.

Launched in 2019, Ohza is a Boston-based RTD cocktail maker specializing in champagne-based drinks such as mimosas and bellinis. The brand is currently available in roughly 2,500 stores in 42 states, with its footprint deepest in the Northeast through retailers such as Whole Foods, Wegmans, Hannafords, Market Basket, Shaws, Roche Bros. and Star Market, in addition to a slew of independent accounts.

Ohza’s product portfolio includes Classic Mimosa, Cranberry Mimosa, Mango Mimosa and Classic Bellini flavors. Each 12 oz. can contains 130-140 calories, 30% juice and have a 5% ABV. The products retail for $9.99 per 4-pack.

According to founder and CEO Ryan Ayotte, the brand is now working on growing its presence across the country, with a focus on states such as California, Florida, Arizona, Washington, Indiana and Georgia.

In January, Ohza brought on former Constellation Brands regional sales director Matt Giese as EVP of sales and beer industry vet Jeff Janisse as its director of national accounts. Ayotte said their combined experience in the beverage alcohol industry has helped to open doors for Ohza — including making connections to major distributors and national retail chains.

“Between the two of them they’ve each had over 20 years experience in either wine, spirits or beer and both have different skill sets,” Ayotte said. “So I think that brings a lot of value to the table when we are entering these markets and really feel like we know what we’re doing despite being a young brand.”

In addition to CircleUp, the round included funding from Branch Venture Group, Ruttenberg Gordon Investments, Riverside Ventures and individuals such as 10K Projects founder Elliot Grainge and existing investor Austin Rosen, founder of Electric Feel Management. CircleUp Growth Partners general partner Pat Robinson has also joined Ohza’s board of directors.

Ayotte said CircleUp will be able to support Ohza through access to market data and help guide the company on hiring and budget among other strategic decisions.

“[CircleUp will] really allow us to do what we do best, and that’s to create the brand, be scrappy and do things, and not try to dictate everything going on,” Ayotte said. “Same with everyone else, too. I think they’re all really great believers in what we’re building and it’s nice to have that support when you need it.”

In addition to expanding in retail, Ayotte said Ohza will also work to expand its direct-to-consumer online business and hire “proven” ecommerce brand builders. As well, some of the financing will go towards marketing and R&D initiatives, he added.

The RTD cocktail category has emerged in recent years as consumers seek new and better-for-you alcohol innovations like hard seltzer and canned wine. With that, investors are beginning to pay more attention to the space.

Last year, 18 RTD alcoholic beverages (including seltzers, wines and cocktails) received institutional investment totalling $31 million, Thomas Sineau, manager of consumer retail at CB Insights, told BevNET. So far, 14 brands have received investments totaling $47 million to date in 2021, including Ohza, as well as companies like canned wine maker Bev ($14 million), Two Robbers Hard Seltzer ($6 million), sparkling tequila soda Onda ($5 million) and seltzer brand Mighty Swell. Sineau noted that CB Insights’ tally of investments only includes brands that publicly announced their financing or shared their data with the firm.

Sineau said that the total number of deals in this year is on track to nearly double from 2020, but noted that the size and number of investments in the category is still relatively small compared to broader food and beverage financing activity. Many of these brands are early stage and thus require smaller investments, he said. While the rise of hard seltzer brands is now beginning to point investors in the direction of RTD cocktails, most of these investments went to seltzer brands with cocktails only beginning to receive attention.

Much of the growth in RTD cocktails today is coming from ecommerce sales, Sineau said. However, Ayotte believes for Ohza to grow the brand needs to build an omnichannel strategy both online and in brick-and-mortar to succeed.

Ayotte said he has already seen some grocery buyers overhaul beer coolers to make more room for RTD cocktail displays (notably Market Basket). But while Ayotte envisions a marketplace where the category can eventually mirror craft beer — with dozens of highly differentiated brands all coexisting on shelf — he noted it is still difficult to secure cold box space in the bulk of stores.

“On one hand, because it’s such a new category and it’s sort of a cross-section of everything, it is a challenge,” Ayotte said. “It’s not as straightforward as ‘Oh, you have an IPA, every store you’re in it goes in the IPA section.’ But I think, over time, more and more people are of the conviction that canned cocktails are here to stay.”

Danone Manifesto Ventures Acquires Majority Stake in Harmless Harvest

Danone Manifesto Ventures (DMV) announced in June that it has acquired a majority stake in premium coconut products maker Harmless Harvest. Terms of the deal were not disclosed.

Harmless Harvest is the first U.S. investment to become majority-owned by DMV, the venture arm of French multinational corporation Danone, the company said in a press release. In 2017, DMV led a $30 million funding round in Harmless Harvest, participating alongside Mousse Partners and AF Ventures among others.

“It has been a privilege to be part of the Harmless Harvest success story over the past few years, as the company has continued to grow, innovate, and pioneer more responsible business practices,” said Laurent Marcel, CEO of Danone Manifesto Ventures, in a press release. “We are thrilled to further the partnership with a group of people who aim to be harmless to the planet and society and share our vision of a healthy and sustainable food system.”

