Bevscape: The Latest Beverage Brand News

Sanzo Lands $10M Investment from CircleUp; Disney-Pixar LTO Arrives in March

For San Francisco-based CircleUp, the investment marks its first within the sparkling water space. The company uses a proprietary AI-driven platform, dubbed Helio, to identify funding targets within the healthy CPG market; its past investments include nutpods, Super Coffee, Koia, Liquid I.V. and Ohza, among others. Sanzo previously closed a $1.3 million funding round in August 2020.

By focusing on unique flavors — Lychee, Calamansi, Mango and, added in February, Yuzu Ginger — while also delivering the zero-calorie, better-for-you credentials consumers expect from the sparkling water category, Sanzo has gained placement at over 2,000 locations nationwide. Despite thin margins and a threadbare team, founder and CEO Sandro Roco said the company has been able to drive growth efficiently through grit and hustle, emphasizing on-the-ground work with DSD partners — including LA Distribution (SoCal), Rainforest (New York City) and Good Stuff (NorCal) — to help cover gaps in inventory and staffing. That’s been supplemented by efforts to drive velocities online via D2C and digital retailers like Amazon, Weee! and Thrive Market. In direct-to-consumer, repeat purchase rates are over 30%, according to the company.

Backed by CircleUp’s strong background in analytics, Sanzo is set to continue its current approach of using data to guide targeted expansion into new markets and channels, while also turning up the pace on innovation. That means partnering with DSD houses in regions with large Asian-American communities, while simultaneously driving the product through select retailers including Whole Foods’ Northeast and Mid-Atlantic regions to reach sparkling water consumers seeking differentiated premium products.

The brand enjoyed a big boost in awareness when it landed a deal with Marvel Studios to feature characters from the film Shang Chi and the Legend of the Ten Rings on a set of limited edition cans in September 2021. The movie was one of the biggest box office hits of last year and a cultural touchstone for many in the Asian American community, but the brand’s performance in Whole Foods suggests Roco’s prediction of a wider audience is coming to fruition.

“Our velocities at Whole Foods are comparable to other really hot CSDs in the prebiotic space, in the probiotic space and the like,” he said. “The folks picking this up are not just Asian Americans — were actually crossing over or we call it bridging cultures.”

That focus on bridging cultures has deepened Sanzo’s connections within the entertainment industry: Shang Chi star Simu Liu joined the brand as an investor, and it also partnered with Disney to promote the release of the animated film Raya and the Last Dragon in March 2021. Next up is a LTO Lychee can tied to Disney and Pixar’s Turning Red, the directorial debut for Chinese-Canadian animator Domee Chi, set for release on streaming service Disney+ in March. Unlike with Shang Chi, this release will be available both in D2C and in some select retail partners. New investor Gold House Partners, an AAPI advocacy group with deep ties to artists and athletes, also provides a path towards further collaboration and cross-promotion.

“Our ability to partner with these creatives I think helps educate maybe the buyers, retailers, distribution partners that this is what’s happening in American culture and hopefully, as a beverage, we’re able to operate as that bridge,” Roco said.

As Sanzo has grown, Roco has embraced the opportunity to become a role model for young AAPI entrepreneurs and an example of how business and culture can be authentically and harmoniously integrated. Having seeded the product in QSR and food service accounts across New York City, Roco said that sense of responsibility heightened after he watched many of those urban businesses suffer in the wake of COVID-19. Meanwhile, the opportunity to collaborate with Disney on projects that highlight positive role models for the AAPI community — as well as offering opportunities for Asian-American talent in front of and behind the camera — is indicative of a broader interest that the company is hoping to tap into.

“Why I’m kind of vocal about this is that I think in the beginning, we kind of faced that cold start problem where, whether it’s investors, consumers, or buyers, I think people were still not really sure about it,” he said. “I think our goal is kind of showing our community and also the broader American populace that this is kind of for real. It’s here to stay, and it is worth investing in — not just dollars and cents but also time and attention.”

KKR to Acquire Majority Stake in Refresco

New York-based investment firm KKR announced in February it has entered an agreement to acquire a majority stake in Refresco Group B.V., one of the largest independent beverage contract manufacturers worldwide. Terms of the deal were not disclosed.

According to the companies, the majority stake will be acquired from Refresco’s existing stakeholders, French investment firm PAI Partners and Canadian group British Columbia Investment Management Corporation (BCI), but they will retain “significant” minority positions in the company.

The deal values the bottler at around $7.9 billion (or 7 billion euros), according to Bloomberg, and “marks a rare example” of KKR using its global infrastructure fund to invest in a consumer company. The report noted that Swiss investment firm Jacobs Holding AG had been considered a frontrunner to acquire the majority stake in Refresco, but was ultimately outbid by KKR in a “hotly-contested auction that ended early Tuesday.”

“Refresco has established itself as an industry leader supporting the global beverage industry with a blue-chip global customer base, an experienced and highly regarded management team, and an impressive network of assets that provides compelling value to customers,” said KKR partner James Cunningham in a press release. “The Company also has a strong commitment to sustainability, which is an important differentiator for its customers. We look forward to leveraging our operational expertise from across the KKR platform to support the Company’s continued growth and further advance the sustainability of its value chain.”

Founded in 1999, Netherlands-based Refresco provides bottling and beverage solutions for retailers and brands across North America and Europe. The company currently operates over 70 manufacturing sites across the two continents, claims over 10,000 employees and also offers material planning, procurement, warehousing, fulfillment and distribution services.

The acquisition comes as Refresco seeks to expand its global footprint and services, according to the release, with plans to focus on innovation and M&A opportunities.

“We are very pleased to welcome KKR, one of the world’s most prominent investment firms, as our new majority owner,” said Refresco CEO Hans Roelofs in the release. “To support further growth, we have explored the various alternatives available to us and believe that the investment by KKR is an incredibly positive development for the Company.”

“Like our existing shareholders, KKR is supportive of our strategy and will bring operational expertise, access to capital and a well-established network to support us in our growth, innovation and M&A strategy. Our focus of growing alongside our customers, combined with expanding into new categories and geographies, remains unchanged. I look forward to this new chapter, and for all our employees and customers to capitalize on the opportunities ahead of us.”

PAI Partners and BCI initially acquired Refresco through a consortium in 2017, which valued the bottler at about 3.3 billion euros. At the time, the firms said they supported Refresco’s buy-and-build strategy to grow the company. Most recently, Refresco purchased three U.S. production facilities from The Coca-Cola Company in Texas, Michigan and Missouri.

“We are proud to have been instrumental in Refresco’s growth since we initiated our investment with BCI in 2018,” said PAI managing partner Frédéric Stévenin in a statement. “We are even more excited about the prospect of continuing to stay a part of Refresco’s strong growth trajectory alongside KKR. We are convinced of Refresco’s unique value-add capabilities, its growth initiatives and a proven M&A track record, and we look forward to the next phase of this journey.”

Infinite Drinks and Beyond: Cana Develops ‘Beverage Printer’

It’s been a longstanding trope of science fiction media that future technology will allow people to produce any food or drink they want on demand. Although it might be a while before we dine Star Trek style, California-based startup Cana Technology believes an era when we can “print” any beverage we want, anytime, at home, is just about here.

Fueled by $30 million in capital funding from San Francisco holding company The Production Board, Cana has created a home appliance it is touting as “the world’s first molecular beverage printer.” The device is designed to produce a near-infinite number of beverages which are instantly mixed with water through the use of replaceable “printer cartridges” containing hundreds of unique flavor compounds.

The machine, which will unveil its final design in the coming weeks, is built to fit comfortably in any home kitchen and uses a touchscreen to allow consumers to customize their beverage of choice.

Rather than concentrates or single-use pods, Cana uses molecular technology to identify and mix over 500 compounds that can, the company claims, create or approximate nearly any beverage in the world. Since about 95% of any beverage is water, Mahar said, Cana has focused on mapping out the remaining 5% of every category of drink and developing its machine to produce selections on command.

This also extends to drinks with extensive manufacturing processes or specific standards of identity, Mahar said. For example, while kombucha by definition must be fermented, Cana can nevertheless mimic its taste and texture to create a drink that may not technically be booch, but is, in theory, nearly indistinguishable.

This method also allows Cana’s machines to inject functional ingredients to beverages as well, primarily caffeine and alcohol. The introduction of alcoholic options, however, means the appliances will only be available for purchase to consumers 21 or older in the U.S.

The brand’s primary financier is The Production Board, an investment firm and holding company founded in 2016 that is focused on the food, agriculture and biomanufacturing industries. Beyond Cana, the company is also an investor in meal replacement brand Soylent. Production Board founder and CEO Dave Friedberg also serves as the executive chairman of Cana.

With the upcoming launch, Mahar said Cana is seeking to double its 35 person team this year, with open positions across hardware and software engineers, design, operations and marketing.

Cana is the first beverage project for Mahar, who joined the company as CEO in February 2021. He most recently spent nearly seven years with Vivint Smart Home, where he held several positions including VP of product management and general manager for cameras and video.

Other team members at Cana, according to LinkedIn, include head of brand marketing Lindsey Fahey, who previously worked at Nike and Rothy’s, and former ZX Ventures global manager Daniel Dengrove as head of business development and strategy. Beyond ZX Ventures, Dengrove brings additional food and beverage industry experience to the company as the founder and former president of frozen dessert brand Brewla. Former Ripple Foods VP of R&D Lance Kizer serves as Chief Science Officer.