Launched in 2016, DMV primarily invests in food, beverage and food tech companies focused on health and sustainability. At the time of its initial investment, Harmless Harvest was the sixth brand added to the DMV portfolio, which includes companies such as Kona Deep, Halsa, Forager Project, Laird Superfood, HowGood and AF Ventures.

Harmless Harvest was founded in 2009 by Justin Guilbert and Douglas Riboud with a line of premium organic coconut waters. In 2018, the company brought on current CEO Ben Mand and since then has expanded its product portfolio to include flavored and functional coconut waters, smoothies and coconut-based yogurt alternatives.

The expanded product portfolio has also accompanied a shift in strategy. Last year, Mand told BevNET that the company is aiming to grow its footprint within existing accounts with its plant-based yogurt cups. As of October 2020, he said the brand had a roughly 90% ACV in the natural channel and was over 50% in MULO, prompting a new focus on ecommerce. Earlier this year, the company launched an Energizing Coconut Water line, with caffeine from tea, which Mand said is positioned to drive ecommerce sales.

According to DMV, Harmless Harvest is expected to generate $100 million in sales this year. MULO and convenience channel data from market research firm IRI show that Harmless Harvest products classified as bottled fruit juice were up 59.6% to $14.8 million in the 52-week period ending June 13, while products categorized as “all other fruit juice” were down 0.8% to $19.6 million.

The acquisition comes at a time where the coconut water category is beginning to see new growth after multiple flat years, in large part driven by All Market Inc-owned Vita Coco, which earlier this month became the subject of IPO rumors. In January, Zico relaunched months after it was discontinued by The Coca-Cola Company, but now faces a “slow, methodical” rebuild as it attempts to meet its past sales heights, according to founder Mark Rampolla.

Zevia Files for IPO

In late June, sugar-free soda maker Zevia filed for an IPO to list on the New York Stock Exchange. The California-based company has applied to list under the ticker symbol ZVIA.

The company has retained Goldman Sachs & Co., Bank of America Securities and Morgan Stanley to serve as lead bookrunning managers for the proposed offering. Stephens Inc., BMO Capital Markets and Wells Fargo Securities will act as joint bookrunners. The filing does not state how many shares Zevia will offer and does not give an estimated public offering price.

Founded in 2007, Zevia produces zero calorie soft drinks naturally sweetened with stevia. In addition to sodas, the company also produces energy drinks, iced teas, cocktail mixers, kids fruit drinks and sparkling waters. In 2010, the company was purchased by Paddy Spence, who currently serves as chairman and CEO. In March, Zevia was incorporated as a Delaware public benefit corporation and is also a certified B Corp.

Speaking to BevNET, Spence said that he believes the company’s B Corp certification and focus on zero calorie beverages positions the company for the market. He noted that consumers reducing their sugar intake is a global phenomenon.

“We believe that our positioning as a B Corp that’s focused on the global challenges of sugar, plastic and affordability in an important message when combined with our products and their leadership position in the channels in which they compete,” Spence said. “And so really, it’s the ability to continue our social impact mission.”

Spence said that in addition to being zero sugar and sustainable through its focus on using recyclable aluminum packaging, Zevia has also benefited from being broadly affordable, noting that the brand is in the 37th percentile of price per ounce. The brand, he said, has “a really strong value structure” that appeals to a broad range of consumers.

According to the filing, Zevia reported $110 million in net sales in 2020, up 29% from 2019, while gross profit grew 34% to $49.6 million. In 2010, Zevia earned just $7 million in net sales, representing a 10-year compound annual growth rate of 32%.

The company reported retail dollar sales of $128 million in 2020. As of last year, Zevia was sold in 22,043 stores, up from 18,136 locations in 2018. Average retail sales per store rose to $5,789 in 2020, up from $4,204 in 2018.

Zevia is outpacing the broader zero calorie CSD category, up 25% in the 52-week period ending May 16, compared to 9% growth for the category, per SPINS data shared by the company.

In December, Zevia raised $200 million in a minority investment from Canadian firm Caisse de dépôt et placement du Québec (CDPQ), which the company planned to use to fuel a global expansion. However, Spence said that Zevia has not yet expanded outside of the U.S. and Canada.

Spence also suggested that the company was considering going public, telling BevNET at the time of the investment that CDPQ supported an IPO.

In addition to the public offering, Zevia announced that it has brought on former Red Bull North America president and CMO Amy Taylor to serve as president, beginning Monday, and as a member of the board of directors. Boston Beer Company SVP of supply chain Quincy Troupe has also been added to the board of directors.

Taylor previously spent two decades with Red Bull North America, including two years as president and CMO, but was fired from the company amid controversy over its lack of a public statement in response to the murder of George Floyd in 2020. In addition to overseeing the energy drink’s marketing, Taylor has been a longtime advocate for social justice and founded Red Bull’s Inclusion and Diversity initiative as well as serving as an executive committee member for The Trevor Project.