Friedberg said he was inspired to create Cana in 2018 after reading a research article about scientists breaking down and creating a version of red wine from its molecular compounds that tasted virtually identical to the real thing. But beyond the novelty and convenience of developing an at-home beverage printer, Friedberg also highlighted the potential for the product to reduce waste and bypass traditional supply chains – a key proposition at a moment where supply disruptions have led to global product shortages. As well, Cana claims a relatively small carbon footprint to develop the machines compared to the extensive waste created by traditional CPG companies.

Convenience is also a big part of the brand’s strategy, Mahar said. Each Cana machine will be internet connected and, when the printer cartridge is low, the company will automatically ship a refill cartridge to the owner’s address.

Still, there’s a long way to go between introducing a great concept and having the world buy into it: just ask the backers of recent failed gadget brands like Juicero and Bartesian, both of which overestimated both their utility and their technological advantages.

For those wondering about Cana, there’s still some uncertainty, as well: Final pricing, product imagery and a more detailed look at the science behind the machine are yet to be revealed.

The machines will eventually be sold online and in retail, but Mahar declined to offer specifics of Cana’s rollout strategy prior to the full announcement. However, the focus at launch will be on the home user, with the food service and office channels set aside as future projects.

“I think we’re providing a new type of tool, a new way of creating beverages for the world,” Mahar said. “And I think you’ll see that come to life in a very different way than anything that’s been seen before.”

L.A. Libations Announces ‘L.A. Vibrations’ Marketing Unit

With the opening of its new CPG marketing services division, L.A. Vibrations, SoCal-based beverage incubator L.A. Libations has taken another step towards becoming a complete one-stop shop for startup brand building.

Under the leadership of LAL CMO Bonnie Shah, L.A. Vibrations offers full marketing and branding services for CPG companies, including product design, social media management, content strategy, web development, production and retail and trade marketing. The unit also provides support with digital, ecommerce and Amazon sales, helping companies to register their brands, manage P&L, SEO, and paid social ads, Shah said.

“I think what we’re really able to be nimble with is being an emerging brand marketing arm,” Shah said. “A lot of emerging brands don’t necessarily have the budgets to be able to afford a CMO or be able to work across a lot of different marketing functions, like in the digital space or to build Amazon, and also work at experiential events to support their markets.”

Unlike the main LAL business, which is deal and partnership based with the company taking equity in many of its core brands, L.A. Vibrations operates on a work-for-hire basis, CEO Danny Stepper said. However, he noted that brands should still fit LAL’s better-for-you ethos – “We’ve got to believe in it,” he said.

The announcement marks another step forward for LAL, which was founded in 2009 with a focus on introducing better-for-you beverages into mainstream retail channels. In 2019, the company launched Relentless Trade Solutions, its first for-hire division providing merchandising in California retail, and later that year Molson Coors Beverage Company acquired a minority stake in LAL with the aim of using the incubator to create new non-alc beverage brands and having the group work with its existing companies. Most recently, in December 2020, the company launched its SoCal Incubation Program (SIP), which works with startups selected through an application process.

L.A. Vibrations has been quietly running over the past year with 22 partner brands, – including companies like Shaka Tea, Hawaii Volcanic, Mingle Mocktails and Swedish energy shots brand Carly’s Naturals – but LAL is now expanding the service publicly as the company looks for opportunities to scale operations. The division has allowed LAL to move beyond beverage, working with snack brands like Blue Nest Beef. Stepper said that although the core LAL business will always remain focused on beverage, the new unit – as well as Relentless – have the potential to expand into the broader world of CPG beyond food and beverage.

“At our core, we are about emerging beverage brands, we’re never going to be The Coca-Cola Company in scale, because that’s not who we are and that’s not strategically what we are trying to be,” Stepper said. “Having said that, there are pieces of our business that are completely scalable, like L.A. Vibrations, like Relentless. There’s literally no limit to how big those businesses can get.”

L.A. Vibrations currently has 12 full time team members working on the unit, while the entire company is now up to 80 employees, Stepper said. The expansion comes as LAL is continuing to focus on its relationship with Molson Coors, both in creating new lines like Huzzah!, MadVine and barley milk brand Golden Wing, as well as working to build Molson’s partner brands like plant-based energy drink ZOA and launch new meal replacement products such as Don’t Quit! and orro.

Stepper noted that while the brands enrolled in L.A. Vibrations and Relentless remain separate from the company’s in-house and partnered portfolio, the units have synergy across the entire business. In addition to helping develop the company’s own product launches, LAL is able to form relationships with more brands who may or may not go on to work with the company in a closer fashion down the line.

“As far as L.A. Vibrations and Relentless, it’s a great way for L.A. Libations to get to know brands,” CEO Danny Stepper told BevNET. “But now with this new addition, we have, soup to nuts, every capability that an emerging beverage would need. This was a gap for us before, we had everything but this marketing capability that Bonnie’s built.”