Troupe has served as SVP of supply chain at Boston Beer Company since 2016 and previously held leadership positions at Campbell Soup Company and Mars. Spence noted Troupe’s role in “nurturing” innovative product launches at Boston Beer, highlighting his work on the Twisted Tea and Truly Hard Seltzer brands.

“Bringing Amy and Quincy to our board, and Amy to our leadership team, is also indicative of our commitment to this business and leverages talented experts from the bigger beverage industry,” Spence said.

Zevia’s filing follows a number of recent public filings by health and wellness focused food and beverage companies, including Oatly, Flow Alkaline Spring Water, Laird Superfood and Beyond Meat. Last week, media reports suggested Vita Coco parent company All Market Inc. is currently exploring an IPO and could file within the next few months.

VYBES Branches Beyond CBD With Adaptogenic Elixir Line

California-based VYBES has released its first line extension, a sparkling Adaptogenic Elixir that does not contain CBD.

VYBES Adaptogenic Elixir is a functional sparkling beverage aimed at supporting natural anxiety relief and relaxation. The formula contains a blend of eight ingredients designed to work in harmony to “improve mood, mental clarity and the body’s immunity and vitality,” according to press materials.

Those ingredients include four aimed at the mind — ashwagandha (100mg), L-theanine (50mg), rhodiola (100mg), L-tyrosine (50mg) — and four for the body — elderberry (50mg), vitamin C (250mg), zinc (25mg) and red ginseng (25mg), according to VYBES founder and CEO Jonathan Eppers.

The new shelf-stable line has soft launched at retailers in Los Angeles, San Francisco and Denver in three flavors: Apricot Lemon, Pineapple Ginger and Watermelon Lime. The product is further distinguished from VYBES’ core CBD line through the use of a 11 oz. amber glass bottle with a twist-off crown cap and screen-printed label. The suggested retail price is $4.99 per unit (compared to $5.99 for the core VYBES line).

Having entered the beverage business with VYBES after experiencing the benefits of CBD in his personal life, Eppers sees the launch of VYBES Adaptogenic Elixir as a way to expand the company’s reach into wellness and mental health in particular.

“I’m a real big believer in functional wellness, and that’s where I see VYBES evolving as we are coming into our third year,” he said. “This is something that I always intended to do, to launch another beverage that didn’t have CBD in it, so I don’t see this as cannibalizing our CBD line but as really expanding the market of plant-derived functional wellness.”

Along with protecting the integrity of the adaptogens, the apothecary-style bottle is intentionally designed to look medicinal, Eppers said. Flavor wise, the new SKUs are designed to be “light and refreshing” with a robust level of carbonation.

As brands like Recess, beam, DEFY and Cloud Water have shown, introducing a non-CBD product is also a way to sidestep complex legal questions around its use as an ingredient: Despite consumer interest, the slow and uneven rollout of rules regulating the safe use of CBD as an ingredient in food and beverage products has hampered VYBES’ ability to maximize its growth potential, Eppers said. To that point, he added that the new Adaptogenic Elixir line will launch in some retail accounts in which the company’s CBD products were previously pulled from: specifically juice bars, hotels, gyms and coffee shops.

However, he framed the move into non-CBD drinks as an acceleration of the company’s existing goals of bringing new consumers into the brand and category, this time with more familiar ingredients and a lower price point. Following the initial rollout, Eppers said VYBES will look to take the line from independent stores to national chain grocers such as Wegmans and Sprouts over the next 12 months.

Though the drink does contain L-tyrosine, which Eppers described as boosting mental alertness and clarity, the caffeine-free line is mainly centered around the theme of mental health and anti-anxiety, and is designed for anytime use rather than a specific occasion.

“Some of these aren’t necessarily new ingredients but they are being used now for the first time in ways to mimic existing ingredients on the market that may have some side effects that are kind of counter to where society is going,” he said. “We just try to use ingredients that improve mental health, and I think that’s where adaptogens and cannabinoids have shown the most promise.”

Like many during the pandemic, VYBES leaned into e-commerce to offset losses in brick-and-mortar retail; according to Eppers, online sales, which were 3% of the total business pre-COVID, are now at 18%. In that channel, the brand offers 6-packs and delivery within 24 hours for most customers, while its monthly subscriber base is growing at around 50% each month (around 400 total since launching in December), according to Eppers.

However, he emphasized that VYBES’ primary focus is in retail. The products are currently sold in 38 states nationwide, having recently entered Colorado and Tennessee (the latter as an on-premise item with I Love Juice Bar) and launched with Atlantic Naturals in the Northeast (Maine, New Hampshire and parts of Massachusetts).

VYBES is one of a growing list of beverage brands that, after emerging as buzzed-about early pioneers of the category during its boom several years back, have made the shift into non-CBD products. Meanwhile, adaptogen-boosted relaxation and mood enhancing drinks are having something of a moment themselves: see PepsiCo’s launch of two in-house developed functional CSDs, Driftwell and Soulboost, plus new innovations from Kin Euphorics and smartwater.

According to an April trends report from research firm The Brightfield Group, 18% of U.S. consumers reported looking for stress reduction claims in products that they buy, while 14% reported looking for items that promote relaxation.